What’s the State of Arizona’s Housing Market?
Around the country, home prices have soared over the past couple of years. Arizona is no different. As more people migrate to the state, the demand for both new and existing homes continues to increase. However, the market conditions are changing. So, what does that mean for the state’s overall housing market?
Home Prices are Expected to Rise, But Not as Fast
Over the past five years, the typical value of a home in Arizona has increased by over 90 percent. The prices for new homes in tolleson az follow the averages, as have homes in surrounding parts of the state. Even with those cost increases, investing in a new home continues to be a common goal for people throughout the region.
Some industry insiders are expecting a drop in prices due to the higher interest rates buyers are now facing, but other experts predict only a slight slowing of interest, not a severe slump. While the real estate market in and around Phoenix has historically been somewhat volatile, new home buyers are expected to purchase the available housing stock quickly. Of course, seasonal adjustments mean the values will swing somewhat over the coming months, but the overall trend will still be upward.
Rental Inventories are at Historic Lows While Rents Continue to Rise
Renters are discovering that finding affordable units is increasingly difficult, and the cost of available rental properties continues to rise. Statistics indicate that the median rent cost for the area is up as much as 45 percent over the past year. That figure will vary by area, but virtually all neighborhoods experienced double-digit increases over the past 12 months.
So, why is there a shortage of rental units? Population growth continues to affect the cost of both renting and owning as the demand for housing outstrips the supply. The Phoenix area continues to see significant job growth, which is another factor pushing rents higher. People moving to the area to accept new jobs need a place to call home, which increases the demand for all types of housing.
When rents are high, homeownership frequently looks like a better alternative even if the prices of homes are also higher than they were a year ago. That shift from renting to homeownership puts additional upward pressure on home prices.
Where is the Arizona Housing Market Going?
Right now, that’s a tough question to answer. While the recent increase in mortgage rates has reduced the demand for new homes slightly, the market isn’t seeing any significant downward price pressure. Some real estate experts anticipate interest rate reductions following the mid-term elections, but that is only speculation. Other industry insiders anticipate a slight softening in the market over the coming months, which is more likely if rates stay where they are. However, current industry trends suggest decreases of only a couple of percentage points are more likely.
Should Buyers Wait or Purchase a New Home Now?
If you need a home, waiting might not be the best idea. Even if there is a slight drop in values due to the interest rates rising, the demand isn’t likely to let up any time soon. Prices are predicted to keep going up even if the pace of the increases is reduced. Interest rates will impact how much buyers can spend on a new home, but remember that, if rates go down, refinancing or upgrading to a different home will be viable alternatives to consider. In other words, investing now may be the best option for most people.
