Arizona home prices rose more than 500% in 40 years
Add Axios as your preferred source to
see more of our stories on Google.
Arizona home prices have ballooned 500% over the past four decades, according to an analysis of Freddie Mac data.
Why it matters: Phoenix, once a mecca of affordability, now requires a six-figure income to afford a median-priced home.
Threat level: Wages have not kept up with housing costs. The median home price was 5.2 times the median income in metro Phoenix last year, compared with 2.7 times the median income in 1990, according to a Harvard analysis.
What happened: Though the brunt of Phoenix's affordability crisis came to a head in the past five years, our housing shortage is the result of decades of policy decisions, Mark Stapp, executive director of the Master of Real Estate Development program at Arizona State University, told Axios.
Flashback: Beginning in the early 2000s, some Valley suburbs adopted zoning rules like larger lot sizes aimed at limiting new home building, Stapp said.
- After the Sept. 11, 2001 terrorist attacks, the Federal Reserve lowered interest rates.
- This, coupled with subprime lending and speculation buying, sent Arizona's home-building industry into overdrive and spiked home prices in the aughts, Stapp said.
- Eventually, the housing bubble burst, more than 100,000 Arizona homes fell into foreclosure, would-be buyers walked away from new-build contracts and homebuilders were left with expensive homes they couldn't sell.
Between the lines: Builders were shell-shocked by the housing crash and barely added any new stock to the market for almost a decade.
- Yes, but: People kept moving to the Valley, and by the time homebuilding restarted in earnest in 2019, demand was already exceeding supply.
The bottom line: "This was a long time in the making. It's very complex and it's going to take a long time to unwind," Stapp said.