Trying to navigate metro Phoenix’s current housing market? Raise your budget and lower your expectations.
We buyers are like addicts looking for our next fix – snagging the house of our dreams, no matter the cost. “I can do it,” we say. “What’s a few thousand dollars over my budget?”
Buying a home, often the most important purchase that most Americans will ever make, has undergone a fundamental transformation, especially in Arizona. It’s possibly a long-term one, given the realities of both supply and demand. Many properties are being sold without an appraisal and “as is” with neglected mechanicals, windows painted shut and roofs in dire need of repair.
Even if you have the best home inspector, it’s buyer beware!
Sellers expect buyers to make all the concessions
I’ve heard horror stories from friends, not to mention my own personal experiences. It’s a meat market out there and if you aren’t a seasoned hustler, you better watch out for the pros: agents, investors and, especially, sellers.
You’ll be stomped on as if you are mud under their feet, but by the count of 10, you’ll bounce back ready to make the next offer using magic words like “bid higher,” “escalation clause,” “no appraisal” and “quick close.”
The median home price was expected to reach a record $425,000 in December, according to The Arizona Republic’s Catherine Reagor – $92,000 higher than a year ago.
Most sellers expect buyers to pay HOA transfer fees, warranties and any other monies due. Many want to lease back their homes for months after closing, for free, to enjoy the Arizona winter before packing up.
A real-estate agent told me this week that I couldn’t visit a property unless there was a signed contract because the renter was uncomfortable with showings. If you aren’t good with a deal like that, the seller will just go to the next highest bidder with unreasonable demands.
And the funny part is, buyers cave.
On average, homes in Phoenix sell after 30 days on the market, Redfin reports, compared to 32 days in 2020. About a quarter of the homes sold from June 2020 to June 2021 were sold to cash buyers.
‘We’re in a feeding frenzy,’ agents tell us
The median home price in metro Phoenix was expected to reach records again in December.
Some real-estate agents will tell you anything to get the highest offer. Maybe they have three or four other contracts in hand, or perhaps just a verbal commitment, but they’ll say their listing is sure to go $50,000 to $80,000 over asking price because it’s “today’s market.”
The answer to any of your pricing questions is always the same: “We’re in a feeding frenzy.”
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And don’t bother asking why the seller is moving – it’s usually “they want to be close to family.” They no longer use the “relocation” excuse because many people now work remotely.
But you never hear, “it’s all about raking in the moola, cashing in your chips and scoring big.”
The housing bubble in 2007 was created by the mortgage industry. This is different. The frenzy then was based on a fake demand. Banks were lending to anyone and everyone.
Our current housing shortage has attracted large investors, but there also are a lot of people needing to rent and people wanting to buy. An average of 244 people per day moved to the Phoenix area from July 2019 to July 2020, according to the U.S. Census Bureau, making it the top metro area for migration for the third year in a row.
So, now investors are buying properties to make them 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 particular about repairs on doors, windows or appliances.
A few tips to navigate this madhouse
What have I learned?
If the online photos don’t show curb appeal or are the size of a postage stamp, something is wrong. It might be a converted apartment complex disguised as a condo. Perhaps all the windows have ragged, faded canvas awnings hanging over broken panes of glass and shredded screens. Maybe the front is painted a hideous yellow, or it’s really a third-floor walkup with narrow metal stairs.
If you’re the kind that likes to witness chaos in person, schedule an appointment. But be prepared for unexplained funk: dirty dishes stacked in sinks, broken drawers, unflushed toilets and garage doors that never open.
Always check the parking situation: covered or uncovered, nearby or a half-mile away, and how many smash and grabs have occurred in the past year.
The most important tip 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’re looking for and tells it like it is – not how they want it to be.
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I want a house that the previous owner loved and cared for. I want a home I can make mine, not a place that was put together fast with substandard finishes and second-hand appliances.
I’m still in the thick of this housing market craziness. This week I lost a small, one-bedroom, one-bath 1920s bungalow to an investor who offered more than $75,000 over its list price. The home 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 house in this market is caution, common sense and sticking to a budget you feel is fair. Even if you lose a few bids in the process, there’s always a better one “coming soon.”
Terry Ratner is a registered nurse and freelance writer who lived in Arizona for more than 30 years before moving back to Chicago. After braving the cold for a few years, she’s back in the Valley looking for a seasonal home. Reach her at email@example.com.
AUTHOR: Terry Ratner