By Mike Bodeen · 11 January 2021
The Phoenix Metro housing market continues its incredible trajectory of price increases and product shortage. Whether you’re looking at buying or renting, our local market is not encouraging. Let’s just say it as it is, it’s very discouraging.
When a new rental listing hits the market, multiple renters submit applications – many sight unseen. When a new home listing for sale hits the market, multiple offers often ensue with bidding wars taking place. In both cases, buyer and renter strategies resemble one another. These include
Offering more than list price.
Writing a soft touch letter to the owner or landlord
Have your pre-approval letter and/or Financial ducks in a row
The owner or landlord is king. Buyers and renters are peasants. And, by the way, what’s happening in the Phoenix Metro area is happening in many metros across the country. We just happen to be leading the race.
Renting
If you are only moderately observant, you’ll notice apartment complexes are being built in droves – just not fast enough! The monthly average price per square foot for a valley rental increased 21% from January of 2020 to now. Meaning if one year ago, you could rent a 1500 Sq Ft home for $1500 per month, today that same sized home rents for $1815.00.
The other issue is lease instability. Typically, a rental lease is only for one year. At the end of that year, the landlord can and often does, raise the rent. Yes, the renter can move, but where?
Buying
New home builders are growing their land banks and new home sales are increasing each year – just not fast enough to meet the demand. Inventory of homes for sale continues to dramatically drop. (See Chart Below) Like renters many prospective resale buyers are similarly discouraged in their quest to buy watching affordability slip away from them each month they don’t buy. Though mortgage rates are at basement levels the higher sales prices are negating the lower rates.
But, the huge advantage for buying is that you can settle some roots with a relatively stable cost of living. Whether prices go up or down, it’s good to sink roots into the earth and get on with life.
Moving
Does there come a time when you consider moving? It probably has entered your thought process at some point, right? Well, for some it could be an option. Our caveat is to thoroughly vet whatever “grass is greener” area you’re thinking about. This would include climate, cost of living including housing, schools, job security, family, etc.
Our best hope and prayer for our buyers and renters in 2021 is that their housing quest would be settled, one way or another, helping them to focus on the most important relationships that occur within their walls.