Is Now a Good Time to Buy a House in Phoenix?

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Question Mark Here’s a question we hear all the time:

Is now a good time to buy a house in Phoenix?

Let’s see what a few other real estate agents in Phoenix had to say about this very question recently on Trulia Voices – a real estate “Q&A” forum.

. . . I have to tell you that we haven’t see buying opportunities like this in many years.

I have to agree, now is an excellent time to buy.

If you want a good hedge on inflation now would be a great time to invest.

There are awesome values in Phoenix area right now!

This is the best time in AZ history to buy a home.

Now is the best time to buy in Phoenix, prices are way bellow (sic)replacement values. . .

And from the National Association of Realtors themselves comes all sorts of material available to Realtors in the (ridiculous) “It’s a Great Time to Buy!” campaign (search realtor.org for “It’s a great time to buy” and you get 2,720 results…).

So, is it a great time to buy a Phoenix home?

I answered this question a little over a year ago. My answer hasn’t changed.

Maybe, maybe not.

Yes, interest rates are at historical lows. (and yes, I need to update these charts)

Yes, there are a ton of homes in Phoenix to chose from. A “ton” is defined here as the 38,237 single family homes currently listed in the Arizona Regional Multiple Listing Service (ARMLS). Throw in condos, multi-family units and land and there are over 52,000 choices.

Yes, there is a new $8,000 refundable tax credit available for first time home buyers.

But whether it is a good time for YOU to buy depends on many factors such as:

  • Your financial situation.
  • Your personal situation.
  • How long you intend to stay in the home if you’re going to occupy it.
  • Your risk tolerance if you are looking at investment property.
  • The location of the home you would like to buy.
  • The condition of the home you would like to buy.
  • And more. Much more.

Are there “deals” out there to be had? Yes, there are.

Is every home listed in Phoenix a “deal”? Absolutely not.

Are there realistic and “motivated sellers”? Yes. But clearly not all sellers are realistic or motivated.

Are there unrealistic sellers? Yep. But not all sellers are unrealistic. (and trust me, there are also plenty of unrealistic buyers too.)

Are foreclosures and short sales a great deal? Maybe, maybe not. Depends.

Will prices continue to decline in the Phoenix market? Maybe, maybe not. I’ll go out on a limb and say “Generally speaking, probably.” We still have far too much inventory – in most locations. There are location pockets that are in what is generally considered a “neutral market” (loosely defined as six months of available inventory).

So while much of the Phoenix area market is a “buyer’s market”, that does not necessarily mean this is the right time for anyone to buy a home.

Is it the right time for you to buy a home?

Maybe, maybe not. Talk with professionals – a real estate agent, a CPA/Financial planner, a mortgage lender for help in determining your options and what is right for you in your specific situation. Everyone is different.

Photo Credit: –bast- on Flickr

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About the Author
Jay Thompson

I'm a real estate broker in Phoenix, Arizona and the publisher of the Phoenix Real Estate Guy blog. I tend to drive too fast and scream at the University of Texas and Denver Broncos football teams. My two kids are smarter than most adults I know and my wife is simply amazing.

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  1. Seb Frey says:

    Very balanced answer to the question. I work a different market, and my sense of the market is that the bottom is still quite a ways off (California unemployment now tops 10%). Even though I am nearly certain prices will be dropping at least throughout the rest of this year, I counsel that, depending on a buyer's situation, it may be a fine time to buy. For example, some people intend to live here for many years to come; if they can find a home which is priced such that a mortgage would be less or not much more than renting the equivalent property, it may make sense to buy.

  2. Mike says:

    Jay, this may be the best article I've seen on "Is Now a Good Time to Buy". Bravo for a fair and honest article.

  3. Jay

    Excellent summary of "is it a good time to buy now" question.

    I could not agree more.

    In my San Francisco Peninsula market, I would say:

    Are there good values to be found? Yes.

    Are we at botttom? Probably not. I expect contiuned downward pressure on prices. (In most San Francisco Peninsula cites, values are down maybe 10% to 20% from the peak in 06/07)

    Is it a good time to buy? Yes: 1) if you find a house you really like in the community where you want to put down roots 2) you have a long-term perspective – say 10 years and 3) your job situtation is pretty stable and 4) you buy comfortably within your financial means – this is not the time to stretch.

    **Arn Cenedella´s last blog post..Jackie Speier proposers to raise Obama refi limit from $417,000 to $729,500</abbr></abbr>

  4. I agree with Mike, this is one of the most honest articles I have seen on this subject, because you take the time to address what I feel is the most important factor; "Is it a good time for YOU to buy a home?"

    As opposed to most other articles which simply ask "Is now a good time to buy a home?"

  5. Evo Terra says:

    An interesting observation, Jay. But it misses the most important mark: Is now a good time to sell a house in Cottonwood? Or perhaps even better? Will Feb 2010 be a good time to sell a house in Cottonwood, when is when my renter's lease is up?

    **Evo Terra´s last blog post..My next Ignite Phoenix presentation will be better</abbr></abbr>

  6. jkproperties says:

    Great post as always.

    **jkproperties´s last blog post..Free blogging Course</abbr></abbr>

  7. Paul says:

    One of the best posts I have seen on whether or not is a good time to buy.

  8. Thanks folks for all your nice thoughts. I just call it like I see it.

    @Evo – given that the real estate decline in Cottonwood will end on Dec 17th, 2009 at 2:14pm, you should be in good shape for a sale by Feb 2010.

    And just in case someone reads this that doesn't know me, I can be a bit on the smart a$$ side… *no one* can accurately predict a bottom. Though personally, I think we'll see a bottom in Phoenix toward the end of 2009. Cottonwood? Beats me, I don't know that market, and I may be completely wrong about Phoenix!

  9. Great post Jay. I subscribe to the idea that no mater the mark time, place, or conditions, only 20% of the homes listed in the MLS are of the proper price and condition to sell. The rest are just listed, but not seriously for sale.

    This sort of thinking has worked out quite well on my last several listings. Talk with the home owner and decide upon the price they want to get for their home, and then show them exactly what they will need to spend on their home to get that price, next conversation, do they want to do that, or adjust their sale price expectations to market reality? Works with the serious sellers, the non serious sellers are not convinced.

    Next question, do you care about the non serious sellers??? My answer is a profound NO!!

    **James Boyer´s last blog post..Morristown NJ Homes For Sale, The Feb 2009 Report</abbr></abbr>

  10. A very fair and balanced answer-and I have to agree. I think it will get a little worse before it gets better; however, I think if you are qualified, can afford the payments, have a secure job, and are looking to buy then now is a great time for you because of all the choices of homes and the lower prices you can find now.

  11. Well put (as always) Jay,

    I love how you tell it like it is. My philosophy has been somewhat similar, but probably could be summed up a little more simply (considering what a simple guy I am):

    If buyers are not positive they're going to live there more than 4 or 5 years, there is no hurry & buyers can afford to be really picky.

    If buyers are pretty sure they'll be there well over 4 or 5 years, "now might be a great time to buy". Not because "they'll miss out" if they don't. I don't think the market or interest rates are going anywhere anytime soon. HOWEVER — getting the ball rolling and being 5 years closer to having their home paid off is a significant benefit compared to waiting several years for "the right time".

    At a certain point, you have to focus not on "timing the market", but on taking that first step toward getting that home paid off, and the sooner you do that, the sooner you are financially free.

    **Joel McDonald´s last blog post..Buffalo Ridge – Castle Rock Colorado Real Estate</abbr></abbr>

  12. Scott says:

    Jay,

    My secondary market is similar to Phoenix. Lee County, Florida, I saw a stat that only 8% of homes sold since November 1 are not distressed sales or REO. Our foreclosure wave will continue throughout the year which means we are not at bottom yet. Here is how I look at it though as an "investor."

    I can buy a duplex built newer than 2004 for $65,000 from the bank. (Original note $280k…yes, really). I can rent each side of the duplex for $650-$750 per side depending on location. Financed or cash, the cash flow is huge. If the market came down say another 20% which is hopefully unlikely, the cash flow generated on a 5-10 year hold will make up for any short term negative equity. My opinion is that these duplexes will go over 100k in 5 years so give a little now and make more later is how I look at it. So I guess as an investor, you are mitigating your risk on potential losses. Can homeowners guarantee themselves that buying later down the road is better because we haven't hit bottom yet? As you said, nobody can predict the bottom, but with prices the way they are today, why not at least consider based on monthly debt and rates which are going to be extremely low.

  13. I'm from Miami, Florida and I was watching the news on Phoenix foreclosures. It surprised me that many of the houses were going for about 85,000 ; what surprised me the most about that was the size of each house, some were listed to be 2600 sq ft. Many people that can afford it are going to make a lot of money off these foreclosures.

    **Bryan Dasilva´s last blog post..Time To Be Serious</abbr></abbr>

  14. You put that perfectly-the right time to buy is when the time is right for YOU, regardless of whatever "deals" are out there at the moment. None of it matters unless you are financially ready. Good job, Jay.

    **Linda Craft-Raleigh NC Real Estate Expert´s last blog post..Safety for Raleigh Home Owners</abbr></abbr>

  15. Now isn't really a bad time to buy investment properties if you have the means. I liked how you pointed out that the time to buy depends on the buyer and their situation.

  16. Well, it seems that a bunch of people who I have been showing houses to these past few weeks think it is a good time to get a great deal.

    **Jim Boyer´s last blog post..Chatham NJ Homes For Sale, The Expired Listings</abbr></abbr>

  17. These have all been excellent comments. Depending on the situation with the buyer it is an incredible time to buy. We have not seen deals like these for 20 years. I wish more people good be taking advantage of this market.

  18. Very diplomatic Jay. You are right though, it depends on the person's situation. If they qualify for the credit, are currently renting and paying over say 1,200 a month in rent for a house, than why not pay that or less towards your own mortgage?

    **Charles´s last blog post..First Time Home Buyer Tax Credit</abbr></abbr>

  19. Good Advice! One of the biggest factors that says it is a great time to buy is the fact that you can purchase a home cheaper than what it can be built for. I've seen some homes foing for $50/ sq. ft.

  20. Impressive post as for all time.

  21. I love the answers from real estate agents. We are an optimistic lot. :)

  22. I also noticed the types of homes in foreclosure in Phoenix and I rather spend there then buying a home here in Miami because of the price differences, shown at http://brydasilva.com/category/foreclosure

  23. I just had my friends down from Seattle and took them to a foreclosure I sold out in Palm Valley that was 3,300 square feet on the course and brand new. They couldn't believe the value (either can I). You're definitely right though, it depends on each individuals specific goals.

  24. Sometimes I do wish we had a magic 8 ball to predict when the bottom would be. I would agree though, the time to buy is when it is financially sound for the buyer and makes sense for their situation.

    **MaryAnn Knell-Peoria Real Estate´s last blog post..“It’s Better Here”</abbr></abbr>

  25. There are some wonderful deals out there for qulified buyers, so if it works in your budget, and your job is secure, then it isn't a bad time to house hunt.

    **Margaret Safford-Metro Atlanta Real Estate´s last blog post..Does the Metro Atlanta Real Estate Market Mimic the New HGTV Shows?</abbr></abbr>

  26. Esko Kiuru says:

    Jay,

    As you clearly indicate, it could be an excellent opportunity to buy a house in Phoenix now so long as many other things fall into place for the buyer. Does he qualify for a mortgage in this environment, for instance? Price-wise, yes, a solid buyer's market. Here in Las Vegas today's housing scene is very similar to yours.

  27. Jay, that was a wonderful fair and balanced overview of your market-the same could be said anywhere right now, and that is a great point to make. It doesn't matter what deals are out there-if you can't afford to buy-and make the payments-, then no time is good. And vice-versa.

  28. Fair statements to make for any market, and very sound advice.

  29. With all the money coming into the market and the drop in prices, it has to be a good time to buy. It is always better to buy when there are more sellers and sell when there are more buyers.

    My best answer to buying and selling a home, not withstanding that you must buy or sell, relocation or larger family etc causing you to act, you should consider the following.

    When the market is so good that it is unbelievable, it has been raising in double digit percentage increases for 3 years straight, everyone is convinced that it is going extremely higher, your neighbor buys a new Mercedes Benz and only makes 100k a year, your real estate broker tells you to name your price for your house, you know 3 people going to get their real estate license, you should sell. I mean if that is what you needed to do anyway.

    When you hear that the market is going much lower after it has dropped two years in a row, all the people that went to real estate school now work at Macy’s, a few of your good friends have lost their job. There are for sale signs every where and finally some are gone, it is reasonably hard to get a mortgage, you are afraid of the market going lower yourself, everyone tells you not to buy. The newspapers and TV have for sometime said the market is terrible, the stock market is in bad shape. It is time to buy!

    Richard

  30. Russ says:

    "Mercedes Benz and only makes 100k a year, your real estate broker tells you to name your price for your house, you know 3 people going to get their real estate license, you should sell. I mean if that is what you needed to do anyway."

    "When you hear that the market is going much lower after it has dropped two years in a row, all the people that went to real estate school now work at Macy’s, a few of your good friends have lost their job"

    I say wait until the Macy's stores and Benz dealerships shut down. That should be a year, tops.

  31. Over half the home sales in Arizona are lender foreclosures. As the recession worsens and foreclosures increase the price of available homes should continue to decline. Compared with last year the market looks rich in bargains, but there may be plenty of better deals soon enough.

  32. Jack says:

    Most believe that we have arrived at the halfway point in the financial crisis, so yes, now would be an excellent time to buy property if you haven't been hit that hard.

  33. We aren't at the bottom of the pit yet, but nearly. Around mid this year would be the best time to buy and will help guarantee you'll get a house for as cheap as possible. Wait to long though and you risk the prices beginning to rise again.

  34. Houses and property in urban areas is the cheapest and the best ones to buy at a time like this. When everything clears up their value will skyrocket. Rural areas are still more expensive and luxury locations have seen little change.

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