First time buyer in Arizona!

[Austin Bull]

My name is Austin, I'm 26, and I'm planning on buying my first property ever in Arizona in the Phoenix Metro area. I'm looking to house hack in order to get my REI snowball rolling. I'm most familiar with the east valley which was a great place to grow up. Currently I have been working in the valley as a plumber. When I was a residential plumber I'd take calls all around the valley so I feel like I have a good idea of areas I'd want to live/invest. However, REI is all knew to me and so is examining the markets.

My main question is: currently in 2023, is this market more tailored towards playing the long game with appreciation or looking to get a property that will cash flow.

Also some people tell me to "time the market" and to wait a little to start, while others tell me to just get in the game while I can. What do you all think?

Any advice is greatly appreciated, thanks!

[Doug McVinua]

@Austin Bull Each market will vary, Arizona, specifically the Phoenix/Mesa MSA is short on inventory, and prices are rising in spite of the interest rates. Buying a property like you want is a longer-term play, buy in a decent location you want to live in, and house hack for a year or two until you are ready to move on to property two. The loan you get today may be short-term, as soon as rates drop you will want to refinance, which will improve your cash flow.

Waiting is going to cost you money in this market.

[Austin Bull]

@Doug McVinua

Thanks Doug for the feedback, I am curious why you said the loan may be short-term?

[Doug McVinua]

@Austin Bull Interest rates are high right now, and as soon as they drop a point or two, you will want to refinance. A good lender will get you into a loan now at a low cost (higher rate) but then prepare to refi once the rates drop down. Hence, the loan you get today may be a short-term one. Short-term being relative to a property you may hold for many years.

@Josh Young has done really well for himself by investing in the SE Valley. Josh knows the path to success, where, how, the lender piece, etc.

[Austin Bull]

Quote from @Doug McVinua:

@Austin Bull Interest rates are high right now, and as soon as they drop a point or two, you will want to refinance. A good lender will get you into a loan now at a low cost (higher rate) but then prepare to refi once the rates drop down. Hence, the loan you get today may be a short-term one. Short-term being relative to a property you may hold for many years.

@Josh Young has done really well for himself by investing in the SE Valley. Josh knows the path to success, where, how, the lender piece, etc.

Awesome thanks for explaining that. I'll reach out to Josh Young

[Josh Young]

@Doug McVinua thanks, and you are spot on with regards to our market, low supply and prices are appreciating, people are moving here and there is a lot of growth happening, as rates starts to drop in next couple years prices will continue to increase.

@Austin Bull remember this, time in the market always beats trying to time the market. Getting started is the most important thing. I’ll shoot you a message, so we can connect.

[Austin Bull]

Quote from @Josh Young:

@Doug McVinua thanks, and you are spot on with regards to our market, low supply and prices are appreciating, people are moving here and there is a lot of growth happening, as rates starts to drop in next couple years prices will continue to increase.

@Austin Bull remember this, time in the market always beats trying to time the market. Getting started is the most important thing. I’ll shoot you a message, so we can connect.

I heard David Greene say that about time in the market vs timing the market on the bp podcast as well. Living in AZ I hear friends saying they just want to wait. But all the investors say differently.

[Chad McMahan]

Quote from @Austin Bull:

My name is Austin, I'm 26, and I'm planning on buying my first property ever in Arizona in the Phoenix Metro area. I'm looking to house hack in order to get my REI snowball rolling. I'm most familiar with the east valley which was a great place to grow up. Currently I have been working in the valley as a plumber. When I was a residential plumber I'd take calls all around the valley so I feel like I have a good idea of areas I'd want to live/invest. However, REI is all knew to me and so is examining the markets.

My main question is: currently in 2023, is this market more tailored towards playing the long game with appreciation or looking to get a property that will cash flow.

Also some people tell me to "time the market" and to wait a little to start, while others tell me to just get in the game while I can. What do you all think?

Any advice is greatly appreciated, thanks!

Hi Austin.
Welcome to the investment game.

It is very difficult to predict real estate changes. So, unless the incoming changes are obvious, I recommend make the best purchase you can, when you can.

[Austin Bull]

@Chad McMahan

Thanks Chad for the input. That seems to be the consensus.

[Scott E.]

"Don't wait to buy real estate. Buy real estate and wait."

Yes it's just another cheesy quote. But wise words to live by.

[Sean Bozigian]

@Austin Bull Welcome to BP and congrats on taking the steps to get your first property under your belt! 

In regard to timing the market, I''ll use this most recent correction as an example as to why it is so difficult to do. When the market started reversing last summer, many were excited for a chance to finally "time the market" and find a deal. Don't get me wrong, some were able to do so, but by means of luck more than anything else. Many passed up on a window of low buyer competition and more motivated sellers because they were waiting for the "perfect" time. Fast forward to today and prices and competition are back on the rise. In hindsight, November would have been the best time to close on a home. However, we didn't know that until just a couple of months ago. Real estate is so difficult to time because data lags months behind what we are seeing in real time. 

Life can change fast - if you are in a position now to take the steps to start building wealth, I would personally take full advantage. Hope this helps!

[Austin Bull]

Quote from @Sean Bozigian:

@Austin Bull Welcome to BP and congrats on taking the steps to get your first property under your belt! 

In regard to timing the market, I''ll use this most recent correction as an example as to why it is so difficult to do. When the market started reversing last summer, many were excited for a chance to finally "time the market" and find a deal. Don't get me wrong, some were able to do so, but by means of luck more than anything else. Many passed up on a window of low buyer competition and more motivated sellers because they were waiting for the "perfect" time. Fast forward to today and prices and competition are back on the rise. In hindsight, November would have been the best time to close on a home. However, we didn't know that until just a couple of months ago. Real estate is so difficult to time because data lags months behind what we are seeing in real time. 

Life can change fast - if you are in a position now to take the steps to start building wealth, I would personally take full advantage. Hope this helps!

 Thanks for the comment. When you say "a window of low buyer competition and motivated sellers" was that when the market prices were higher? And then when you say "competition is back on the rise" do you mean because prices have lowered a tad? is that correct?

[Doug McVinua]

@Austin Bull , The bottom of the market was December of 2022. Prices have been rising since that time in almost all cases. December would have been the best time to buy in the Phoenix, AZ, market. Demand was at its lowest at that time. Since then, demand has increased, and today we see multiple bids on many properties. I had one recently with nine offers on it in the first two days on the market.

[Austin Bull]

@Doug McVinua

Ok makes sense. Prices fluctuate based on demand. From your experience why is the demand rising right now? 

[Sean Bozigian]

@Austin Bull not exactly. In the Phoenix area, we saw a peak in prices last May, followed by a period of declining prices through the end of the year. A lot of factors contributed to this (mortgage rate shock, ibuyers pulling out of the market, affordability concerns) to name a few. For the first time in a couple of years, buyer demand was down significantly while we saw an increase in supply. This meant that the buyers who WERE in the market had much more negotiating power.

Since January, this has reversed course and we have seen prices appreciate month over month to this point. Much of this is due to historically low inventory levels. I hope this helps clarify a bit! Happy to have a more detailed conversation about the market and specific strategies at any point. 

[Andrew Rodgers]

@Austin Bull Thanks for posting the question, I'm learning a ton from the others commenting.

There is a shortage, the rates are high, home pricing are "bouncing back" - but home prices historically rise going into summer and deflate as we approach Christmas and the holidays. How you want to use this info to decide on what to purchase is completely up to you, but keep that in mind if you are feeling pressured to purchase something this summer.

[Austin Bull]

Quote from @Andrew Rodgers:

@Austin Bull Thanks for posting the question, I'm learning a ton from the others commenting.

There is a shortage, the rates are high, home pricing are "bouncing back" - but home prices historically rise going into summer and deflate as we approach Christmas and the holidays. How you want to use this info to decide on what to purchase is completely up to you, but keep that in mind if you are feeling pressured to purchase something this summer.

An investor I talked to today said the same exact thing about purchasing in the summer vs the winter. I'm hoping that regardless of that fluctuation, that the market in Phoenix will appreciate a lot in the long term, regardless if I buy in summer or winter this year.

[Hamp Lee III]

If the numbers work for you, your situation, and your investing goals, it’s always a good time to buy.

I wish you all the best.

[Zach Wain]

"Also some people tell me to "time the market" and to wait a little to start, while others tell me to just get in the game while I can. What do you all think?"

Most experts struggle to "time the market".  Most of the successful investors use more a dollar cost average approach.  Consistently add to your RE portfolio over time and in the end it will work out.

For a first time buyer, (IMO) its more about affordability then it is timing the market.  Find a home you like, one that will be a good rental in the future, and if its affordable (via house hacking) press forward.  Save up some more money, and do it again, and again.  Slow and steady/consistent wins the race!