By Erik Tinker
It may be time to start keeping up with Joneses again, Phoenix.
The National Association of Realtors’ July housing report showed that cheap home sales are down and luxury home sales are up. Sales of homes priced at $100,000 or below dropped by 14 percent year over year. On the flip side, sales of million-dollar and higher homes jumped 20 percent since last July.
There has been a return and rise of luxury custom homes in the Valley and this has transpired for a multitude of reasons. One reason is due to job growth. There are a number of corporations moving their business to Arizona and many more forecasted to do so. An example of this is Tempe’s large State Farm office, which now houses a number of high-level, highly paid executives to Phoenix. In addition, as the Arizona economy continues to grow, so do executive salaries. This means executives already living in the Valley are now making more money and are looking for a luxury upgrade in a home. New executives are also moving into town with the intent of purchasing luxury and higher-end homes.
When the market crashed 10 years ago, many homeowners had to foreclose and walk away from their homes. This affected their credit and, ultimately, their finances. Buyers are in equity positions for the first time since the crash. They are able to qualify for home loans and those that have homes, can leverage their homes if they so choose. Furthermore, lending guidelines have softened for Jumbo loans. The limit for Jumbo loans in Arizona is $424,100. Since the rates are extremely low for these loans, this has helped to contribute to the influx in luxury home purchases.
As a spec home builder, these factors have contributed to my desire to build luxury homes in Metro Phoenix. Although the price of land and construction has increased, I have created margins by bringing together a top architect and interior designers to ensure my homes feature expensive finishes. I am building larger than what is typically built in the area, too.
Erik Tinker is the founder of custom homebuilder Tinker Development.