The typical price of a Valley home could hit $ 500,000 within the next year. But is the growth sustainable? Experts intervene.
PHOENIX – The price of a typical home in the greater Phoenix area is expected to be more than $ 500,000 by next summer, according to Zillow’s forecasting models.
The company predicts that US home values will rise 11.7% over the next year, a slowdown compared to the last 12 months when home values rose 17.7%.
Although demand continues to outpace supply, Mark Stapp, executive director of real estate programs at the WP Carey School of Business at Arizona State University, said that all forecasting modules are suggesting real estate prices will rise.
“We started with very low inventory and, like the rest of the country, are underdeveloped,” he said. “There is no doubt that prices will continue to rise.”
Stapp said a combination of things brought us to the current real estate market – millennials reaching their 30s and begging to buy houses, the 2008 housing crisis that resulted in fewer houses being built in the past decade, in addition to the pandemic, Labor restrictions, and concerns from developers and investors.
“We have lagged so far that it is almost impossible for us to get out of this problem again,” said Stapp. “We started the pandemic with low inventory and we currently have pre-pandemic inventory.”
Priced out
Oscar Solis has been looking for the perfect new home for his family over the past year.
This new dream property must be a ranch with enough land to house his recently purchased horses.
“We search every day,” said Solis. “But it was an emotional roller coaster ride, we make offers and then get outbid.”
Solis and his wife work in the Phoenix area. Their goal was to find a ranch within the city limits, but looking for overbids has shown they need to increase their budget or get out of town.
When Solis was in college 14 years ago, he bought his current home for about $ 80,000. His plan was to sell the house with the equity it earned and use it as a down payment on the new ranch, but “as the houses go up in value, my equity won’t be enough on my new mortgage,” said Solis.
Despite good credit, a steady job, and cash on a down payment, the battle for a home requires more.
“There was a time when the seller took two offers and the other person who also bid was $ 5,000 more than I gave as a ‘move out gift’ so they went,” said Solis. “I wanted to use that money to modernize the house, paint, buy new furniture, but I couldn’t even do that.”
As a current homeowner, Solis said he can be patient and keep searching until the right opportunity arises, but he worries about first-time buyers who don’t have the luxury of building equity as they look.
“The past 12 months have been insane when it comes to showing homes and getting deals,” said Alma Chavez, broker at Equity Realty Group.
Chavez said although the “craziness” has subsided slightly, she expects the trend to continue despite rising home prices. With 60% of their clientele, first-time home buyers, a vast majority of them are Latinos.
“They buy, eager to have a home to call their own, and millennial Latinos are a big part of that,” Chavez said.
House prices in 2022
Zillow expects property values to rise 12.1% between July 2021 and July 2022, with a typical home costing around $ 517,000 by September.
“I don’t think you’ll find a better deal if you wait,” said Professor Stapp. “In fact, it’s probably going to be more difficult.”
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