With people leaving the major US cities, the Phoenix metro including Scottsdale Arizona is leading the US in annual home value growth year over year. Sunny skies, warm weather and wide open spaces are all contributing factors combine with good employment and more moderate taxes and more favorable government business restrictions than other West Coast states like California, Oregon and Washington. (Photo: View of Phoenix metro from Dobbins Lookout Point at top of South Mountain Phoenix from City of Phoenix Parks and Recreation website)
As reported on 2/27/21 in hte AZ Business Magazine, "The Phoenix residential real estate market is booming, recording the highest annual growth in both home values (17.1%) and typical rent (8.4%) among the nation’s largest metros, according to Zillow’s latest market report.
Extreme demand driven by exceptionally low mortgage rates, demographic pressures and pandemic trends kept the housing market boiling as we moved into 2021, according to Zillow.
Monthly appreciation of home values in January matched recent record highs, while annual growth is higher than any time since 2006. Home sales are moving briskly, with homes typically staying on the market for 18 days as of mid-January before the seller has accepted an offer from a buyer — 28 days faster than in 2020 and 2019. For-sale inventory declined again in January, and now stands 26.3% below levels from a year ago.
The Zillow Home Value Index (ZHVI) rose to $269,039 in January, up 1.1% month over month, matching December’s all-time record for monthly growth in data reaching back to 1996. Annual home value appreciation was 9.1% — the largest annual growth recorded since June 2006, before the Great Recession.
“Homebuying demand has pushed the pedal to the metal for price appreciation this winter,” said Jeff Tucker, senior economist at Zillow. “Normally we’d be talking about the spring selling season ramping up, but it looks more like last summer’s selling season simply never ended. Buyers eager to secure more space and lock in today’s rock-bottom interest rates are having to move quickly and aggressively to win out in this competitive market.”
Home values rose in all 50 of the largest U.S. metros, with the most drastic yearly growth in Phoenix (17.1%), San Jose (14.2%) and Austin (13.7%). The slowest growth — a relative term in this case — was seen in San Francisco (5.3%), Chicago (6.7%), and San Antonio (6.7%).
REALTOR® Jeff Masich, shows homes for sale in Scottsdale Arizona with local landmark Camelback Mountain in the background
A few major demand drivers are keeping competition high and the market hot through the customarily cool winter. For one, a wave of millennials are now entering their peak home-buying years. The number of Americans aged 25-34 was 12% higher in July 2020 than July 2010, according to Census estimates — an increase of approximately 4.9 million people.
Another is mortgage rates, which averaged 2.74% for a standard 30-year fixed in January — up slightly from a historic low of 2.68% in December. These rates are making monthly mortgage payments more affordable as a percentage of income, even when considering rising prices.
The COVID-19 pandemic and widespread changes to work-from-home policies have also pushed many to reconsider what they want and need in their living space, and where it should be."
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