Home News Feds hike moving to Phoenix, real estate market to “balanced” territory

Feds hike moving to Phoenix, real estate market to “balanced” territory

by admin
0 comment

On Sept. 23, the Federal Reserve raised interest rates by another three-quarters of a percentage point to combat inflation.

Mortgages are not directly tied to federal interest rates, but they correspond to federal interest rates.

According to data released by St. Louis Federal Reserve Bankthe average 30-year fixed mortgage rate is 6.29%, the highest rate since the Great Recession 14 years ago.

Interest rates are rising rapidly, at the same time mortgage rates were below 3% last year, and most recently the average 30-year fixed rate in January 2021 was 2.65%.

The lowest average record ever.

The rapid rise has shocked the system of the Phoenix real estate market. In 2018, Phoenix’s average list price and selling price hovered around $300,000.

The four-year rise in house prices peaks in the first half of 2022 with both figures nearing half a million.

But since rate hikes began last year, the average selling price of Phoenix homes has corrected by 6%. The listing price has been reduced by 7%.

Another way to look at it is house prices year over year. Prior to 2021, Phoenix sales prices increased by an average of 10% annually.

Last year, when interest rates bottomed out, average selling prices tripled year-on-year.

Since the rate hike, annual growth has slowed to a more modest 14% year-on-year.

This meant that the Arizona housing market was hot last year, with housing analysts now calling Phoenix a “balanced market.”

The Cromford Index is one way Phoenix realtors measure whether a home is in the ‘buyers’ or ‘sellers’ market, with values ​​above 100 being considered the sellers market.

In March of this year, the Cromford Index surpassed 400, giving sellers a significant advantage in real estate deals.

In September, the Cromford Index hit 105. Analysts say the oversupply has yet to materialize and sales are hitting long-term averages.

One area of ​​the market that hasn’t seen a major correction is homes priced above $500,000, where the number of homes under contract appears to be in 2021.

For the first time in a long time, incentives are being given to buyers.

One of the new developments in the Phoenix market is the growth of “2-to-1 buy-down mortgages.” To attract buyers, some mortgage companies offer mortgage rates that are 2 percentage points lower than the fixed mortgage rate for the first year the borrower is in his first year and 1 percentage point lower for the second year. .

This is unlike the popularity of variable rate mortgages due to the Great Recession housing crash, where the cost of lower interest rates comes directly from the seller and the final rate never exceeds the fixed 30-year rate.

appId : '1561178210822538',

xfbml : true, version : 'v2.9' }); }; (function(d, s, id){ var js, fjs = d.getElementsByTagName(s)[0]; if (d.getElementById(id)) {return;} js = d.createElement(s); js.id = id; js.src = "https://connect.facebook.net/en_US/sdk.js"; js.async = true; fjs.parentNode.insertBefore(js, fjs); }(document, 'script', 'facebook-jssdk'));

You may also like