The Power is Now

Buying into the Arizona Real Estate market in 2022

Homeownership Program

Author: Tamra Lee

Congratulations! If you are reading this, it means you are interested in homeownership. It is the best decision ever and I am here to guide you through it all.

Buying a home is no easy feat and one has to consider so many tiny details that the process is almost overwhelming, especially for first-time buyers. The state of Arizona is one of the best places to buy a home. The weather here is perfect for almost any outdoor activity. The culture here is extremely welcoming, the people so full of love. I am quite sure you already love the place. But it is important to mention that just like so many other markets right now, the Arizona market is blazing hot. We are operating in a seller’s market and this is not meant to scare you. In fact, so many markets are in the seller’s domain. That said, it is important that you go into this market armed with the right information and the right mindset.

So, why don’t we get started?

Arizona Real Estate Market

Here is a snapshot of 2021… despite the awkward year 2021 was, the Arizona real estate market remained relatively strong, in fact growing at a moderate pace. The demand was extremely high, supply extremely constrained forcing prices to blow out the roof.

This year, the real estate market will continue to remain strong. In October last year, the average sales price for a typical home in Arizona was $396,235 which was a decent 31.5% increase year over year. While there are signals showing a price stalling trend, we might be seeing the price rise 12.7% within the next year. As such, buyers should brace themselves!

While prices of homes throughout the state are rising astronomically, the number of homes available for sale statewide is decreasing rapidly at 21.5% as of November 2021.

My prediction is that inventory will remain relatively sparse. Remember, many buyers are in the market right now, especially after being attracted by the low rates last year. The rates are rising, and many want to lock in a decent rate before they could rise any further.

On the other hand, there is a section of buyers who are giving up hope in the American dream which is actually sad. But, that’s good news for the market because as more people drop out of the market, the prices will start stabilizing and perhaps drop towards the end of the third quarter.

It is also important to highlight that despite the crazy prices, 2021 experienced the toughest bidding wars I’ve ever seen which actually spilled into 2022. This trend might continue into the spring before eventually dying off.

To sum up, the real estate market in Arizona is as strong as it has been in the last 10 years as more people flock to the city from neighboring states and counties. A large share of the homeowners are the ones, probably like you who are tired of renting a house. Homeownership is a vibrant dream in Arizona, as there are so many benefits, both social and financial of homeownership. There are some factors that you need to take into consideration when buying a home in Arizona.

Evaluate Your Situation

One of the best entry strategies into any market must be informed by data. This simply means you must understand the numbers and figure out whether the odds are for or against you. I will suggest that you evaluate your financial situation before making any rash decisions. Don’t forget that homeownership is likely to be the biggest financial undertaking you’ll ever make in your lifetime. Any single misstep could cost you years.

I advise my clients to go in when they are completely sure that homeownership is what they want. If there is any shred of doubt abo0ut it, no matter how small, do not overlook it or underestimate the impact it might have on your life.

After you evaluate your situation, the next step is getting preapproved for a loan. This is important as it speaks volumes to the sellers. They are able to see that you are serious about homeownership. It also shows that you have the financial backing to buy the home. In Arizona, to get preapproved, lenders will have to see your credit score and any liabilities that you may be carrying. If feasible, make sure that you have cleared most of the debts which in turn raises your credit score. Preferably, most lenders look for an average of 620 or above to easily get loan approval.

House Hunting begins

After you’ve been preapproved for the loan, you can now start looking for your dream home. I suggest having a budget for this and sticking to the price range. I advise my clients to give an estimate of what they are comfortable paying at the end of the month. Use at least 3 times your income as the base point, a suggestion I highly recommend.

It is also advisable that if you can, look for your next home in a trendy neighborhood, whereby the price for the homes will actually rise in the coming years.

Making a downpayment

This is often one of the biggest challenges for many people- raising the downpayment. Many people believe that they need at least a 20% down payment but that is a myth. In fact, you can secure your cream with a 0% down payment

Nonetheless, the current average nationally sits at around 10%. Being able to pay at least a 10% down payment means that you’ll be able to save yourself some cash that will cover your upfront costs.

One other consideration you will have to make is the mortgage expense. This will largely depend on your current situation. It may be advantageous to go with a fixed-rate mortgage or even a 15-year term mortgage whatever works with your finances.

Unfortunately, homebuying is not as easy as most people make it look, the expenses involved do not end there. There are expenses that you will incur when closing on the home. These include the transfer taxes, attorney fees, inspection fees, appraisal fees among others. These will actually cost you around 3% of the sales price.

Know your market well

Buying a home should be a conscious decision made based on information. Remember, this is a place you have not just invested financially, but emotionally too. Therefore, I suggest investing even more in gathering information about your market. This also eliminates the chances of getting manipulated by unscrupulous sellers.

Right now, when the world is grappling with the effect of COVID-19, Arizona’s real estate market remains relatively stable, which is attributed to the steady supply of housing units. In 2018 inventory went from two months’ worth of supply to nearly four months of supply.

Comparing this to the previous years, it means that real estate in Arizona is by far less competitive and much more affordable. The best time to hunt for your next home is during the summer months. It is during this time that you will fetch the best deals at a relatively lower price. Do not attempt to go into the market in January or February as they are the busiest months in Arizona. And while you will find more selections on the market, they will be pricier.

One thing you have to keep in mind is that housing market trends tend to fluctuate from time to time and to get the best results and outcome that you will be proud of it is a good idea to always employ the services of an experienced local agent. Get in touch with me today to get started on your journey to homeownership.

Sources:

https://listwithclever.com/real-estate-blog/8-steps-to-buying-a-house-in-arizona/

https://www.arizonadownpaymentassistance.com/buy-house-arizona/

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