The New Year begins as always. We are full of hope, dreams, and good intentions. To make a turn for the better. To wake up each day in positivity. And then real life knocks on our door, reminding us how the right kind of change can be hard to come by. The same resonates in real estate.

Why Buy a House on the “Up And Up”

One of the more consistent comments I receive from would-be buyers is, “It’s too late to buy a house. Shouldn’t I wait until the market tanks or prices come down?” Here is the Phoenix metro area 2022 reality check. Buyers that sat on the proverbial fence in 2020 and 2021 watched as homeowners reaped in rewards.

Inflation. Rates Rise. Higher Property Valuation.

Scarcity of property in both the rental and ownership markets remains a constant across Maricopa County as well as Apache Junction. Builders cannot complete construction due to the strain on supply chain and the escalating costs of materials.

Sellers who consider listing their current property may hold off as they ponder, without answers, where to go next. This leaves buyers without choices in properties available. What is on the market is often lackluster, needs repair, or immaculate bringing in multiple offers above asking price favoring cash buyers or loan-based offers with contingencies removed.

Maybe this is a familiar story to you or someone you know. So what, then, is the intrinsic benefit to going through the stress of purchasing now as opposed to later?

Interest rates can only stay this low for so long. In 2022, so long to that!

Here’s What We Know for 2022

Talk to any lender and they will echo the same. Rates are over 3.25 percent with some programs edging over 4 percent. For homeowners wanting to refinance, their window of advantage has likely closed.

Swift adjustments are coming to the vacation home market. While last year buyers could utilize purchase programs requiring only 5 percent or 10 percent down for a second home (vacation home), lenders are tightening that to 20 percent minimum down payment.

Timing Gets Better for First-Time Buyers

Relief for first-time buyers has finally arrived. Lenders now have access to other resources, such as grant programs, and other incentives that make home ownership for newbies to the market more plausible.

From loan programs that only require 1 percent of the purchase price, to those that are more credit score forgiving, first-time buyers should stay informed about opportunities in 2022.

This is not the time or place to give up.

There are varying reasons why owning a home is a good idea.

Phoenix and the surrounding areas are set for another year of value increases (average 15 to 20 percent). While that may be good enough reason to understand why it is not too late to buy a home, the risk adverse consumer may still find the housing environment potentially volatile.

Let’s go with that for a moment and remove the statistical-based analysis given for more upside. Instead, consider a home purchase in a flat market – meaning there are no real swings in value up or down. Pricing is static and the market is stable with a relatively even keel between buyers and sellers. (Does anyone even remember those days?)

Negotiations on a home purchase using the above-mentioned conditions takes on an old school feel where value is based on recent sales instead of supply and demand (though still relevant), and void of FOMO or investor-driven interest.

But this is not our reality, and current market indicators support that value decline in Phoenix, Scottsdale, Gilbert, Chandler, Mesa, Tempe, Surprise, Peoria, and Apache Junction isn’t in the near future either.

What’s a home buyer to do?

Remember the Fundamental Benefits of Owning a Home

Peace of mind. (Who couldn’t use more of that?) No more moving due to landlord requests or rental rate increases.

What Home Ownership Offers:

• Pay your own mortgage instead of your landlord’s

• Forced savings account through mortgage payment

• Property tax write-off

• Mortgage interest write-off

• Mortgage insurance premium write-off (if your loan has MIP)

Every Real Estate Market Is Different

Careful about how and where you research information about housing market trends, current statistics and projections. In today’s point and click climate, it’s easy to read market facts from the East Coast, the UK, or Canada by accident and assume they are relevant to our market. Misinformation can be detrimental to healthy real estate decisions. Make sure to check and validate the source.

A Word About New Construction

Long wait for builder lot openings; lotteries or bidding wars to secure one. Unexpected delays, often. Rising interest rates in 2022 brings more questions to opting for a brand, new home.

With build out completions typically running 12 to 16 months or more (from purchase agreement sign off to close of escrow), projecting monthly mortgage payments will need to be cushioned with rate increases. Interest rates generally cannot be locked into a deal for more than 60 days prior to closing. It is better to err on the side of higher cost and be pleasantly surprised than the other way around.

When entering a new construction contract with a large homebuilder, make sure that the purchase agreement price is locked in and not subject to price increases due to construction and design material cost increases. You don’t want to be locked into something today that you can’t afford at completion.

The Real Estate Truth that Needs to Be Said

For most consumers, buying a home is the single most important financial investment they will make for themselves and their family. While we can intellectually and emotionally decide when it is the right time to move forward, external factors beyond our control can thwart even the best made plans.

Here’s what seldom gets discussed between buyers, sellers, and Realtors but really should be part of the property-intrinsic conversation:

“Life will throw you an unexpected punch or two, testing your resiliency.
Is buying a home desirable only through rose-colored glasses?”

Like any other life decision that requires commitment, buying a home and owning it means you are answerable to the responsibility, no matter what unwanted surprises come about. There will be hard work. There will be doubts along the way.

However, in my humble opinion, the quest to acquire peace of mind through homeownership is a noble and rewarding effort and end game.

The Great Repositioning Continues

Trauma and tragedy have touched each of us, some more than others, during The Pandemic -- emotionally, mentally, physically, and financially. For those who embrace spirituality, there may be moments where we question the existence of something greater than ourselves.

Although time seems to stand still since the virus spread’s inception, an awakening becomes evident: Our love for family, friends, and personal sanctity as a driving force for current life desires.

As we take a deeper look at our lives, where we’ve come, what we’ve accomplished and what is left to experience, the great repositioning is apparent.

Weighing Dollars and Sense

Perhaps one of the greatest life lessons we have awakened to in the last couple of years is that tomorrow is not promised. There is an underlying urgency to live today at the fullest.

Closer proximity to loved ones is a primary priority. Achieving a “healthier work-life balance” is now beyond a corporate slogan – employees demand it or find somewhere else to work.

The need to be part of a culture embedded in positive changes that benefit humankind, animals, the environment, and the Universe are well in the works. Dinner table conversations, public and private schools and universities, government agencies and corporate entities focus on putting the talk into action.

There may be discontent and disagreement on the scale and speed of its implementation into how we live, but we are amidst the transformation.

The Great Repositioning (as I refer to it) in residential housing is in response to the need and desire for better quality of life. Where do you want to be when the global shift settles?

Plan Your Next Move