Many analysts expect the housing market to cool down significantly in 2019. More on that below. Meanwhile, according to one new analysis, Phoenix could continue to be a hot spot for home sales next year.
Across the country, the median price of existing homes sold has risen for 80 straight months. Locally and nationally, demand for lower-priced, entry-level homes has been robust, as Millennials get serious about starting families and buying homes. Home prices, rising around 6 percent a year in recent years, have outpaced wage increases, creating an affordability gap for first-time homebuyers.
Nowhere is the situation worse than in Silicon Valley and other tech hubs (and many West Coast cities in general), where prices have skyrocketed in recent years.
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The home-search site Trulia expects the tech-hub hotness will give way next year to “a new group of affordable, young, opportunity-filled, desirable—and largely inland—cities primed to drive growth in the years to come.” Of the 100 largest U.S. metro areas, here are the 10 “poised for takeoff,” according to the analysis:
- Colorado Springs, Colo.
- Grand Rapids, Mich.
- Jacksonville, Fla.
- Bakersfield, Calif.
- Austin, Texas
- Fresno, Calif.
- Columbia, S.C.
- El Paso, Texas
- Oklahoma City, Okla.
The analysis was based on these factors:
- Job growth the past year.
- Vacancy rates, indicating housing supply does not exceed demand.
- Starter-home affordability, suggesting first-time home buyers stand a chance at buying a home.
- More inbound than outbound home searches on Trulia, as a gauge suggesting more people are interested in that market than those looking to leave.
- A large share of the adult population under the age of 35, which represents more potential first-time buyers.
No Crystal Ball
However, multiple analysts see rising interest rates and a potentially slowing economy having a negative effect on the 2019 housing market.
In fact, Zillow, the parent company of Trulia, anticipates a nationwide “cooling from red-hot [home value] growth of 8 percent in March of this year” to a more modest 3.79 percent increase for the year 2019.
Realtor.com predicts a more modest 2.2 percent price increase nationwide in 2019, with the number of existing home sales falling 2 percent as younger buyers find prospective mortgage payments ever more challenging.
Growth in Jobs & Population
How all this plays out locally is anyone’s guess.
As previously reported, Phoenix is among the most popular destinations in the country for job seekers.
Maricopa County is the fastest-growing county in the nation. And last year, Phoenix-Mesa-Scottsdale metro population passed the San Francisco Bay Area to become the 11th-largest U.S. metro area (Phoenix proper is the nation’s fifth most populated city).
Across much of NoPho, the I-17 corridor from Norterra to New River, prices have held steady or edged up over the past year, though sales volume slowed somewhat in October. See details by zone, including a list of every home sold, in the most recent analysis by North Phoenix News and In&Out Magazine:
SIDEBAR: Pent-Up Demand
Rising home prices and rising interest rates have, over the past decade, put the dream of home ownership out of reach for many potential buyers. As recently reported by North Phoenix News and In&Out Magazine, a growing number of parents with children at home are renting, deferring the American Dream while they wait for better buying opportunities.
The appetite among first-time homebuyers is there. According to a recent Bank of America analysis, some 72 percent of Millennials (roughly age 23-40) say owning a home is a top priority in their lives. And 38 percent of potential first-time buyers plan to buy within 2 years.