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Phoenix Is Turning Vacationers Into Residents

By May 21, 2021November 14th, 2022No Comments

By Amy Gamerman | The Wall Street Journal

Elliot Swart spent his last day in Boston in June packing up his Jeep Wrangler for a four-day, one-way road trip to Phoenix.

Mr. Swart had been renting a one-bedroom apartment in the Prudential Center, which also was where 3Derm, the medical-software startup he co-founded, was based. When the coronavirus pandemic shut down his office, Mr. Swart, in the process of putting together a permanent remote engineering team, saw the opportunity for a major reboot.

“I always knew I loved Phoenix,” said Mr. Swart, who is 29 and now the chief architect of Digital Diagnostics, which acquired 3Derm in August. “I love off-roading, I love the desert. I wanted to stop living life on hard mode, but at the same time, I still wanted a city with all the trappings of modernity.”

Just before New Year’s Eve, he closed on a four-bedroom home built into a mountain cliff with views of downtown Phoenix for $932,000. The home, in a gated community near North Mountain Park, has vaulted ceilings, a master suite with a balcony and a spacious wraparound patio with a cascading waterfall.

“It’s near Sunnyslope, a neighborhood with a very good amount of socioeconomic diversity and plenty of shops and places to eat five-to-seven minutes away,” Mr. Swart said. “As someone who is multiracial myself, it’s nice to be in a place where I don’t stand out like a sore thumb.”

America’s fifth-most populous city, Phoenix also is one of the fastest-growing. Between 2010 and 2019, it saw the highest numeric increase in population of any city, according to the U.S. Census Bureau. Nearly 1.7 million people were living there in 2019.

Phoenix has continued to draw new residents through the pandemic, in part because of levels of job and wage growth well above the national average, according to the nonprofit Milken Institute, an economic think tank. Housing permits in the Phoenix metropolitan area—which includes Mesa and Scottsdale—were up by nearly 30% in September over the previous year.

Now, Phoenix is drawing record numbers of luxury-home buyers—even as summers there grow ever-more scorching. Temperatures hit 100 degrees and higher a record-breaking 145 days last year.

Many, like Mr. Swart, are relocating from other parts of the country where prices for comparable homes are much higher. “In Boston, you pretty much have to take a company public in order to buy a nice house and feel comfortable,” he said. “I’m paying less for mortgage than I did for rent for my one-bedroom.”

Mr. Swart now has space for a home office and family heirlooms, like the desk made from a swing that once hung inside his great-grandparents’ home in India.

“I’ve never seen as low active inventory as I have in the last six months.”
Jay Macklin, Corcoran Platinum Living

In 2020, 3,233 homes priced at $1 million or more were sold in the Phoenix-Mesa-Scottsdale metropolitan area, a 56% jump from 2019, according to Realtor.com. Those sales far outpaced other single-family home sales, which saw an 8% growth overall.

Overall, prices for luxury homes—the top 5% of the market—have surged nearly 40% since 2015. And the competition for those homes is fierce.

“I’ve never seen as low active inventory as I have in the last six months,” said Jay Macklin, a broker with Corcoran Platinum Living in Scottsdale, who said that more than 40% of the luxury-home buyers he is working with now are from other states, particularly California and Oregon.

“There’s a lot of escalation—bidding over asking price, waiving inspections, waiving appraisals,” he added. “Those are not great ideas, but people are willing to do a lot right now to find a house.”

Mr. Macklin also is going the extra mile: He has created a dozen customized video cards that he has begun sending out to owners of desirable properties that aren’t on the market, with a personalized appeal to consider selling. “We’re putting it in a FedEx package with a letter from a buyer—‘I’m looking in your neighborhood, your home matches exactly what I’m looking for’—and an offer,” he said. “We’re trying to think out of the box.”

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