May Our Market Not Follow Suit
There's no way to sugarcoat the challenges facing the Phoenix Metro and national residential real estate markets. Sales have been stuck near multi year lows for more than three years and remain low as buyers expect mortgage rates to fall to an acceptable level. We expected sales to accelerate once rates declined, but we're still waiting.
One year ago, at the beginning of Autumn, I wrote this:
"Mortgage rates, which had been up and down since a high point of 7.76% in November 2023, had been on the decline for almost 2 years and then recently hit a one year low last week near 6.2%! … When rates had dropped below 6.5%, it seemed like buyers were finally beginning to get off the proverbial fence, though it's too early to see if that trend continues." 09.29.2025, Mike Bodeen
Unfortunately, it was too early. That lowering trend did not continue. Instead, as a direct result of inflationary pressures due to the rise of oil prices / Middle East war, we find ourselves again with rates over 7%. We weren't doing great before, and now the market may fall further.
We weren't doing great before, and now the market may fall further.
US News and World Report made the point last week that the bond market which moves mortgage rates is especially price sensitive. Middle East conflict pushes oil prices up, that makes everything more expensive to manufacture and transport, and higher inflation means higher interest rates.
Higher mortgage rates will not only further slow sales, they are likely to pull pricing down as well. If sellers have to sell, we will see some radical price drops. These drops, if they persist, will initiate foreclosures. Unfortunately, it's what I've observed too many times over my vast and past career.
They were not pleasant memories.
Mike Bodeen has been analyzing the market and serving clients since 1976. This article first ran in Mike’s Monday Market Snapshot, the Bodeen Team weekly email.
