It’s not wise to take just one month’s data point and put too much stock in it, but this last month’s average lease price per square foot (PSF) had the largest one-month gain in over 20 years and THAT caught my attention. (Cromford Report Figures taken from the Arizona Regional MLS)
For the past two years, with one exception, our Phoenix Metro residential rental market has maintained an average PSF between $1.30 and $1.35 (see chart below). Up and down, but stable. Another caveat to mention is that the MLS is only a portion of all rentals but large enough of a sample size to serve us well as a potential trend spotter.
At over 7%, mortgage rates recently hit a 20+ year high (7.09%). It is yet to be seen how much the higher rates will affect our Phoenix market, but it’s certainly not moving in the direction we want to see it moving. Note this: The next round of our news cycles will be to see if rates will hit the 8’s?
If homes were decreasing in value because of our woefully low inventory, higher mortgage rates would bring in cash investors to scoop up deals. So far, that’s not been happening, but we are precariously near that point (price reductions) if not there already. Read it here.
As we’ve preached before, rather than reducing their price, sellers may want to consider teaming with a lender to contribute to a “rate buydown” which offers a buyer a lower initial mortgage rate for 2-3 years before it returns to a current rate. Talk to us about this.
Lastly, and some good news, is that U.S. Homeowners are paying their mortgage on time at a delinquency rate not seen for over 40 years. This is further evidence that the national state of the residential real estate market is no balloon, and not about to pop anytime soon. Read it here.
