Early 2021 saw an unprecedented surge in house prices that is only just starting to cool down. This period saw ABC 15 report a gigantic 30% surge in Scottsdale and Phoenix prices, with 29.5% seen in Mesa and 27% in Chandler and Tempe. With a cool now on the horizon, this gives realtors and buyers a chance to find some solid ground when it comes to local real estate trends. How that will shape the market, however, is up for debate, but there are a few facts that will color the recovery.
Big house purchases
Home equity is surging across the USA, and Arizona is number one in that regard. AZ Big Media reported that equity-rich homes were up 30% in the first quarter of 2021, and this number has not been beaten by any other state in the country. This opens up two areas of interest. Firstly, that’s a lot of spare money going around, and a potentially very liquid market where refinancing is concerned. Secondly, this raises the prospect of new home purchases. Taking equity out of the home will provide a better basis for jumbo loans, opening up access to the new super-valued homes across the state. Expect big home purchases and a greater level of jumbo loan issuance.
Lasting prices
While most of the country is seeing housing prices slow or even deflate, that isn’t the case across Arizona. Phoenix in particular has seen consistent house price rises despite the cooling of the boom, according to KTAR News, in a huge deviation from the adverse reputation the area gathered during the financial crisis of 2008. With rising prices will come more buying from out-of-state as locals are priced out of the market and the area garners a reputation for better quality luxury homes. Phoenix may become a more attractive area for those looking to sink their money into larger properties.
Mega mansions
While Phoenix is the poster city for these sorts of price rises, the mega-properties that are being exchanged for ever-increasing sums of money are hardly constrained to that one area. Fox Business highlights a $7 million Scottsdale estate recently listed for sale. These properties are not limited to Arizona, of course, and estate or ranch-style properties are becoming ever-more popular across the United States mainland. What’s different is the number of these properties available and the general idea that they could be made available for purchase by a greater number of people from a greater number of backgrounds. That, in turn, will help to drive the Arizona property market forward into what is a sustainable real estate scene – rather than one marked by local trends and inflation.
The new normal may be bigger than before, then, but it’s here to stay regardless. The property market has driven up prices but if wages increase too, it’ll mean that the properties and their new valuations are available to a wider section of the real estate market.