- Strong rent growth in the Southwest mirrors strong population growth in November 2019
- Low-end or affordable properties experiencing the largest rent increases
- Existing home sales volume finished strong at+10.8% y/y in December 2019
Molly Boesel, the principal economist with Corelogic, said, “Strong rent growth in the Southwest reflects strong population growth in this part of the US. Arizona ranked third for population growth in 2019 by both the numbers and the percentage increase, according to the US Census Bureau.”
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While the country as a whole experienced a rental growth increase of +3%, take a look at these disproportionate rent increases in the Southwest:
- Phoenix – +6.9%
- Tucson – +5.7%
- Las Vegas – +5.1%
Phoenix has had the fastest rising rent growth for the last 12 months, according to CoreLogic.
Seattle also experienced lopsided rent increases to the tune of +5.4% in November. All four of these cities are the beneficiaries of strong job growth. That strong job growth is attracting new residents while their respective local housing industries are not keeping up with demand.
Meanwhile, according to The National Association of REALTORS® (NAR), existing home sales volume rose +10.8% y/y in December 2019.
Existing home sales volume in December overshadowed existing home sales volume in November 2019 at +3.6%. On a full year adjusted basis, existing sales in 2019 equaled that of existing sales in 2018.
Lawrence Yun, chief economist with NAR, said, “I view 2019 as a neutral year for housing in terms of sales. Home sellers are positioned well, but prospective buyers aren’t as fortunate. Low inventory remains a problem, with first-time buyers affected the most.”
Bill Banfield, QuickenLoan’s chief risk officer, indicated that low interest rates helped buyers buy in 2019 but that demand will become “the” issue in 2020. “While December 2019’s jump in home construction is positive…it will not sufficiently meet the demand likely to occur in 2020. This will continue to push prices upwards, stretching first-time buyers – who make up nearly one third of the market.”
Median existing home prices spiked +7.8% y/y in December 2019, according to NAR, for all housing types to $274,500.
NAR’s Yun said, “Price appreciation has rapidly accelerated and areas that are relatively unaffordable or declining in affordability are starting to experience slower job growth. The hope is for price appreciation to slow in line with wage growth, which is approximately 3%.”
Thanks to InmanNews’ Veronika Bondarenko and Patrick Kearns, Core Logic and the National Association of Realtors