Residential real estate in greater Phoenix continues to see price appreciation, driven by modest personal pay increases and falling interest rates. Current 30-year conventional loans are 3.82% with .5 points. (Fannie Mae, June 2019)
Further, the Federal Reserve is now forecasting a drop in rates through next year with many Wall Street analysts predicting three reductions of ¼ point each over the next 12 months.
Why the change in rate forecast?
Late last year, signs of a significant slowing in the U.S. (and global) economies began to emerge. The Gross Domestic Product (GDP) had slowed, and forecasts were predicting continued slowing over the next several months. Also, the U.S. found itself in a significant trade dispute with China (and for a brief time, Mexico), and trade disputes are almost never good for global economic growth. With the economy significantly slowing, the Fed announced its intent to change its forecast of approximately three interest rate increases to taking a “wait and see” position.
Today, analysts are predicting rates in 2020 to be flat to slightly down:
(Reuters) – The U.S. Federal Reserve is done raising interest rates until at least the end of next year (2020), according to economists in a Reuters poll who gave a 40 percent chance of at least one rate cut by end-2020.
So what have these lower rates done to our housing market? Our median sales price in June 2019 is $278,000, up 4.9% year over year.
One last point, whether buying or selling, please keep in mind that our market is not monolithic. Price ranges and neighborhood locations will vary in performance, often significantly.
For the $150,000 to $225,000 range, expect annual appreciation rates to be between 6%-10%. For homes that sell for $225,000-$500,000, appreciation is expected to be between 3%-5% and those selling over $500,000 appreciation is expected to be between 1%-3%. (Cromford Report, June 2019)
If you have any questions or need more specific information about your neighborhood, please contact me and I would be happy to help you find any information you need!
