This time last year, it seemed like the entire Phoenix-Scottsdale-Mesa area was caught up in a home buying frenzy. But as we enter 2023, the tide has changed considerably.
High interest rates and high inflation oh please don’t even mention the threat of recession have deferred many son to be buyers from their dreams of homeownership.
Home sales were down 45% in the Phoenix metro area from Dec. 2021 to Dec. 2022, according to According to the Arizona Regional Multiple Listing Service. That trend may continue through the end of the year as the market stabilizes.
We spoke with local real estate pro Juan Pesqueira about how to navigate the home buying process during uncertain economic times. Here is his best advice.
Buying a home is likely the biggest purchase you will make in your lifetime and it’s a decision that should not be rushed. Still, there’s never going to be a perfect time to buy.
Juan Pesqueira, Realtor with Attorneys Realty brokerage, said many first-time buyers make the mistake of waiting around for the market to crash so prices will drop.
“That’s not going to happen here,” he said, noting that the Phoenix area market has seen steady growth for the past several years. Try to avoid bidding wars at all costs unless you have found your dream home. Then ask your agent to do a full market analysis and figure out the highest offer price based on market data.
Check out new construction homes:
If you’ve had no luck finding a Phoenix, Arizona home in your budget on the resale market, consider broadening your search to include spec homes.
“Builders are desperate right now to sell because they don’t want to lose money on the construction they’ve already started.
This means many builders are dropping their sales prices, offering 1%+ off current mortgage rates for a certain amount of months/year in order to seal the deal, and offering huge buyer incentives.
For those non-cash buyers… explore different loan options
Gone are the historically low interest rates that buyers enjoyed during the early days of the pandemic.
Buyers should take a hard look at their budget and determine what kind of monthly payment they are comfortable with and how much cash they can afford to put up at closing.
Many lenders have special programs for first-time or low-income homebuyers. Every program has different qualifications and benefits, so take the time to shop around.
And finally Make sure to factor in added costs.
While you may be able to afford the purchase price of a new home, you also need to account for things like home insurance, flood insurance, taxes, inspections, HOA transfer fees, etc. Add an extra 3-5% buffer on top of your purchase price for these items. And goes without saying enjoy the process. I know it will get emotional, you might lose out on a property or two, but at the end it will all be worth.