Home prices skyrocketing, a tight labor market and an uneven recovery from the Covid-19 pandemic have shaped Arizona’s economy for the past year, and will be indicators economists continue to keep an eye on in 2022.
At the University of Arizona’s Eller College of Management Economic Outlook Friday afternoon, George Hammond, director and research professor at the Economic and Business Research Center, said both Phoenix and Tucson have seen steep increases in home prices and rent costs, driven by issues on both the supply and demand sides.
“It seems pretty clear that we've seen an increase in demand for housing, at the same time that we've seen a limited supply of housing and housing inventories were falling,” Hammond said.
In Phoenix in the third quarter of 2019, about 68% of homes sold were affordable to a family earning the median family income. By the third quarter of 2021, it was down to only 51%, he added.
“So we are seeing a real deterioration in housing affordability, but you want to keep in mind that, compared to the high-cost western metropolitan areas like San Diego, L.A., San Francisco, San Jose and even Seattle housing is still a lot more affordable here in Arizona, than it is in those areas,” Hammond said. “So, to the extent that we're drawing migrants out of those high-cost areas that's likely still going to happen.”