- Young, wealthy people are increasingly opting to put down roots in Phoenix.
- Transplants get more house for their money and enjoy summerlike weather year-round.
- “Why vacation here when you can live here?” one real-estate broker said.
- See more stories on Insider’s business page.
In a golf community set in the canyons north of Phoenix, Dragos Sprinceana is building a 20,000-square-foot mountaintop mansion.
The 42-year-old shipping-logistics CEO, who already has homes in Boca Raton, Florida, and Chicago, initially saw the Sun Belt swath as a professional opportunity. He has grand plans to expand his firm, GoldCoast Logistics, into a low-cost warm-weather state teeming with new companies, executives, and newly remote workers.
Then, Sprinceana said, he saw hedge funders buying properties in the nearby Phoenix suburb of Glendale and had a revelation: The state was good not just for his bottom line but also for families.
“Pictures don’t do it justice,” Sprinceana said of his under-construction $35 million house during a phone call with Insider from a yacht vacation in the Bahamas.
The home — set on 7 acres in Silverleaf, a prestigious new-money gated community with a golf course that comes with a joining fee of $200,000 — won’t be ready for another year. But Sprinceana, his wife, Gabriela, and his young daughter are already making a big bet on Arizona, like the 129,558 new residents who moved to the state between July 1, 2019, and July 1, 2020 (the most recent time period for which population data is available). GoldCoast, too, is just one of dozens of corporations and startups from Amazon to DoorDash that have recently made inroads there.
Young, wealthy people are increasingly opting to put down roots in Arizona, a sign of the changing demographics that challenge the state’s longstanding reputation as a haven for retirees.
In particular, the capital of Phoenix, which with a population of 2 million is America’s fifth-largest city, has attracted relocators from coastal and Midwestern cities seeking a cheaper, more laid-back life. There’s a laundry list of lures: They can get more house for their money, take advantage of work-from-anywhere policies, and enjoy summerlike weather year-round. Average July temperatures of 106˚F make Phoenix physically hot, but its trendiness is a decade in the making.
In fact, US Census Bureau data showed that Phoenix had greater population growth than any other American city between 2010 and 2019. The capital, as well as its cactus- and palm-tree-filled suburbs Scottsdale (where Silverleaf is located) and Paradise Valley, was already booming as a hot spot for poolside bachelorette parties and outdoorsy vacations in national parks. And that was before the coronavirus pandemic flung open the gates for many to reevaluate their living situations. Why live in a dense, cold metropolis when you can feel like you’re on vacation all the time?
This shift in mindset about the best places to live has driven homebuyers like Sprinceana, who are have been scrambling to secure footholds in the Phoenix area. Competition for the scant number of homes available has sent property prices skyrocketing. Buyers are fighting each other in bidding wars and paying over asking price, and homes, even at luxury price points, are flying off the market in record time.
Here’s a look at who, exactly, is turning the desert into their post-pandemic paradise and the effects of this mad dash for the Grand Canyon State.
Who’s coming and why
“My clients aren’t retirees,” Stacy Dragos, a broker with Century 21 in Peoria, a city 25 minutes northwest of Phoenix, told Insider. She added that her buyers included tech entrepreneurs and physicians and that they hailed from big cities across the country, from New York to Miami and Chicago.
Relocated Californians, in particular, account for a large portion of new locals, according to Frank Aazami, a Sotheby’s broker who’s worked in the Scottsdale market for over two decades. The Chandler, Arizona, mortgage advisor Kirk Brewer, who helps new Phoenix residents finance their purchases, founded a “California to Arizona” Facebook group last year. The online community has since attracted 2,700 members and counting who commiserate and share tips on how to best settle into Arizona living.
“We’ve got people coming over here in droves,” Brewer, a California native who decamped to Arizona 20 years ago, said.
Newcomers work in three major industries: finance, oil, and tech, Aazami said. The prevalence of remote work has also emboldened entrepreneurs and executives to move away from traditional hubs, he said, and corporations are starting to follow the talent.
Homebuyers are attracted to Arizona’s lower taxes, bigger homes, and larger lots, Dragos said. Newcomers are purchasing second homes and land, and building both residential and commercial developments in the Phoenix area, she added.
Demand is so strong — and the number of houses for sale so paltry — that buyers are purchasing properties sight unseen, Dragos said. She sometimes doesn’t have time to tour houses in person herself before placing bids on behalf of clients. “I can sell homes without even seeing them,” she said.
Phoenix is ‘the Silicon Desert’
Brewer is a resident of Phoenix’s East Valley neighborhood, which has earned the moniker”the Silicon Desert,” he said. That’s thanks to the growing presence of tech companies and manufacturers that have set up shop and expanded locally over the past two decades — and even more so over the past 15 months.
The microchip giant Intel is the center of Arizona’s tech hub, Brewer said, with PayPal, Honeywell, and eBay among the marquee names with significant local workforces. Other major employers include device manufacturers and online-security companies.
Businesses want to move to Arizona for the same reasons they’re moving to Texas, Brewer said: It’s cheaper and there’s plenty of labor. Meanwhile, new residents are largely people who want to work remotely, find new jobs, or transfer within their companies, he added.
The hottest neighborhoods and the most luxurious homes
Aazami said newcomers were settling into locations from downtown Phoenix to slightly farther-out havens like Scottsdale, a wealthy desert enclave northeast of Phoenix known for its golf courses and resorts, and Paradise Valley, a town just north of Scottsdale known as Arizona’s wealthiest municipality.
Paradise Valley is the “Beverly Hills of Arizona,” he added, with no commercial buildings, minimum 1-acre lots, and streets that offer even bigger 5-acre lots to deep-pocketed buyers craving space and privacy. Also popular is Arcadia, a desirable, affluent community close to Scottsdale that draws many blue-chip residents. Sprinceana’s new home of Silverleaf is a new-money neighborhood, Aazami added, great for young families with children and replete with natural trappings like hiking trails and signs of wealth like private jets.
Many buyers seek a resortlike lifestyle, Aazami said: “Why vacation here when you can live here?” Sought-after home amenities include infinity or zero-edge pools, space for six lounge chairs, swim-up bars, outdoor kitchens, and “disappearing” sliding doors for indoor-outdoor living.
With low-humidity weather and no mosquitoes or flies, people are outside more, except in the height of summer, he said. There’s an active country-club scene, complete with plenty of golf courses, horseback riding, and polo matches.
It’s all leading to a frenzied, expensive real-estate scene
Newcomers and investors are banking on the home-price increases Phoenix has recorded over the past few years — especially in the past nine months — will continue. Dragos said homes that would have sold for between $400,000 and $500,000 in 2019 would be at least $600,000 this year.
In the Phoenix-Scottsdale metropolitan area, the median price of homes sold as of June was $376,500 — up 10.6% year over year from $295,000 in June 2020, according to Realtor.com.
As of April, Phoenix inventory was down 28.6% year over year, homes lasted an average of just seven days on the market before going under contract, and the average rent was $1,559, up 13.4%, or $184, year over year. As of February, 33% of homes in the metropolitan area sold above list price, compared with 12% that sold above list price in February 2020.
“It’s no longer, ‘Can I do a comp for you?'” Aazami said. “It’s: ‘What would you like to sell this for?'”
Investors are joining the clamor for homes
People and institutions trying to get in on the Arizona’s boom are adding to the competition for homes, buying properties to rent out or resell. There’s been a “significant difference over the last year,” Dragos said, with a greater percentage of her clients interested in purchasing investment properties.
Homeowners are seeking more square footage, privacy, and outdoor space, and as a result, the single-family market has been hot. So investors from individuals to firms like Tricon and Invitation Homes are moving their money into single-family homes. Triple-net properties (whose tenants pay expenses like property taxes, insurance, and maintenance costs in addition to typical rent and utility payments) are luring investors, too, in addition to other income-producing property types like units to list on Airbnb and senior housing.
Case in point: A Scottsdale home normally priced between $2.8 million and $3 million recently sold for $500,000 over asking, Aazami said. Six bidders fought over the house, trying to sweeten the deal for the seller by waiving closing contingencies like appraisals or inspections.
The prize property — which had no neighbors, a pristine backyard, and views of brick-red Camelback Mountain, a local landmark — is a “pretty special place,” Aazami said. It’s indicative of the next generation of Arizonans, for whom trophy homes “become a ‘want buy,'” he added, “like a Chanel bag.”
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