Roland Murphy

Phoenix is one of the fastest growing cities in the country. It has the fastest growing apartment rents in the US, one of the fastest growing populations and a diversifying economy. As a result, it has also been listed as a top buy market for many asset classes, and has seen an influx of buying activity. That's the good news. The bad news: the market is starting to see housing affordability problems. While there is a large apartment construction pipeline, rental rates are expected to increase again this year, and that will only put more pressure on the growing problem.

“Affordability is tightening across the board,” Roland Murphy, director of research at ABI Multifamily, tells GlobeSt.com. “For example, on the single-family side, there was a lot of weeping and gnashing of teeth when we fell to number 17 on the HSH.com list of most affordable cities after being in the top 10 from 2014-17. Interestingly, even with that level of mortgage affordability, we still saw solid populations in the renter-by-choice category.”

There has been growing concern about increasing housing costs in Phoenix for several years, largely because the prices have grown alongside the local economy. For a market badly impacted by the Great Recession, this was welcome growth. “Last year, Maricopa County was the fastest growing in the nation, and we've been near the top for the several years before that,” says Murphy. “A lot of the migration has been due to successful efforts to draw attractive industries — such as tech, bioscience research, financial services, and distribution and fulfillment — that pay good-to-very-good wages but can still manage to pay less here than states like California. Still, wage growth here and across the country has been lower than anyone would have expected, though it has finally been ticking upward.”