Are you preparing to move to Phoenix? Congratulations! You will be sure to enjoy the sunny weather, hiking and rock climbing, and affordable living that Phoenix has to offer.
As you consider your move, are you wondering whether to buy or rent a Phoenix home? That’s a good question. Let’s look at the numbers.
Average Home Sale Price and Rental Price in Phoenix
Most people in Phoenix own their own homes. In fact, over 52% of Phoenix residents live in a single-family, three-bedroom home built between 1970 and 1999.
Phoenix residents spend on average $232,000 for their homes. You may spend $1,175 per month as a mortgage payment for a loan in this amount. This, of course, depends on how much you are able to put down on your loan, your loan’s interest rate, and your credit rating.
The average monthly rent in Phoenix is $1,389.
Before you rush to your bank or mortgage company to take out a loan for a home, there are other things to consider.
Other Costs of Owning a Home
If it costs $214 more per month to rent than to buy, most would choose to buy. The problem is that purchasing a home is a little more complicated than renting. The $1,175 per month amount that was listed above does not include your property tax payment and homeowner insurance premiums.
The tax rate for the Phoenix area ranges from .87% to 1.5%. This means that in addition to the payment for your loan, you may pay an additional $290 per month in property taxes.
If the home you purchase is larger than the one you would rent, you will also be paying more money in utility bills. This is true all over the country, but especially in Arizona where most residents have to pay high cooling cost most of the year.
And as a homeowner, what will you do when your air conditioner bites the dust? You have to pay for a new one. While one would hope that these large-ticket items won’t break every month, you need to be prepared for such emergencies when they periodically arise when you’re a homeowner.
You may also have to pay neighborhood association dues and for lawn care expenses. As a Phoenix resident, at least you don’t have to pay for snow removal.
While this discussion is not meant to alarm you to keep you from purchasing your first home, it is intended to give you a realistic look at the additional costs that many new homeowners may not think about when buying a home.
This is just one part of the big picture. There is more to consider.
Consider Your Financial Situation
Do you have a consistent income? What is your credit score? Do you have other non-mortgage debt? How long do you plan to live in Phoenix?
If you live in Phoenix, the job prospects are looking good. Phoenix is experiencing job growth at a more rapid rate than other cities in the U.S. Hopefully, this means that the average salaries will rise with the increased number of jobs.
The average household income for a Phoenix is $46,881, which is less than the U.S. average. How does your financial situation compare?
One thing to remember is that there are many first-time home buyer programs available that allow you to purchase a home without a significant down payment. You may not need to have as much cash saved as you would think.
Phoenix Market Outlook
One of the most essential considerations in whether to purchase or rent is the temperature of the market. If you buy a home in Phoenix, will it be worth more than what you bought it for in five or ten years?
While no one has a crystal ball to see into the future, it is a good guess that Phoenix property values will continue rising in 2019. The home values went up 6.8% last year, and they are predicted to rise another 4.4% in the coming year.
Owning or Renting? Which is Better?
Even though you will pay more per month in mortgage, taxes, insurance, utilities, and other expenses, it is better for most people to purchase a home in Phoenix rather than rent.
This statement comes with two caveats. First, it is only better to purchase than rent if your personal finances are in order. Second, Phoenix homeowners need to stay in a home for two and a half years before it is financially advantageous to own rather than rent. If you aren’t sure whether or not you will be in Phoenix two and a half years from now, then maybe renting is the best option for your family.
Are you ready to buy a home in Phoenix? Do not make this important financial step without consulting a Clever Partner Agent in the Phoenix area. Your buyer’s agent will lead you to properties that will hopefully increase in value to make sure you get a good return on your investment. They will also negotiate on your behalf to make buying your first house as affordable as possible.