Are Californians Ruining Arizona’s Real Estate Market?
The median price of an average single-family home in Arizona has increased dramatically in recent years. Since 2015, the Arizona real estate market has seen the median closing sale price drop from an astounding $ 211,000 to $ 350,000.
While many native Arizonans angrily claim that they don’t have the price of a home in their own state, many others have vindictively attributed a source to this problem: their Californian neighbors.
The idea is this: in a booming housing market, the only people who can afford the increasingly high asking prices are the high-income people coming from out of state. In the same way that Arizona’s changing political demographics and ever-increasing freeway traffic are associated with the people of the Golden State, Californians are also attributed to the widespread bidding wars that are going on for middle houses. range in Arizona.
While there is some truth behind the idea that Californians made the Arizona real estate market more competitive, the real causes of the rise in Arizona home prices are much more nuanced than an influx of people. from the westernmost state of the lower 48.
“It would be easy to put that on California”, Tom Kasper, real estate agent with My Home Group Real Estate, mentionned. “But this is not true. It’s too simplistic. “
The problem, as stated by Kasper and other professionals in the real estate market, is a general housing shortage, not only in Arizona, but nationwide. This fact is best represented numerically. Months of supply, a term used by realtors to determine how long a housing market can continue to sell homes at its usual rate, is at an all-time low for Arizona cities.
A healthy market contains about five to six months of supply on average. According to data provided by Russell diehl of ArizonaRealEstate.com, Mesa, Arizona, one of the states’ most popular destinations for people looking to buy a home, had less than a month’s supply at the end of 2020. That number has only continued to decline.
“The real problem is the supply. You know, three years ago on several listings there were about 19,000 homes available at that time of year, ”Kasper explained. “That dropped the following year to around 15,000 that were available. That number dropped the following year to about 9 to 12,000, and last month we are at an all-time low of about 5,800 homes available on the market right now. “
“You have created a demand here from families who live here and from people who want to stop renting and want to buy a house, so between that, economic growth and an influx of foreigners,” Kasper continued. “We have a perfect storm for a demand for housing that we cannot meet.”
What this means to recent homebuyers like Jeff Miller is one of the most difficult experiences one can have in the real estate market. After saving tens of thousands of dollars for a down payment and getting approved for over $ 300,000 in loans, he found himself constantly outbid in a state he once owned a home.
“It was, probably, in the top five of the most frustrating things I’ve ever done in my entire life,” Miller said. “It was not my favorite experience. I will say that. Mainly because for me the fact that I saved $ 30,000 was just something I was breaking my arm patting my back, you know what I mean? And the fact that this, and what I was able to get approval for was not enough to get the homes I was looking for, regularly not enough to get the homes I was looking for, it was, yes, extremely frustrating.
The causes of this supply shortage are almost as widespread as the problems it has created. COVID-19, the recent Texas freeze, one of the lowest federal interest rates in history, lumber shortages, political instability in coastal states, climate fatigue in the Midwest and Arizona’s bustling economy are all near double-digit contributing factors. annual increase in house prices in Arizona.
Similar in complexity to the cause of this housing crisis, there are no easy solutions. The production of more houses stagnated due to the higher cost of production. The land on which the houses could be built is more expensive than ever before. The regulations for building a house are more complex than they were 50 years ago, and the population of people looking to buy what is built continues to grow. Experts suggest that it may be years before market prices start to fall.
Californians, like Arizonans, are experiencing exactly the same difficulties as the nation as a whole. So are the people of Seattle, New York, New Jersey, and many other states. As everyone searches for a new place to rest, Arizona, with its many positive attributes and relatively low cost of living, has emerged as one of the nation’s hottest markets.
The cost of being perhaps the country’s best-selling market? An entire generation of first-time home buyers outside the state in which they were born.