Is it a good time to buy a house in Phoenix?

I purchased my home almost exactly one year ago in 2016. I’ll share my thoughts as I carefully considered whether I wanted to buy my house or continue renting, but I pulled the trigger, and I have no regrets in owning. I wrote about the buying process, here, with a focus on millennials like myself.

There are a few factors you want to consider as a buyer.

  • Ability to borrow. Interest rates vary based on the term length, amount, and other features like PMI and loan-to-value (LTV) that is usually offset by your down payment. If you get a mortgage that is favorable to you and at a rate that is reasonable (now about 4.10%). Interest rates significantly affect how much a person can acquire for the same amount of cash.
  • Inventory of homes. While there are data points out there to find exactly how many homes are officially on the market, driving around in the neighborhood of your desired house could give you an idea whether there are some similar houses vying for your business. Personally, I liked using tools like Zillow to just get a peek at kind of homes available. Accessing the MLS (free through a real estate agent) will give you even more up-to-the-minute listings on homes with plenty of search criteria. When the buyer has plenty of choices, sellers tend to be more flexible since buyers are more scarce than the number of homes available. If homes stay on the market longer, that’s a good thing for the buyer since they have some leverage in negotiating.
  • Values are determined by buyer’s demand, not (only) algorithms. Websites like Zillow and Redfin are helpful tools to gather basic neighborhood and expected home value data. Comparable house research is worthwhile so you can make an informed decision and don’t pay the top-dollar just because it was listed at that. Don’t read too much into the forecasts – sometimes it’s better, sometimes it’s worse.

I feel like housing prices are accelerating upward, but not at a dangerous pace. With plenty of apartments being built around the Phoenix and East Valley, those typically repress the buyers from jumping into the market. For me, the threshold to say no to renting was $1100. Once you cross that $1000/mo line, most mortgages can be had for around there.

All that said, I didn’t regret working with a buyer’s agent. My agent was very helpful to understand local real estate trends. A good agent will bargain on your behalf and will make sure you get the house for a fair price for you and the seller.

I don’t expect to “double” my investment on my home when it’s time to sell. Realistically, following the Great Recession was the best time to get in and double one’s investment over a several-year period. I’d be happy if my home holds its value long-term. The benefit of the home is that (super long-term here) when you retire, you have minimal living expenses and you have a roof over your head.

[Answered on Quora]