Metro Phoenix Homeowners Rank No. 2 For Home Wealth Gains

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Skyrocketing home values in the Phoenix–Mesa–Scottsdale metro area have increased homeowner’s wealth by 118% in the past 5 years. In fact, Phoenix saw the 2nd most significant percentage increase in wealth from homeownership in the country. Over this period, homeowners in the area saw average home wealth gains of $256,600.

A new report by our team, a real estate marketplace, highlights the cities with the most significant wealth gains from home ownership over the last five years.

Here are the primary data points for Phoenix–Mesa–Scottsdale, AZ:

  • Median Home Sales Price in 2022: $474,500;
  • 5-Year Housing Wealth Gains (Since 2017): $256,600;
  • % Change in Housing Wealth Gains: 117.8%;
  • % Change Home Price Appreciation: 99.5%;
  • 5-Year Annualized Growth: 14.8%.

The American real estate market has seen a significant share of turbulence, but the two years following the pandemic saw the sector achieve historic gains. Now that the real estate market is starting to stabilize thanks to the Fed’s fight against inflation, the economic aftermath of its recent trailblazing is worth examining.

The report shows which cities have seen the greatest gains of wealth due to the appreciation of home values. It highlights the top 25 cities in the United States with the most significant increase in the value of homes over the last five years.

The data shows a positive trend in housing wealth gains over the previous five years in the United States, with many cities experiencing significant appreciation in the value of their homes.

Read on to discover which metros have seen the most wealth appreciation due to homeownership over the past five years.

National Outlook:

  • National Median Home Sales Price in 2022: $368,000,
  • 5-Year Housing Wealth Gains (Since 2017): $155,400,
  • % Change in Housing Wealth Gains (Since 2017): 73.1%,
  • % Change in Home Price Appreciation: 58.5%,
  • 5-Year Annualized Growth: 9.7%

Can I List My Property In A Low Inventory Market if I Haven’t Found A Home To Buy

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Yes, you can list your property in a low inventory market even if you haven’t found a home to buy yet. In fact, it may be advantageous to list your property first before finding a new home, especially in a low inventory market where homes are in high demand.

Listing your property before finding a new home can give you a better sense of the current market and the demand for your property. This can help you make informed decisions about the timing and pricing of your sale. Additionally, you may receive multiple offers on your property, giving you more options to choose from and potentially a higher selling price.

However, it’s important to have a plan in place for where you will live if your home sells quickly and you haven’t found a new home yet. You may want to consider temporary housing options, such as renting or staying with family or friends, until you find your next home. It’s also a good idea to work closely with your real estate agent to ensure a smooth transition between the sale of your current home and the purchase of your next one.

Sizing Up ARMs: What They Are And Who They’re Good For

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Adjustable-rate mortgages, also known as ARMs, come with pros and cons — like most major decisions in life. While the rate on the loan adjusts with market conditions, meaning it could fluctuate over time, ARMs are a lending option that could offer opportunity for the right buyer at the right time.

The Lending Landscape

Mortgages are either considered conforming or non-conforming, based on their type. The most common are conforming, which includes fixed-rate mortgages and adjustable-rate mortgages.

A fixed-rate mortgage offers borrowers a static interest rate on the loan, which means it will not change over the life of the loan. While those rates may be a bit higher than those offered with an ARM, since a lender has to hedge against market changes, a static rate provides a homeowner with financial predictability over the long term.

An adjustable-rate mortgage may offer a lower initial interest rate than a fixed-rate loan, but terms of the loan allow the lender to increase or decrease the rate over time based upon the terms of the loan.

Both types of loans term at 30 years and both scrutinize a borrower’s credit score, but borrowers with a higher debt-to-income ratio may have an easier time qualifying for an ARM than a fixed-rate mortgage.

Finding A Good Fit

There are a number of variables to consider when deciding between an ARM or a fixed-rate mortgage, most notable among those variables being the estimated length of time for which the mortgage is needed.

While the lifetime of the loan is 30 years, a buyer might know that they will sell the home within a few years. Why is this important? Because ARMs include an introductory, fixed-rate period when the interest rate won’t change. While the length of the fixed-rate period may vary from loan to loan, it is common to see introductory periods of 5 to 10 years. You may often see ARMs advertised as 5/1 or 7/1 ARMs.  The first number represents the number of years the rate will stay the same.  The second number represents how often the rate can adjust.  So a 7/1 ARM will have the same rate for 7 years and can adjust every 1 year thereafter.

Once that introductory period is over, the adjustable-rate period begins. So, if a buyer expects to not  keep the home past the loan’s designated introductory period, or if they expect rates to come down within the introductory period, it could make strategic sense to capitalize on the oftentimes lower rates offered by ARMs, as compared to 30-year fixed-rate loans.  Oftentimes such ARMs are amortized over a 30 year period, so if a buyer wanted to purchase a home with an ARM and ride it out for the duration of the full term of the loan, they could.  Such a move would be a roll of the dice, but as ARM rates can also go down, there could be benefit to the borrower by holding on to the note (although most who get ARMs do not plan on doing so).

ARMs also make sense in a high-interest rate market. If rates are above where a buyer is comfortable for the long haul, an ARM could provide a more affordable gateway to homeownership — and one that allows a buyer to pay down principal faster. ARMs don’t only adjust up. When interest rates stabilize and return to a more reasonable range, ARMs adjust down.

For contrast, fixed-rate mortgages are better for those buying their “forever” home, those who were able to lock in a low interest rate during a favorable period or those who live on a tight budget and need financial predictability. Regardless of the choice a buyer makes, it’s important to remember there are always options out there and that the market finds solutions to nearly every economic situation that arises.

If you’re considering a move, the team with Jose Vergara is ready to help. We keep an eye on market trends so you don’t have to. Moving is an exciting time of transition, and we’re ready to help you with it. Contact us today so we can learn more about how we can support your needs.

What Are The Tax Implications Of Owning A Home And How Do I Prepare For Them?

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Owning a home can have significant tax implications, both in terms of deductions and potential tax liabilities. Here are some key tax considerations for homeowners:

  1. Mortgage interest deduction: Homeowners can deduct the interest they pay on their mortgage, up to a certain amount, on their federal income taxes. This can result in significant tax savings, especially in the early years of a mortgage when most of the payments go toward interest.
  2. Property tax deduction: Homeowners can also deduct the property taxes they pay on their federal income taxes, up to a certain amount.
  3. Capital gains tax: When you sell your home, any profit you make (i.e., the difference between the sale price and the cost basis) is subject to capital gains tax. However, there are certain exemptions and exclusions that can reduce or eliminate this tax liability, including the primary residence exemption.
  4. Home office deduction: If you use a portion of your home exclusively for business purposes, you may be able to deduct certain home office expenses on your federal income taxes.

To prepare for these tax implications, it’s important to keep accurate records of all of your home-related expenses, including mortgage interest, property taxes, and any home improvements or repairs. You may also want to work with a tax professional or use tax preparation software to ensure that you are taking advantage of all available deductions and credits.

It’s also important to note that tax laws and regulations can change over time, so it’s a good idea to stay informed and consult with a tax professional if you have any questions or concerns about your tax situation as a homeowner.

Choosing the right neighborhood is an important part of the homebuying process. Here are some factors to consider when evaluating whether a neighborhood is a good fit for you:

  1. Location: Consider the neighborhood’s proximity to your work, schools, and other important amenities like Parks, shopping centers, and restaurants.
  2. Safety: Check the neighborhood’s crime rate and consider factors like lighting and visibility at night.
  3. Community: Research the neighborhood’s sense of community, events and activities, and local organizations or groups that align with your interests.
  4. Schools: Check the quality of the local schools, especially if you have children or plan to in the future.
  5. Traffic and transportation: Consider the traffic flow and accessibility of public transportation in the area.
  6. Housing values: Look at the housing values in the neighborhood to determine if they are increasing or decreasing, which can affect your investment.
  7. Noise levels: Check the noise levels in the neighborhood, especially if you are sensitive to noise.
  8. Walkability: Consider the walkability of the neighborhood and whether it has sidewalks, bike lanes, or other amenities that encourage walking or biking.
  9. Future development: Research any planned development in the area, including new construction or renovations, which can impact property values and quality of life.
  10. Personal preferences: Ultimately, choose a neighborhood that aligns with your personal preferences and lifestyle, whether you prefer a quiet residential area or a bustling city center.

It’s a good idea to visit the neighborhood at different times of day and talk to local residents to get a better sense of the community and if it’s a good fit for you.

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What Kind Of Home Inspection Should I Get And What Should I Look For?

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When buying a home, it’s important to have a home inspection conducted by a licensed and qualified home inspector. A home inspection can reveal any potential issues or problems with the property, allowing you to make an informed decision before purchasing. Here are some things to consider when choosing a home inspection and what to look for:

  1. General home inspection: A general home inspection is a thorough examination of the property’s systems and structures, including the foundation, roof, HVAC system, plumbing, and electrical systems. The inspector will look for any defects or issues that may need repair or replacement.
  2. Additional inspections: Depending on the property and your concerns, you may also want to consider additional inspections for things like radon, mold, pests, or lead-based paint.
  3. Inspector qualifications: Choose a licensed and qualified home inspector who has experience and expertise in the specific type of inspection you need.
  4. Inspector’s report: After the inspection is complete, you will receive a report that details the inspector’s findings and any recommended repairs or further inspections.
  5. Review the report: Carefully review the report and discuss any concerns or questions with your real estate agent or inspector. Consider the cost and extent of any repairs or issues and decide if you want to negotiate with the seller or walk away from the deal.
  6. Attend the inspection: It’s a good idea to attend the inspection so you can ask questions and get a better understanding of any issues that may be uncovered.

Overall, a home inspection is an important step in the home buying process that can help you make an informed decision and avoid any potential surprises down the road.

How Much Money Do I Need To Save For A Down Payment And Closing Costs?

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The amount of money you need to save for a down payment and closing costs will depend on several factors, including the purchase price of the home, the type of loan you’re getting, and the location of the property. Here are some general guidelines:

  1. Down payment: Most lenders require a down payment of at least 3% to 20% of the purchase price of the home. The higher your down payment, the lower your monthly mortgage payments will be. Some government-backed loan programs, such as FHA loans, require a lower down payment, often as low as 3.5%.
  2. Closing costs: In addition to the down payment, you’ll also need to pay closing costs, which typically range from 2% to 5% of the purchase price of the home. These costs include fees for things like the appraisal, title search, and loan origination. You can ask the seller to pay some or all of the closing costs, but this will depend on the real estate market and the terms of the purchase agreement.
  3. Prepaid expenses: In addition to the down payment and closing costs, you may also need to pay for prepaid expenses, such as property taxes and homeowners insurance. The amount you’ll need to pay will depend on the location of the property and other factors.

To get an estimate of how much you’ll need to save for a down payment and closing costs, you can use online mortgage calculators Here. Keep in mind that there may be additional costs associated with owning a home, such as ongoing maintenance and repairs, so it’s important to factor these expenses into your budget as well.

Precios De Las Casas En Arizona

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Los precios de las casas en Arizona varían según la ubicación, el tamaño, la edad y otras características de la propiedad. Según los datos de Zillow, el precio medio de las casas en Arizona en febrero de 2023 es de aproximadamente $465,000 dólares. Sin embargo, es importante tener en cuenta que el precio medio puede variar considerablemente según la ciudad o el vecindario en el que se encuentre la propiedad.

Por ejemplo, en la ciudad de Phoenix, el precio medio de las casas en febrero de 2023 es de aproximadamente $455,000 dólares, mientras que en la ciudad de Scottsdale, el precio medio de las casas es significativamente mayor, alrededor de $925,000 dólares. En la ciudad de Buckeye, el precio medio de las casas es de aproximadamente $335,000 dólares.

Es importante tener en cuenta que los precios de las casas en Arizona han estado aumentando en los últimos años debido a la creciente demanda y la escasez de inventario. Sin embargo, aún existen opciones asequibles en algunas partes del estado.

Es recomendable trabajar con un agente de bienes raíces local para obtener información detallada sobre los precios de las casas en el área de su interés y para ayudarle a encontrar la propiedad adecuada que se ajuste a su presupuesto y necesidades.

3 Reasons First-Time Home Buying Is Up

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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.

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.

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How Much House Can I Afford?

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The best way to find out how much house you can afford is to talk to a lender. They must factor in your credit, your debt-to-income ratio, and more. Your best bet is to speak with a seasoned mortgage banker that comes recommended from your agent or a trusted friend/family member. The internet is ripe with traps that will sell your information to lenders looking for leads. Not all lenders are created equally and “teaser rates” can oftentimes cost you more in the end. You are looking for knowledge and partnership in a lender as they can help you structure a loan that is best for you in the long run. I would love to connect you with one of my trusted lender partners who will help you determine what price point you can start shopping for, no strings attached. Buyers are having great success in this market without as much competition out there.  

To determine how much house you can afford in Arizona, you should consider your income, expenses, and other financial obligations. A common guideline used by lenders is the 28/36 rule, which states that your housing expenses (including mortgage payments, property taxes, and insurance) should not exceed 28% of your gross monthly income, and your total debt payments (including housing expenses and other debts such as credit card payments, car loans, and student loans) should not exceed 36% of your gross monthly income.

Here’s a step-by-step process to help you determine how much house you can afford in Arizona:

  1. Calculate your monthly income: Add up your monthly income from all sources, including your salary, bonuses, and any other income.
  2. Determine your monthly expenses: Calculate your monthly expenses, including your rent or current housing payments, utilities, transportation costs, groceries, and other regular expenses.
  3. Estimate your monthly housing costs: Use a mortgage calculator to estimate your monthly housing costs based on the price of the home, the down payment amount, the interest rate, and the term of the loan. Be sure to include property taxes and insurance in your estimate.
  4. Apply the 28/36 rule: Determine if your estimated housing expenses are less than 28% of your gross monthly income, and if your total debt payments (including housing expenses and other debts) are less than 36% of your gross monthly income.
  5. Consider other factors: Keep in mind that other factors, such as your credit score, the amount of your down payment, and the interest rate you qualify for, can also impact how much house you can afford.

It’s always a good idea to consult with a lender or financial advisor to get a more accurate estimate of how much house you can afford based on your individual financial situation.

Metro Phoenix Home Listings, Average Sales Price Increase In January

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January delivered a strong start to the year, offsetting a slouching December, according to a report released by Phoenix REALTORS. Analyzing the latest ARMLS data, there were 6,848 new Metro Phoenix home listings hitting the market, compared to 4,105 in December. As well, average sale prices rose in January from December and sat at $539,617, which was up by nearly $4,000.

“The first month of the year saw a rebalance in the real estate market,” said Butch Leiber, president of the Phoenix REALTORS board of directors. “Buyers and sellers alike remained cautious, but pending sales rose as the market saw a greater inventory of homes.”

In January, there were 17,085 Phoenix home listings, an increase of 160.1% from January 2022 when there were only 6,568 homes available. Data reflecting days on the market until sale also revealed that sellers typically saw their homes on the market for 76 days, a 10-day increase over the past month, and a 30-day increase from the previous January. There is also nearly three months of housing supply inventory available, which seems to be excessive given that a year ago houses barely saw 24 days on the market before sale.

“Some analysts may feel that the numbers are heading in the wrong direction, but when we take an honest look at the data, there’s a clear indication that the market is rightsizing to more sustainable levels,” said Leiber. “Given how red hot Arizona’s real estate market has been the past few years, most Arizonans – especially newcomers to the state – see a downward spiral instead of the correction we were anticipating.”

While last January was ripe with pent-up demand, a shortage of housing supply and soaring sales prices, data revealed home sellers are still receiving top dollar for their homes. In fact, in January, they received 97.1% of their asking price, which was only down 3.3% from January 2022, but inched 0.1% higher from the December figures.

“Mortgage rates, inflation and economic conditions will continue to have an impact on the residential market, but Arizona is fortunate to still be entertaining positive sales activity as new businesses prepare to open and greater numbers of out-of-state home buyers enter the market,” said Leiber.

Sellers are also getting more creative as they compete with other properties for the attention and dollars of fewer buyers, as seller concessions have made a significant comeback.

“Prior to the boom years, sellers offered some degree of help to buyers in 35-40% of all transactions, which often helped buyers with closing costs. During 2021, that dropped to 10-15% of all sales,” said Leiber. “Since the shift in the market, we’re seeing more than 50% of all sales including seller concessions – and they’re significant. The median concession is currently over $9,000 – nearly double pre-pandemic amounts.”

One reason the amount is so high is that sellers are now helping buyers buy down their interest rate. There is an increase in “2-1 buy down” where the seller helps reduce the interest rate for the first two years of the loan, which is typically a 2% buy down for year one, and a 1% buydown for year two.

“This helps immensely with affordability as buyers hope rates will drop during that two-year period, allowing them to refinance at a lower rate,” said Leiber.

As the market continues to evolve and right-size itself, Phoenix REALTORS continues to keep a trained eye on data to help successfully guide buyers and sellers through both sides of the process.