Trying to navigate the current Metro Phoenix real estate market? Increase your budget and lower your expectations.
We buyers are like drug addicts looking for our next fix – to snag our dream home, no matter the price. “I can do it”, we say. “What’s a few thousand dollars more than my budget?” »
Buying a home, often the most important purchase most Americans will make, has undergone a fundamental transformation, especially in Arizona. This may be a long-term project, given the realities of supply and demand. Many properties are being sold unevaluated and “as is,” with neglected mechanicals, shuttered painted windows, and roofs in dire need of repair.
Even if you have the best home inspector, it’s buyer beware!
Sellers expect buyers to make every concession
I’ve heard horror stories from friends, not to mention my own personal experiences. It’s a meat market out there and if you’re not a seasoned scammer, you better watch out for the pros: agents, investors, and most importantly, salespeople.
You’ll be stomped on like you’re mud under their feet, but on the count of 10 you’ll bounce back ready to make the next offer using magic words like “higher offer”, “escalation clause”, “no escalation”. ‘Evaluation”. and “quick close”.
The median home price is expected to hit a record high of $425,000 in December, according to Catherine Reagor of the Arizona Republic, up $92,000 from a year ago.
Most sellers expect buyers to pay HOA transfer fees, warranties, and any other monies owed. Many want to rent out their homes for months after closing, for free, to enjoy the Arizona winter before packing their bags.
A real estate agent told me this week that I could not visit a property if there was no signed contract because the tenant was not comfortable with visits. If you disagree with a deal like that, the seller will simply go to the next highest bidder with unreasonable demands.
And the funny thing is that the buyers give in.
On average, Phoenix homes sell after 30 days on the market, Redfin reports, compared to 32 days in 2020. About a quarter of homes sold from June 2020 to June 2021 were sold to cash buyers.
“We’re on a feeding frenzy,” officers tell us
Some real estate agents will tell you anything to get the highest offer. Maybe they have three or four other contracts going on, or maybe just a verbal commitment, but they’ll say their ad is sure to be $50,000 to $80,000 higher than the asking price because that’s “the market today”.
The answer to all your pricing questions is always the same: “We’re on a feeding frenzy.”
And don’t bother asking why the seller is moving – it’s usually “he wants to be close to his family”. They no longer use the “offshoring” excuse as many people are now working remotely.
But you never hear, “it’s about picking up the moola, cashing in your chips, and scoring big.”
The housing bubble of 2007 was created by the mortgage industry. This is different. The frenzy then rested on a false request. The banks lent to everyone.
Our current housing shortage has attracted big investors, but there are also a lot of people who need to rent and people who want to buy. An average of 244 people a day moved to the Phoenix area from July 2019 to July 2020, according to the U.S. Census Bureau, making it the top metropolitan area for migration for the third straight year.
So now investors are buying properties to make rentals, not high-end flips. I bid on a condo three weeks ago, but lost out to a landlord who had six other rentals and wasn’t particularly attentive to repairs to doors, windows or appliances.
A few tips for navigating this madhouse
What did I learn?
- If the photos online are unattractive or the size of a postage stamp, something is wrong. It could be a converted apartment complex disguised as a condo. Maybe all the windows have faded, faded canvas awnings hanging over broken panes and ragged screens. Maybe the facade is painted a hideous yellow, or it really is a walk-up floor with narrow metal stairs.
- If you’re the type who enjoys witnessing the mayhem in person, make an appointment. But be prepared for unexplained annoyances: dirty dishes piled up in sinks, broken drawers, toilets that won’t flush, and garage doors that never open.
- Always check the parking situation: covered or uncovered, nearby or 800 meters away, and how many smashes and grabs have occurred in the last year.
The most important advice I can give you is to find the right real estate agent, not a friend of a friend or the listing agent because you think that’s your “in”. It’s not. Do your homework and choose someone who is honest, understands what you are looking for, and tells it like it is, not how it wants it to be.
I want a house that the previous owner loved and cared for. I want a home that I can make my own, not a place that was built quickly with substandard finishes and second-hand appliances.
I am still at the heart of this real estate market madness. This week, I lost a tiny 1920s one-bedroom, one-bathroom bungalow to an investor who offered over $75,000 above its list price. The house was on the market for three days and had 13 offers.
How do you compete with that?
But I’m not ready to give up the search. The trick to finding the right home in this market is caution, common sense, and sticking to a budget that feels right for you. Even if you lose a few deals in the process, there’s always a better one “coming up”.
Terry Ratner is a registered nurse and freelance writer who lived in Arizona for over 30 years before moving back to Chicago. After braving the cold for a few years, she is back in the Valley looking for a seasonal home. Contact her at [email protected]