Nov. 25, 2005: Short-term interest hikes shouldn't discourage Phoenix-area home buyers
You may not have bought a home yet, but don't say it's for lack of interest.
Here's a modern curse: Virtually everything that matters in real estate is a long-run phenomenon, but the news we use to judge the real estate market is all about the short run. Home prices are up compared with last year, last month, last week. Building permits are down compared to last month, but they're up compared to last year. The news item that may cause you the greatest concern is mortgage interest rates. They've been fairly steadily up over the last month.
Take the long-term view. Interest rates for a 30-year fixed mortgage have hovered between 5.25 percent and 6.25 percent for the last three years. Mortgage interest rates in general are at historic lows. There is no reason to expect a 30-year fixed to surge to 8 percent anytime soon, and 8 percent is still a very low rate.
Don't let the short-term news frighten you. The long-term prognosis for the Greater Phoenix market is excellent - continued in-migration from the Snow Belt and California, continued demand-driven appreciation, continued low interest rates.
The high hurdle to leap is entry cost, of course. Current homeowners have their accrued equity to use when they move up. First-time buyers have to qualify for most if not all of their financing, then they have to find a home priced at their qualification level. Now that's a curse!
Even so, it doesn't make sense to buy just anything. The home you buy must have appreciation potential, which means it should be in high demand when you sell it. In the recent seller's market, virtually everything rose in price, but newer single-family homes in freeway-accessible suburbs did a lot better than manufactured homes in the boondocks. Interest rates are still great, housing inventories are up and sellers are negotiable. It may not be a buyer's market, but it's a great time to buy a home.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
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