Despite Rising Rates, Phoenix Real Estate is BOOMING!
The past year has seen more than 3 million jobs added to the U.S. economy, along with nearly 1.5 million new households. Chief economist at Realtor.com®, Jonathan Smoke, argues that this positively staggering news is the driving force behind the national real estate boom – with Phoenix area home sales among those at the forefront – even as interest rates are rising.
Behind the Numbers
Rapid sales in European and U.S. bond markets at the end of April elevated rates to levels unseen in months. According to the Mortgage Bankers Association (MBA) and Diana Olick of CNBC, this led to a 4.6% drop in mortgage applications for the week ending on May 1st. Thankfully for the housing market, this dip was entirely comprised of refinances, as purchase applications continued their climb to the highest level since June 2013!
Motivation to Buy Fuels Sales
Contrary to popular belief, sharp increases in interest rates can actually push prospective buyers to find a suitable property, make more enticing offers, and close sooner than they might have otherwise. Couple this motivated mindset with the fact that purchase applications are 12% higher than a year ago, while listings are lasting an average of 10 days fewer, and we have a recipe for even more robust sales in the months ahead. While rising rates might deter refinancing, they offer another source of fuel to further ignite the already booming real estate market in The Valley of the Sun.