5 housing market predictions for Arizona Housing Market in 2021, by Peggie Simons.

By Peggie Simmons

5

housing market predictions for Arizona Housing market

The low cost of living and equally high quality of living in Arizona is drawing in a lot of people to the area. An understandable fact, seeing that Arizona is one of the relatively cheap places to live in 2021. Unfortunately, though, inventory is currently very slim. So slim that demand by a large margin supersedes supply. The inventory in Arizona for the previous and current quarter has been moving pretty fast. In fact, for the second quarter, the months’ supply has been just 1.05 months. The supply and demand dynamics, coupled with the low interest rates, have pushed price appreciation up 22.7% from the previous year. The high home prices have seen a lot of people leave the market, that and the fact that there are too many bidding wars. The curtains are falling on the second quarter, and many people are curious to know what the rest of the year has in store for us.

1. INTEREST RATES.

For the past year and this year included, mortgages have had historically low-interest rates, which has boosted many people’s purchasing power. The 30-year fixed-rate mortgage for the past year has been hovering at 2.75%, while the interest rates of refinancing a home were at 2.45%. However, this year they have gone up although very slightly. In the first week of July 2021, the interest rates for a 30-year fixed were around 3.05%, a slight rise from June’s 2.99%. Refinancing rates have also gone up to 2.75%, according to Smartasset. com. Although the interest rates have gone up, you must agree they are still low. Thankfully, interest rates are not expected to rise beyond the 3.00% average as the federal reserve waits for the economy to recover. Something that may take months to do.

2. INVENTORY.

In an interview with 12news.com, Pollack,

CEO of Elliot D. Pollack & CO, stated that the housing market is currently driven by low supply and high demand. According to him, the housing market has only a week’s supply of homes when in reality, the market needs at least a six-month supply. Even though the supply has improved from last year, with April seeing a 10.4% raise, the supply is still painfully small. A situation that Pollack says could last into the foreseeable future. With the current housing market, people are making payments on a house they even haven’t seen or have just taken a virtual tour off to beat the competition. To survive in this market, you will need to make many concessions, unless you are a seller-the market is perfect for you.

3. MILLENNIALS ENTERING THE HOUSING

MARKET.

For good reasons, Arizona has seen more and more people enter the housing market. Millennials are taking the lion’s share when it comes to real estate transactions. 4.8 million millennials are, for a couple of years, turning thirty.

An age that is characterized by most of them wanting to settle down and begin their homeownership journeys.

This generational peak is expected to take place in 2021,2022, and 2023— something that will see millennials “take over” real estate.

4. RENT.

Rental prices in Arizona are continuing to rise through the year. So, if it is possible to hold off selling your home and rent instead, it would be an excellent investment. Rental income averages at $2000 and $2500 in good neighborhoods; this investment will be a good source of passive income while at the same time retaining equity that will be very useful when buying the next home.

5. DOWN PAYMENT.

Would-be-homeowners in Arizona are putting down more on their down payments. The key motivating factor is to avoid the private insurance mortgage that lenders would charge on down payments made less than 20%. Most time, loan appraisals are not necessary, saving them even more money.

The pandemic has shifted ground for real estate. A lot of faucets within the industry have been impacted in one way or the other. With the current high prices for homes, it might be tempting to wait out the market. It is understandable to want to do so, but it is wiser to invest now than later with these predictions.

Sources:

https://azbigmedia.com/real-estate/residential-real-estate/5-arizona-housingmarket-predictions-for-2021/. https://www.noradarealestate.com/blog/phoenix-real-estate-market/. https://www.forbes.com/sites/ellenparis/2021/03/25/heres-why-millennialhomebuyers-are-braving-todays-real-estate-market/. https://www.12news.com/article/news/local/arizona/phoenix-real-estate-market2021-is-booming-but-is-it-a-bubble-that-will-burst/75-f099df53-6619-4d7a-8f7f5492a427d8cf.