Why is Phoenix real estate so expensive?
From 2021 to 2022, Maricopa County — which contains much of greater Phoenix — added 57,000 people, registering the largest population growth in the nation. As the Federal Reserve lifted interest rates to lower inflation, mortgage rates increased sharply, raising the costs of buying homes.
The Phoenix MSA has consistently experienced robust population growth. According to the U.S. Census Bureau, Phoenix was one of the fastest-growing cities in the United States. The increasing population creates a steady demand for housing, making it an attractive market for real estate investment.
Con: Slightly Higher Cost of Living
The BestPlaces cost of living score for Phoenix is 113, which includes the typical necessities of things like food, healthcare, taxes, and transportation. This is more expensive than both the state average of 106.4 and the national index of 100.
The months from March to June are the best time to buy a house in Arizona. This is due to the higher inventory, increased competition among sellers, and potentially lower asking prices.
Home Buyers: Likely to increase as mortgage rates stabilize. Home Prices: Set to continue rising due to the low supply-high demand dynamic. New Home Construction Sales: Expected to increase by 3.5% in 2024. iBuyers: May continue making lowball offers due to market struggles.
How much income do you need to buy a starter home in Phoenix? The median sale price of a starter home in Phoenix is $330,000. In order to afford this, first-time homebuyers in Phoenix should make $101,321 per year, up 6.6% from 2023.
Zoom in: Zillow senior economist Nicole Bachaud predicts that home prices may decrease marginally during the first half of the year as consumers come to terms with interest rates that are unlikely to drop to the historic lows we saw during the pandemic.
| Annual Salary | Monthly Pay | |
|---|---|---|
| Top Earners | $50,638 | $4,219 |
| 75th Percentile | $40,700 | $3,391 |
| Average | $32,999 | $2,749 |
| 25th Percentile | $29,800 | $2,483 |
The annual salary needed for a single adult to live comfortably is $126,797. The combined salary for two working adults with two children is $291,450.
Upper Class Salary in Phoenix, AZ. $37,918 is the 25th percentile. Salaries below this are outliers. $66,113 is the 75th percentile.
Will 2024 be a better time to buy a house?
Many prospective homebuyers chose to wait things out in 2023, in the hopes that 2024 would bring a more advantageous market. But so far, with mortgage interest rates still relatively high and housing inventory stubbornly low, it looks like 2024 will remain a challenging time to buy a house.
Because homes in Arizona are going up in value. This will help you build wealth. According to Zillow, the average house is expected to increase in value by just over 4% in the next year. So, for example, if you buy a home for $150,000 you should gain a little over $6000 in equity just in the next year.
It depends on the kind of mortgage loan you secure. According to Arizona Realtors, the median-priced home in Arizona in December 2023 was $352,536. A 20 percent down payment on a home of that price would come to $70,500, but some mortgages require much lower down payments.
Since last year, Phoenix has remained a Seller's Market. Phoenix is a Sellers Housing Market, which means prices tend to be higher and homes sell faster.
He expects the housing market to remain flat in 2024. "We're going to continue in a flat market with positive job growth and positive migration, so people are still moving here," Daniel said. "Jobs are still being created about the same level as they were last year.
Realtor.com is predicting 4.4% year-over-year sales growth in metro Phoenix in 2024, but is expecting a 4.3% drop in year-over-year price growth during that same span.
If you make $70K a year, you can likely afford a home between $290,000 and $310,000*. Depending on your personal finances, that's a monthly house payment between $2,000 and $2,500. Keep in mind that figure will include your monthly mortgage payment, taxes, and insurance.
If you make $30,000 a year, you could probably spend about $110,000 on a house, assuming you get a 30-year fixed-rate mortgage at 6 percent. This is a rough estimate. Your unique financial situation may be different. Getting a pre-approval from a lender is the only way to find your actual price range.
“Individuals with a salary of $75,000 a year should aim for a home price ranging from $150,000 to $225,000, which would yield a mortgage payment of $998 to $1,497,” said Miles, who cautioned to budget for costs beyond the loan itself.
As of January 2024, the median home price in Arizona is reported to be around $433,200, marking a year-over-year increase. This figure underscores the current state of the real estate market, reflecting both the recent increases in value and the resulting impact on affordability.
Why are Arizona home prices so high?
Arizona's housing market is in high demand owing to a growing population, and a shrunken housing inventory. iBuyers Will Continue to Make Lowball Offers: iBuyers offered 104.1% of market value in 2021. They offered 86% in 2022 and around 70% in 2023.
Phoenix Housing Market Trends
In February 2024, Phoenix home prices were up 13.6% compared to last year, selling for a median price of $454K. On average, homes in Phoenix sell after 50 days on the market compared to 72 days last year. There were 1,248 homes sold in February this year, down from 1,375 last year.
- Ahwatukee Foothills.
- Deer Valley.
- North Gateway.
- North Mountain Village.
- South Mountain Village.
The research found in Phoenix, the median household income is $68,435 with the middle-class income ranging from $45,851 to $136,870.
Here's what it costs to live comfortably in Phoenix
According to the study, a Phoenix-area resident without children would need to make $65,670 after taxes to live comfortably. The study is based on the MIT Living Wage Calculator, which uses the cost of housing, food, transportation, medical care and more.
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