Arizona home sales are steadily increasing and in a healthy state. But real estate is a process, and when one piece of the process is lagging behind, it can have a ripple effect on the rest. And the current ripples? They’re having an impact on homebuyers.
When it comes to AZ real estate, here are three big reasons why it’s better to buy sooner than later.
1. Labor Shortages
In Construction. Arizona doesn’t have enough construction workers to keep up with new home demand. The sunshine state employed more than 240,000 construction workers in the mid-2000s, or the height of the housing boom. Arizona now employs nearly half that number.
Reasons for the shortage? Many workers left the state to look for opportunities elsewhere or transitioned into a different line of work during the economic downtown; the shortage is a partial remnant of the housing crisis. A growing skills gap is also impacting the industry. Carpentry hasn’t exactly been a popular area of study, creating a deficit of highly skilled young labor to replenish the currently aging pool of construction workers.
In Appraisals. Arizona also doesn’t have enough appraisers. A decade ago, there were more than 3,000 appraisers working in the Valley. Today, that number is down one third.
Like the construction industry, the shortage was sparked by the recession. The demand for housing — and in turn, appraisals — dropped in the mid-2000s, pushing many appraisers out of the real estate industry. Compounding the issue, the Federal Appraisal Qualifications Board added new requirements and made it more difficult to become an appraiser. This certainly raised the barrier to entry and reduced the number of new workers joining the field.
2. Longer Waits
In Construction. Despite a lack of construction workers, the demand for new and custom homes is rising: 58,000 new construction jobs were recently added nationwide. That’s the biggest increase in nearly a decade. Arizona is following suit with this trend, adding 4,000 new construction jobs over the past year.
While great news for the economy, the combination of a labor shortage in the midst of rising demand has resulted in long waits. Some construction projects have been delayed for months at a time.
In Appraisals. The appraiser shortage is also pushing back deadlines. Closings are moving beyond the traditional 30-day timeline, with some local experts now allowing for up to 45 days.
3. Rising Costs
These combined labor shortages have created a longer timeline for homebuyers. Not to mention, such extensions run the risk of increasing interest rates, additional costs and more.
There’s interest rates, which are expected to rise two more times in 2017. And there’s inflation, which is certainly impacting construction costs. Lumber prices just reached close to $415 per thousand board — the highest in 12 years — last week. Driven by inflation and potential new duties imposed on Canadian lumber, these prices are reminiscent of a 2005-era. And it’s not just lumber. For concrete, drywall, steel studs, metal rebar and more, prices are going up, up, up.
The message to potential homebuyers is simple: Buy sooner than later. Move quickly to find and secure that dream Scottsdale property for sale or new luxury home. In addition to securing the lowest interest rates of the year and sidestepping rising costs, you’ll secure your place in the metaphorical homebuying line before it wraps around the parking lot. Don’t wait any longer or the wait will be longer.