In the late 1990s, downtown Phoenix was pretty much dead. Today, with its state-of-the-art sports facilities, ultra-hip restaurants and bars, completely renovated convention center, and ASU extension campus, the area resembles more of a boom town than a ghost town. Thousands of new apartments and condominiums have been built in the city’s center recently, but the prices on these units are proving to be prohibitively high for some buyers.
Luxury at a Premium
According to a recent article on azcentral.com, most of the 8,000 apartments recently built, underway or planned in downtown Phoenix fall into the category of luxury apartments. These luxury apartments come at a premium. The article cites figures from ABI Multifamily that show that rent downtown costs almost $550 more per month on average ($1,608) than average rent the city as a whole ($1,050). What is even more interesting is that these rents tend to be higher than the average Valley mortgage payment.
Has Gentrification Come to Town?
The high rents for apartments, coupled with the high desirability of living downtown and intensified investor interest, are also driving up the costs of houses in the area. Homes in some of the older, more established historic neighborhoods are going for upwards of $500,000. One real estate agent quoted in the article used the word “gentrification” when talking about how many first-time home buyers are priced out of central Phoenix. She says affordable homes are still out there, but buyers need to work to find them.
To Buy or Not to Buy?
If living in the heart of the city is a priority, now might be a good time to get in while you still can. The city center is thriving and it doesn’t show any signs of becoming a ghost town again any time soon. With interest rates and home prices likely to increase over the next few years, it would make sense to see if you can find one of remaining affordable homes before they are all gone.
On the other hand, one’s money is likely to go farther the further out from the center of town you go. As I mentioned before, some of the Valley’s luxury home builders are starting to focus on building more affordable homes. So, for the same money you’d spend on an older, generally smaller, house downtown, you might be able to get into a bigger, nicer house in a newer part of the Valley. One final thing to consider is the possibility that builders will or have already over-supplied the demand for luxury apartments downtown. It’s not impossible that such a surplus could actually deflate rents and home prices in the area.
Ultimately, where you move is up to you. Whether you want to live where you can feel the pulse of the city or you feel like settling down in a more sedate part of town, AZ Mortgage Brothers can help you get into the home of your dreams. Contact us today to find out what we can do for you!