TUCSON, Ariz. (KOLD News 13) – People living in Sun Belt states who are looking to purchase their first home have stiff competition.
According to a recent survey by the Pew Research Center, Arizona is one of the top locations for out-of-state investors. In 2021, they accounted for 31% of the homes purchased. Only Georgia beat out Arizona, with 33% of homes being bought by out-of-state investors.
“I would say it is 100% investors because all of us invest in property, whether it’s for our personal use or for a rental property,” said Jodi Koch, the President of Tucson Association of Realtors (TAR). “What constitutes an investor in their survey? We have flippers; they are investors. There are also a lot of corporations buying up properties. Those are some of our true investors that are investing in real estate for their client’s investment portfolio. Then, you have an iBuyer company. Their business platform is to purchase low from sellers who don’t want to deal with fixing up their property to put it on the market. iBuyers fix it up and turn around and sell it to the end consumer.”
Still, Koch says it can be hard for families to compete with cash buyers.
In Tucson, inventory is limited and house prices continue to rise.
“The median home sales price increased to about $377,000 in June of 2022,” said Koch. “That’s up about 16% from June of 2021. It is a nicer increase than the 20% to 30% increase we were seeing before.”
High mortgage rates are also driving away potential buyers.
The Vice President of Altitude Home Loans, Danny Plattner, has noticed a slight drop in new clients over the past few months.
“We have been spoiled,” said Plattner. “Rates were in the 2% to 3% range, and now we are in the 5% to 6% range. I mean, historically, that’s not so terrible. So, what I always like to tell everybody is, ‘You are buying your forever home. This may not be your forever loan.’”
Plattner says mortgages can be refinanced.
On Wednesday, the Federal Reserve announced a 75-point interest rate hike. When the Federal Reserve increased its benchmark interest rate last month, Plattner says mortgage rates actually dropped.
“Inflation is an arch enemy of bonds,” said Plattner. “By raising the Fed funds rate, if it helps to curb inflation, that will actually help interest rates because that will help mortgage bonds and it will help the appetite for investors on Wall Street to purchase more mortgage bonds.”
Koch says patience is key to unlocking the door of your new home.
“Our inventory is growing, but it’s still scarce,” she said. “It is climbing upwards in the right direction. So, that’s a real positive as well.”
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