ARIZONA: HOUSING AND LABOR MARKET TRENDS

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1 ARIZONA: HOUSING AND LABOR MARKET TRENDS Joselyn Cousins Federal Reserve Bank of San Francisco

2 National Trends

3 Percent of Buy-Side Transactions Composition of distressed sales by geography 35% 30% 25% 20% 15% 10% 5% 0% 6% 13% 13% Proportion of Distressed Property Transactions May Month Moving Average 6% 12% 11% 5% 6% 12% 9% 13% 7% 3% 8% 11% 4% 8% 8% 9% 7% Short Sale Move-In Ready REO Damaged REO 3% 4% 12% 10% 6% 5% 4% 5% 5% 5% Source: Campbell/Inside Mortgage Finance HousingPulse Monthly Survey of Real Estate Market Conditions May 2014

4 Percent of Property Type Neighborhood stabilization: concerns over investor purchases of distressed properties Who Is Buying Properties? May Month Moving Average 100% 90% 15% 14% 80% 70% 60% 55% 45% 36% 36% Investor First-Time Homebuyer 50% 33% Current Homeowner 40% 30% 20% 10% 25% 20% 39% 30% 50% 0% Damaged REO Move-In Ready REO Short Sale Non-Distressed Source: Campbell/Inside Mortgage Finance HousingPulse Monthly Survey of Real Estate Market Conditions May 2014

5 Percent of Buyer-Side Transactions Financing for home purchases Financing for Homebuyers May Month Moving Average 100% 90% 80% 70% 60% 50% 30% 8% 23% 24% 8% 19% 19% 7% 2% All Other Financing VA Fannie/Freddie FHA 40% 30% 14% 38% 72% Cash 20% 10% 0% 25% 11% Current Homeowners First-Time Homebuyers Investors Source: Campbell/Inside Mortgage Finance HousingPulse Monthly Survey of Real Estate Market Conditions May 2014

6 Arizona Trends

7 Unemployment Rate (%) Arizona s unemployment rate at 6.8% for May Arizona 8 6 United States Source: Bureau of Labor Statistics Recession

8 FHFA House Price Index 2000=100 Arizona house prices continue to rise 240 FHFA (formerly OFHEO) House Price Index (2000=100, quarterly) Arizona 190 United States Source: Federal Housing Finance Agency (formerly OFHEO)

9 FHFA House Price Index 2000=100 House prices improving in most major metros 230 FHFA (formerly OFHEO) House Price Index (2000 = 100) Flagstaff Yuma Tucson Phoenix-Mesa Source: Federal Housing Finance Agency (formerly OFHEO)

10 Number of Mortgages Number of delinquent mortgages and foreclosure starts continues to fall 200,000 Delinquent Mortgages and Foreclosure Starts - Arizona 160, ,000 80,000 40, Foreclosure Starts All Mortgages Past Due Source: Mortgage Bankers Association, National Delinquency Survey

11 New Housing Units (in thousands) New housing starts are slowly growing 300 New Housing Starts - Arizona (Quarterly) Source: Bank of Tokyo-Mitsubishi UFJ

12 Asking Rent Phoenix rents up: $809 for Q1 2014, vacancy rate down to 5% $830 Asking Rent and Vacancy Rate in Phoenix Quarterly Asking Rent Vacancy Rate 15% $800 10% $770 $740 5% Vacancy Rate $ Source: Reis, Inc. Asking rent is calculated by first determining the average rent for each unit size, and then calculating a weighted average based on the number of units in each size category. 0%

13 Asking Rent Tucson rents up: $700 for Q1 2014; vacancy rate at 6% $700 Asking Rent and Vacancy Rate in Tucson Quarterly Asking Rent Vacancy Rate 12% $670 $640 6% Vacancy Rate $ % Source: Reis, Inc. Asking rent is calculated by first determining the average rent for each unit size, and then calculating a weighted average based on the number of units in each size category.

14 Arizona Data Maps

15 Arizona Data Maps Areas Affected by Concentrated Foreclosures May 2014 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

16 Arizona Data Maps Areas At Risk Of Additional Foreclosures May 2014 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

17 Phoenix Data Maps Areas Affected by Concentrated Foreclosures May 2014 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

18 Phoenix Data Maps Areas at Risk of Additional Foreclosures May 2014 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

19 Oregon Tucson Area Data Data Maps Maps Areas Affected by Concentrated Foreclosures May 2014 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

20 Tucson Area Data Maps Areas at Risk of Additional Foreclosures May 2014 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

21 The Rise of Single-Family Rentals in Arizona

22 Homeownership Rate for AZ, CA and NV, relative to the U.S Fig. 1 - Annual Homeownership Rates, AZ 65 US NV CA Source: Housing Vacancies and Homeownership Survey. U.S. Census Bureau.

23 Single Family Rental Housing Stock in Arizona 100% 90% 80% Fig. 2 - Distribution of Renter-Occupied Housing Stock (Arizona) 7.0% 5.9% 17.0% 16.0% 70% 60% 26.4% 22.4% Other 20+ Units 50% 40% 12.7% 11.9% 5-19 Units 2-4 Units 30% 20% 36.9% 43.8% Single Family 10% 0% Note: Other includes mobile home, RV, boat, van, etc. Source: American Community Survey, 1-year estimates

24 Percentage Point Change in Market Share Decline in Multi-Family Housing Fig. 3 - Change in Rental Market Share by Units in Structure 2007 vs (Arizona) Single Family 2-4 Units 5-19 Units 20+ Units Other Note: Other includes mobile home, RV, boat, van, etc. Source: American Community Survey, 1-year estimates

25 Percentage Point Change in Market Share Percentage Change in the Market Share of Single-family Rentals 25 Fig. 4 - Change in Market Share of Single-family Renter-occupied Housing, 2007 to 2012 (Arizona) Pima Maricopa Pinal Source: American Community Survey, 3-year estimates

26 County Foreclosure Rates Fig. 5 - County Foreclosure Rate, (Arizona) 9% 8% 7% 6% Pinal 5% 4% Maricopa 3% 2% 1% Pima 0% Source: LPS (Lender Processing Services Inc.) Applied Analytics

27 Rental Vacancy Rates Rise Fig. 6 - Rental Vacancy Rate, 2007 vs (Arizona) 14% 12% 10% 8% 9.4% 10.4% % 9.7% 8.7% 12.3% 6% 4% 2% 0% Maricopa Pima Pinal Source: American Community Survey, 3-year estimates

28 Cost Burden Among Single-family Renter Households Fig. 7 - Share of Single-Family Renters that Are Cost Burdened* (Arizona) % 45% 46.9% 45.4% 45.0% 44.5% 44.4% 40% 35% 30% 31.1% 25% 20% Maricopa Pima Pinal *Defined as spending more than 30% of income on rent Source: American Community Survey 3-year estimates

29 Housing Construction Update

30 Source: Prepared by Reis, Inc. Metro Construction Breakdown

31 Metro Inventory Details Source: Prepared by Reis, Inc.

32 Inventory Growth Rankings Forecast Source: Prepared by Reis, Inc.

33 Questions? Question please contact Joselyn Cousins at or