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Arizona’s hot housing market is cooling quickly

Increasing interest rates are now pricing out many potential homebuyers, leading to decreased demand. On Your Side's Susan Campbell explains.
Published: Jun. 22, 2022 at 12:16 PM MST
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PHOENIX (3TV/CBS 5) - Arizona’s hot housing market is cooling down quickly. In the past 28 days, 11,845 new residential listings were added in the Greater Phoenix area, according to the Cromford Report. It’s a 34% jump in new listings, compared to the average. At the same time, rising mortgage interest rates are pricing some would-be home buyers out of the market.

“We are absolutely in the middle of the shift,” said Trevor Halpern, a Phoenix-based real estate agent. “We are see seeing a rapid cooling of our market. We are seeing a dramatic increase in the number of listings, the highest percentage in the number of listings that we’ve seen since the Cromford Report was tracking that since 2011.”

Despite the cooling conditions, the Phoenix area remains a sellers’ market. But it could be more balanced soon, with buyers and sellers entering negotiations on an even playing field. Buyers will have more inventory to choose from, and sellers likely won’t be selling their homes within hours of going on the market.

“According to the Cromford Report, if everything keeps going the way it is going, we should see some sort of balance in August or September. So far, the shift toward market balance has not caused home prices to drop. The current median price for home sales in the Phoenix area is $475,000. Last month it was $471,000,“ Halpern said. “We haven’t seen price decreases yet. It’s hard to say whether we’ll see them or not. It really depends on where interest rates go. Now buyers are in a position where they can negotiate; however with their interest rate, they may be priced out of the market simply because interest rates have gone up so much.”

The current average 30-year fixed-rate mortgage is around 6%. For scale, just a year ago it was hovering close to 3%.