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Rising interest rates show signs of cooling off hot Valley housing market

Posted at 9:13 PM, Jun 29, 2022
and last updated 2022-06-30 09:08:17-04

For months now, the Valley housing market has favored the seller. Any "for sale" sign led to bidding wars and a lot of frustrated, outbid buyers.

Tempe Homeowner Wendy Campbell saw it firsthand and she wasn't even selling her house.

“A lot of houses when we walk by... are for sale one day, then the next day it looks like they're already purchased. I get a lot of solicitation for selling my home," she said.

Now that the Feds raised interest rates by 0.75%, the hot Valley housing market is showing signs of cooling off.

“With less people fighting over houses, there's less multiple offers,” said Sindy Ready with the Arizona Association of Realtors.

Ready said about a month and a half ago, interest rates were being locked in for buyers around 3% or higher. Now buyers are locked in at closer to 6%.

Some sellers have even had to come down on their initial asking price.

Realtors we spoke with say the market is in a correction.

For example, a home in Phoenix was listed at $565,000 and was under contract at a $10,000 price reduction. The realtor for the house said it's still an active market as the house was only showing for two weeks before it went under contract.

Ready said the sellers most impacted during this correction are those with more expensive homes — the ones listed at a million dollars or more.

Ready says since the start of June, homes for sale in Scottsdale have dropped 8-10% in price.

With buying power leaning oh-so-slightly toward the buyers, housing inventory isn't at historic lows like it once was.

Ready said, as of Wednesday, there are around 12,000 homes available in the Valley. Compare that to late May or early June when housing inventory in our area was just over 4,000.

Fears of a recession could give buyers pause.

Ready says mortgage lenders don't give loans like they once did and Federal restrictions have been put in place since the recession to prevent giving more than a buyer can afford.

"We're not going to see that crash like we did previously,” said Ready.