Phoenix home construction outpaces population growth — for now
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After years of playing catch-up on homebuilding, the Valley is getting closer to meeting the demand of people moving here, a new Axios analysis of U.S. Census data shows.
Why it matters: Economists and real estate analysts blame a housing shortage for the dramatic spike in home prices and rents in the late 2010s and early 2020s.
Driving the news: The number of housing units in metro Phoenix increased by 16.4% between 2014 and 2024, while the population grew by 15.5%, per U.S. Census Bureau data.
- Before 2022, population growth exceeded housing growth.
Caveat: Mark Stapp, executive director of the Master of Real Estate Development program at Arizona State University, told Axios that the increase between 2022 and 2024 was the result of multifamily construction, which has since slowed.
Threat level: He told us he predicts the Valley will be back to population growth significantly outpacing housing growth by the end of next year.
Catch up quick: Home and apartment building in the Valley all but stopped after the 2008 housing crash and didn't start again until about 2016.
- Meanwhile, metro Phoenix became one of the most popular relocation destinations in the country, setting up a supply-and-demand conundrum that led to pricier housing.
Reality check: While a housing shortage may have caused the dramatic price spike, don't expect metro Phoenix prices to drop just because there's more inventory.
- The region was already behind on supply in 2014, so while the building boom may have halted the runaway prices, it's not enough to seriously lower home values.
Between the lines: High mortgage rates over the last few years have also depressed supply in Phoenix.
- If you're a homeowner with an older mortgage locked in at 3% or so, the idea of moving into a new home at double that rate or more isn't exactly attractive.
That means fewer existing homes are hitting the market as people sit pretty with their comparatively low rates.
- High rates also make new homes more expensive over time for buyers needing a mortgage.
Stunning stat: Over the last five years, one in six prospective U.S. homebuyers has given up because they couldn't find a house they liked or could afford, a recent Bankrate survey found.
What's next: A new bipartisan housing bill aims to ease new home construction and boost supply, but the government shutdown is currently sucking up most of Washington's attention and energy.