Even with the increasing incomes of both individuals and households, most U.S. markets are showing that home prices continue to outpace income growth. However, in the Phoenix metropolitan area, where home prices have risen by 71% in the last 10 years, wage growth has successfully matched pace.
A recent study by Point 2 Homes shows that, in Phoenix, the mortgage burden rose 2% between 2010 and 2015, but has essentially “frozen” since then. Alice Carciu, analyst with Point 2 Homes, stated that the mortgage burden of Phoenix homeowners currently sits at 17%. In other words, homeowners are spending 17% of their income on mortgage payments. Compare this to San Diego where owners spend 30% of their income on their mortgage.
The study looked at the top 100 metros in the country, and Phoenix came out on top among the cities of its size included in the analysis. Phoenix had a 51% increase in the median household income between 2010 and 2020.
“Looking at similar-sized cities, income increased by 49% in San Diego, 44% in Philadelphia, and 28% in San Antonio, Texas.” – Phoenix Business Journal
Phoenix Metro in 2015
- Median New Home Price (single family): $298,000
- Median Resale Value (single family): $205,000
Phoenix Metro in 2021
- Median New Home Price (single family): $354,000
- Median Resale Value (single family): $325,000
“The affordability study is good news for metro Phoenix and the area’s ability to maintain an affordability index of 17% in 2020. Homebuilders are offering more housing product in the lower price tiers, which helps overall market affordability.“
“The lack of resale supply and the lower $29,000 price differential is leading more buyers to new homes. Although still at an all-time low, mortgage rates have begun to tick upward slightly but isn’t causing overall concern. As we look to the remainder of 2021, we are anticipating rates to remain low with many industry experts predicting a slight increase—somewhere around .25%—toward the end of 2021 as the housing market is the driving force in the Phoenix markets recovering economy.” – Kevin Kosan, Senior VP of the Home Builder Finance Group
Source: bizJournals