Buying a home in Phoenix

If you’re thinking about buying a house in Arizona, your search probably includes Phoenix. The metro area is home to 67 percent of the state’s entire population, and it is growing fast. In fact, Phoenix welcomes around 200 new residents each day. If you want to be part of that crowd, read on for a full rundown of how to buy a house in Phoenix.

Why buy a house in Phoenix?

Moving to Phoenix delivers plenty of short-term benefits. From relaxing in the Sonoran Desert sun to hiking Camelback Mountain, living in Phoenix means living a large part of your days outside. Additionally, plenty of employers are setting up shop here, so you’ll have loads of career opportunities to explore.

However, buying a house is a long-term investment. Happily, the future looks very bright for Phoenix (and not just because of the sunshine): The U.S. Census Bureau forecasts that the metro area’s population will climb to around 6.3 million by 2030 — a massive jump from the 4.95 million people who call it home today. As more people arrive, housing values tend to appreciate.

Find a Phoenix home for your budget

Buying a home in Phoenix grew increasingly expensive throughout the pandemic. According to local association Phoenix REALTORS (a sub-group of the National Association of Realtors), the median sales price of a single-family home has jumped to $470,000 as of September 2022, an 18 percent climb since 2021. Housing affordability continues to decrease in the metro area as sellers cash in on high demand.

However, these numbers don’t tell the entire story. There are pockets of the metro area where you can get by on a smaller budget. In Pinal County, for example, median sales prices for single-family homes are $385,000 as of September 2022, and if you don’t need a big home with a big backyard, you’re in even better shape: Townhomes and condos are currently selling for a median price tag of $182,000.

Of course, money isn’t the only piece of the puzzle that matters. You’ll need to think about what you’re looking for in a neighborhood. Do you want a walkable part of the big city with a hip, creative spirit? Start on Roosevelt Row. Are you looking for a family-friendly ‘hood? Perhaps Chandler’s highly-ranked public school district is a good place to land. And if you have an eye for a luxury property, with a massive budget to back it up, Arcadia should certainly be near the top of your list. The Phoenix area is huge — a sprawling 14,587 square miles, to be exact — so you have plenty of options to consider.

When to buy a house in Phoenix

As you’re thinking about the best time to buy a house, it’s important to understand how you define “best.” Are you looking to enter the market when more homes are available to have a better selection? Over the past two years, buying activity has been highest in May and June. However, when buying activity is busy, it also means fiercer competition and sellers are enjoying bidding wars. So, if you think of “best” when you’re likely to get a better deal, it’s important to time your search when sellers aren’t cashing in quite as quickly. Redfin data shows that December and January tend to be the timeframe when the lowest percentage of homes sell for more than their list price.

As you think about the best time to buy a house in Phoenix, it’s also important to think about the broader economy outside of Arizona. Mortgage rates have been increasing, which will have a big impact on how much house you can afford – no matter when you’re aiming to close.

Things to consider when buying a house in Phoenix

How safe are the neighborhoods where you’re looking to live?

Like all major metro areas, Phoenix deals with its fair share of crime. CrimeGrade gives the city a D- when it comes to safety – not exactly a reassuring mark. However, it’s important to understand that figure is an overall one, and every neighborhood is different. The service’s interactive map includes a color-coded system that indicates varying degrees of safety, and you’ll find much lower crime rates as you move further away from downtown.

How long will your commute be?

The average commuting time in Phoenix is 26 minutes. If you’re not enjoying the ability to work from home, it’s important to get an estimate of how much time you might have to spend in your car each day and how those gas expenses will add to your total cost of living. However, you might be able to ditch your wheels altogether. Phoenix has an impressive transit system with the Valley Metro Rail. Be sure to consider whether you can find a home with easy access to the stations.

How much will you pay in closing costs?

In addition to covering a down payment, you’ll need to consider how much to budget for closing costs when buying a home in Phoenix. For reference, the average closing costs in Arizona added up to 1.2 percent of the purchase price in 2021, according to ClosingCorp. However, there are some nuances to this figure.

First, the good news: The seller is typically responsible for paying for the title insurance policy, so be sure to negotiate that into the contract. Now, the bad news: This figure doesn’t include lender fees, which can add up to a sizable chunk of cash. Make sure you compare multiple lenders to find an option that charges low — or better yet, no — origination fees.

How much will you pay in property taxes?

Arizona’s property tax bills are fairly modest compared with the rest of the country, but the rates do vary by county. If you buy in Maricopa County, where Phoenix is, you’ll owe the government $10.82 for every $100 of assessed home value, while rates in adjacent Pinal County are a bit higher at $13.58 for every $100 of assessed value. Be sure to ask the seller of any property you’re considering for a record of their past property tax bills, and be aware if the home is located in any type of special taxing district.

Tips for buying a house in Phoenix

Save for a down payment

The average down payment on a new home in Arizona was $59,000 in the spring of 2022. However, you may be able to become a homeowner in Phoenix for a much smaller upfront cost. If you have excellent credit and qualify for a conventional loan, you may be able to make a down payment of just 3 percent of the purchase price. On a $470,000 home (the median price of a single-family home in Phoenix), that works out to $14,100. You may also be able to secure some assistance with your down payment, thanks to the Home in Five Advantage program in Maricopa County. The program allows low- and moderate-income borrowers to apply for a loan up to 5 percent of the purchase price to cover down payment and closing costs.

Find a local Phoenix real estate agent

Rather than try to navigate the market on your own, it’s important to find a real estate agent who can help point you toward listings that meet your lifestyle needs and budget. Realtors have a good sense of what’s happening in the market — how quickly homes are going to contract and whether other buyers are offering above asking price, for example — so they can help you avoid making big mistakes in the process. And of course, they can be a resource for other local services you’ll likely need, like home inspectors, real estate attorneys and contractors.

Get preapproved for a mortgage

Getting preapproved for a mortgage is the foundation of finding a home. Any seller in Phoenix will want to see that a lender has taken a preliminary look at your finances and signed off on a high likelihood of loaning you the money you need. This step is free, and it doesn’t take much time at all. Pull together documentation about your finances including past tax returns, pay stubs from your employer and bank account numbers, and fill out a lender’s online preapproval application.

Understand the playing field

If you need to secure financing for your home purchase in Phoenix, be aware that you may be at a disadvantage. Phoenix is a big market for real estate investors who see the upside in buying in the Sun Belt. In the first quarter of 2021, nearly one-third of all home purchases in Phoenix were all-cash deals.

However, that doesn’t mean you’re out of luck. Instead, it means you’ll need to take other steps to stand out as a buyer such as waiving certain contingencies, crafting a letter that pulls on the seller’s heartstrings or offering a free rent-back period to give the seller additional time to find a new place to live.

Bottom line on buying a home in Phoenix

Purchasing a home in Phoenix isn’t easy, but there are signals that some of the bargaining power is shifting back toward buyers. The median sales price for a single-family home declined by $15,000 between July and September, and homes have been sitting on the market longer. And if the market continues to cool off in 2023, you may be able to find your dream home in “the Valley of the Sun” — as long as you’re willing to pay plenty of shiny pennies.