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PHOENIX (3TV/CBS 5) – Shelby Payne is a first-time home buyer who’s still unpacking her belongings.
As mortgage rates began to increase this summer, she took the plunge and bought a two-bedroom townhouse before interest rates went up anymore. “It can get really scary,” Shelby told On Your Side. “I mean just the price tag and then you throw in the interest rate, and your head kind of just starts spinning. So, I feel just super, super lucky.”
Shelby is lucky because her interest rate locked in at just under 4.4% in July. With recent rate increases implemented by the Fed, Valley real estate is already starting to cool as a result. A recent report shows 50% of Phoenix home sellers lowered their asking price in July just to attract buyers. “Everything mortgage related, we have definitely felt the hit to production,” Dean Wegner said. He’s a Scottsdale mortgage broker with Guardian Mortgage and been in the lending business for more than two decades. He says when the feds raised rates in June and then again in July it slowed down home buying.
As a result, Wegner says Maricopa County is no longer a seller’s market like it was. “Back then we saw sellers were bullies. You had two weeks to buy the house and it was non-refundable,” Wegner said. “Guess what? Now they’re flexible. They’re not getting a lot of showings.” With interest rates now around 6%, Dean says buyers are no longer bidding over the asking price. In fact, since June he says the average selling price in Maricopa County has dropped 12%.
With today’s announcement that the Fed is raising rates another 0.75%, selling prices will likely continue to dip. Wegner says he’s confident the Valley won’t experience a crash like we did back in 2007. “I don’t think we’re going to see what we did last time. I’m already hearing the buzz,” he said. “‘Oh, we’re headed back to the housing crisis like last time!’ But it’s not going to be like that.”
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