The median home price of the average single-family home in Arizona has been increasing drastically over the past several years. Since 2015, the Arizona housing market has seen the median closing sale price increase from $211,000 to an astonishing $350,000.
While many native Arizonans angrily profess to being priced out of a home in their own state, many more have attributed, vindictively, one source for this issue: their Californian neighbors.
The idea is this: In a booming housing market the only people who can afford the higher and higher prices being asked are people with high incomes moving in from out of state. In much the same way that Arizona’s changing political demographics and ever-increasing freeway traffic are associated with people from the golden state, Californians are also being attributed with the widespread bidding wars happening for mid-range Arizona homes.
While there is some truth behind the idea that Californians have made the Arizona housing market more competitive, the real causes behind the rise of housing prices in Arizona are much more nuanced than an influx of people from the lower forty-eight’s westernmost state.
“It would be easy to lay this on California,” Tom Kasper, realtor with My Home Group Real Estate, said. “But it’s not true. It’s too simplistic.”
The problem, as laid out by Kasper and other realty market professionals, is an overall shortage of homes, not just in Arizona, but nationally. This fact is best represented numerically. Months of Supply, a term used by realtors to determine how long a housing market can continue to sell homes at its typical rate, is at an all-time low for Arizona towns.
A healthy market contains around five to six Months of Supply on average. According to data provided by Russell Diehl of ArizonaRealEstate.com, Mesa, Arizona, one of the states most popular destinations for people looking to buy a home, had less than one month of supply at the end of 2020. That number has only continued to shrink.
“The real issue is the supply. You know three years ago, on multiple listings, there were roughly 19,000 homes available about this time of year,” Kasper explained. “That dropped the next year to about 15,000 that were available. That dropped, the year after that, to about nine- to-12,000, and just this past month we are at an all-time low of about 5,800 homes that are available on the marketplace right now.”
“You have built in demand here from just families who live here and people who want to stop renting and want to buy a home, so between that, the economic growth, and some influx from outsiders,” Kasper continued. “We have a perfect storm for a housing demand that we cannot meet.”
What this amounts to for recent homebuyers like Jeff Miller, is one of the more difficult experiences one can have in the real-estate market. After saving up tens of thousands of dollars for a down payment, and being approved for over $300,000 in loans, he found himself being outbid consistently in a state he had once previously owned a home in.
“It was, probably, in the top five most frustrating things I have ever done in my entire life,” Miller said. “It was not my favorite experience. I will say that. Especially, because, for me, the fact that I saved up $30,000 was just something I would break my arm patting myself on the back over, you know what I mean? And the fact that that, and what I could get approved for, was not enough to get the houses I was looking at, consistently not enough to get the houses I was looking at, was, yes, extremely frustrating.”
The causes of this supply shortage are almost as widespread as the issues it has created. COVID-19, the recent freezing over of Texas, one of the lowest federal interest rates in history, lumber shortages, political instability in coastal states, weather fatigue in the Midwest, and Arizona’s bustling economy are all contributing factors in the near double-digit yearly price increase for Arizona homes.
Similar in complexity to the cause of this housing crisis, there are no easy solutions. The production of more homes has stalled due to the higher cost of production. The land that homes might be built on is more expensive than it has ever been. The regulations to build a home are more complex than they were 50 years ago, and the population of people looking to buy what is being built is constantly growing. Experts suggest it may be years before the market prices begin to soften.
Californians, just like Arizonans, are experiencing the exact same difficulties as the whole of the nation. As are people from Seattle, New York, New Jersey, and many other states. As everyone searches for a new place to lay their head, Arizona, with its many positive attributes and comparatively low cost of living, has become one of the hottest markets in the country.
The cost of being perhaps the best seller’s market in the nation? An entire generation of first time home-buyers priced out of the state they were born in.