Over the last 12 months, the housing market in Arizona has been a rollercoaster. Home prices were rising quickly and the inventory of homes for sale was tight. Now, with average mortgage rates nearly doubled over the last year, the median sale price has dropped and active listings for sale have increased.
"Currently, the ratio between supply and demand shows the Valley moving into a balanced market," said Greg Thorell, senior vice president of residential lending at Arizona Financial Credit Union. "With mortgage rates stabilizing and demand at much lower levels, active buyers in the market are seeking price drops, seller concessions, interest rate buy-downs and negotiations to keep them in the game."
According to Thorell, “The main driver of the rate increase is inflation. The Federal Reserve uses interest rates as the most powerful tool to slow down inflation. Rate increases discourage people from spending and borrowing money, slowing demand and economic growth.”
Higher rates typically mean an increase in your monthly payment and a reduction in purchasing power. The average increase in monthly payment for a 3% interest rate jump is about $350. However, the reduction in the median sales price, interest rate buy-downs and seller concessions have created savings to soften the impact of higher rates.