Home prices in Arizona average about $436,100, well above the national average of $410,200; it’s one of the hottest markets in the country and will likely remain so throughout the decade.
With high housing costs, finding a home within your price range can take a bit of work, but don’t despair: District Lending is here to help. Our mortgage loan officers will work closely with you to get the financing you need for the home of your dreams, whether in metro Phoenix or quaint Gila County.
Today, we’ll explore why home values are so high, which areas of Arizona have the hottest real estate market, and what some of the cheaper cities are, brought to you by District Lending.
Why Is Arizona Such A Hot Market?
There are several reasons why Arizona has such high housing prices, and one of them comes down to a housing crisis regarding single-family homes.
Generally, a housing shortage is identified by “months’ supply;” this divides available properties by how long it takes to sell them. For example, if there were six properties and each took two months to sell, this would mean that the city has a three months supply, which is what most cities strive for.
The Months’ Supply In Arizona
In many areas of Arizona, there is only a month’s supply, meaning that all listings are snapped up within a month of being put on the market, less than half the national average of three months. Many potential home buyers are paying in cash or huge down payments to secure Arizona properties. If you don’t have enough money to afford your home outright, it may be more difficult for you to compete in this real estate market.
Arizona Is A Seller’s Market
One reason for the high housing costs is that people simply aren’t selling. Current homeowners want to hold onto their lower interest rates rather than dip their toes into the housing market.
As such, sellers in Arizona are spoiled for choices: demand is higher than available homes, which means they can name their price and find a buyer. While this is great for sellers, it spells trouble for those looking to buy houses, competing with those with the resources and wealth to put in huge bids.
Real Estate Investing Is On The Rise
While Arizona’s overall rate of homeownership to rentals is currently higher than the national average, this will likely change soon. For those with the money, collecting rent on multiple residents makes more sense than purchasing a single-family home.
New construction on family homes has dropped, but rental housing units have skyrocketed to more than 8% from last year. Many of those currently on the market aim to be landlords, which means the proportion of renters to homeowners will continue to increase throughout the next five years and beyond.
Who Is Moving to Arizona?
Regarding demographics, it might surprise you to hear that a great deal of migration to Arizona comes from California, where highly educated individuals are snapping up pricey properties in Phoenix and other trendy areas.
Contrary to the popular belief that Arizona is just for retirees, the average person moving to the state is an educated 30-year-old with a higher-than-average income. This is great for the local economy but also creates more demand for the dwindling stock of single-unit listings.
What’s The Average Cost Of Living In Arizona?
Despite the intense housing market, Arizona is a relatively inexpensive place to live. The cost of living is 13% below the national average, about $44,875 annually. Those who can buy homes in this challenging market can expect to pay more for healthcare but lower prices for food, utilities, and transportation.
Comparing Your Current City’s Cost Of Living With Arizona
If you’re considering moving to the land of open skies, your first stop shouldn’t be a realtor. Instead, you’ll want to compare how much you’re spending in your state to understand better what your finances will look like here in Arizona. Forbes has an excellent cost-of-living comparison calculator to help you budget effectively for your beautiful new property.
What Are The Hottest Markets In Arizona?
The most expensive place to buy homes is in the largest metropolitan area: Phoenix.
Maricopa County, which includes the Phoenix metropolitan area, is one of the highest-priced markets in the state, with a single-family home going for around $539,900. These prices make Phoenix an unattainable location for many first-time homebuyers, which is why much of the available land is now going toward rental units rather than those buying homes.
In the midrange of affordability sits Tucson, where homes cost about $398,484. While still pricey, it’s below the national average, making it a good value for those who want a more metropolitan lifestyle.
What Arizona Markets Are Relatively Affordable?
Outside of Tucson and Phoenix, properties get cheaper.
If you’re tired of renting and are okay with more suburban life, Douglas in Cochise County is your best bet. It’s the cheapest place in Arizona at an astounding $152,000, with great fishing sites and hiking trails. If you’re not ready to leap into the real estate market and would like to rent for a bit instead, expect to pay much less than you would in other AZ areas: the average is $575 for a one-bedroom.
However, be aware that their local taxes are pretty high: the sale tax in Douglas is 9.9%, which is higher than 94% of other municipalities.
Gila Bend: A Standout Choice
If you still want to live in a community near the glittering lights of Phoenix, don’t give up just yet. Gila Bend, which is about 70 miles away from the city, is a splendidly affordable city with a median price of $249,947. You can enjoy a good cost of living while still heading off to the city for a night out.
Bullhead City: A Midrange Beauty
Also on the lower end of the spectrum is Bullhead City, which is about $300,000 for a single-family home. The cost of living is slightly less than elsewhere in the country – including utility costs! However, healthcare services will cost you more, so it may not be the best choice for owners with health issues.
Ready To Move To Arizona?
No matter the market, District Lending is here to help you meet your goals. Speak with a mortgage loan officer today, or check out our helpful calculators to see what you might be paying each month for your home.