According to Zillow, first-time home buying rose from 37% in 2021 to 45% in 2022. The real estate climate has experienced a major shift and is now more accessible for these individuals to purchase a home. In the years before, a competitive, low inventory market could have likely been a contribution to the limited number of first-time buyers, but inventory has slightly increased this year.
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If you are thinking about buying a home for the first time, here are three reasons why now is a good time.
1. More opportunities to purchase a home due to inventory being slightly up
Inventory throughout the Valley has increased due to historic economic change and a unique shift in the housing market. The housing market has been amplified over the past two years, due to low-interest rates and high migration during the pandemic. But now the market has been cooling for the past few months. The Phoenix Metro area had seen a 257% increase in for-sale listings going from 4,688 active listings in January 2022 to 16,778 in September 2022 according to Realtor.com’s residential listings database. This allows homebuyers to take a calm approach to find the most comfortable place to reside. Buyers can focus on finding a home with their non-negotiables, rather than bid on a home that is less than par to try and scoop something up before it’s gone.
3. If you can afford the home you want, there is not a bad time to buy
When interest rates are high, buying a home may deter people from investing. However, if you can score a home for a lower price now, you can refinance your home in the future. A common phrase I use is: “marry the house, date the rate.” Lock in a low price now and refinance your rate when interest rates decrease again.
The earlier you start investing in real estate, the sooner you can build equity and prepare for your next move in the market.
3. Rent prices are high, which may be encouraging people to purchase a home
Rental prices across Phoenix have been climbing year after year. According to Norada Real Estate Investments, the average rental price for a one-bedroom apartment in Phoenix increased 8% to $1,405 from February 2022 to February 2023. In that same period, studio apartment average rent increased 13% to $1,296, two-bedroom apartment average rent increased 7% to $1,725, three-bedroom apartment rent increased 5% to $2,250 and four-bedroom apartment average rent increased 4% to $2,500. The average renter may face higher monthly costs than homeowners.
Renters risk their rent rising every year, but with a home purchase you lock in your mortgage payment with a fixed rate. Mortgage payments also allow homeowners to invest in the equity in their home, whereas renters’ monthly payments entirely go to their landlord. There are several other benefits to buying versus renting property. Owning a home allows buyers more freedom with their space. You can paint, change your floors or make any investment you desire, such as adding in a pool. A homeowner will have a chance for the renovations to pay off when it comes time to resale.
Arizona is a great location for first time homebuyers. Many are moving to the state, which makes it a lucrative spot to invest. Consider the above reasons to determine if now is the right time for you to invest.
Author: Rich La Rue is the Designated Broker for HomeSmart Phoenix, the flagship brokerage operation in the HomeSmart system. For more information, visit www.richlarue.com.