PHOENIX - It's been exactly two weeks since the federal funds rate hike, which doesn't directly raise mortgage rates, but certainly has an impact, including in Arizona.
With a rise in mortgage rates and home prices skyrocketing over the last year in Phoenix, experts say the real estate market is on track to catch up to other major cities like Seattle and San Diego.
Before 2022, they say the market was undervalued, so the housing prices are finally catching up.
Julia Foley has been a realtor in the Phoenix area since 2007. In the last year, she says she's seen a drastic change. "It's been a wild ride this last year," she said.
An average of 30-40 offers per property and cash buyers are still making up a significant percentage of them.
"They're pushing out people who are financing, so that's making it more difficult," she explained.
This is affecting almost every type of buyer.
"It's very hard for first-time buyers at this point because they don't have the equity to trade up, and even for people who do have equity that they've gained being in their current home, when they sell it, it's hard for them to find a new property," Foley said.
This is something Tanisha Caglin knows all too well.
"We'd ideally love to buy a larger place, but if we sell this, that we have equity in, the question is just, where are we going to go? Because the prices are astronomical," she said.
In response to the fed rate hike two weeks ago, lenders across the board are raising rates.
"It's just been ridiculous. We put in an offer on a house and already the interest rate has gone up …," Caglin said.
Buyers have seen rates go from around 4% to almost 5% in the last few weeks. On a $400,000 loan, that equates to an extra $4,000 a year in interest.
All this makes homebuyers like Tanisha wonder if it's even worth it.
"Are we going to forgo our lower rate here to go into a newer house? I don't know," she said.
Combined with a drastic rise in home prices in a hot market, experts don't think it's slowing down anytime soon.
"Phoenix just offers so much and people are really attracted to it, so I think that the prices will keep going up," Foley said.
Six more rate hikes are expected in the year from the fed, which experts say will likely continue to push mortgage rates even higher.
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