Land sales accelerate as residential and commercial markets strengthen
- The Greater Phoenix housing market continues to improve at a steady pace. In 2017, home prices rose by approximately 5 percent. The median price for new homes rose 4.5 percent in 2017 to approximately $314,000.
- Permitting for single-family homes rose for the third consecutive year in 2017, ticking above 20,000 units.
- Multifamily permit issuance totaled more than 8,500 units in 2017, including an increase during the second half of the year.
- Land sales accelerated in 2017, spiking by more than 30 percent from 2016 levels. Generally, fewer land parcels traded in the second half of the year than during the first half.
- Sales of land for industrial development surged in the second half.
- The median price for land parcels rose by 8 percent from 2016 to 2017, reaching $4.21 per square foot.
- The local commercial real estate market improved in 2017, supporting land sales for commercial and industrial uses. Sales of land parcels for commercial/industrial development gained momentum in 2017, trends that should continue as the amount of vacant commercial space retreats.
The housing market in Greater Phoenix is strengthening, providing the fuel for land sales. The number of land sales have increased in each of the past few years and another uptick is likely in 2018.
The rise in transaction velocity has mirrored housing permitting trends. Single-family housing permits have increased by approximately 10 percent per year since 2016, and a similar increase is forecast for the year ahead.
The commercial real estate market is also improving, which will support land sales for commercial and industrial uses. Land sales for commercial and industrial construction each accelerated by more than 30 percent in 2017, and additional increases could be in line if the economy continues to expand and commercial vacancies tighten further.