As 2022 comes to a close, we have a real paradox in the Phoenix Arizona metro area. Phoenix is leading the United State metro areas in inflation YET we are in a period of cooling home prices. WHAT you say? How can this be? Yet it is true. Most general prices are going up while at the same time housing costs are decreasing in what has become a Buyer's Market for homes. (Photo: Phoenix Valley of the Sun from Dobbins Lookout Point- Phoenix Parks and Recreation website)
This strange, maybe temporary situation or 'window of opportunity' was described by The Arizona Republic on December 11, 2022 in an Article Inflation, Housing in 2023 to Shape Arizona by reporters Russ Wiles and Catherine Reagor.
Phoenix Inflation Highest in US as Prices for Goods and Services Increase
"Phoenix is the nation’s inflation leader (12.1%). Metro Phoenix was entrenched as one of the nation’s inflationary hot spots in 2022, largely because of housing costs....
Phoenix inflation for general goods and services at 12.1% (Graph: Pixabay)
...The region’s latest numbers reported in November showed an inflation decline, but that drop was from a peak of 13% to a still daunting 12.1% compared with the previous 12 months. The Phoenix area still has the highest rate of inflation of any large metro area in the country. Higher prices for homes and apartments largely fueled Phoenix-area inflation. Home prices and rents here have faced upward pressure from heady job growth locally and from a steady infusion of newcomers moving from other states.
What happens with the economic measure likely is key in the next year."
Metro Phoenix median home prices DECREASE
Continuing. "Home prices and rental costs in the region started to cool off later in 2022.
The median home price in the Phoenix area is on track to drop to $419,000 in November, based on pending sales.
That’s down almost 12% from the $475,000 record price hit in May.
Higher mortgage rates and affordability concerns are the main reasons home sales are slowing and prices are falling, said housing analyst Tom Ruff with The Information Market, a division of ARMLS.
The average 30-year mortgage rate was 7.1% at the beginning of the month, more than double January’s rate of 3.2%, according to Freddie Mac.
Sam Khater, Freddie Mac’s chief economist said recent increases in interest rates “will certainly inject additional lead into the heels of the housing market.”"
It may be a good time to buy before home prices increase looking at the long run while we are in this period at the current moment where median home prices have dropped. Many home sellers are currently offering seller incentives (which we have not seen during past 2 years), some home buyers are electing to use these Seller incentives to buy down the mortgage rate 1 or 2 points.
Buy a home in Phoenix, Scottsdale or elsewhere in Arizona.
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