Mortgage Rates Plunge: Is a Comeback on the Horizon for Arizona’s Housing Market?

Arizona’s real estate landscape is shifting as experts anticipate an uptick in activity following the recent decline in mortgage rates. The standard 30-year fixed mortgage rate has dipped to below 6.5%, offering a glimmer of hope after a sluggish July for the housing market.

In Phoenix, seasoned loan officer Amy Swaney notes, “With interest rates lowering and the back-to-school season approaching, we expect an increase in market activity throughout August.” This optimism is buoyed by a notable fall from the previous high of 7.2% in May.

Factors contributing to this decline include hints from the Federal Reserve about potential interest rate cuts in September, although caution remains. “That may change if some large event occurs. But right now the market is responding to that possibility,” Swaney added.

Despite the positive outlook, realtor Kelly Schmidt of the Jason Mitchell Group describes the current situation as “stagnant,” pointing out that many properties are experiencing slower sales. For instance, a home listed at $395,000 in a strategic neighborhood has seen minimal showings, marking a significant shift from previous market conditions.

The overall housing market in Arizona still faces challenges, particularly a shortage of affordable options. Current data indicates around 19,000 units are available, which includes townhouses. The average price for single-family homes has fluctuated slightly but experts agree it doesn’t equate to a buyer’s market just yet.

Real estate developer Jamison Manwaring of Venture Neighborhoods hopes that as mortgage rates decline, more homeowners will choose to list their properties. He notes, “There is definitely a lot of demand in Phoenix for buying and for renting,” highlighting the strong rental market that currently comprises about 40% of housing stock.

Chief economist Lisa Sturtevant stated last week that, “While it is certainly not a buyer’s market, it has been a long time since buyers have had this much leverage in the market,” reflecting a nuanced shift in dynamics.

Looking ahead, new regulations regarding home purchasing will take effect on Saturday, August 17. These changes are expected to empower buyers in negotiations. Schmidt suggests that now is an opportune time for buyers to propose competitive offers as homes linger longer on the market.

In a related initiative, United Wholesale Mortgage has recently introduced a zero-down mortgage program for first-time buyers, aiming to invigorate sales and increase accessibility to homeownership.