Turn The Holiday into your permanent home — no online swap or bad breakups required.
The house that served as the exterior of Cameron Diaz’s California mansion in the popular film can be yours: It’s now on the market for $11.8 million with realtors Brent Change and Linda Change of Compass.
Alamy
Although it was technically home to Diaz’s high-powered character, Amanda, it was Kate Winslet’s Iris who spent the most on-screen time at the 7-bed, 6-bath estate. The exterior and backyard were the only two spaces to be featured in the movie (the stunning interiors were likely sets crafted by design queen Nancy Meyers), but there are plenty of camera-ready features this “landmark two story” has to offer.
Don Lewis
Don Lewis
Potential buyers enter the property, which was designed by architect Wallace Neff, through a set of gates that open into the façade’s court. The centerpiece of the striking welcome is a center fountain, surrounded by plants. The rest of the grounds are no less extravagant, and include a formal rose garden, an inner courtyard, a spa, a pool, a tennis court and a BBQ area.
Don Lewis
Don Lewis
In the living room, original details like coved ceilings, iron sconces and an oversize fireplace welcome guests. A stunning library with a carved wood ceiling is another standout, but a second family room that opens out to the pool is equally impressive.
Don Lewis
Don Lewis
The kitchen boasts hand-painted tile, a generous sized island and an adjacent breakfast area. A basement media room and formal dining room also come with the San Marino property.
Though the star-studded cast — which extends to the main ladies’ love interests, played by Jack Black and Jude Law — won’t likely be hanging around, the new owners will feel almost as famous after scooping up this Hollywood retreat.
Owning your own home gives you assurance that your monthly housing costs will never go up, (assuming you get a fixed-rate mortgage). Landlords can jack up your rent when you are least expecting it.
But home ownership also comes with added responsibility. When something breaks in your rental unit, it's a quick call to the landlord to get it fixed. Homeowners are on the hook for both making and financing any repairs.
It's a big financial leap to becoming a homeowner. Experts recommend asking yourself these questions before you start out house hunt:
Do you know how much you can afford?
Take the time to calculate how much home you can afford to buy.
This isn't the time to ballpark numbers. Overcommitting to a mortgage payment can leave you house poor, meaning there's very little money left over at the end of the month for other things.
Add up all your spending, including current rent, food, transportation and discretionary expenses like travel, eating out and entertainment Don't forget to include debts like student loans and car payments.
Once you know how much you have coming in and going out each month, determine a number you can afford to spend on housing.
Generally, personal finance experts recommend aiming to spend around 28% of your monthly income on housing.
Getting pre-approved for a loan will also help give you a sense of your housing budget. But note thatjust because a bank agreed to give you a loan, doesn't mean you have to spend that much.
"In my experience, [lenders] are always trying to get [buyers] to buy a home for more than they can afford or are comfortable with," said Francine Duke, a certified financial planner in the Chicago area and former mortgage underwriter.
Do you have a down payment?
You don't need a 20% down payment to get a loan. But putting more down can work in your favor. It can help you get better lending rates, beat out the competition in hot housing markets and will lower the amount of interest you pay over the life of a loan.
You can get a mortgage with as little as a 3.5% down, but anything less than 20% means paying private mortgage insurance (PMI), which will increase your monthly payment.
Working to save for a large down payment shows financial responsibility and gets you used to living on a strict budget.
"When you really work to save enough to get 15%-20%, it shows you have a meaningful commitment," said Bill Van Sant, certified financial planner and senior vice president at Univest Wealth Management.
Will you have money left over after closing?
Your bank account shouldn't be zero after closing.
You should still have an emergency savings fund that will cover around three to six months of living expenses on hand.
In addition to the emergency fund, Van Sant recommends having six to nine months of mortgage expenses available.
"First-time homebuyers are typically looking at older homes because of their lower price point, and they require more work. You need that 'hanging around' money, in case the A/C or heater goes."
Is your credit in good shape?
You want to get your credit score as high as possible when shopping for a mortgage. The higher the score, the better the lending terms and rates.
A credit score of 750 and up is generally considered excellent and will make you the most attractive borrower.
Have you paid down other debts?
Your debt-to-income ratio plays a major role in the health of your finances.
You can calculate your debt-to-income ratio by adding up all your monthly debt payments and dividing it by your gross monthly income.
The general rule of thumb is your debt should not exceed 43% of your available credit to take out a mortgage.
Where do you see yourself in five years?
If you don't plan on staying in an area for more than a couple of years, buying a house might not make financial sense.
The huge upfront investment including the price of the home, plus the added costs like taxes, closing costs and escrow fees, might take a while to pay off.
"Make sure you have roots there and will be staying," said Van Sant. "Some Millennials have no problem not being tied down to an area and jump around the country ... buying might not be the best bet if you don't plan on sticking around."
Buying a home is a major financial undertaking, so much so that a growing number of Americans are struggling to meet that milestone. For one thing, the homeownership rate among Millennials has dropped in recent years, due in part to a limited inventory of starter homes, and also to student debt payments monopolizing so much of younger workers' income.
Gen Xers are having a hard time buying homes as well. Between credit card debt and child care expenses, many workers in their 30s and 40s don't have the funds on hand to take that leap.
The problem, of course, is that those who put off homeownership lose out on key tax breaks for as long as they continue to rent.
If you're looking to become a homeowner, but you're finding it difficult to meet that goal, here are a few tips to make the prospect of buying more affordable.
1. Rework your budget
You might think you don't have much leeway when it comes to saving money each month, but if you're willing to take a long, hard look at your budget, you'll probably come to find that there are some expenses you can manage to cut, whether it's the cable plan you can afford to downgrade or those daily lunches you know you can prepare yourself. Reworking your budget is apt to get you closer to your goal of buying a home, so comb through your expenses line by line and figure out which are less important to you. Then, pledge to reduce or eliminate those spending categories and bank the difference.
2. Get a side hustle
Many people think of side hustles as a way to drum up a little extra spending money. But if you're willing to put in the time, that second gig could help you save some serious cash. Among the estimated 44 million U.S. adults who currently have a side hustle, 36% earn over $500 a month from that extra work. And that could help you reach your homeownership goal way faster than by just cutting corners here and there.
3. Consider the suburbs
It's often the case that you'll get more for your money in the suburbs than in a city. If you're struggling to come up with a down payment that'll buy you more than a shoebox in your local metro area, consider expanding your search perimeter to its surrounding towns. Many suburbs offer convenient public transportation options that allow you to commute to work while enjoying the benefits of cheaper housing and bigger living spaces than what you'd find in a city.
4. Boost your credit score
Though having a strong credit score won't help you come up with a down payment, it will help you qualify for the best possible mortgage rate available, thus making the prospect of homeownership more affordable on the whole. Therefore, if your score isn't stellar, it pays to take steps to raise it as quickly as possible.
You can accomplish this in a number of ways. First, make a point to pay all of your bills on time. Secondly, aim to pay down a chunk of whatever outstanding balances you're carrying. This will alter your credit utilization ratio, which is a major component of determining your score. Finally, review your credit report thoroughly for errors. One in five credit reports contains a mistake; correcting yours could send your score into more favorable territory.
5. Tap your IRA
Though this should only be used as a last resort, if you're really having a hard time saving for a home but are tired of throwing out money on rent, you have the option to remove up to $10,000 from an existing IRA in order to purchase your first home. Normally, withdrawing funds prior to age 59 and 1/2 would subject you to a 10% penalty, but the IRS allows this exception for first-time homebuyers.
But again, this option is far from ideal, because any time you remove money from an IRA, that's less income you'll have available in retirement. Furthermore, it's not just that principal amount you're losing out on during your golden years, but the growth it could've achieved over time.
Still, if you're desperate, you might choose to take an early withdrawal and make that homeownership dream come true. As a compromise, you might decide that whatever tax savings you glean from owning will go directly into your retirement plan to compensate for the sum you withdrew.
It's been a long, hard road to recovery for metro Phoenix's boom-and-bust-battered housing market.
But some Valley neighborhoods are there — back to 2006 price levels, and higher. And other neighborhoods are very close.
As expected, millennial first-time homebuyers are propelling the recovery.
Metro Phoenix home prices are rising the fastest in many of its most affordable, centrally located neighborhoods, from downtown Phoenix to central Mesa, where young buyers want to live and can afford houses.
2017 was a good year for the housing recovery in the Phoenix area. Almost one-third of the Valley’s ZIP codes posted double-digit-percentage increases in prices last year, according to The Arizona Republic/azcentral Street Scout Home Values report.
Street Scout is azcentral's neighborhood and housing site that provides property valuations, home sales data, real estate news and listings.
But there is concern buyer demand for affordable homes is beginning to outpace the supply. And there's always worry in Arizona about the possibility of another housing bust when prices climb for a few years.
Recession rebound
In nearly 30 Phoenix-area neighborhoods, prices have rebounded to 2006 levels or even higher, data from The Information Market shows.
Most of those areas still have median home prices below $300,000.
“Last year was a strong one for the Valley’s housing market, particularly the more affordable neighborhoods closer in,” said Tina Tamboer, senior housing analyst with the Cromford Report. “Only 2004, '05 and 2011 were better years for home sales, and those weren’t normal years.”
The housing boom inflated home prices and sales between 2004 and 2006, and then investors drove up sales as foreclosures climbed and prices plummeted from 2010 to 2012.
Home prices have doubled in many Phoenix-area neighborhoods since the bottom of the market. Besides the 30 ZIP codes where home prices have bounced back from the crash, values in another 40 neighborhoods are within 10 percent of recovering.
Fastest-growing home prices
Aysia Williams and Benjamin Hughes rented in downtown Phoenix’s historic Woodland district for about a year before deciding to buy their first home.
“We fell in love with the area, but saw prices and rents climbing fast,” Williams said. “We knew we wanted to buy, but there was a lot of competition for the houses we liked.”
Woodland is part of the 85007 ZIP code,one of central Phoenix's more affordable neighborhoods. The area, which has also attracted many investors, saw its overall median home price climb 10 percent to more than $192,000 in 2017. Sales in the area jumped nearly 20 percent last year.
Home prices in their neighborhood on the western side of downtown have rebounded from the crash and are almost 2 percent higher than they were in 2006.
“Aysia and Benjamin were so lucky and bought from their wonderful neighbor, who didn’t want to sell to an investor,” said Sherry Rampy, a downtown Phoenix real estate agent with HomeSmart.
The couple’s house, for which they paid less than $250,000 a few months ago, wasn’t even listed for sale.
“People talk about the gentrification of central Phoenix pricing too many first-time buyers out," Rampy said. “But more high-end home sales in the area help other more affordable areas like Woodland and Coronado improve, too.”
'First-time homebuyer market is exploding'
Stephanie Silva and Billy Horner moved to Chandler from Chicago for the warmth last March.
“We wanted to rent first to see if we liked the area and a 'shovel-free life,' " said Silva, who works in Tempe. Horner works in downtown Chandler.
The couple recently bought a home for under $275,000 in the central Mesa ZIP 85210, almost halfway between their jobs. Prices in the still-affordable neighborhood climbed 9 percent, and sales rose 38 percent last year.
Home values just rebounded back to 2006 levels in their neighborhood, where the median price is about $215,000.
“We are on a quiet, cozy block in a home with a pool and a yard,” Silva said. “So far, it is everything these Midwest transplants could ask for.”
The couple’s real-estate agents Matthew and Tia Coatesof Chandler-based Revelation Real Estate said if more people don’t decide to sell in the popular, affordable neighborhoods closer in, then it will soon get even tougher for first-time buyers.
“The first-time homebuyer market is exploding. So many people are done with renting and dealing with landlords,” Matthew Coates said. “But we are seeing a deficit of homes available.”
The number of Valley homes for sale priced under $350,000 is down almost 20 percent from last year, according to the Cromford Report.
Some potential buyers are giving up
Nils and Heather Hofmann began looking for a home midway between their jobs in Deer Valley and Chandler more than a year ago. Their budget was $300,000.
The couple, who was renting in north-central Phoenix, put their home search on hold last fall after seeing dozens of houses. The ones they liked usually sold before they could get an offer in.
“I think we must have seen more than 80 houses,” Heather Hofmann said. “We wanted to buy where we were renting, but prices were too high.”
The couple decided to stop looking for a while late last summer because it became too frustrating. But then they found out Heather was pregnant, resumed their search and upped their price to $400,000.
The Hofmanns bought a home last month in north Phoenix’s Desert Ridge neighborhood, close to several freeways for their commute.
The median home price in the Desert Ridge area is about $485,000, up 5 percent from 2016.
David Meek of Keller Williams Arizona Realty said the Hofmanns saw the house they bought on the day it was listed and made the first offer. A couple of offers quickly followed theirs, but they got the house.
“Several of my first-time and move-up buyers have quit or paused their home search due to lack of acceptable inventory,” said Meek, who is about to put his own north Phoenix house on the market for $250,000 to move a bigger one farther north for his growing family.
His client, Bonnie Jordan, who rents in the upscale Kierland community and works in north Scottsdale, doesn’t want to move too much farther out to buy her first home. Rising prices have made her decide to put her home-buying search on hold.
“I have been looking for a home to buy for the past few years. Whenever we found one for around $200,000, the investors swooped in first,” she said. “I don’t want to move far out west and take my son away from his school. I am done looking for a while.”
Looking farther out
Valley real-estate agent Diane Brennan of Coldwell Banker is working with a first-time buyer who is looking to the West Valley suburb Buckeye because that's the only place he can afford to purchase.
Before the housing market crash, the "drive until you qualify" mentality was how many buyers were able to afford their first houses in the Valley. The farther out they went, the lower the prices on the houses.
The metro Phoenix suburbs farthest out were hardest hit by the crash and have been the slowest to recover.
But both sales and prices are again climbing in those areas, including the West Valley suburbs of Goodyear, Surprise and Buckeye and southeast Valley areas of Queen Creek and Maricopa.
The median home price in the Buckeye ZIP code 85326 is up almost 10 percent from last year to $192,000. But the area's home values are still about 19 percent off the 2006 peak.
Will this be the year?
Metro Phoenix home prices continue to climb in most neighborhoods.
The median Valley home price is now about $253,000, up from $235,000 a year ago.
Some homeowners and national market watchers see price increases in the Valley and are concerned about another bubble.
“The housing market is very solid now. The deals are gone, but that’s not a bad thing,” said veteran real-estate agent Joseph Callaway, who with his wife, JoAnn, are the team known as "Those Callaways." “But there’s nothing that shows we are heading for another crash."
Metro Phoenix’s December 2017 median price of $250,000 is still below the high of $260,000 from 2006.
Housing market watchers say 2018 could be better than 2017 for prices and sales.
Whether this is the year the area’s median market reaches that 2006 level depends on whether first-time buyers can find homes they can afford.
“Either low inventory numbers for homes for sale will restrict sales because buyers can’t find houses in their price range or Millennials, the driving force behind our market, will be able to and decide to buy," said Tom Ruff, housing analyst with The Information Market, owned by the Arizona Regional Multiple Listing Service.
"That, coupled with an improving economy, will lead to increased sales in 2018," he said.
Spring has sprung, and what better way to celebrate the warmer temperatures ahead than taking some time to revamp your yard?
According to Houzz’s latest Landscaping Survey, homeowners are investing to make their outdoor spaces more livable — a plus since 27 percent of owners say these spaces are bigger than their home, and many use them for relaxing (62 percent) and gardening (44 percent).
Seventy percent of outdoor renovations take place in the backyard, while 39 percent take place in the front yard. Another 30 percent of owners said they revamped their side yards as well.
The most popular reasons for starting these projects included deteriorated or broken down outdoor features (29 percent) or repairs needed after severe weather or natural disasters (9 percent), with hurricanes (35 percent) and rainstorms (26 percent) being the main culprits.
In the backyard, homeowners primarily invested in lounge furniture (43 percent), followed by fire pits (38 percent), string lights (35 percent), dining furniture (34 percent), benches (27 percent), ceiling fans (15 percent), patio heaters (14 percent) and rugs (14 percent).
In the front yard, Houzz says homeowners focused on building major curb appeal with beds and borders (60 percent), perennials (56 percent) and shrubs (54 percent).
For sellers who are aiming to take advantage of the spring homebuying season, but don’t have the budget for major renovations, Houzz says planting eye-catching flowers and shrubbery in the front and side yards is sure to draw in potential buyers.
When it comes to the backyard, Houzz contributor Karen Egly-Thompson sayssellers should use their garden wall or fences to artistically hang flowers, vines and succulents, which are wildly popular.
Sellers who have an ample budget can create blended spaces, which refers to connecting indoor and outdoor rooms and spaces.
Photo courtesy of Andersen Windows.
According to HomeAdvisor’s Brad Hunter, homeowners and sellers can invest in outdoor kitchens, extended roofs and sliding glass patio walls for a “wow” factor. And when it comes time to sell, agents can capitalize on that extra livable space.
“Agents can help buyers to get over the sticker-shock by pointing out the potential to utilize the backyard as a living space,” Hunter said. “This could make a 2,000-square-foot home live a bit like a 2,200 square-foot-home. That’s a 10-percent reduction in the price-per-square-foot value ratio.”
A new community is going up in north Phoenix, different from any other neighborhood in Arizona — and maybe the U.S.
Luna Azul will have 30 cottage-style homes, 24-hour staff and a clubhouse for adults with specialized needs.
Unlike in other similar communities, these homes aren’t rentals. They are for sale, something developer Mark Roth believes makes the community unique.
Since residents will own their own homes, they will be able to customize their houses to fit their needs, and hire whatever level of help they need, he said.
Roth, a Seattle attorney, began working on Luna Azul a few years ago after looking for a home for his teenage daughter Emma. Emma was born with a genetic condition that impacts her physically, cognitively and emotionally.
"My wife and I would be up at night terrified about where Emma would live as an adult," said Roth, a Phoenix native. "We didn't want her to be isolated in a condo on her own and couldn’t find a group home that we felt would work."
The community, at 16th Street and the Loop 101, will have homes with two or three bedrooms, large porches and smart-home technology. They will be priced from the mid $300,000s to mid $500,000s.
Luna Azul will also be gated and have a full-time director.
Roth said he chose the Valley for its quality medical care, particularly for people with special needs, and because finding available land is easier and less expensive than in Seattle and other parts of the country.
Not the first
Metro Phoenix is becoming a hub for innovative housing developments for adults with specialized needs, and parents looking for homes for their aging children are leading the charge in building them.
"I believe today we are with housing for special populations in metro Phoenix where Del Webb was 50 years ago with Sun City and senior living,” said Denise Resnik, a prominent Valley leader whose son Matt has autism.
She has been working with others to create First Place with 55 apartments for adults with autism. It will have a training academy and institute for medical researchers. It opens in central Phoenix this summer.
The project has been held up internationally as an innovative development and helped garner Phoenix the title "most autism-friendly city in the world."
"For special populations, there is no one size fits all,” said Resnik, who has been worrying about where her son would live as an adult since he was a toddler. “We need pioneers to create different types of housing for our diverse population. Phoenix is a collaborative community for doing it."
Last year, Brenda and Kurt Warner, the retired Arizona Cardinals quarterback, opened Treasure House. Their son Zachary was the first resident to move into the Christian-based residential home in Glendale with studio apartments for young adults with intellectual and developmental disabilities.
Brenda Warner said the family checked out many residential places looking for an adult home for Zachary and were always disappointed.
"So many times, we came home distraught and upset that anyone had to live like that," she said in 2016.
Emma's new home
Construction of Luna Azul is planned to start in the next few months with the first residents, including 18-year-old Emma Roth, moving in during mid-2019.
"Luna Azul is a community suitable for adults with disabilities, providing them and others convenient access to services, vocational opportunities and urban amenities," said Roth. "We have designed the community for people with a wide breadth of disabilities."
Other residents who have signed up to buy in Luna Azul include a mom with a son who is able to drive and works at Home Depot and a young man who will live with his sister while she goes to Arizona State University.
Sean Zimmerman with LaunchPAD Sales & Marketing said initial interest from buyers in Luna Azul "has been overwhelming."
Roth said he wants to build a community where his daughter will not be alone.
"I envision a community where Emma gets invited to swim parties and makes lifelong friends," he said.
I recorded a quick video outlining some of the issues that our clients need to be aware of when looking into selling their current home in order to purchase a new one. We handle this transaction all the time, but it can be a complicated one comparatively. Make sure and do your homework before moving forward with any aspect of it!
Last year was a good year for the housing market homebuilding industry, according to data collected by Belfiore Real Estate Consulting, a residential market research firm that services all of Arizona. In fact, last year was good for Arizona’s residential real estate market with boosted home sales, prices, and agents making deals.
Demand for both new and resale homes was higher than a year ago, while supply was balanced by a limited resale inventory. And despite the shortage of resale inventory, 7 percent more resale homes sold in December of 2017 than the year before.
While the market has picked up in the past year, so has the number of people looking to capitalize on the hot market.
As of January 2018, the Arizona Department of Real Estate counted 45,326 sales agents and 12,128 brokers in Arizona for 57,454 active licensees in total, a 4.4 percent increase in just one year.
“Most of the increase is related to market health,” says Wendy Forsythe, COO of HomeSmart International, a technology-driven real estate company. “A positive year in the market means more people get licenses and 2017 was one of the best years for home sales in a long time.”
She noted two main reasons for this. One is that housing inventory is projected to increase as builders strive to meet demand and more sales require more agents. Second, higher home prices lead to better commissions, encouraging more people to become real estate agents.
One might wonder if having more agents competing for a limited housing inventory will result in changing commission rates to stay competitive. HomeSmart International thinks not, mainly because the trend hasn’t been seen in other markets.
For instance, markets like California that entered the downturn earlier (in 2010 or 2011) than Arizona recovered first and are now ahead in market growth. They have yet to see any indication of agents requesting higher commissions.
According to Forsythe, “This may be because, from a seller’s perspective, limited inventory means properties sell faster, requiring less time, effort and expense from an agent.”
However, Belfiore Real Estate Consulting reported that, starting in September of 2017, co-brokerage fees increased above the standard 3 percent in three of the four Metro Phoenix Area regions. Some of the submarkets that experienced the highest average co-brokerage fee were North Glendale (4.0 percent), Central Scottsdale (3.3 percent), North Scottsdale (3.2 percent), Sky Harbor South (3.2 percent) and Paradise Valley (3.2 percent).
However, this appeared to be only a temporary change. By November, only two regions in the Metro Phoenix area had higher than average commissions. Whether commission percentages will fluctuate during 2018 is yet to be seen.
Sales move forward
Compared with 2016, 11 percent more homes from homebuilders were sold in 2017. Typically, sales fall from November to December due to the holidays, but this past December saw 10 percent more homebuyers signing new purchase contracts than in December 2016. Throughout 2017, builders sold an average of 32 homes for every active community, resulting in almost 18,000 new production and semi-custom home contracts.
Overall, new home supply is up 6 percent, partly due to the proliferation of condominium units in the Metro Phoenix Area. Central and South has the most substantial new home supply, driven primarily by the North Central, Downtown and Biltmore East markets in the Phoenix metropolitan area. Apartments have been on the rise for the last five years, with all-time lows for vacancies in the last 36 to 48 months.
Though housing has become more expensive over the last few years, Metro Phoenix is still one of the most affordable western U.S. metropolitan areas, with the median home price for 2017 around $245,000. Sales of both new and resale homes in 2016 were higher than any year since 2006, and 2017 increased even further.
While the market was focused heavily on rentals after the financial crisis, buying is making a comeback.
“This is because the cost of renting in the Phoenix Metro Area is becoming less desirable than homeownership of a similar size,” says Jim Belfiore, owner of Belfiore Real Estate Consulting. “The laws of supply and demand suggest people will buy a home if they can afford it.”
Currently, increased job security is boosting people’s confidence and purchasing power, allowing more potential buyers to afford a downpayment. Furthermore, the foreclosure crisis that resulted in hundreds of thousands of repossessions and near-repossessions has officially passed. Foreclosures have reached near normal levels, falling 22 percent in 2016, and 28 percent by the third quarter of 2017.
Millennials entering and renters returning
One noticeable shift in 2017 was that Millennials are now reaching a point of financial well-being.
“Unlike previous generations, most Millennials have waited until their late 20s or early 30s to purchase their first home,” Belfiore says. “Now, a large percentage of Millennials are entering the housing market, increasing the percentage of first-time buyers.”
This trend is expected to continue for at least the next decade.
According to Homeowners Financial Group, a local mortgage banker specializing in the residential market, this transition is made easier by recent changes to conventional loan limits, which are allowing more first-time homebuyers into the market. Joe Conner, branch manager and licensed mortgage professional for HFG says, “The loan limit has been raised from $424,100 to $453,100, meaning that home buyers can purchase a more expensive home at a higher price point and still qualify for a loan.”
Due to this change in market subgroups and financial capability, as of 2017 the best-selling areas were new home communities with smaller, lower-priced lots, targeting entry-level buyers. However, these entry-level homes (usually under $300,000) may have a more limited inventory. Because of that, many first-time buyers may want these homes, but be unable to find them, leading them to continue renting or seek alternatives elsewhere.
Another subgroup showing signs of growth is in the older population that lost their homes during the financial crisis or sold out of necessity and began renting instead.
“Recently, credit agencies have changed their policies, choosing not to report certain judgments and liens on credit,” Conner says. “This can improve people’s credit scores, enabling buyers to get better interest rates and qualify when they may not have been eligible previously.”
With renewed confidence and repaired credit spurring them to re-enter the housing market, this older subgroup may begin buying homes again, alongside the Millennials who are buying a home for the first time.
Continued growth for 2018
This year should be healthy as far as the market is concerned.
“It’s the American dream to purchase your own house and most people will strive to achieve that,” Belfiore says. “Right now, we have a burgeoning population, a healthy job market and buyers with increased levels of confidence and financial wherewithal.”
Belfiore reports that out of the 555 active communities in Arizona, 56 percent have 32 or fewer lots remaining. This means that if builders can maintain their 2017 sales average, they may sell out within this year. However, this doesn’t necessarily mean the number of active communities will drop.
Fulton Homes is outwardly optimistic for 2018, according to CEO Doug Fulton.
“We see 2018 as a year we’ll be able to hang our hats on. All leading economic indicators look great and the trends in sales are surprisingly solid even in our typically slow months of November and December,” says Fulton. “It’s time again to bet on housing.”
For the first 10 months of 2017, 12 percent more construction permits were issued than in 2016, with a projected yearly total of 21,200. By 2018, that number is expected to be 23,500, and it could be 25,400 by 2019.
In general, new openings are increasing, while close-outs become slower. Smaller community builders with fewer than 20 lots are also entering the market, and these homes tend to sell less rapidly than the Phoenix Metro Area average.
Builders in high-volume sales areas, such as suburban and exurban submarkets, are upping inventory to be ready with a deliverable supply of homes. However, it should be noted that during the last two years, home construction costs increased 30 to 35 percent, so builders will most likely aim to raise prices to compensate and continue replacing land supplies.
Though construction costs are rising, the projected increase in appreciation, sales volume and continued lack of resale supply offer builders an opportunity to make up the difference. While the estimated new home appreciation rate for 2017 was 4.3 percent, appreciation rate is expected to move to 5 to 7 percent within the next year.
Looking ahead to the rest of 2018, there will most likely be an increase in new home sales. Builders are purchasing more land, developing new subdivisions, and working on more infill projects in urban areas, as well as vertical growth in the form of condos or town homes. However, though the 2018 market is expected to be strong, there are no dramatic increases projected.
“The lack of housing inventory has increased competition between buyers, resulting in more multiple-offer situations and much faster home sales, despite the rise in home prices,” Conner says.
In Phoenix, vacant lots are quickly being filled, as new construction projects commence. The question is, however, whether this "boom" will lead to a bust.
One real estate expert says no.
"Our economy, going forward, is projected to be nice and steady stable growth, which is awesome," said commercial real estate advisor Michael Marsh. He says people are seeing all that Phoenix has to offer, and are taking advantage of it.
"Phoenix has a deep and talented labor pool, especially in the tech field where companies are really discovering, and it hasn't been quite has broadcasted as loudly as it has been recently," said Marsh.
About 60,000 through 100,000 people are moving to the Phoenix area, every year.
"You have people coming from California looking to invest, you have people looking for opportunity here, you also have companies internationally looking to relocate their headquarters here," said Marsh. He went on to say one of the things companies are taking advantage of is Phoenix's climate. In addition, natural disasters are low in Arizona, which is appealing to data centers and other businesses.
"What Phoenix offers is really a safe disaster recovery solution for everybody, but with that, you're starting to build up and have a huge influx in companies," said Marsh.
Meanwhile, the cost of living is pretty inexpensive, considering property in other cities like San Francisco and New York City.
"For the millennial group, you're able to come out here, pay off your loan debts," said Marsh. "You're able to save for a family, you're able to do all this cool stuff and really have a quality of life you didn't have in the Bay Area or LA."
