Is a slowing in the string of all time record Phoenix metro median high SOLD prices ready to start slowing with rising mortgage rates? Well, maybe not quite yet as May 2022 is expected to be another all time high with sold prices of $475,000. Don't expect a reduction from the median of $475K soon and in fact it may increase further in June for homes that went under contract in May. (Photo from City of Phoenix Parks and Recreation website: Dobbins Lookout Point South Mountain)
However there are signs that a slowing (not a downturn) of home prices may be approaching. Catherine Reagor the Real Estate Reporter for the Arizona Republic reported today June 2, 2022, "Metro Phoenix’s hot housing market is less frenzied than last year, though it’s not that obvious yet as prices continue to climb.
The Valley’s median home price is expected to hit $475,000 in May and climb to $480,000 in early June, according to the Arizona Regional Multiple Listing Service.
But after that, home price increases “will begin to wobble,” according to the research based on pending sales."
Jeff Masich, REALTOR® Arizona Homes and Land Group, HomeSmart says, "Record median Phoenix metro home SOLD prices are expected to reach $480K in June 2022, after that it is not clear."
Reagor continued, "Housing experts aren’t predicting anything close to a crash but instead a shift to a more stable market this year.
“When the housing market moves from a sellers’ market to a balanced market, demand softens first, and a drop in demand is what we’re seeing,” said housing expert Tom Ruff of ARMLS' Information Market group.
Interest rates are a big wild card for home sales, Ruff said."
Freddie Mac Mortgage Rates Survey
Continuing, "The rate for a 30-year mortgage climbed to 5.3% last week, up from 3.2% in early January, according to Freddie Mac. The difference adds about $500 to the monthly payment on a $450,000 mortgage. Ruff said those indicators suggest the Valley’s housing market is “cooling.”
In late April, housing analyst Michael Orr of the Cromford report put out an alert on metro Phoenix home sales and prices.
He said though the market is still “far above normal,” it’s changing rapidly with rising supply and falling demand.
Orr said those two indicators are the most important to watch and not home prices, which are from home sales started months ago.
“Our market has moved from euphoria to unease," said Sarah Perkins, director of strategic accounts at Clear Title Agency of Arizona, and a housing market analyst.
But she said there’s no reason to fear a bubble; instead, it's being called a market correction.
Perkins' analysis shows several differences between NOW and the housing bubble of 2005-06:
2005: High vacancy and foreclosure risk
False demand led to vacant properties, and vacant properties lose value.
Bad financing with subprime loans.
Lots of speculation, with buyers never intending to occupy homes.
Overbuilding.
2022: High equity, low foreclosure and vacancy risk
Good loans with significant down payments.
Cash buyers with little risk for foreclosure.
Higher occupancy rates.
New home building struggling to keep up with demand.
The other wild card is inflation for metro Phoenix’s housing market. Phoenix is leading the nation for inflation with prices 11% higher in April than a year ago, according to the Bureau of Labor Statistics.
“Higher home prices and higher rents have translated into higher inflation,” Ruff said. “When you combine rising interest rates, record prices and add in record inflation, a homebuyer faces a triple-edged sword.”"
One thing for sure is that 5.3% 30 year mortgage rates are still closer to record lows than record hights and for those that wish to lock in a monthly payment now instead of battling continuing rent increases and expected higher still mortgage rates as predicted by the Federal Reserve this may be the time to buy even if it is a smaller home or condo as a first home. Building equity is better than renting and paying a Landlord's mortgage.
Give me a call (call/text 480-242-6500) to review your home purchase or sell options and let me help you put your best offer together.
For more information on, see: Arizona Homes For Sale.
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