Phoenix Arizona Real Estate Market Update - August 2023

Mortgage interest rates just went higher! How does this affect you? Watch our Phoenix Arizona Real Estate Market Update for August 2023 to learn more!

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Video Transcript:

Here’s your Phoenix Arizona Real Estate Market Update for August, 2023.

Well, just when you thought mortgage interest rates couldn’t get any higher... they just did. In fact, the last time rates were this high, Blockbuster Video was about to convert from VHS to DVD, YouTube wasn’t invented yet, and Tom Brady had yet to win his first Super Bowl.

So if you’ve followed me for a bit, you know that here in Phoenix Arizona, we currently have fewer homes available than we have buyers. And if you’re not following me, now is a good time to hit that follow button and subscribe.

Elevated interest rates are killing affordability for home buyers. And yet the monthly median sales price of a home in the Greater Phoenix Area is up by about 6% since the start of the year. Currently the median sales price for a single family home in Phoenix is $475,000. The issue is that we aren’t getting a lot of new inventory. As of this recording, Phoenix has 1164 single family homes for sale without a pending contract, which is just 7 more single family homes available compared to last month and roughly half as many homes compared to this time last year. And the reason we’re not seeing a lot of new inventory is that over 60% of homeowners have interest rates below 4% and they’re not rushing to trade up to a higher interest rate.

But here’s where it gets it’s interesting. Demand has already softened due to affordability resulting from higher rates and higher home prices.

So the question is, where do we go from here and how does this affect you as a home seller or home buyer?

Well, the Fed's hellbent efforts to restore annual inflation to its 2% target have resulted in persistently elevated mortgage rates. If the economy continues to show unexpected strength, the Fed has said another rate hike may be necessary; but if the job market slows and consumer spending weakens, this could give them cause for pause. While many real estate economists had predicted lower mortgage interest rates by the end of the year, several are now pushing out those predictions to the 2nd quarter of 2024.

So if elevated interests rates are here to stay for a while, here’s what to expect as a home seller:

The good news is that elevated rates will keep some of your neighbors from listing their homes, which means less competition in your neighborhood. If you need to sell a home to buy a home, the window of opportunity remains open to cash out your home equity and not have to compete against as many buyers or overpay beyond asking price.

On the flip side, days on market may increase a bit, you may receive more offers needing seller concessions to help the buyer buy down their interest rate, and buyers may be less interested in your home if it requires them to spend additional money on updates.

And the good news if you’re a homebuyer is you can expect less competition and the opportunity to negotiate seller concessions to buy down your mortgage interest rate. However, you need to be comfortable with your monthly mortgage investment both now and in the future.

One thing that most real estate economists agree on is that there is an army of homebuyers sitting on the sidelines waiting for interest rates to drop, and when they do, these homebuyers are going to flood the market creating multiple offer situations which is going to put a lot of upward pressure on home prices.

So the million dollar question is… have interest rates reached their ceiling or will we see them creep higher before the end of the 3rd quarter? And will home prices be affected, or will the combination of reduced supply and demand maintain a steady appreciation?

Curious to know YOUR thoughts and what you’re seeing in your neighborhood. Comment below, Like this post, and follow & subscribe. Take care of each other.

Тэги:

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