For many, Arizona is the ideal place to live, and it's not hard to see why. For one thing, the cost of living in Arizona tends to be lower than in other parts of the United States. Furthermore, there are plenty of opportunities for those who enjoy an active and outdoor lifestyle.
The weather is beautiful for most of the year, as well, and in most areas, you can enjoy the perfect combination of suburban life, city access, and rural charm.
There's no shortage of viable options for those looking to buy a home in Arizona. However, if you're hoping to truly get the most out of your budget — and the most house for your dollar — it's important that you understand some of the basics of real estate in the area.
For instance, in order to make the best offer at the right time, you'll have to understand timing, the market and its fluctuations, closing costs, taxes, and other information pertinent to buying a home.
There's a lot to learn and consider, but don't worry. This guide can help you find the best home for your budget in the great state of Arizona.
How to Find an Arizona Buyer's Agent
No matter where you're searching for or what kind of home you want, the first step you should always take when buying a home is to consult and partner with a local real estate agent who has a great deal of experience in the specific area you want to purchase.
Buyer's agents can provide you with a wealth of information and support that you'd be very unlikely to come by without their help. For instance, a real estate agent can offer you guidance and support through the home buying process. They can also be your advocate along the way, which comes in especially useful when it's time to the all-important yet often dreaded task of negotiating a fair price.
Finally, they can help you find the best deals and time your offer correctly. They can help you find a great property that meets your needs, is feasible, and will bring you years of happiness.
Clever can instantly connect you with top-rated buyer's agents in your chosen Arizona market. What's more, Clever can help save you money since all Clever Partner Agents work on a flat fee basis.
Make sure to get in touch with a Clever Partner Agent today for your no-obligation consultation.
Learn More: What Does a Real Estate Agent Do for a Buyer?
Arizona Housing Market Forecast for 2019 - and Beyond
Arizona is a hot housing market that has been growing for a long time. Taking advantage of the opportunity and jumping on the property that you want now can help you benefit in multiple ways.
First, the growing market means that when you purchase a home now, you're likely to see appreciation rates that are above average. This, of course, means that your property will increase in value in the coming year or two.
Secondly, getting in now means you can save money since homes are going to be more expensive in the next few years.
The median home value in Arizona is $252,300. The median listing price is $286,495, and the median sale price is $235,800. There's been a growth of 7.5% over the last year, and the next year is projected to see a growth rate of 4.8%.
The average home spends 73 days on the market, and in February of 2019 17.8% of listings had a price cut associated with them.
Between desirable turnaround time, projected growth rate, and opportunity for price cuts, the outlook is good for home buyers who take advantage of the deals they find and work closely with their real estate agent to time their offers correctly and appropriately.
Best Time of Year to Buy a Home in Arizona
Knowing what you want in a home is important. But knowing when to buy it is just as critical. Timing your purchase correctly is an intricate process that only an experienced real estate agent will truly know how to advise you on. However, you can also use historical data to make a guess regarding which month will be the best for buying a home in Arizona.
Highest Number of New Listings per Market
Choosing to purchase a new home during the months where the highest number of new listings occurs can help you benefit from both the increased inventory that affords as well as being able to choose from the freshest listings on the market.
In Arizona, Phoenix specifically, January, March, and April tend to be the months that have the highest number of new listings. In January, that number tends to be around 9,500. In April, there are around 9400 new listings on the market, and in March there are 9600 homes on the market that have been newly listed.
While it's not entirely necessary to purchase a home during the months that have the highest number of new listings, being able to take advantage of these listings is a good opportunity if you can.
Most Competitive Month
The most competitive month in the Phoenix metro area is April. In April, 17.3% of listings that sold are purchased above list price. May and July are also competitive, with the percentage of homes selling above list price at 17.1% and 16.9% respectively.
Purchasing a home in the most competitive month isn't necessarily a deal breaker. However, the more competition you have, the faster you're going to have to make an offer, and the more likely it is that you'll lose the property you had your heart set on.
If you can time your purchase so that you're shopping in a less competitive month, you can increase your chances of success and avoid disappointment.
Shopping during the months that have the highest inventory means you have the most selection to choose from.
In the Phoenix metro area, March tends to be the month with the second highest number of homes on the market. In March, there are usually around 30,000 homes on the market. However, May and June tie for the months with the most inventory at 31,000 homes each.
Being able to choose from the widest selection of available homes can help you feel confident in your purchase. Buying a home when inventory is scarce can sometimes lead to buyer's remorse when a more suitable listing comes up later. Try to purchase when inventory is high so you can avoid wondering if there was a better option available later on.
Most Discounted Months
Finally, shopping for a home during the months that historically have the most discounts can obviously help you find a better deal.
In Phoenix, January, February, and March tend to be the months with the most discounted homes on the market. In January, about 20.1% of all homes on the market have a discount associated with them. In February, that percentage is 19.9%. But in March, 21.6% of homes on the market have a discount associated with them.
All things considered, March is usually the best month to start shopping for a home in Arizona, particularly in the Phoenix metro area. During this month, you'll be able to enjoy the highest inventory, the highest number of new listings, some of the most discounted rates, and the least competition.
Learn More: When Is the Best Time to Buy a House?
Calculate Your Property Taxes in Arizona
We all wish we didn't have to pay taxes, but unfortunately, property taxes are just part of the process when it comes to home ownership. Property taxes are typically calculated in one of two ways. First, however, taxes have to be calculated based on the assessed value of your property.
The assessed value of your property is determined every five years, usually by a county assessor. The property includes both the land and any buildings and structures that are on it. After the new rate is assessed every five years, the property owner will be charged a tax amount based on either the mill levy or the assessed property value.
The mill levy method relies on mills, each of which is equal to 1/10 of a cent. In other words, for every $1,000 of assessed value, $1 is equivalent to 1 mill. Tax levies for each individual jurisdiction are calculated independently. Then, all the levies are combined to determine the regional mill rate, or how many mills your area will be charged.
Assessed Property Value
In the assessed property value method, the mill levy is multiplied by the assessed property value of your home in order to arrive at the property tax rate. Assessed property value is usually defined as the reasonable market rate for your home.
For example, in Arizona, the effective real estate tax rate is 0.72%. The annual taxes assessed on a $194,000 home would be around $1,400. The state median home value is $193,200, which would make annual taxes on the median home in Arizona around $1,398.
Taxes can vary widely from region to region, however. Property taxes are often charged by county, so moving a single zip code can dramatically change the rate you'll pay.
For instance, in Phoenix, the average tax rate is 0.802%, which would make annual property taxes on the median home $1,891. In Tucson, the rate is 1.052%, making the grand total $2,481.
Anyone considering purchasing a home should discuss the estimated property taxes with their real estate agent. Doing so can help you assess the overall cost of homeownership in the area.
Learn More: How to Calculate Property Taxes
How Much Are Closing Costs for Home Buyers in AZ?
It can seem like all you do is pay fees when you purchase a home, but closing costs are a necessary part of the process. It's critical to have at least a basic understanding of what closing costs are, what you can expect to pay, and the types of closing costs that exist.
Typically, there are two different kinds of closing costs that buyers need to be aware of. There are non-recurring closing costs and recurring closing costs.
Non-recurring closing costs include things like endorsements, escrow fees, transfer taxes, home protection plans, real estate agent commission, lender fees, and notary and wire fees.
Recurring closing costs include things like fire insurance premiums, property taxes, mortgage and mutual insurance premiums, and other types of insurance premiums.
In general, buyers can expect to pay 3% of the sale price of their home in closing costs. Given that the median home value in Arizona is $364,000, that means that you can expect to pay $10,920 in closing cost on average.
In Arizona, you'll also have to pay transfer taxes and fees. Transfer fees on Arizona properties tend to be taxed at a rate of 1.1% of the purchase price for homes that sell at $399,999 and under. If you buy a home at $400,000 or higher, your rate for transfer taxes will be 1.45%.
Given the median sale price in Arizona, transfer taxes are typically around $4,004.
However, fees and taxes vary on a state, regional, and even local level, so it's important to consult with your real estate agent and allow them to guide you through the entire process to make sure you haven't missed anything.
Learn More: Who Pays Closing Costs on a House?
Clever Will Help Pay Your Closing Costs!
Closing costs are an unfortunate part of the home buying process, but you don't have to be stuck with all of them. Fortunately, there are rebates available in most states — including Arizona.
Clever's Home Buyer Rebate Program is an additional cost-saving opportunity for home buyers. Clever buyers who spend $150,000 or more get a $1,000 rebate to help with closing costs. Fill out the online form to learn more and connect with the top-rated Clever Partner Agent in your area for a no-obligation consultation today.
Learn More: How to Get a Home Buyer Rebate