As a Realtor, I get asked a lot of questions so I thought I would publish and answer a question I have been asked recently.
Michael K of Maricopa asked me the following question, “Can you tell me if I should buy a home now in Maricopa before prices go up further or, do you expect that prices will level out soon? We are looking for a good investment as it will be our first home purchase”.
Michael obviously has been following the real estate market because he knows that prices have gone up. For some people that thought about buying a home two years ago and didn’t, the price increase may seem significant.
We have enjoyed on average a 10-percent increase in equity the last two years in Maricopa, so a home in 2017 that might have sold for $200,000 now in 2019 may sell for $240,000. In determining if it is a good time to buy a home, there are several factors I recommend looking at.
Let’s take a look at some of the factors that can cause house prices to fall:
- Rising interest rates (making mortgage payments more expensive)
- Economic recession / high unemployment (reducing demand and causing home repossessions)
- Fall in bank lending and fall in availability of mortgages (making it difficult to buy)
- Fall in confidence / expectations of future house prices.
- Changing demographics. (less demand)
- An excess of supply in the housing market
The expectation for interest rates over the next few years is there will be slight increases but nothing too significant. You currently can still get a mortgage loan for under 5 percent. The unemployment rate is lower then it has been since 2000 with no expectation of any major changes.
There are many loan types available and even a Down Payment Assistance Program still available, yet loan underwriting is stable and guidelines for getting a loan are still conservative.
Consumer confidence is strong too and expected to remain that way. Maricopa is still more affordable then many other surrounding areas. As long as that remains, there will always be a demand for housing in Maricopa.
We currently have about a 90-day supply of homes available for sale in Maricopa. Due to all of the building in Arizona in general, a new build is taking about eight months to complete the build out.
So to answer Michael’s question, it is still a very good time to buy a home in Maricopa. Prices are not expected to level out anytime soon. Although a 10-percent equity gain is not guaranteed, prices are still rising.
At the end of the day, when you rent a home and move the most you can hope for is to leave with all your security deposit. When you own a home and sell you have a greater potential to leave with a nice chunk of equity in your account the day you close. It just makes sense to buy if you are financially able to.
If you have a real estate question, I would love to answer it in the next column:
Pat Lairson, Realtor