By Shelley Sakala
Phoenix needs more houses! With the economy strong in both nationally and in Arizona, new home construction is on the rise – but it’s pacing below the demand needed to accommodate the increase in home buyers. So, what exactly is causing this uptick in demand? One reason is the unemployment rate. As of June, Arizona’s unemployment rate was steady at 4.7%. By comparison, the unemployment rate during the economic crisis of 2009 was 10.9%. Another contributing factor is the influx of California transplants looking to build luxury homes (don’t hate on California – this is actually a good thing for the Valley).
All of this has resulted in a significant increase in new home construction. In the first half of this year, more than 11,000 building permits were issued for single-family homes in the Valley. That includes nearly 2,000 for the city of Phoenix – almost double the number from the same time period last year. But it still might not be enough construction to keep up with the demand. When this happens, buyers often turn their attention to existing homes.
The luxury market in Norterra/Deer Valley is limited, with just 10 homes currently listed for sale at price points of $750,000 or above. One thing North Phoenix has, however, is acreage – something hard to find in the interior of The Valley. Homeowners looking for a little more elbow room can cash-out of their expensive California homes, grab a large piece of Phoenix land, and build a mini-mansion here in the desert. There is much more inventory in Norterra/Deer Valley for the non-luxury market, but the supply is still low. For homes listed below $750,000, the Norterra area (85085) shows 144 properties for sale, while Deer Valley (85027) shows 85 properties.
New communities such as the 1,100-home Union Park at Norterra will help ease some of the local market pressure, but will also increase the desirability of North Phoenix as a place to live, work, and play. And as long as Californians keep pointing their moving vans toward Phoenix, more construction will still be needed. While there are no guarantees, don’t be surprised if you see your home value increase over the next couple of years. The economy is strong, people are working, and the market is heating up. That’s a good combination.