Why Metro Phoenix’s Economy is One of the Best in the U.S. Right Now
If you’re investing in real estate in Phoenix, you’re in the right place. A recent study by the Milken Institute ranked the Phoenix-Mesa-Scottsdale metro area as the 23rd best-performing large city in the country. That’s out of 200 major metros—a strong showing for one of the fastest-growing regions in the U.S.
So, what’s driving Phoenix’s economic success? Let’s break it down.
1. Job Growth is Booming
One of the biggest factors in Phoenix’s ranking is its strong labor market. The metro area saw an impressive 14% job growth from 2018 to 2023, ranking 13th out of all large U.S. cities.
For real estate investors, this is great news. A growing job market means more renters, stable occupancy rates, and rising rental demand. More jobs also lead to more wage growth, which brings us to our next point.
2. Wages Are on the Rise
From 2018 to 2023, wages in Metro Phoenix jumped by 47.4%, putting it at #17 nationally. Higher wages mean renters can afford higher rents, leading to increased property values and stronger cash flow for landlords.
With a strong labor market and rising wages, Phoenix is proving to be one of the most resilient economies in the country. But what about affordability?
3. Affordability Remains a Key Strength
Despite the rapid growth, Phoenix remains relatively affordable compared to other major metros. Nearly 70% of households spend less than 30% of their income on housing, a key indicator of housing affordability.
For investors, this means a growing tenant pool that can sustain higher rent levels without financial strain. It also suggests that Phoenix still has room for appreciation before hitting affordability ceilings seen in markets like California.
4. Room for Improvement in the High-Tech Sector
While Phoenix excels in job and wage growth, its high-tech industry still has room to grow. The metro area saw a 40.7% increase in GDP from the high-tech sector between 2018 and 2023, but that only ranked #69 nationally. In terms of industry concentration and specialization, Phoenix landed at #105.
This means there’s still potential for growth in high-paying tech jobs, which could further boost housing demand and property values in the future.
5. Income Distribution & Economic Opportunity
Phoenix ranked #65 out of 200 metros for income equality, showing that while wages are rising, there’s still a gap in economic distribution. However, with strong job growth and a business-friendly environment, Phoenix remains a top choice for investors looking for long-term rental stability.
Final Thoughts: Why This Matters for Real Estate Investors
For real estate investors, the Phoenix market remains one of the best in the country. A strong labor market, rising wages, and solid affordability create the perfect storm for long-term real estate growth.
With demand for rentals rising, this is an ideal time to invest in single-family homes and rental properties before prices climb further.
Want to make your Phoenix investment truly passive? Consider working with a property management company to handle the day-to-day operations while you focus on growing your portfolio.
Thinking About Investing in Phoenix?
If you’re looking to expand your real estate portfolio in one of the best-performing economies in the U.S., now is the time to act. With strong fundamentals in place, Phoenix continues to be a prime location for long-term real estate success.