Arizona Housing Bubble Watch

Housing prices in Arizona are going up, which is a sign of a healthy economy. But rising prices also make some of us nervous. A question I am often asked is, “Is there a housing bubble in Arizona? Should I be worried?”

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How to Spot a Housing Bubble

Housing crashes are admittedly hard to predict. If they were easy to see coming, we wouldn’t have seen the housing market crash of 2008.   

Still, we can track a few valuable metrics that indicate a healthy market – helping us to spot a bubble, and anticipate a potential recession in advance.

Here are a few metrics that I track to help keep homeowners and homebuyers with Gluch Group safe:

Are People Missing Their Mortgage Payments?

One important indicator of a potential bubble is the percentage of homeowners who are behind their mortgage payments by 30 days or more.

Right now, the national average for owners who are behind on their payments is 5.1%. That’s extremely low.

In Arizona and California, it’s even lower: Hovering around 3%.

Lenders want to make sure people can afford the houses they are buying, and people are making their payments on time.

Lease Price vs. Sale Price

When it’s cheaper to rent a house than to buy a house, that’s not a good indicator of a healthy market.

Right now, the average monthly lease price in Arizona is $1,565.

The average sale price of a home is around $277,000, which would generate a monthly mortgage of around $1,550.

So, it costs about the same to buy a house as it does to rent a house – a good sign of a robust market.


An additional metric we’ll want to track is average pay versus home affordability. Can the average wage earner in Arizona afford to purchase a home?

According to the most recent measures, the average household income in Arizona is around $58,000 per year. Since the average home payment is around $1,550, that amounts to about 33% of an average annual income (before taxes).

Spending one-third of your income on housing is a healthy number. Another indicator of solid growth.

Unemployment Rates

High unemployment is an indicator of an economy that’s performing poorly, and a housing market that could see trouble ahead.

But that’s certainly not what we’re seeing now.

Unemployment rates are at historic lows, nationally. In Arizona, unemployment is at around 5%. In California, it’s even lower.

High employment means that people can afford to pay their mortgages on time, and buy houses that they can afford.

Population Growth

A newer metric that we’re tracking at Gluch Group is population growth. This metric doesn’t vary as dramatically as other statistics, but it does have a strong correlation with housing prices.

Right now, lots of people are moving to Arizona. In fact, Governor Ducey recently released a statement saying that Maricopa County has added 81,000 people to its population in a relatively short time frame, amounting to around 200 people per day!

With a rapidly growing demand for housing – and a labor shortage caused by low unemployment – builders can’t keep up. The result is that prices are rising, and it’s a bit more challenging than usual to find a house.

That being said, homebuyers can still typically find houses that fit their price range.

The Results?

All signs are pointing towards a healthy market. No signs of a housing bubble here! If you’re interested in buying a home in Arizona, give us a call at 480-378-6700.

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