Yikes! Where are All the Affordable Houses?

Home prices are going up in Phoenix. Great news if you are a seller…not so great if you are a buyer. Particularly a buyer who does not currently own a home. The bar for entry level homes is going up – homes are becoming less affordable. You are jumping onto a moving merry-go-round, my friend.

A graphic representation of the shrinking inventory of homes price below $250K.

A graphic representation of the shrinking inventory of homes price below $250K.

Check out this visual from my good friends are the Cromford Report:

Yup…the inventory below $150K is quickly becoming non-existent, and the inventory of affordable homes between $150K-200K is starting to fade away as well. Anything below $250K is going to be gobbled up quickly by strong buyer demand – and guess what? We are on the brink of our busy buyer season here in Phoenix. So, this is your best case scenario for 2016.

Budgeting for your home purchase

Stock up on Top Ramen and save up for that house!

So what does this mean for buyers?

The median income in Phoenix Metro right now is about $65K. That typically qualifies you for a $225K home with 3.5% down.  That equates to a monthly payment of about $1500 per month, factoring in taxes, mortgage and homeowner’s insurance. Notice on the chart above all the negative numbers at $225K and below? It’s going to look worse this time next year. There will be fewer affordable homes in the market next January. Just saying.

Broken record time…don’t wait. Get off the fence. Get your ducks in a row. It’s just going to get harder. Look at some of the down payment assistance programs if your cash reserves are on the light side. Start looking NOW! And be realistic. If you are waiting for the 4 bed/2 bath with a pool and a 3-car garage in the under $250K price range, you are going to be waiting for a long time.  There are a total of 39 such homes currently listed in Phoenix Metro now and most of those are, well, not exactly “in town”.  One of them is a manufactured home. We are talking slim pickings here.

Here are some 3 bedroom, 2 bath homes priced at $225K or less to get you started:

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