Millennials opt out of housing market, driving growth of multifamily market
By: AZ Big Media
The single-family housing market has been on a steep incline over the past couple of years as home price appreciation has skyrocketed. Historically low-interest rates and demand far exceeding supply led to a frenzy of activity from buyers and investors in the past couple of years. However, what goes up must come down. And we are starting to see that now. Increased interest rates and higher monthly mortgage payments are taking the cost of owning a home out of reach for many, and as a result, the rental market is becoming increasingly attractive.
Home prices and interest rates are continuing to rise in tandem, especially in high population growth markets in the Sun Belt region like Phoenix, making it increasingly difficult for first home buyers. According to a recent Redfin study, home buyers in the Sun Belt need 40% more income than they did a year ago, while across the U.S., they need 34% more income.
In Phoenix, buyers must earn $87,026 to afford the metro’s average monthly mortgage payment of $2,176, up 45.7% from a year earlier. Phoenix has a median household income of $67,068 and an average rental rate of $1,667.