By Frank May, Real Estate Agent
Spring is finally here, and the home market is still heating up like the temperatures! Over the past month, we have still seen an increase of homes going under contract along with the inventory remaining low. This is great for prices as we had price drops over the last half of 2022 that have finally seemed to have stopped.
Interest rates are a huge factor in what will happen moving forward. If interest rates increase that will put some brakes on the number of buyers who can remain in the market, or they will have to look at lower-priced homes. This is what happened last year as the Fed increased rates very quickly and buyers who could afford a $600,000 home one day found themselves looking at $500,000 homes the next.
New homes have also stopped lowering prices in the communities we’ve been to these past couple of months. They are selling their inventory quickly so in some communities they have not only stopped lowering prices, but they are back to price increases. New home builder K. Hovnanian opened a small community near 43rd Avenue and Happy Valley Road and had six sales in the first week and they weren’t even on-site yet. After the first week they raised their prices $5,000 because they sold all their released lots already.
I have seen a couple of national articles that have put the Phoenix market in a group of cities that is supposed to be crashing but what we are seeing is the opposite right now. More people keep moving here because we have incredible weather and more good jobs coming. Also, more and more buyers are deciding to get into a home knowing they can refinance later. This is a better option for them than renting, as rental prices have been very high these past few years. Add in the fact that homes are less expensive than they were a year ago and it makes it an even easier decision for buyers to get into their own home.
I mentioned the fact that if the interest rates go up it will slow the market down again but if they remain the same and then drop, the number of buyers is expected to increase by quite a bit! This is part of what we have seen over the past month or so. Interest rates went down a little and things really heated up with multiple offers and price increases. If rates get back down in the 5% range, then we will continue with strong sales and price increases. The other benefit of lower interest rates is the fact that we need some more inventory and owners who have put off selling will be more tempted to make a move. They haven’t wanted to sell because a lot of owners have a 3% mortgage rate, and they didn’t want to trade that for an almost 7% rate! So, you can probably tell I’m a huge fan of getting the interest rates down!
Home sales stimulate so much of the economy. From electricians, handyman services, roofing, furniture sales, landscaping, and so much more, these lower rates equal more sales, which equals more people working and spending money. It seems like a win-win but since I’m not in charge of the Fed, I guess we’ll just have to wait and see what they do.
Also, I wanted to mention that I have a list of different services that I have worked with over the years, so if you are ever looking for someone to do work at your home, please feel free to reach out and I will pass on their contact information. And if you have worked with anyone recently who has provided outstanding service, I would love to have their contact information and what they did so I can possibly add them to my list. I love to keep good people/companies in business, and I love not having to roll the dice when looking for someone to work at my home!
If you have any questions on anything real estate, please feel free to contact me. Have a great beginning of spring and a great St Patrick’s Day!
Frank May grew up in the Valley, graduating from Northwest Christian School and Northern Arizona University. He is a real estate agent with RE/MAX Fine Properties and has been helping both buyers and sellers for over 20 years. He has been a Dave Ramsey Endorsed Local Provider (ELP) since 2003. Learn more at mayteam.com.
