Unless you’ve been hiding in your coronavirus bunker, you’ve probably heard that it is a red-hot real estate market here in Arizona. Houses are selling very quickly with multiple offers. We had one house we listed the other day get 57 offers in a weekend!
So, there are two main topics I’m going to be covering in this post.
- How did it get this way?
- How can you profit from it?
Let’s dig in.
How did the market get this way?
A lot of people are wondering, why hasn’t the shutdown and the resulting unemployment slowed the demand for properties. Well, there are a couple of reasons. The first of which is that a lot of the jobs lost were not by people who were buying homes but rather by those in temporary jobs or in the service industry who are more commonly renting. That is not to say these are not incredibly difficult times for these people, and it is obviously terrible but it doesn’t really impact the housing market that much.
In fact, we’ve seen an increase in demand, in part because people are home a lot more. They’re looking around asking themselves, “Is this where I want to be?” or “Do I need that extra bedroom for my home office?” We’re seeing lots of demand from people just wanting to make a change.
Now, before moving onto the second main point of this post, I want to sidestep for a second and cover another common question we’ve been getting a lot.
Why are there not more foreclosures going on right now?
Again, this is in part because most job losses have been experienced by people who don’t own homes. Now, they are renting from landlords and the landlords may not be collecting as much rent, but they’ve still got plenty of equity in their property and they can lower the rent should they need to. There are always people looking to rent. And, on top of all this, landlords always have the option of just selling their property should they need to.
How can you make a profit in this current housing market?
Well, this is why I’m sure you’re all here, so let’s get to it.
I’ve been getting calls each week from people in California who are looking to move to Arizona. And Arizona’s great. It’s a friendly place with a lot of different businesses and people in different tax brackets. Right now, we’re the third fastest-growing state in the country. Another main reason we’re seeing this influx is that interest rates are super low, which really does incentivize people to get out of that rental apartment and look into buying a home.
So, because of all this demand and the fact that there aren’t really any foreclosures coming, a big reason we’re seeing this crazy red-hot market is because there is a low supply. In recent years, as well, labor demand has gone up so the machine of building new houses has slowed down. Because of all this, we’ve got a scenario where there’s a lot of demand making it a red-hot seller’s market. Demand is only getting higher.
So, what does this mean to you? How can you profit from this?
Well, my first piece of advice is to do whatever you were already planning. If you were going to sell, sell. If you were going to buy, buy. If you’re going to buy a rental, buy a rental. It’s very hard to time markets, so who knows when this thing is going to slow down. I always tell people, let your life be the dictator of what you’re going to do in terms of housing. Now, even so, I’m going to walk through a few scenarios for some help in case you’re needing it.
If you’re planning on buying, I wouldn’t wait. Interest rates are crazy good right now and we’re seeing prices going up, with appreciation around 10%.
If you’re going to sell and move up to a bigger, more expensive property then I would do that as soon as possible. Because if you’re buying a more expensive home, yes, your house is appreciating, but that more expensive home is too. And it will only get more expensive the longer you wait in this market.
If you’re downsizing and you’re not in a hurry, then I would wait because your big expensive house is appreciating very quickly. So, I’d wait it out a bit and try to time it in the market.
And if you’re thinking about investing, like buying a rental property, and you have the funds and the desire to do so, now’s a good time to do that as well.
Now, if you weren’t planning on doing anything, well then, just hang on tight and enjoy the house. And in a year from now, it might be worth another 10% more than it is today, and you can reevaluate your options then.
To wrap it all up
I hope you’ve found this helpful in orienting yourself in this red-hot market. Go and make the most of it, whatever that means to you!
And if you need any help, if you want to know how you can get into that next property, how you can sell, what your home’s worth today, or any other questions, let me know. We’d be happy to help you out. You can shoot us a message at firstname.lastname@example.org or give us a call at (480) 378-6700.