The real estate market is considered less volatile than stocks, but that doesn’t mean it’s favorable. There are changes in this market, but they don’t happen overnight. Even though the movements are there, it takes time to see noticeable changes.

A common problem millennials from Arizona face these days is affordability. The percentage of affordable homes for families with average incomes has dropped significantly in the past several years. The comparison is made between before the pandemic and the end of 2023.

Buying a home in Arizona as a millennial seems almost impossible, but it doesn’t have to be, as there are ways to bypass these obstacles when you are considering a purchase.

Why Have Homes Become Unaffordable for Millennials?

Multiple factors contribute to the drop in percentage, but the two main ones are interest rates and high demand.

The increase in prices is directly linked to the rise in interest rates. Before the start of the pandemic, the interest rate was around 4%, and in the first year, the average dipped below the 3% mark. Near the end of 2023, the average almost reached 8%, and today it sits around 6.5%.

When you crunch the numbers, a 30-year mortgage with 6.5% interest and a 10% down payment totals a monthly payment of around $3,300.

This means you’ll be returning well over double the initial price of your home. On the other hand, with a 3% interest rate, you’ll return roughly 2/3 of the property’s value.

The second reason homes are becoming unaffordable for millennials is supply and demand. States like Arizona don’t have enough property for all the potential buyers.

As a result, people often bid and offer more than the real value to secure their new home. This pushes the average price up, making this even worse for people with a slightly limited budget.

Combine that with the fact that there isn’t enough to satisfy the demand, and you end up with high real estate prices. To be fair, this is a common occurrence across the US, not just when buying a home in Arizona.

How to Overcome This Problem?

With high real estate prices these days, millennials are constantly looking for ways to buy their homes without overpaying for them. Luckily, there are several ways to do that.

Don’t Rush

Being young and eager to live under your roof is understandable but can lead to problems. In this case, rushing things when choosing your home can result in paying more than it’s worth. This can become especially true if you go in a bidding duel against someone else who wants the same property.

Finding that one home that may seem like the perfect one doesn’t necessarily mean you will purchase it when buying a home in Arizona. The process is long, so you may find something you don’t like somewhere down the line.

This is why it’s a good idea to be patient. It will take you longer than planned, but you’ll ensure you get a better home.

Research the Market

Finding a home that matches your criteria isn’t the simplest thing in the world. We all have different ideas about our homes, meaning you’ll be somewhat limited if you want something specific. The location also plays a role here, especially if you’re going to get property in a specific neighborhood.

This is why research is necessary when buying a home in Arizona: to know your potential options. It’s also a good idea to have several potential homes shortlisted in case you don’t manage to buy the first one you find.

Be Mindful of Your Financial Situation

Looking at the real estate prices, it becomes clear that buying a home isn’t as affordable as it once was. This is why you should look at your financial situation and how much you can afford. It will help you determine how big and where your home will be.

This is another reason why research is important, especially if you’re flexible in terms of size and location. Usually, the less popular locations will have more affordable homes, meaning you can get a larger one if that’s your goal.

State and Government-Backed Loans

You’ll probably take the loan route, considering that some state- or government-backed loans and schemes can help you get a better deal. Arizona has a few potential options that may help you out with this. These are especially helpful for first-time home buyers.

If none of them work, you can always consider the government-backed options. Many companies can offer a FHA, USDA, or VA mortgage loan in Phoenix or any other larger city in Arizona, so it’s easy to find multiple options. You should only consider if you’re eligible for any of these.

Buying a Home in Arizona

Many people consider millennials to be the group that may struggle to get a home. As true as that may seem at first glance, even in Arizona’s current market state, there are several ways in which you can get the keys to your new home.