Let us gaze into the crystal ball for some Arizona housing market predictions. Phoenix’s housing market has fared quite well in 2021. Realtor.com predicts house purchases in the metropolitan area will shoot up over eleven percent over last year’s levels, exceeding the national average. Why the increase? A desirable climate, ample and world-class dining and activities, and an affordable cost of living. Plus, with more and more people able to work from home, the need to stay in the vicinity of their employer is becoming less and less necessary.
Here are some predictions for the remainder of 2021…
1. Mortgage rates will stay low
The current 30-year fixed rate is about 2.75%, which is a 50-year low. Refi rates are lingering around 2.45%, but that doesn’t mean they’ll stay there. For those looking to save on mortgage payments, consider comparing rates from different lenders before making a move.
2. Supply won’t keep up with demand
Despite low interest rates and high demand, limited stock has driven up prices. Great for sellers, less so for buyers. Nevertheless, homes can go under contract within hours of listing because of the scarce inventory.
Millennials, many in their mid-30s, will continue to maki the biggest mark in home buying, leading the charge of younger, first-time owners. Older Millennials, on the other hand, will continue to contribute to the trade-up market.
4. Owners renting their houses will do very well
With rental prices climbing steadily, those with houses that can rent their houses, should. The supply-vs-demand mentioned above doesn’t just apply to buying, but also to renting. Rents in The Valley averaging over $2,000— and in some areas, $2,500— the smart move may be to rent your house in favor of selling it, giving way to purchasing additional properties without selling the first one.
5. Buyers will make larger down payments
In order to best qualify for a home, we’ll continue to see buyers putting down amounts larger than the standard 20% so as to avoid paying mortgage insurance. They’ll also have lower mortgage payments, lower interest rates, and the possibility of saving on an appraisal. In short, putting more down up front can save buyers more down the road.
The world is changing on a weekly basis, but with evolving priorities come eager buyers and sellers, so only time will tell if these Arizona housing market predictions will come true. It’s hard to say where things will level off and what will become the new normal. The desire to be in a more comfortable place will likely continue, which can remain a boon for the Phoenix area.