If you want to successfully navigate the 2020 Phoenix real estate market, there are three key points to remember:
1. July and August, traditionally the two slowest months of the year, are anything but.
In the wake of the COVID-19 pandemic, 2020 has been anything but a normal market. The pent-up demand from March, April, and some of May has come to roost in June and July. Right now, we’re seeing multiple-offer situations for homes across all price segments. If you’re a buyer, hire an agent who knows how to win out in multiple-offer situations, is familiar with different segments of the market, and has good relationships with other agents in the area.
2. As the old saying goes: Don’t wait to buy real estate—buy real estate and wait.
The average price point in Maricopa County is up to an astonishing $350,000, a significant increase over the past several years. This means if you were to purchase a house now for $300,000 at an interest rate of 4%, you’d build up about $32,000 worth of equity by 2025 (and have a loan balance of around $268,000).
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At the end of the day, the affordability index is quite low in the Phoenix area.
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Conversely, if you were to rent a house at that same price point, you’d pay roughly $2,000 per month. In that scenario, assuming you’d be living the same lifestyle, you’d end up paying $120,000 in rent after five years. In the first instance, you’d be putting $32,000 toward your net worth. In the second, you’d be squandering $120,000. In short, homeownership is a huge advantage.
3. Interest rates are very low.
In July of 2019, the average interest rate for a 30-year mortgage hovered around 3.8%. Right now, it’s down to 3.2%. Although rates will probably creep back up eventually, they’re low now and even more advantageous than last year, and last year was a very good market for both buying and selling.
At the end of the day, the affordability index is quite low in the Phoenix area. We have great job sector growth, low property taxes, and our price points are relatively low given all of the amenities Phoenix offers.
If you have more questions about our Phoenix area market or are thinking of buying or selling soon, feel free to call or email me anytime. I’d love to speak with you.