market report phoenix-mesa-scottsdale, az cbsa...phoenix-mesa-scottsdale, az cbsa, sep. 06, 2018...
TRANSCRIPT
MARKET REPORT
The Valley housing market is expanding, and although not at the levels seen pre-recession, new home construction is picking up pace, reaching the fastest level seen in the last decade. Home prices are climbing aggressively, but the Valley remains one of the most affordable markets in the West. Meyers Research data indicates May sales activity was the best market performance in years, preceded by robust activity in March and April. While buyers flocked to urban areas in Phoenix, Tempe, and Scottsdale during the early recovery years, home buyers are now pushing the outward boundaries of the Valley, trading location for affordability, fueling sales.
Strengthening permit activity.
High demand fueling SF rental prices.
Phoenix-Mesa-Scottsdale, AZ CBSA
Increased Valley visibility.
Permits are up 18% for the first half of the year compared to a year ago, totaling 11,808 permits. In comparison, only 10,000 homes were built per year between 2009 and 2011, with 60,000 homes constructed during peak years 2005-2006.
Single-family rental prices had the 2nd-highest increase in the US during the month of April, up 5.5% YOY, according to CoreLogic. High demand and steady employment growth are driving continued rent increases.
Phoenix is a go-to destination for homebuyers looking to move from other major metro areas. About 23% of out-of-state buyers looking in Phoenix during Q1 were from Los Angeles, while also the top pick for Denver residents.
1
691CBSA
582AZ
610USA
MEYERS INDEX
June 2018
EMPLOYMENT SUMMARY
2.6%55,400 jobs added YOY
3.9%Unemployment
2.6%58,827 jobs to be
added YOY
4.1%Unemployment
2,092,500 total jobs 2,146,990 total jobs
July 2018 2019F
SUPPLY
TYPE PROJECTS REMAINING UNITS
PERMITS YOY CHANGE PEAK PERMITS
Single-Family 672 65,067 22,079 12.9% 60,926
Multifamily 107 4,002 10,422 17.4% 37,924
69,069 30.3%32,501 98,850Totals: 779
TOP CITIES Active New Home Projects
Phoenix100
Mesa52
Buckeye44
Peoria41
Scottsdale37
July 2011
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018 Economy
2
Phoenix metro is ranked 15th in the US for tech talent on CBRE’s annual Scoring Tech Talent report, with a labor pool of 83,930, or 4% of its total employment. Industry growth is expected to continue, with the university system graduating more students than local companies can hire. Phoenix added 12,650 tech jobs between 2012-2017, while adding 24,718 tech degrees between 2012-2016, the 9th highest of the top 50 markets, and above Seattle and Austin.
The 53-acre Lotus Project near Loop 202 and Kyrene Rd in Chandler is expected to break ground mid-August, featuring industrial components in its first phase, and a mix of industrial and office during the second phase. Upon completion, the project is projected to create 1,500 to 2,500 jobs.
JOB GROWTH
July 2018 Job Growth:
new jobs55,4002018 Job Forecast:
58,827
Summary
UNEMPLOYMENT RATE
July 2018 Unemployment:
↓3.9%Moody's Analytic 2018 Forecast:
Key Highlights
↑
2015
172,920
57,640
-172,920
-57,640
-115,280
-230,560
115,280
0
1999
2011
1995
2007
2019
F19
9120
03
2014
4.0
8.0
12.0
2.0
6.0
10.0
0.01998 2010 2019F1994 20061990 2002
new jobs
Total nonfarm employment in the Phoenix-Mesa-Scottsdale, AZ metropolitan statistical area increased 2.6% from the same period last year to 2,092,500 payrolls in July 2018. There are approximately 55,400 more jobs than July of last year. The local unemployment rate decreased to 3.9% in July 2018 compared to 4.0% in the previous month. July’s jobless rate is lower than it was this time last year when it stood at 4.0%. Forecasts from Moody’s Analytics show that the region’s unemployment rate will finish the year at 4.1%.
↓4.1%
year over year
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018
3
Iron Mountain, a Boston-based storage and information management services company, has broken ground on a 550,000 square foot, 48MW data center in Phoenix. The first phase of the project, located at 48th and Van Buren streets, is expected to be completed in June 2019, adding 24MW of capacity.
Increasing e-commerce activity is fueling the industrial market with 1.83M square feet delivered in Q2, double the amount of Q1 deliveries, pushing the market to record low vacancy rates.
EMPLOYMENT BY SECTOR Key Highlights
JOBS BY SECTOR
TTU
16,275
13,020
9,765
6,510
3,255
0
-3,255NRMPBSOMIHGFEHCON
Construction (CON)6.0%
Education & Health (EH)15.3%
Finance (F)9.1%
Government (G)11.4%
Hospitality (H)10.9%
Information (I)1.7%
Manufacturing (M)6.2%
Other (O)3.1%
Professional & Business Services (PBS)
16.9%
Natural Resource Mining (NRM)0.2%
Trade, Transport & Utilities (TTU)
19.2%
(YEAR-OVER-YEAR)
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018 Community
4
POPULATION GROWTH
2018 Median Age:
36
POPULATION BY AGE
2018E Population Growth:
1.5%2018 Population Growth:
2010
5,063,170
4,701,515
4,339,860
3,978,205
3,616,550
2,893,240
3,254,895
2000
2018
E
85+
1,095,175
657,105
219,035
876,140
438,070
0
75 to
84
65 to
74
55 to
64
45 to
54
35 to
44
25 to
34
15 to
24
Under 15
6
ETHNICITY
‘Invest In Education’ organizers are proposing nearly doubling income-tax rates on Arizona’s highest earners as a way to fund an additional $690M for public schools. The campaign has gathered more than 270,000 signatures, well above the 150,642 valid signatures needed to get their measure on the ballot.
Kroger, the parent company of Fry’s Food & Drug Stores, announced a partnership with autonomous vehicle company Nuro to deliver groceries from it stores. While no official announcement has been made on where the delivery program will be launched and tested, Nuro has been actively recruiting new hires in the Valley.
Arizonans have an average credit score of 669 (fair), ranking in the bottom third of all US states and DC, managing 3.04 credit cards with an average balance of $6,389.
monthyear
Others10.1%
Two Plus3.0%
American Indian2.0%
Pacific Islander0.2%
Asian3.0%
Black4.1%
White54.1%
Hispanic23.5%
Summary
There are approximately 1,721,594 households in the region which is up 1.4% year-over-year. Forecasts show that household formation is expected to increase by an annual growth rate of 1.5% for 2018. Median household income in the area increased 1.1% from the previous year to $56,217. Incomes are forecasted to increase 1.1% for the year in 2018.
Key Highlights
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018
5
Passenger traffic at Phoenix Sky Harbor International Airport stayed relatively flat YOY, up just 0.2% in June to record 3.77M passengers. Stagnant traffic patterns are typical at Sky Harbor during the summer months.
HOUSEHOLD INCOME
2018E Median Household Income:
$56,217
HOUSEHOLD GROWTH
2018E Household Growth:
1.5%
Key Highlights
2018
E
42,900
45,760
48,620
51,480
54,340
57,200
60,060
2000
2010
1,186,560
1,450,240
1,713,920
1,054,720
1,318,400
1,582,080
1,845,760
2000
2018
E
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018 Supply
6
PERMITS
2018LTM Total Building Permits:
32,501 Single-family
HIGHLIGHTS
2012
31,840
7,960
39,800
15,920
23,880
02018LTM2010 20162008 2014
Multifamily
Land transactions remained strong during the month of June, posting $160M in total sales according to a Colliers International study, although a decline from the $202.8M spent in May. Single-family residential dominated activity, accounting for nearly $107M in transactions, with KB Home, Maracay, and Brookfield Residential closing deals during the month.
Maracay will be building 394 homes in south Phoenix near Dobbins Rd and 7th St. Avance will be a gated community featuring plans ranging from 2,000 to 5,000 square feet. Models are expected in early 2019.
In the Phoenix-Mesa-Scottsdale, AZ region, total residential building permit activity increased 14.3% year-over-year to an annualized rate of 32,501 units in July. In the twelve-month period ending July, single-family building permit issuance increased 12.9% to 22,079 units while multi-family permit issuance increased 17.4% to 10,422 units.
DAYS ON MARKET
June 2018 Days on Market:
62
2014
60
120
75
135
90
45
105
2017
2012
2010
days
E/P RATIO
E/P Ratio:
1.8
2013
105,810
-246,890
-105,810
70,540
-211,620
-70,540
35,270
-317,430
-176,350
-35,270
-282,160
-141,080
0-2
4
-6-8
-10-12-14-16-18
-4
6
20
2018
F20
1120
0920
15
Tota
l Per
mits
/Job
Gro
wth
E/P
Ratio
Total Permits Non-Farm Annual Growth E/P Ratio
NUMBER OF LISTINGS
July 2018 # of Listings:
18,526
2014
29,355
19,570
48,925
9,785
39,140
0
2012
2018
CM20
1020
16
↓
7
NUMBER OF ACTIVE PROJECTS
Total
544
Oct. 201
6
700
560
420
140
280
0
July 20
18
July 20
16
Apr. 201
8
Apr. 201
6
Jan. 201
8
Jan. 201
6
Oct. 201
7
Oct. 201
5
July 20
17
July 20
15
Apr. 201
7
Apr. 201
5
Jan. 201
7
Jan. 201
5
Sep. 201
8
Tota
l Num
ber O
f Pro
ject
s
Detached
469Attached
75
ACTIVE BUILDERS top 15 results
RANK BUILDER # OF PROJECTS
AVG SALES
5213121 $370,983Lennar 3.9610.17%
2112952 $290,646D.R. Horton, Inc. 6.4410.03%
299203 $374,433PulteGroup Inc. 4.617.13%
267784 $465,417Taylor Morrison 3.886.03%
326575 $359,998Meritage Homes 3.505.09%
285996 $349,348Richmond American Homes 2.944.64%
155547 $368,207Fulton Homes 5.084.29%
244718 $473,311Shea Homes 3.523.65%
144499 $372,190K. Hovnanian Homes 4.223.48%
1241310 $258,828Garrett Walker Homes 4.683.20%
1337811 $266,142KB Home 4.022.93%
533412 $356,567Robson Resort Communities 10.502.59%
1131113 $378,160Mattamy Homes 3.752.41%
931114 $286,047Beazer Homes 3.522.41%
930215 $373,563Ashton Woods Homes 3.692.34%
# OF YTD SALES
% MARKET SHARE
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018
AVG PRICE
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018 Sales
8
NEW HOME MARKET ANNUALIZED
Change from 2017:
0.0%
Total Home Closings:
19,635
31-year Historical Average:
sales19,222
July 2018 Detached:
18,105
Summary
EXISTING HOME MARKET ANNUALIZED
Change from 2017:
↑13.7%31-year Historical Average:
sales80,980
Key Highlights
2014
43,005
28,670
71,675
14,335
57,340
02012201020082006 2018LTM2004 2016
July 2018 Attached:
1,530
Total Home Closings:
124,996July 2018 Detached:
104,192
2014
200,900
160,720
120,540
80,360
40,180
02012201020082006 2018LTM2004 2016
July 2018 Attached:
20,804
New home closings in the Phoenix-Mesa-Scottsdale, AZ metropolitan area experienced a 0.0% year-over-year decrease to an annualized rate of 19,635 units in July. Of those home closings over the past 12 months, 1,530 were attached closings and 18,105 were detached closings. Existing home closings for the same period posted a year-over-year gain of 13.7% to an annualized rate of 124,996 units. Of those home closings over the past 12 months, 20,804 were attached and 104,192 were detached.
Nearly 50% of potential homebuyers from outside Arizona searched for homes in Phoenix during Q1 according Redfin, with residents from Los Angeles, Seattle, and Denver leading the charge. This is the first time Phoenix has topped the list for drawing the most prospective homebuyers looking to move from other major metros.
Green Street Communities has broken ground on Campus Grove and Acacia Court, located in Arcadia and Central Phoenix. Campus Grove features homes priced from the $600Ks, while homes at Acacia Court will start from the $900Ks.
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018 Prices
9
NEW HOME
NEW DETACHED MEDIAN HOME PRICE
Change from 2017:
2.4%
Change from 2017:
7.6%
31-year Historical Average:
$188,041
31-year Historical Average:
$164,206
Summary
NEW ATTACHED MEDIAN HOME PRICE Key Highlights
2014
181,920
151,600
333,520
303,200
272,880
242,560
212,240
2012201020082006 2018LTM2004 2016
July 2018 Median Attached Closing Home Price:
$300,750
July 2018 Median Detached Closing Home Price:
$309,273
2014
176,950
353,900
283,120
212,340
141,560
318,510
247,730
2012201020082006 2018LTM2004 2016
The median closing price for a new detached home in the Phoenix-Mesa-Scottsdale, AZ region increased 2.4% year-over-year to $309,273 in July while the median closing price for a new attached home increased 7.6% from the same year-ago period to $300,750. Homes priced between $240,000 and $320,000 experienced the most closing activity over the past year. The new home affordability ratio for a detached home reached 43.6% in July.
↑
↑Despite recent mortgage rate hikes, few homebuyers are halting their searches for new homes based on a Redfin study, with only 5% reporting they’d call off their search if rates rose above 5%. Nearly one-third of buyers are more willing to adjust their criteria regarding size and location.
Statesman Group launched its first phase at The Luxe in Desert Ridge near Deer Valley Road, between 52nd and 56th street, with 50% of the initial 30 units pre-sold. In total, The Luxe will have condominiums ranging from 1,630 SF to 2,300 SF, with pricing from the $500Ks.
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018
10
NEW HOME CLOSINGS BY PRICE RANGE
DETACHED AFFORDABILITY
640K
-4.9M
2,930
5,860
1,465
4,395
7,325
0
560K
-640K
480K
-560K
400K
-480K
320K
-400K
240K
-320K
160K
-240K
80K-16
0K0-8
0K
201832.0
64.0
40.0
72.0
48.0
80.0
56.0
201720162015201420132012201120102009
AttachedDetached
ExistingNew
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018
11
EXISTING HOME
EXISTING DETACHED MEDIAN HOME PRICE
Change from 2017:
4.2%
Change from 2017:
5.9%
31-year Historical Average:
$152,783
31-year Historical Average:
$111,306
Summary
EXISTING ATTACHED MEDIAN HOME PRICE Key Highlights
2014
181,500
151,250
121,000
90,750
272,250
242,000
211,750
2012201020082006 2018LTM2004 2016
July 2018 Median Attached Closing Home Price:
$177,895
2014
115,000
230,000
143,750
57,500
172,500
86,250
201,250
2012201020082006 2018LTM2004 2016
July 2018 Median Detached Closing Home Price:
$253,149
The median closing price for an existing detached home in the Phoenix-Mesa-Scottsdale, AZ region increased 4.2% year-over-year to $253,149 in July while the median closing price for an existing attached home increased 5.9% from the same year-ago period to $177,895. Homes priced between $160,000 and $240,000 experienced the most activity over the past year. The existing home affordability ratio reached 49.5% in July.
↑
↑Single-family rental prices in Phoenix recorded the second-highest increase in the US during the month of April, up 5.5% YOY. High demand and steady employment growth are driving continued rent increases.
Low inventory and pent-up demand is reducing housing affordability across the US and Phoenix is no different. While still one of the most affordable markets in the West, Maricopa County is at its least affordable for the average wage earner since 3Q08.
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018
12
EXISTING CLOSINGS BY PRICE RANGE
DETACHED AFFORDABILITY
640K
-5M
49,700
39,760
29,820
19,880
9,940
0
560K
-640K
480K
-560K
400K
-480K
320K
-400K
240K
-320K
160K
-240K
80K-16
0K0-8
0K
Median Attached New Home Price:
201832.0
64.0
40.0
72.0
48.0
80.0
56.0
201720162015201420132012201120102009
AttachedDetached
ExistingNew
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018 Distress
13
Phoenix is among a handful of cities that saw an increase in foreclosures during the first half of the year, up about 5% YOY, according to Attom Data Solutions. Nearly half of all active foreclosures are tied to loans originating in 2009 or later and are a result of more recent distress triggers. Still, despite the increase, the 5,000 foreclosure filings through June-end are a small fraction of the 74,000 foreclosures during the peak of the housing crisis.
HOUSING TRANSACTION VOLUME BY TYPE Summary
NOTICES OF DEFAULT & FORECLOSURE
July 2018 Notices of Default:
11,479July 2018 Total Foreclosures:
3,036
Key Highlights
2017
92,460
61,640
154,100
30,820
123,280
02016 2018LTM
2018LTM
6,885
13,770
4,590
11,475
2,295
9,180
02017201620152014
Foreclosures in the Phoenix-Mesa-Scottsdale, AZ area have declined over the past year. There were 11,479 notices of default sent out in the region in the twelve-month period ending July which is a 29% increase year-over-year. The region experienced 211 foreclosures in July. Over the past twelve months, there have been 3,036 foreclosures in the area which is lower than it was this time last year.
Existing Foreclosure Sale NODNew Foreclosure
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018 Market Health
14
2015 2016 2017 1 YR AGO JUL. 2018 % CHANGE
Job Growth (12-Month) 62,030 64,660 55,620 51,900 55,400 2.6% ↑
Unemployment Rate 5.2 4.7 4.2 4 3.9 -
ECONOMY
Median Age - - - - 36.6 -
Median Household Income 53,678 54,313 54,948 55,582 56,217 1.1% ↑
COMMUNITY
Days on Market 73 72 66 63 N/A N/A
E/P Ratio 2.8 2.3 1.9 1.9 1.8 - 6.8% ↓
Number of Listings 21,264 21,459 19,985 21,162 18,526 - 12.5% ↓
Total Permits 22,402 28,583 29,312 28,424 32,501 14.3% ↑
SUPPLY
Attached Existing 14,154 15,589 17,915 17,134 20,804 21.4% ↑
Attached New 944 1,183 1,722 1,609 1,530 - 4.9% ↓
Detached Existing 76,061 82,160 92,050 89,286 104,192 16.7% ↑
Detached New 11,897 15,312 17,915 16,897 18,105 7.1% ↑
Total Investor Sales 2,705 2,511 1,972 2,099 1,614 - 23.1% ↓
SALES
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018
15
*Current year-over-year job growth and unemployment rate are as of Jul. 2018.
2015 2016 2017 1 YR AGO JUL. 2018 % CHANGE
Affordability (%) 57.8 56.7 53.4 52.9 49.5 - 6.4% ↓
Attached Existing Median $144,000 $155,000 $169,900 $168,000 $177,895 5.9% ↑
Attached New Median $268,956 $281,137 $301,259 $279,378 $300,750 7.6% ↑
Detached Existing Median $213,950 $226,250 $239,000 $242,950 $253,149 4.2% ↑
Detached New Median $292,990 $299,538 $305,616 $302,105 $309,273 2.4% ↑
PRICES
Foreclosures 5,917 4,777 3,583 3,988 3,036 - 23.9% ↓
Notices of Default 10,825 9,526 8,778 8,880 11,479 29.3% ↑
DISTRESS
Phoenix-Mesa-Scottsdale, AZ CBSA, Sep. 06, 2018 Appendix
16
ABOUT
DEFINITIONS AND METHODOLOGY
Meyers Research, a Kennedy Wilson Company, combines experienced real estate and technology advisors with leading data to provide our clients with a clear perspective and a strategic path forward. Based in Beverly Hills, we are home to 80 experts in 10 offices across the country.
Experienced real estate and technology advisors.
An international real estate investment and services firm with a success proven legacy.
www.kennedywilson.com
A comprehensive research platform withreal-time information all in one place.
www.meyersresearchllc.com [email protected]
(877) 966-3210
All information presented involved the assembly of data sources that we consider to be reliable, including the Bureau of Labor Statistics, CBRE- EA, Nielsen Claritas, Public Record Data, Moody's Analytics, Great Schools, U.S. Bureau of the Census, Zillow, various regional Multiple Listing Service providers, Meyers Research and Zonda. We do not guarantee any data accuracy as all information is subject to human errors, omissions, and/or changes.
Meyers IndexThe Meyers Index is a proprietary index that produces a score ranging from 0 to 1,000 for a geographic area. A higher index score captures the desirability of housing development for the selected area and is calculated using specific data sets weighted
to interpret the strength of the market. Such metrics include price appreciation, sales activity, permit activity, demographic growth, household income levels, school scores, and affordability.
DefinitionsCM - Current Month E - Estimated F - Forecast LTM - Last 12 Months