market report phoenix-mesa-scottsdale, az cbsa...phoenix-mesa-scottsdale, az cbsa, sep. 06, 2018...

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


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


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%


$188,041


$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.


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


11

EXISTING HOME

EXISTING DETACHED MEDIAN HOME PRICE

Change from 2017:

4.2%

Change from 2017:

5.9%


$152,783


$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.


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


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

market report phoenix-mesa-scottsdale, az cbsa...phoenix-mesa-scottsdale, az cbsa, sep. 06, 2018...

Documents