Maricopa County, which contains about 90 percent of metropolitan Phoenix’s residents, was the fastest-growing county in the U.S. last year. Strong domestic in-migration continued to drive population growth that more than doubled the national average.
In addition to warm weather and a low cost of living, prospective residents are drawn to Phoenix’s robust job market. Hiring sprees in the tech, financial, healthcare and manufacturing industries have been large contributors to the area’s impressive employment growth, which is nearly twice the national average since 2016.
According to the U.S. Census Bureau’s most recent population estimates, roughly 145,000 new residents moved to Maricopa County last year from other states. Nearly 85,000 county residents left Arizona, resulting in a net gain of about 60,000. Natural population growth, the net between births and deaths, only added around 23,000 to the county population.
Intrastate migration had a negligible effect on Maricopa County’s population growth. Around 32,000 of last year’s new residents moved from a different county within Arizona, and roughly the same amount left Maricopa County for another county in the state. International in-migration accounted for a limited share of the county’s growth, consistent with trends from recent years.
Most of Maricopa County’s new residents came from increasingly unaffordable areas such as Los Angeles, Chicago, the Bay Area and New York. According to CoStar subsidiary Apartments.com, those same cities have accounted for the bulk of out-of-state searches for Phoenix apartments in the past four quarters.
The average monthly rent in Phoenix is about $1,050, which is about 25 percent below the national average. However, the gap widens further when comparing some of the cities new Phoenix residents are leaving. The average monthly rent in Chicago is $1,360, about 30 percent higher than in Phoenix; Los Angeles’ is $1,870, nearly 80 percent higher than in Phoenix; and San Francisco’s is $3,030, almost tripling the Phoenix average.
Phoenix’s multifamily market has been one of the prime beneficiaries of the flight to affordability. Nearly 60 percent of new residents from out-of-state were previously living in rental properties. Although some of these newcomers arrive with the intent of transitioning into homeownership because of relatively low home prices, renting remains a lifestyle or a necessity for many. Apartment demand is outpacing the rate of new supply this year, sending vacancies to all-time lows in September.
The influx of people from major cities is also bolstering the local workforce. Last year, more than 42 percent of Maricopa County’s new residents from out-of-state possessed a bachelor’s degree or higher. Coupled with graduates from Arizona State University and Grand Canyon University, Phoenix has the growing pool of skilled workers that continues to spur numerous corporate relocations and expansions.
If Phoenix can maintain above-average job growth, recent in-migration trends have a good chance to sustain their momentum. High-tax, high-cost coastal states such as California are unlikely to get any cheaper and will inevitably price out more residents to affordable havens such as Phoenix. As long as Phoenix can continue to provide well-paying jobs and a high quality of life, expect more growth in the Valley of the Sun.
CoStar Market Insights provides a snapshot of recent real estate trends. The CoStar Market Analytics team monitors commercial and multifamily real estate across 390 metro areas, with a granular understanding of the projects, players and economic trends that move these markets. |