An increase in minimum wage may not be the only change that will positively impact the housing market in 2024.
For Arizonians, a jump in pay will in turn increase buying power. As the working class earns more, they will have more financial resources for purchases and investments that were previously unattainable, including housing. Additional income inherently increases purchasing power, making homeownership more accessible to a broader spectrum of Arizona’s population. As a result, the demand for housing is likely to rise throughout the state.
An increase in minimum wage may not be the only change that will positively impact the housing market in 2024. A decrease in mortgage interest rates is forecasted during the coming year and may be the final piece of the puzzle for many people trying to achieve homeownership. National Association of REALTORS (NAR) Chief Economist Dr. Lawrence Yun believes we’ve already reached the peak of high interest rates and expects that interest rates will drop to between 6-7% by the spring buying season. A rise in earnings paired with decreasing rates will stimulate the housing market through an influx of buyers who can more readily afford to buy the homes available.
In 2023, the housing market was limited, and the median sales price outweighed the average revenue of would-be homebuyers. As the year came to an end, more homes became available in the Quad Cities market, a trend that is anticipated to continue. Increased inventory can indicate less competitive pricing, which is another advantage for those interested in purchasing a home. As more buyers can afford down payments and monthly mortgage payments, a surge in homebuying activity is expected. Sustained purchasing by an expanding demographic of buyers and increased inventory will help contribute to the stability and growth of the housing market.
Not only does the minimum wage increase benefit potential homebuyers, but it also positively affects renters. Higher incomes can ease the burden on renters, making it more feasible for them to pay rent while saving to buy their own home. Additionally, landlords may witness increased demand for rental properties as individuals move out of shared spaces, now being able to afford their own. This change will create a more dynamic and competitive rental market, as a new class of renters enters the market.
The positive effects of this minimum wage increase extend beyond individual households to the broader economy. As people have more money to spend, local businesses in the housing and construction sectors may experience increased demand. This economic growth can create a cycle of prosperity, as more jobs are created, and new members of the workforce seek places to live. As this cycle repeats, demand for housing will remain steady and the housing market will continue to be active.
Arizona’s minimum wage increase is a progressive step toward fostering economic well-being for residents of the state and acts as a catalyst for improving housing affordability, allowing buyers to comfortably enter the real estate market. With an increase in take-home pay and improved affordability from decreasing interest rates, Arizona is likely to see increased activity in both the homebuying and rental markets. In turn, the overall growth and prosperity of the state’s market will benefit. Using a trusted and knowledgeable realtor is the best way to navigate the ever-changing real estate market. Let a local expert guide you through the homebuying process to achieve your dream of homeownership this year. QCBN
By Jeanelle Shearer
Jeanelle Shearer is a local realtor and associate Broker for Realty One Group Mountain Desert. She is the 2024 President of the Prescott Area Association of REALTORS (PAAR). For additional information or to contact PAAR, go to www.paar.org.
