Demand for homes in Arizona significantly increased in 2017. Although supply has stayed relatively stagnant, sales have still experienced a drastic year-over-year increase.
Between 2016 and 2017, sales from homebuilders and resale homes increased by 11 and 7 percent, respectively. This growth even occurred during the holiday season, which usually experiences slowed sales – sales in December saw a 10 percent year-over-year increase last year. In fact, Arizona posted record highs for new and resale home sales in 2017.
Additionally, 2017 also experienced a 4.4 percent increase in real estate licenses, meaning that more people are selling homes. This likely occurs because home values are rising, which ramps up the commission real estate agents receive from their sales.
The progress hasn’t slowed in 2018. This year, home construction permits have increased by more than 10 percent. And although construction costs have risen between 30 and 35 percent this year, builders will likely keep their prices down because of the increased value of houses and the volume of sales in the current housing market.
Arizona REALTORS President Lori Doerfler doesn’t necessarily believe this is a bubble either. She explains, “Arizona as a whole is experiencing a solid buyer demand with lower inventory. At this time, we call this a ‘seller’s market.’ Although some home prices are rising due to demand, mortgage rates are still historically low (they increased about 1 percent in the past year), and buyers are buying. Homes hitting the market in the lower to middle price ranges are continuing to experience multiple offers if priced appropriately.”
Apartments represent one section of the housing industry that is especially thriving this year. According to a study by apartment search website RentCafe, developers are set to build over 10,000 apartments this year, which represents a 55 percent year-over-year increase. Tempe will add the most with 1,915 apartments, and Chandler, Scottsdale, and Gilbert/Mesa fall close behind.
When the housing market booms, buyers sometimes struggle to find their perfect home before others snag it. “The buyer must have their finances in order. Proof of funds is an absolute requirement to purchase. Unless home buyers have ready cash, they will want to talk with a lender and get pre-qualified for a home loan,” explains Doerfler. She continues, “A buyer will want to work with a local realtor who knows that particular market. Their local realtor will help them find the right property as soon as it hits the market and draft a contract that will help them compete in this fast-paced market. Remember, in a seller’s market, time is of the essence.”
The housing market is hot right now, and the nature of its future is uncertain. Many buyers are looking to seize the opportunity to lock down their dream home before someone else grabs it.