Limited Inventory Causes Home Prices to Heat Up in Arizona
Sunny weather and a laid-back lifestyle combine in Arizona to make it appealing to potential homebuyers of all ages. The state is home to some of the most beautiful places in the U.S., including the Grand Canyon, Horseshoe Bend, and Petrified Forest National Park. It’s also a golfer’s paradise, with more than 300 courses, and has long been a top pick for retirees looking for a spot to spend their golden years (or at least their winters).
Arizona State University and the University of Arizona bring in students from across the country, and recent remote work programs have led to an influx of young professionals as well. Plus, the state’s tax structure — which includes low property taxes and no business inventory or manufacturing equipment taxes — also draws transplants for both personal and business reasons.
Phoenix Home Prices on the Rise
Currently, the median home price in the state is $303,230, an increase of 13.7% in the past year. In the capital of Phoenix, home prices are increasing faster than in any other city in the country, with a 9.9% jump from August 2019 to August 2020. As of July 2020, the median home price in the area reached a record high of $315,000.
Experts are forecasting continued growth in the market here, and the city landed in sixth place on a list of the top 10 housing markets for 2021. As a result, there’s a massive demand for new construction, as reflected by the 25% surge in permit pulls year over year. Nearby upscale Gilbert also took fifth place in a recent WalletHub ranking of the best real estate markets in the country. As of July 2020, the median home sale price was $349,250, up 10.7% from May of 2019.
So Many Buyers, So Little Inventory
Like much of the country, however, Arizona homebuyers are challenged by high demand and lack of supply; a situation which has intensified with COVID-19. According to the Tucson Association of Realtors, there were nearly 47% fewer homes listed in June of 2020 than the same month in the previous year.
“The pandemic has created a very dramatic situation where there’s very little inventory compared to the amount of buyers out there,” Kevin Kaplan, Vice President of Marketing and Technology at Long Realty, told Inside Tucson Business. “We’re seeing people not take vacations and instead take some of those dollars and buy a second home or a vacation home and potentially working out of them for long periods of time,” he added.
In Tucson specifically, homebuyers can get a bit more bang for their buck, as the median price for new homes is $307,558 and median price of existing homes is $250,538, up from $236,000 in 2019.
A Rush to Refinance
And while recent low interest rates have been spurring a flurry of activity within the market, particularly when it comes to refinancing, it’s wise for homeowners to think long term about their goals before jumping into action, according to Prime Lending Senior Loan Officer Matthew Thorne.
“There’s a lot of different things that they want to make sure that they’re looking at and not just kind of drawing to the flame of interest rate and that’s it,” he told 12 News. “You know, what is the term, what are your goals, what are the costs?”
If you’re a current Arizona homeowner, it’s worthwhile to explore other options for making the most of your home’s value before choosing to refinance or sell. A home equity investment allows you to tap into your equity without worrying about having to pay interest or monthly payments.
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