Arizona is a Top Five State for Year-Over-Year Population Increase

February 1, 2023

 

Arizona is a Top Five State for Year-Over-Year Population Increase
2022: The Year in Review
Why I Am Optimistic
By Fletcher R. Wilcox
Russ Lyon Sotheby’s International Realty
602.648.1230 Fletcher.Wilcox@RussLyon.com 

             

Arizona #5 for Year-Over-Year Numeric Population Increase 

According to a December 22nd release from the U.S Census Bureau, Arizona finished number five amongst all states in year-over-year numeric population increase. The Census bureau measured numeric population increase from July 1, 2021 to July 1, 2022. Over this time, Arizona’s population increased by 94,320 or by 258 people per day. For the three-year period from July 1, 2019 to July 1, 2022 Arizona’s population increased by 322,208 according to Census data. Over the last three years, only three states have gained more people than Arizona. They are Texas, Florida, and North Carolina. See Table One. 

2022: The Year in Review

2022 started out as another year of ever-increasing purchase prices. The median purchase price (MPP) for a single-family resale home in December 2021 was $475,000. By May 2022 it was $540,000. May’s MPP was the highest it had ever been. So, in a span of just five months, December 2021 to May 2022, the MPP increased by $65,000 or 14%. At the same time the MPP was rising, the thirty-year fixed mortgage rate was ever-increasing. It was 3.1% in December 2021 rising to 5.23% by May 2022. 

When the fixed mortgage rate reached five percent, sales subsequently started to slow. Now, homes were not as affordable. May’s record purchase price and the higher mortgage rate meant that buyers now had a higher down payment and a higher monthly principal and interest payment. A buyer’s monthly mortgage payment for a median priced home in May 2022 was approximately $850 more than December 2021…decreasing affordability for some potential buyers resulting in less demand or sales. Following the decrease in sales was the decrease in the MPP. Since May 2022, the MPP has declined seven consecutive months, ending at $469,000 in December 2022. Since the MPP has decreased by $71,000 since its peak, shouldn’t that make purchasing more affordable? Yes, but a monthly mortgage payment is still about $850 more because mortgage rates more than doubled from the beginning of the year. The thirty-year fixed mortgage rate hit seven percent in October (the thirty-year fixed mortgage in December averaged 6.33%).

Sellers responded to the market by making changes: 

  1. some have dropped their sales price
  2. sellers are more willing to make repairs, which previously they would not have made earlier in the year
  3. some are now giving a seller concession. (The number of transactions in which there is seller concession has tripled compared to last year at this time. Some buyers are using the seller concession to buy down their mortgage rate. Some buyers are obtaining a variable rate mortgage to further lower their monthly payment). 

December Results for Greater Phoenix and for Thirty-Three Cities

Table 2 has overall results for Greater Phoenix single-family sales, listings, and median purchase price. December 2022 sales were forty-four percent less than December 2021. December 2022 listings were forty percent less than December 2021. December 2022 median purchase price was $459,999 compared to $475,000 in December 2021.  

Table Three shows the median purchase price year-over-year and month-over-month for thirty-three cities located in either Maricopa or Pinal Counties. Year-over-year, (December 2021 compared to December 2022), twenty-one cities had price decreases, ten cities had price increases and two cities had no price change. Month-over-month, (November 2022 to December 2022), twenty-two cities had price decreases, nine cities had price increases and two cities had no price change.  

Reasons Why I Am Optimistic on Our 2023 Residential Market

Arizona’s population continues to increase for the following reasons:

  1. The snowbirds are coming back for our great weather.
  2. The Superbowl returns.
  3. The Waste Management Phoenix Open along with many other annual events that draw people here.
  4. Arizona has increased job growth, for example, the Taiwan Semiconductor Manufacturing Company (TSMC) is being built.
  5. According to the Arizona Commerce Authority, year-over-year Arizona employment increased by 111,500. They reported for November 2022, that all eleven major employment sectors gained jobs year-over-year. Leading the way with the largest gains were the following: Education & Health Services (32,700 jobs), Leisure & Hospitality (21,400 jobs), and Manufacturing (15,300 jobs). All seven Arizona metro areas (MSAs) gained jobs. The largest percentage gains were recorded in Flagstaff MSA (4.9%), Phoenix-Mesa-Scottsdale MSA (4.0%), and Prescott MSA (4.0%).
  6. Maximum loan limits for both conventional and FHA loans in Maricopa and Pinal counties increased in 2023. The maximum conforming conventional loan amount is now $726,200, and for FHA it is $530,150. Therefore, this increases affordability for some buyers.

Yes, the market has shifted. But overall, Arizona has lots of good things in its favor. That is why I am still optimistic.  

Table Three: December 2022 Results for Thirty-Three Cities by The Wilcox Report™