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So, you’re planning to move to Arizona – maybe for the fantastic blue skies and deserts or the Phoenix Suns, Sedona vortexes, and the majestic Grand Canyon. However, before you make the big move, you must know a little about the real estate market here. It’s witnessing an all-time high. The sellers are thriving while the homebuyers are frustrated as houses are being sold for tens of thousands of dollars over the asking price. But, why are houses so expensive in Arizona? Let’s find out.
Arizona, especially the Phoenix area, is one of the hottest housing markets in the United States today. It has not only recovered after a slump caused by the COVID-19 pandemic but the demand for houses has reached newer heights. The pandemic had paused house sales. This created a pent-up demand for houses. Arizona, which was once known for its affordable land and housing, is no longer easily accessible to every prospective homebuyer – especially first-time homebuyers.
The Arizona real estate market
In Arizona, the median home price for a single-family home has risen dramatically in recent years. Since 2015, the median sale price in Arizona has risen from $211,000 to an incredible $350,000.
The average housing prices across Arizona have gone up by 31.9% in the past year as compared to 12.5% from October 2019 through October 2020.
The locals believe that as more and more people with high incomes are moving into Arizona from other states, the average home values are going up. They blame it on an influx of outsiders who have entered the state for its social and economic opportunities. Especially their Californian neighbors who’ve made the housing market more competitive by their bidding wars.
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The root cause
The reason for an unprecedented price hike is the shortage of houses caused by the pandemic, the recent freezing over of Texas, historically low federal interest rates, lumber shortages, Arizona’s political instability, and its bustling economy. All these factors have contributed to the double-digit yearly price increase for Arizona homes.
Another pertinent root cause is the single-family zoning in the area. Many years back, Arizona may have thrived as a suburban hub but it’s no longer able to accommodate the growing emigrants from across the states as well as the nation.
Unfortunately, there’s no one easy solution to this housing crisis. There has been a delay in the production of more, newer houses due to the higher building costs. Also, the land prices that homes might be built on have gone up – more than they have ever been.
Moreover, the regulations to build a home are more complex today than ever before. And to top it all, the population of homebuyers is constantly growing.
Most real estate agents believe that it may be years before the market prices will begin to stabilize.
Arizona, with its many positive attributes and comparatively low cost of living, has become a magnet for those looking for a house. This makes the Grand Canyon State one of the hottest markets in the country.
Experts feel that policymakers, government leaders, and developers will need to reconsider the balance of low- and high-density zoning. The only solution is to extend high-density zoning and allow builders to meet the market demand for newer, more affordable housing.
So, why are houses so expensive in Arizona? Well, the reason is a discrepancy in the supply and demand of houses. It’s a seller’s market where the housing construction is not keeping pace with the population growth. Unfortunately, the gap between housing supply and demand is widening every day. As a result, Arizona’s housing prices are skyrocketing.
Read more: Today’s housing trends for millennials.