(Source: AZCentral): Catherine Reagor – Interest rates are up, and home prices are down a bit in metro Phoenix.
The combination hasn’t made it easier for buyers or sellers. But housing analysts aren’t alarmed or predicting any big drops in home prices in the Valley.
Other parts of the U.S., including several more expensive cities, are seeing bigger dips in prices than metro Phoenix has so far.
The median home price in the Phoenix area is down about 2.8 percent from the record high in July.
“The housing market is going back to a more normal balance now,” said Tina Tamboer, senior housing analyst with the Cromford Report. “We won’t see a big price drop in the Phoenix area, but prices could go flat for a while. That’s not necessarily a bad thing.”
The average rate on a 30-year mortgage is up almost a percentage point from a year ago.
The rate is now hovering around 4.83 percent, according to mortgage giant Freddie Mac. That adds about $150 to a monthly payment for a $250,000 loan.
Metro Phoenix’s median home price is about $260,000 now, compared to a record $268,000 in June, according to the Arizona Regional Multiple Listing Service.
Home sales so far this year are down about 6 percent, compared to 2017.
In January, Tom Ruff of The Information Market/ARMLS, said strong demand from buyers for a short supply of homes priced below $400,000 coupled with higher interest rates could slow prices and sales in metro Phoenix this year.
He said that’s what we are likely seeing now. And other housing markets are seeing it too, some even more so.
Where home prices are falling
According to the National Association of Realtor’s third quarter report, here are the U.S. cities with the biggest recent price declines.
- Denver: 3 percent.
- Austin: 4 percent.
- Chicago: 4 percent
- Washington DC-area: 4 percent.
- Seattle: 5 percent.
- San Francisco: 8 percent.
- San Jose: 8 percent.
- Nashville: 9 percent.
Phoenix home prices were flat for the third quarter, according to this national report.
Better for buyers
The shortage of homes priced below $400,000 has sparked bidding wars on Valley houses in that price range over the past year.
Investors paying cash outbid many first-time buyers, making the market even more competitive.
Matthew Coates of Chandler-based Revelation Real Estate said the recent slowing due partly to interest rates means there’s “going to be a slight tick downward in what price sellers are willing to accept.”
Tamboer said some Valley sellers are asking too much for their homes and are going to have to readjust their expectations because prices aren’t climbing like they were six months ago.
Valley real-estate agent Diane Brennan of Coldwell Banker said she is currently working with a few buyers who feel good about the market now and are either moving up or investing.
No bust scenario
Some buyers are hoping for prices to drop more so they can find bargains.
Real estate agents are hearing from buyers who want to wait because they think Valley home prices will plummet like they did in 2009-11.
But those agents and all housing experts agree there’s not another bust headed for metro Phoenix anytime soon.
Metro Phoenix prices skyrocketed 50 percent during 2005-06 and then plummeted by even more than that during the crash.
Home prices in metro Phoenix have climbed steadily between 6 and 11 percent since 2011, but it’s been no boom.
And Ruff said he thinks the Valley’s median home price could tick back up to $268,000 by the end of the year.