If you like warm weather and spending time outdoors, Phoenix is a city worth considering planting roots in. But is now an ideal time to purchase a Phoenix home? Here’s what you need to know.
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Inventory is very limited
In May, Phoenix only had a 0.95-month supply of available homes on the real estate market, according to data compiled by Housing Tides, an EnergyLogic company. That represents a 1.51% decline from the previous May.
Of course, this problem isn’t unique to Phoenix. Housing inventory has been down across the country due largely to the economic and health-related impact of the pandemic. On a national level, there was only a 1.13-month supply of available homes available in May, and that’s well below the 4- to 5-month supply needed to create a fair housing market for both buyers and sellers.
Because inventory is so low in Phoenix, you might struggle to find a home that meets your specific requirements. You might also struggle to find a home that works for your budget, especially given where home prices in the city are sitting today.
Homes are more expensive
In February of 2016, the median home price in Phoenix was $217,000. In May of 2021, the median home price hit an astounding $400,000. That represents a 33.3% year-over-year gain (meaning, home prices are up that much from the previous May). And that alone could thwart your plans to buy a home in Phoenix.
Mortgage rates are still competitive
While home prices in Phoenix have soared and inventory is extremely limited, the good news is that mortgage rates are still pretty competitive on a national level. And that extends to rates in Arizona as well. In fact, as of this writing, the average interest rate for a 30-year fixed loan is 3.2%. And if you can swing a 15-year mortgage, you might score a rate as low as 2.4%. These low rates could help offset higher property costs.
Should you buy a home in Phoenix today?
Phoenix is a great place to live, and the fact that home values have steadily increased over the past five years means that buying one could be a solid investment. But whether you should buy a home there today really depends on your financial comfort level.
If you have enough money saved for a down payment on a Phoenix home, and you think you’re in a good position to score a low mortgage rate, then it could pay to look at buying now, while rates are competitive. On the other hand, if you wait for housing inventory to open up, you may benefit from lower home prices and more selection, which could, in turn, leave you happier with the home you end up with.
Ultimately, there’s no right or wrong answer, so think about how you feel about buying a home in Phoenix. There’s nothing wrong with taking the plunge if you’re ready, but don’t feel pressured to dive right in. There’s a strong chance mortgage rates will stay competitive for at least another year, if not beyond, so you won’t necessarily lose out on that savings by delaying your home purchase.
View more information: https://www.fool.com/the-ascent/mortgages/articles/is-now-a-good-time-to-buy-a-home-in-phoenix/