In the third quarter of 2023, the United States witnessed a historic low in housing affordability, marking a challenging period for homeownership, notably evident in Arizona’s metropolitan regions. The dwindling affordability trend, initially observed in the fourth quarter of 2022, intensified in several Arizona areas, with Lake Havasu City-Kingman and Tucson facing a sharper decline in housing accessibility.
Delving into the specifics, the proportion of homes accessible to families with median incomes plummeted across various Arizona locales. Sierra Vista-Douglas stood at 56.9%, comparatively higher than Yuma (42.9%), Lake Havasu City-Kingman (37.5%), Tucson (33.8%), Flagstaff (27.5%), Phoenix (24.9%), and Prescott Valley-Prescott (20.9%). Interestingly, only three areas—Sierra Vista, Yuma, and Lake Havasu—exceeded the national average for affordability, positioning them among the top 12 within the Western region, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index. Notably, the index pointed to surging interest rates as a key culprit behind this declining affordability.
Examining the broader national landscape, housing prices surged by 2.6% year-over-year in August, as per the S&P CoreLogic Case-Shiller Indices’ October 31 release. This increase, notably evident in cities like Phoenix and Las Vegas, though slight, still left them at the lower spectrum among the 20 city-composite, registering -3.9% and -4.9%, respectively. In contrast, cities like Chicago, New York, and Detroit showcased more substantial price hikes during this period.
Shifting the focus to employment and compensation, Phoenix experienced a 3.5% rise in the Employment Cost Index (ECI) for private industry workers during the third quarter of 2023. However, this growth rate indicated a slightly slower compensation increase compared to the previous quarter. Notably, Phoenix's ECI stood slightly below the national average of 4.3%, with metros like Miami-Fort Lauderdale-Port St. Lucie and Philadelphia-Reading-Camden showing higher compensation growth rates.
The Job Openings and Labor Turnover (JOLTS) report for September 2023 depicted stability in job openings and hires nationally. However, certain industries saw notable fluctuations, with accommodation and food services witnessing a surge in job openings, while sectors like other services, the federal government, and information experienced declines.
Analyzing unemployment rates across Arizona’s metropolitan regions revealed varied trends. Flagstaff remained stable, but other areas witnessed increases, with Yuma recording a significant 1.8 percentage point change over the year. Overall, fluctuations in unemployment rates were observed across multiple metropolitan areas nationwide, with figures ranging from lows of 1.4% in Bismark and Fargo to highs of 21.1% in El Centro, CA.
This economic snapshot reflects a complex interplay of factors impacting housing, employment, and regional economies, illustrating the multifaceted challenges and opportunities faced by various communities in the United States, particularly in Arizona
Ryan Meeks is a Real Estate Professional serving the entire Phoenix Metro area! Ryan Meeks and his team can be contacted at Ryan@Meeksteam.com or by phone at (480) 612-2219. Be sure to visit our YouTube Channel for more great content YouTube.com/EscapeToArizona