At the close of 2020, the Arizona real estate market continued to remain strong. Historically low mortgage rates kept buyers buying, meaning Arizona’s housing inventory was unable to keep up with demand. Representatives from the 2021 board of the Arizona Association of REALTORS share their predictions for 2021 as the seller’s market continues to flourish throughout the state of Arizona.
“If the housing inventory continues to stay as low as it has been, the market will continue to be strong well into 2021,” says Jan Leighton, Arizona Association of REALTORS president. “Unfortunately, this sudden boom has made it more challenging for first-time homebuyers, however, there may be more opportunities in the outskirts of their towns.”
According to Leighton, if mortgage rates remain low throughout the year, buyers will continue to buy which also sweetens the pot for both buyers and sellers as buyers will take advantage of rates to upgrade.
“If a buyer is looking for a bigger house or a better location, they will pay top dollar for it,” says Leighton. “But they will also get top dollar in return for the sale of their current home.”
With COVID-19 impacting many local businesses, Leighton is concerned for Arizona’s commercial real estate market.
“There are many restaurants, bars and other smalls business that have closed due to the pandemic – creating a large number of vacant storefronts,” says Leighton. “However, what we know, is that Arizona’s small businesses are resilient and there may be opportunities for those entrepreneurs to take advantage of this current market.”
Prediction 2 — Northern Arizona
Arizona Association of REALTORS President-Elect Gary Nelson describes the real estate market in Northern Arizona as extremely “vibrant” this past year and expects it to remain that way through 2021.
“Most would say vibrant is an understatement and that the market is downright hot,” says Nelson. “For instance, right now there are only 65 active residential properties for sale in the Flagstaff area. In a city of 75,000 that serves a total area of 125,000 people, to say that we have a lack of inventory of homes is an understatement.”
According to the Northern Arizona MLS (NAMLS), in 2020, the median sales price of a single-family home rose more than 10 percent to $475,000 within select Flagstaff zip codes. With the three gated communities, the median price of a single-family home rose to $503,000 in 2020. That compares to a $400,000 median in the western United States and a national median of $272,000 in 2019.
“This trend is expected to continue in Flagstaff and surrounding areas due to unprecedented demand,” says Nelson. “Flagstaff is a strong second home, resort-style market with high-demand for homes, townhomes, condos and cabins. With interest rates expected to be at historic lows in 2021, demand will continue to outpace supply and prices should continue to surge.”
Seasonally, Northern Arizona’s housing market begins to heat up in early April and typically peaks during the summer months.
Prediction 3 — Southern Arizona
According to Arizona REALTORS® First Vice President Eric Gibbs, in Arizona’s second-largest housing market, Tucson, the real estate market remained strong through last Fall when it typically slows.
“I expect the resale inventory to remain low forcing the sales prices to continue to rise, which will keep the market strong into the first half of 2021,” says Gibbs. “As we move farther into the year, we may see those low interest rates move slightly from the 2% range into the upper 3% range.”
In 2020, Gibbs saw a good mix of first-time homebuyers taking advantage of the low interest rates, along with boomers downsizing and families of out-of-state relocating to Arizona to get more out of their money.
“New constructions sales will continue to remain strong throughout 2021,” says Gibbs. “Even as sale prices continue to rise due to low inventory, new construction will continue to keep prices as low as possible for both Arizonians and families from out-of-state looking to buy.”
The Arizona REALTORS® recognize that the lack of affordable housing throughout the state is an incredibly complex and far-reaching subject.
“Affordable housing continues to be in short supply in Arizona. We hope to help alleviate this with our Realtors® and our sellers and buyers contributions to the Arizona Housing Fund,” says…