Home sales and prices outpace national averages; inventory remains tight
IRVINE AND SILICON VALLEY, CALIF. – April 19, 2017 – Ten-X, the nation’s leading online real estate transaction marketplace, has released its Fourth Quarter 2016 Economic and Single-Family Housing Market Outlook Report for Phoenix, which reveals that the metro’s homeownership rate remained flat in the last quarter of 2016 at 63 percent. While homeownership in Phoenix has trailed the national level through much of this cycle, the gap has narrowed over the past year, and the quarter closed 260 basis points higher than a year ago.
“The Phoenix housing market continues its remarkable recovery from the Great Recession,” said Ten-X Executive Vice President Rick Sharga. “Home sales and home price appreciation both continue to outpace national averages. Extremely low inventory of homes for sale, coupled with below average numbers of adults in the key 25-54 age group, are keeping homeownership levels slightly below the U.S. average – but only slightly.”
Phoenix Homeownership Rate Remains Flat
Sources: US Census Bureau, Ten-X Research
Phoenix Home Sales Tick Up
Sources: IHS, Ten-X Research
Existing home sales in Phoenix increased slightly in Q4 to a seasonally adjusted annual rate (SAAR) of 116,520, which is up 12 percent year over year and double the average US pace. Existing homes sales remained at a high level, just 14.6 percent below their previous cyclical peak, reflecting strong demand in the area. Inventory of homes for sale in Phoenix remained tight, hovering around 20,966, but up 6.9 percent from a year ago. The average time a home for sale sat on the market decreased slightly to a seasonally adjusted 59 days. Though they continue to lag behind historical levels, both housing starts and permits picked up in Q4, growing 11.6 and 8.1 percent year-over-year respectively.
Phoenix Home Prices Continue to Outpace the US Average
Sources: FHFA, Census, IHS, Ten-X Research
Phoenix home prices continued to make post-recessionary strides with a 7.8 year-over-year gain in Q4, outpacing the US average as it has done for nearly every quarter in recent years. The median home price ended the year at $231,788, still remaining below the metro’s prior peak, which suggests that there is room for further price gains moving forward.
“While prices continued to grow this past quarter, Phoenix still offers affordable home ownership options for most buyers, since median family income also increased and finally grew higher than it’s prior peak set back in 2008,” noted Sharga. “The strength of the region’s economy should help offset rising home prices and potentially higher interest rates.”
Economic and Demographic Fundamentals
Phoenix’s economy continued to perform well in the final quarter of 2016 as the professional/business and education/healthcare sectors pushed overall employement up 2.5 percent year over year. To close out the year, unemployment fell 10 bps from year-ago levels to 4.4 percent, hovering just below the national average.
Phoenix’s demographic picture remains strong, having outpaced the U.S. population growth over the past 20 years. The metro added 87,988 residents in 2015 measuring a 2 percent year-over-year increase, with domestic in-migration accounting for more than half of the population increase as Phoenix’s strong labor market attracted domestic workers. One potential issue for continued housing market growth, however, is that Phoenix’s total population skews to both extremes with larger-than-average proportions of residents in the under 24 years old and over 65 years old brackets. The metro lags the national average in age brackets between 25 and 64 years old, which are typically a consumer’s prime home buying years.
Ten-X is the nation’s leading online real estate transaction marketplace and the parent to Ten-X Homes, Ten-X Commercial and Auction.com. To date, the company has sold 275,000+ residential and commercial properties totaling more than $46 billion. Leveraging desktop and mobile technology, Ten-X allows people to safely and easily complete real estate transactions online. Ten-X is headquartered in Irvine and Silicon Valley, Calif., and has offices in key markets nationwide. Investors in the company include CapitalG (formerly Google Capital) and Stone Point Capital. For more information, visit Ten-X.com.