In 2021, the Phoenix housing market is to remain one of nation’s hottest and set to see a surge in home sales, with prices continuing to rise more than the national average. Asher Cohen, founder of Scottsdale-based BUYAZRE.com, outlines expectations for the local housing market in 2021.
According to new data from Realtor.com, home sales in the Valley are expected to jump 11.4 percent over 2020 levels, which is the 11th largest expected increase among the top 100 metros in the U.S.
Inventory will be low. We expect active buyers to outnumber the properties listed for sale. Ultimately, there will not be enough supply to meet the demand. Home prices tend to rise under these conditions which is why forecasts and predictions for the Phoenix real estate market in 2021 look extremely positive.
Mortgage rates will also stay low. Currently, the 30-year fixed rate is hovering around an all-time low of 2.75 percent, which is actually a 50-year low. Refinancing rates are hovering around 2.45 percent, but these numbers change on the daily. If you’re interested in saving money on your monthly mortgage payments or considering a cash-out refinance, make sure to compare rates from multiple mortgage lenders.
Home rental prices are also on the rise. If there’s any possible way to hold onto your home and rent it out, do it. The average rental home in the Phoenix metro area currently rents for over $2,000 a month and in some neighborhoods, well over $2,500 a month. In many cases, it makes sense to keep your home and rent it out. There are ways to use the equity in your current home in order to buy your next home without selling it.
Buyers will continue to put down more cash. It’s not uncommon to see buyers put more than 20 percent down in order to avoid paying for mortgage insurance. Buyers will not only have lower mortgage payments and possibly lower interest rates, but sometimes an appraisal isn’t needed which could save an average of $600. Putting more money down is also seen as a positive by many sellers when they’re reviewing multiple offers.
First-time home buyers will remain a strong force. While younger Gen-Z buyers are expected to play a growing role in the housing market, the largest group of Millennials are now in their mid-30s. This is bringing a wave of demand from renters looking to buy their first homes. Additionally, the oldest Millennials are increasingly contributing to the trade-up market.
If you’re already a homeowner and finding ways to save money has become a priority during the coronavirus pandemic, you should consider refinancing especially if your current interest rate is 3.5 percent or higher. Refinancing not only provides an easy way to lower your mortgage payments, but it also gives you the option to take cash out of your home to pay off high interest debt like credit cards while keeping your monthly payment the same. Be sure to consult a loan officer to find out which option is best for you.