Cost of owning a home in metro Phoenix up nearly 50% from last year, report finds

PHOENIX — The cost of owning a home in metro Phoenix continues to rise, according to a recent report, and an industry expert said it doesn’t appear the Valley’s hot housing market will cool anytime soon.

The monthly payment on a typical home in metro Phoenix last month was $1,767. That’s up 20.4% from the start of the year and 48.9% higher than a year ago, according to Zillow’s market report.

The amount is calculated assuming the home is a 30-year mortgage with a 20% down payment.

Homes in the Valley were also worth approximately 30.2% more year-over-year in March at $453,110, the report found, with dwindling availability sending prices soaring.

“We have so many businesses moving into the Valley right now that our market is being driven by supply and demand,” Sindy Ready, a board member with the Arizona Association of Realtors, told KTAR News 92.3 FM’s Arizona’s Morning News on Friday. “There are more buyers than there are houses.”

Ready said there were about 6,700 homes available for all price points in the Valley as of Friday morning, with a normal market having about 35,000 homes up for sale in one day.

The report found inventory grew 6.4% from February, but was still 9% lower than a year ago. Newly pending sales also dipped 5% in March when compared with last year but were up 8.6% from February.

Relief for prospective homebuyers doesn’t appear to be on the way, Ready said.

“It’s gonna be a hot housing market, they’re speculating for the next three to seven years,” Ready said.

The benchmark 30-year mortgage interest in the U.S. has been rising recently as the Federal Reserve increases short-term rates to combat surging inflation. It started at 3.2% to begin the year and has since gone up to 5.11% last week, a 12-year high, according to mortgage buyer Freddie Mac.

While a raise in hikes could result in less competition for homes, economists say it could lead to fewer homes up for sale. This is because most homeowners with a mortgage may have locked in ultra-low rates over the years, resulting in less incentive to sell.

Ready said the raise in hikes will affect first-time homebuyers or those who don’t have the money for an increased down payment.

“It’s going to affect the amount of house they can buy,” Ready said. “They can’t buy as expensive of a house because they got to spend a little more on the interest rate.

“Even at the rates we’re at right now, it’s still a reasonable interest rate and a good opportunity to invest in real estate.”

Ready said she has heard the mortgage interest rate could rise to 8% by the end of the year.

She added there are programs to help people who can’t afford the rising down payments, such as lowering the cost down to 10% or even 5% down, but there are problems with that as well.

“The difficulty with that is if you get into a bidding situation and if there’s cash offers in addition to the finance offers, the sellers are always going to lean towards the cash offers if everything else is equitable because it’s easier for them,” she said. “They don’t have to worry about if someone is going to be approved for a loan, they don’t have to worry about an appraisal.”

Renting in the Valley isn’t providing much relief either, as the report found metro Phoenix’s typical price was up 23.7% year-over-year in March to $1,921.

The Associated Press contributed to this report. 

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