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Essential Workers Are Getting Priced out of Phoenix's Hot Housing Market
February 28, 2022

Essential Workers Are Getting Priced out of Phoenix's Hot Housing Market

by The CE Shop Team

Phoenix’s Pricey Housing Market Is Creating Problems for Essential Workers

Teachers, firefighters, police officers, and other essential workers are getting priced out of Phoenix’s crazy-hot real estate market — and experts say that the situation is only going to get worse unless action is taken soon. A report delivered to the Arizona House Commerce Committee in February highlighted the desperate situation that some of Phoenix’s essential workers are in when it comes to finding housing. 

Expert Economist Weighs In

"This is not something that is going to get better by itself," Elliott Pollack, a Phoenix-area economist. In his report, titled “Current State of the Greater Phoenix Housing Market,” Pollack says that the issue is grave and requires immediate action from local municipalities and the state. 

According to Arizona Family's coverage, Pollack's key findings are as follows:

  • The median home price in the Phoenix area rose 216% since 2000 while the median salary only rose 48%.
  • By 2025, only 21% of the Valley's population may be able to buy a home.
  • Essential workers, including police officers, firefighters, school teachers, construction workers, and those who work in retail, are already priced out of the homebuying market. This group is also already priced out or close to being priced out of the rental market.

Graph of the median sale price in Phoenix, AZ

In his report, Pollack said the problem is that home-building has not kept up with the area’s population growth. Between 2018 and 2021, Phoenix’s population increased by nearly 5%, and as a state, Arizona’s population (currently 7,408,017 residents) is projected to reach 8,284,861 by 2030

This quick growth in population is affecting every community in the Phoenix area, from entry-level homes to even luxury homes. In the report, Pollack stressed that every income level will need assistance. 

Essential Workers are Getting Priced out of Phoenix's Hot Housing Market

What’s the Solution to Phoenix’s Pricey Pad Problem?

Simply put, more housing. One of the best solutions to curb the increase in home values is to develop thousands of homes and apartments. The number of active listings in the Phoenix-Mesa-Scottsdale area was 4,533 homes in January 2022 — just above the area’s record low of 3,809 active listings in February 2021. 

The report also cited the impact of Wall Street investors and private equity firms purchasing thousands of homes throughout Phoenix with the intent to rent the properties to residents. One company alone owns more than 8,500 rental properties in Phoenix, and if you think that number is high, Pretium, an investment firm focused on single-family rentals, purchased 35,000 homes last year from Zillow, which brought its total assets to 75,000 nationwide. Pretium is the second-largest single-family landlord after Invitation Homes Inc. the real estate branch owned by Blackstone Inc. 

The CE Shop readers: Is your market struggling with similar problems? If so, what are some solutions you think could alleviate the issue? Let us know in the comments below!

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