You now want a six-figure wage to afford a starter residence in Phoenix.
Phoenix, AZ, is a sunny, outdoorsy metropolis residence to famend sports activities franchises, spectacular vistas, and loads of golf programs. Nevertheless, Phoenix isn’t simply the center of The Valley of the Solar; it’s additionally residence to a booming actual property market that’s seen important progress lately.
For a lot of, shopping for a house in Phoenix is a dream come true, however it’s additionally essential to know the way it will affect your funds. From down funds to month-to-month mortgage funds, there’s lots to know earlier than shopping for your first residence
So whether or not you already dwell in The Valley of the Solar or want to relocate to the realm, right here’s a breakdown of the earnings you’ll have to buy your first residence in Phoenix.
Try our unique report for an in depth nationwide evaluation.
How a lot earnings do you have to purchase a starter residence in Phoenix?
The median sale value of a starter residence in Phoenix is $330,000. With the intention to afford this, first-time homebuyers in Phoenix ought to make $101,321 per 12 months, up 6.6% from 2023. Nevertheless, the median earnings in Phoenix is $89,521, that means the everyday resident usually can’t afford a starter residence.
As anticipated, starter properties in Phoenix are rather more reasonably priced than the common residence (all value brackets mixed). With the intention to afford any median-priced residence within the space, you’ll have to make $121,368 (as of October 2023).
Nationwide, you want an earnings of $75,849 to afford a typical starter residence, which prices a median of $240,000. The typical U.S. family earns an estimated $84,072.
First-time homebuyers’ information to the Phoenix housing market
Phoenix has been a preferred migration vacation spot for years amongst homebuyers on the lookout for sunshine and affordability. However in the course of the pandemic, the area noticed an explosion of progress and recognition, which has hardly slowed down. In reality, the town has persistently been the high vacation spot for relocating residence consumers. This inflow has boosted home costs by 29% since January 2021, from $325,000 to $459,000 in April 2024. Home costs have almost tripled previously decade.
Local weather dangers are a significant concern for residents in Phoenix, although. The town is within the midst of a decades-long megadrought plaguing the Southwestern U.S., and just lately hit 110° F for 31 days in a row. 2023 was additionally the town’s hottest and driest on document.These developments are anticipated to proceed as local weather change worsens.
The desert metropolis is residence to many world-class facilities positioned all through its spread-out neighborhoods. Some widespread neighborhoods in Phoenix embrace Central Metropolis, Maryvale, and Ahwatukee Foothills. From the Phoenix Zoo and Heard Museum to South Mountain and Camelback Mountain, there are many causes to name Phoenix residence.
What does a typical down fee appear to be for a starter residence in Phoenix?
Listed below are some frequent down fee quantities for a typical $330,000 starter residence in Phoenix:
| Down fee proportion | Down fee quantity |
| 3% down fee | $9,900 |
| 3.5% down fee | $11,550 |
| 5% down fee | $16,500 |
| 10% down fee | $33,000 |
| 15% down fee | $49,500 |
| 20% down fee | $66,000 |
Down funds can vary from 0% to 100% of the overall home value, relying in your price range, mortgage sort, and long-term priorities. Whereas specialists have traditionally really helpful budgeting for a 20% down fee, the rising value of properties and continued sluggish wage will increase has led to a 15% down fee turning into extra frequent.
Some mortgage sorts permit for decrease down fee quantities. For instance, a Federal Housing Administration (FHA) mortgage requires simply 3.5% down, whereas the bottom doable down fee for a standard mortgage is 3%. These quantities sometimes rely in your credit score scores, so consumers with greater credit score scores could qualify for decrease down funds.
What’s the typical mortgage fee for a starter residence in Phoenix?
The standard month-to-month mortgage fee for a starter residence in Phoenix is $2,533. This assumes you place 3.5% down and have round a 7% rate of interest.
If this fee sounds too excessive, you possibly can contemplate renting an condo in Phoenix. The typical lease value is $1,962, probably making it a greater possibility whilst you save for a down fee on a home. You can even use an affordability calculator to see what you possibly can afford primarily based in your earnings and down fee.
What must you do subsequent?
For those who’re available in the market to your first residence in Phoenix, it’s essential to know how a lot home you possibly can afford. Take your annual earnings, credit score rating, the present mortgage charges, and native market developments to decide that works finest for you.
From there, a Phoenix agent can assist you navigate all the residence shopping for course of and supply useful native experience. To be taught extra about easy methods to purchase a house, take a look at Redfin’s First-Time Homebuyer’s Information.
Methodology
Redfin divides all U.S. properties into 5 buckets primarily based on Redfin Estimates of properties’ market values. There are three equal-sized tiers, in addition to tiers for the underside 5% and high 5% of the market. Redfin defines “starter properties” as properties whose sale value fell into the Fifth-Thirty fifth percentile of the Redfin Estimate tier.
We calculated the annual earnings wanted to afford a starter residence by assuming a purchaser spends not more than 30% of their earnings on housing funds. Housing funds are calculated assuming the client made a 3.5% down fee and likewise take a month’s median sale value and common mortgage-interest price into consideration.
The nationwide earnings knowledge is adjusted for inflation utilizing the Shopper Value Index. 2024 earnings is estimated primarily based on projections from the U.S. Census Bureau’s (ACS) 2022 median family earnings utilizing the 12-month transferring common nominal wage progress price. The speed was compiled from the Present Inhabitants Survey and reported by the Federal Reserve Financial institution of Atlanta.
We assume housing funds embrace the mortgage principal, curiosity, property taxes, householders insurance coverage, and mortgage insurance coverage (when relevant).
All knowledge sourced February 2024 except in any other case acknowledged.
