This year has been like the last couple of years in the Phoenix real estate market, loaded with change. That’s the only constant. We need to look at the 2023 Phoenix real estate market update YTD. In particular, we are dealing with the effects of higher mortgage interest rates. This has affected both buyers and sellers. What about the housing crash that some forecasted at the first of the year. Did that come to pass? What happened with prices this year?
Interest Rates have affected both buyers and sellers
It is understandable that higher interest rates would affect buyers. In fact, every 1% increase in mortgage rates will rise the loan payment by 12%. Watch this video do find out how this has affected sellers.
Phoenix real estate market update – Inflation is NOT transitory
The Federal Reserve has been aggresively fighting inflationi, even though the came late to the game. Two years ago there was a congrassional hearing that brought up inflation. Chairman Jerome Powell reassured everyone that it would be transitory and that virtually all forecaster agreed that it would subside as the economy re-opened. This has not been the case and has had negative ecomonc results. The increase in the Fed Funds rate is an attempt to bring inflation under control. The real question is what is the colateral damage to the economy in the mean time.
What was unexpected was the reduction in listing or inventory. This can be best explained by examining the low interest mortgages that many sellers currently enjoy. As of the last quarter of 2022, 62% of mortgage holders have an interest rate under 4%, and 23.5% have a rate under 3%. When sellers look at selling and buying another home with a mortgage, there is sticker shock and they realze that they really don’t mind where they’re living.
Prices have not fallen as many predicted. The median sales price in Phoenix has risen 5.7% since the first of the year after declining 13.5% from the high last May.
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