Arizona has long been a refuge, attracting people from other parts of the country for a variety of reasons. From agreeable weather to tolerable taxes to a lower overall cost of living, the desert is enticing for homebuyers across all income brackets — and lately — more so for some of the country’s highest earners.
That means, as the temperature begins to heat up across the state, so too does the luxury housing market. Some, like the Phoenix Business Journal, have even said it’s “on fire.”
The weekly publication backed its excitable characterization of the Phoenix luxury home market by showcasing an Arizona Biltmore Resort mansion that was once purchased out of foreclosure for $4.25 million but is now listed for $15 million. Even on a national scale, though, Arizona is among the most popular states for high-earner migration.
The Ascent, a rating and review service of The Motley Fool, recently reported that Arizona came in third behind Florida and Texas as the top three states for high-earner migration. Over the course of one year, Arizona gained more than 5,200 high-earning households.
The year-over-year increase in home values within the luxury market further underscores the theory that it is heating up. In Paradise Valley, for example, the average home price increased from $3.34 million in January 2022 to $4.04 million in January 2023. In Scottsdale, the increase was more subtle, from $1.2 million in January 2022 to $1.39 million in January 2023.
What’s fanning the flames of this luxury housing market fire? A few things.
Arizona’s proximity to California, which is home to the country’s highest concentration of high-earning individuals, is definitely a factor. As work environments shifted during the COVID-19 pandemic, and hybrid or remote work became more acceptable, many states — including California — experienced a migration away from big-city hubs, giving professionals more options when it comes to luxury housing.
Statistics reveal California lost more than 600,000 residents between 2020 and 2022, and Arizona was among the most popular destinations alongside Texas, the Carolinas and New York. Those who leave California experience a lower tax burden, a lower cost of living, and lower housing costs.
For comparison, the estimated cost per square foot to build in Arizona is between $85 and $200. In California that average begins at $350 and can soar upwards of $800 per square foot, according to housing industry analytics.
Put simply, a high-earners dollar goes further in Arizona, which is fueling an increase in searches for luxury market homes. And prices continue to climb because demand is outpacing supply – a familiar symptom of the Phoenix housing market as a whole.
With a population that continues to grow, often faster than any other state in the country, Arizona’s need for housing regularly feels the pains of limited supply and the luxury market is no exception. Zoning regulations and limits on development in certain areas further tighten the market, propping up a steady increase in property values.
From an investment standpoint, Arizona is also attractive to high earners. As the state’s economy continues to expand, and the volatility of its real estate market remains more palatable than other markets, it’s easy to see why high earners would find Arizona’s luxury housing market as a ripe investment opportunity.
If you’re considering a purchase in the luxury market, the team at Halpern Residential is ready to help. We keep an eye on market trends so you don’t have to. Moving is an exciting time of transition, and we’re ready to help you with it. Contact us today so we can learn more about how we can support your needs.