PHOENIX — The Federal Reserve paused interest rate hikes last week, but mortgage rates are still over 6%.
Because rates are high, Patty LaBenske, a Realtor with the Sibbach Team, says more people are staying put and choosing not to sell or buy.
After moving to Arizona from Chicago and renting for about a year, Asia Parker decided it was time to buy. With the help of LaBenske, she recently closed on a condo in Paradise Valley.
“We kind of just said, you know, it’s not going to get any better anytime soon so there’s no point in trying to wait it out for a better rate or home. If you find something you like, jump on it now,” Parker said.
LaBenske says buying, if you can, is always the better option compared to paying high rent prices. She says what comes up must eventually come down.
“It’s your investment. It’s going to appreciate,” LaBenske said. “At some point, interest rates will adjust and they will come down and buyers can refinance.”
But because of high rates, she says fewer people are buying or selling, which means fewer houses are on the market. Redfin reports Phoenix is the number one city in the country where the number of new listings fell the most over the past year.
In return, the average price of a home in the Valley is down $56,000 compared to this time last year, according to data from the Arizona Regional Multiple Listing Service.
While there may not be as much to choose from, LaBenske says that means less competition — and that is in the buyer's favor.
“You’re going to get concessions and repairs whereas when you’re in that low interest rate, you’re not going to get anything,” she said.
Just be prepared for that higher monthly payment.
“It definitely stings looking at the mortgage payments that I just made and how much is going to interest rates versus the principle,” Parker said. “I try not to look at it, but I know that in the grand scheme of things, it’s a property I now own versus renting and it’s basically my own savings account.”
LaBenske says the average mortgage payment now when buying a $400,000 home is around $2,700 and $3,500 a month.
