The Phoenix real estate market has arguably been one of the most attractive in the country for several years. From the smallest single-family rental investors to flippers and institutional funds, investors of all stripes have focused their sights on this market and have been rewarded handsomely in return. As we are heading into 2022, though, the question on everyone’s mind is will Phoenix continue to outperform the rest of the nation?
As we know, the health, or lack thereof, of any real estate market is generally not a leading indicator, but rather a reflection of the economic fundamentals, such as employment dynamics, population trends, and supply pipeline. To gain a meaningful perspective on the real estate market, we must first understand those fundamentals.
In this article, we won’t be able to detail all of the data. Our hope is to simply provide the highlights on what is driving the Phoenix economy to help you understand why Phoenix has been, and will likely continue to be, a darling of the institutional investor class.
Employment trends in the Phoenix metro area
Employment dynamics is always the place to start, and as we survey the available statistical publications, Phoenix MSA is typically near the top of all primary markets as it relates to job growth. In 2020 and 2021, Phoenix was the fastest market to recover jobs and reduce unemployment. Companies large and small have been and continue to set up shop in Phoenix at a record pace.
A bit of background on this: Phoenix MSA was one of the hardest-hit markets in the Great Recession, due mostly to residential over-building, and took much longer to stabilize and start the recovery process. The foreclosures took a long time to work through.
To make things worse, the MSA started to lose population heading into the Great Recession. This happened in large part because those who came here to work in the residential construction space bought houses with mortgages that many of them should not have been…