News > The Tough Road For Phoenix First Time Homebuyers

2023-09-23

The last 5 years has been good for home owners. As of 2022, nearly half of all mortgaged properties had over 50% in home equity, and owners are staying put with that equity, keeping housing prices high. Even though the rate of growth in home prices has slowed in 2023, a combination of high prices and high mortgage rates has kept first time homebuyers on the side lines.

First-time buyers made up 26% of all home buyers, down from 34% last year, according the National Association of Realtors.“Millennials shrunk as a share of buyers this year, and first-time buyers dropped to their lowest share of buyers ever recorded in 41 years of data,” the NAR stated. “Urgent action is needed to ensure a generation of Americans has access to the American dream and the opportunity to build wealth and achieve financial security through homeownership.”

There is no sign of this trend changing, even in the Phoenix area, which in the past has been very friendly to first time homebuyers because of affordable prices and plenty of inventory.

Home ownership is one of the largest sources of wealth in the U.S. According to the National Association of Home Builders, "The primary residence was the largest asset among households across various age groups — with the exception of the 55-64 demographic, where the primary residence and business interests were equally dominant assets. It was also the largest asset across racial and ethnic demographics, with the primary residence accounting for more than 30% of household wealth for non-white and Hispanic/Latino households." Part of the reason that home ownership is a source of wealth is because it's a kind of forced savings. Principle payments on a mortgage and home price increases both contribute to long term wealth.

NEW APARTMENTS IN PHOENIX OUTPACING CONDO CONSTRUCTION

The Fed's previously loose monetary policy fueled construction of apartments, not only in Phoenix, but in much of the country. In the greater Phoenix area, thousands of apartments are being constructed right now, to the point where mid-town and downtown Phoenix and Desert Ridge don't look recognizable in some areas because of the new midrise apartment buildings that have popped up. Even Toll Brothers is getting into the rental business, with a new 403 unit apartment building that opened up in Midtown Phoenix this spring.

Meanwhile, New Construction condos in Phoenix are few and far between. Edison Midtown, one of the more affordable new construction condos, start at $549,000, which is no doubt unaffordable for most first time home buyers.

OTHER FIRST TIME HOME BUYER ISSUES GETTING WORSE

First time homebuyers are saddled with other issues that keep them out of the housing market. The primary factor is mortgage rates over 7%, which add to the monthly housing costs in a big way. The other major factor is the down payment. Higher apartment rents and debts are making it hard for 20 somethings to save for that down payment on their first place. If you're in that category, it may be time reign in spending and put some extra effort in paying down debt.

SOME HOPE FOR FIRST TIME HOMEBUYERS IN PHOENIX

Condos can still be a good choice for first time home buyers in Phoenix. Even though there are a smaller number of options, there are some good ones!

A one bedroom condo at Larronata, in North Phoenix next to the Scottsdale border, is currently listed at $300,000. With a 20% downpayment, your monthly mortgage (7.2% rate), HOA and property tax payment is approximately $1850, which is comparable to the new apartment rents just down the street. And in 5 years, you'll have accumulated $7700 in home equity just from your monthly principle payment alone, which wouldn't have happened if you picked the apartment down the street. If you don't have a 20% downpayment, the monthly payment will increase because of the added mortgage amount and mortgage insurance.

Need to go lower? Consider Red Rox, which is across from Papago Park and an easy commute to Phoenix or Downtown Scottsdale. A one bedroom condo here currently goes for the low $200's, which could bring your payment down closer to the $1500 range.

You might be able to get a better deal if you buy a fixer-upper condo, but it would be wise to price out new carpet, paint, and a kitchen and bath remodel so you can factor that into the price differential.

Some more affordable condo communities are included below. The first step would be to get in touch with us so we can send you a comprehensive list in your area and price range, and also give you some names of mortgage lenders who can let you know what you qualify for.

 

Though not guaranteed, information and statistics in this article have been acquired from sources believed to be reliable.

Related Links

• BELAFLORA
• CORDILLERA
• DESERT BREEZE
• LARRONATA
• RED ROX
• SPRINGS AT YORKSHIRE
• DAKOTA AT CAMELBACK
• BRICK COMMONS
• Phoenix Condo First Time Homebuyer articles

 

BELAFLORA Condos For Sale!

Belaflora is a resort-like gated community with pool, spa, 2 BBQ areas, clubhouse with fitness center, pool tables, computer room, and TV's. Tranquil fountains throughout common area and Tuscany furnishings make this community a pleasure to walk through.

Belaflora backs to Papago Park and the golf course. Students can bike to Tempe or catch the light rail a few blocks away to get to Tempe or downtown Phoenix. Spring training is nearby too!

CORDILLERA Condos For Sale!

Cordillera condominiums in North Phoenix has the resort style ambiance with a smaller price tag. The 1, 2, and 3 bedroom condos at Cordillera are enhanced with details such as maple cabinetry, stainless steel appliances, in-home laundries and ceramic tile flooring. Split floorplans are available.

An array of recreational amenities are offered at Cordillera, allowing for a relaxing day in the sun by the pool or spa, or a workout in the fitness center or indoor racquetball court. ...

DESERT BREEZE Condos For Sale!

Desert Breeze is a popular condo development near Westgate City Center which includes the Glendale Arena, the Cardinals Stadium, dining, shopping, and entertainment. Ak Chin Pavilion is nearby, so great live entertainment is easily within reach. Mature park-like landscaping, a giant resort pool and spa, fitness center, BBQ stations, and a beautiful clubhouse are just some of the amenities residents enjoy.

Condos at Desert Breeze feature 9-foot ceilings, full sized laundry rooms, ...

LARRONATA Condos For Sale!

If you're looking for affordable luxury living, consider Larronata (formerly the Montage) condos, located in the part of Phoenix adjacent to Scottsdale, and just minutes from the Mayo Clinic. This gated community offers a clubhouse, a two-story fitness facility, two resort-style pools, and a Jacuzzi spa. You don't have to swim to enjoy the spectacular lounge area replete with a gas fireplace for chilly evenings, a java bar, and a grand piano.

Choose from a variety of ...

RED ROX Condos For Sale!

Located in the scenic Papago Peak area, Red Rox offers resort living in a gated community, conveniently located just off Loop 202 so you can easily get to downtown Phoenix, Tempe, and Scottsdale. You don't have to get in the car if you don't want to - the close-by light rail stop gets you easily to Mill Ave. and ASU or to downtown Phoenix.

Red Rox residents enjoy two resort style pools, spa, state-of-the-art fitness center, vollyball court, putting green and an outstanding ...

SPRINGS AT YORKSHIRE Condos For Sale!

For a wide choice of floor plans to fit every need, discover the Springs at Yorkshire. Ranging from 626 to 1,257 square feet, these one, two and three bedroom condos have modern appliances, large windows and an open floor plan. Relax at one of three pools in this gated community, which also offers a sauna and fitness center.

For easy access to shopping, entertainment and the Valley's freeway system, make the Springs at Yorkshire your new home. Deer Valley Towne Center with its ...

DAKOTA AT CAMELBACK Condos For Sale!

Great value and prime location await buyers at the Dakota (also known as "20th and Campbell"). This development is an easy walk to the Biltmore shopping area where you can catch a movie, have a gourmet meal or shop your socks off. Or stay home and enjoy the Dakota amenities, which include 2 pools, spa, well equipped fitness center, media theater, clubhouse, and putting green.

BRICK COMMONS Condos For Sale!

Located in Encanto Village, across the street from The Phoenix Country Club, Brick Commons is a gated-entry community with a fully equipped fitness center, business center, theater room, billiards room, resort-style swimming pool, and spa.

Brick Commons features large floor plans, gourmet kitchens, nine-foot ceilings, refined bathrooms, and even built-in wine storage! Also included is underground parking, though with light rail just steps away, you may have little use for a car. ...