Home prices in Phoenix are ticking back
Home prices are on the rise again in metro Phoenix and across the country, as reported by the S&P CoreLogic Case-Shiller Indices on April 30.
With mortgage interest rates remaining around 7%, many first-time homebuyers lack the financial means to afford a home purchase.
Nevertheless, not everyone is interested in purchasing a home, according to Randy Grudzinski, partner and head of capital markets at Scottsdale-based Empire Group of Cos., a company that is developing thousands of rental units in metro Phoenix.
Grudzinski explained, “There are renters by necessity and renters by choice—two distinct segments of the market. Our urban residents prefer to live in trendy, walkable neighborhoods.
Sometimes, these penthouses cost $5,000 a month. At those rent levels, they could afford to buy a house.”
Phoenix rents increased 0.2% in April, compared with a 0.5% increase nationwide, according to the latest research from Apartment List. Year-over-year, however, rents in metro Phoenix are down 3.9%.
Meanwhile, home price growth is up 4.9% year-over-year, according to the newest Case-Shiller report.
Even so, Greg Hague, CEO of Scottsdale-based residential real estate agency 72Sold, believes that home ownership is a more sensible option.
If you’re trying to decide whether buying or renting a home makes more financial sense, consider this: “Should I save a little now if it’s going to cost me a lot later?” Clearly, that’s not the best move. Opting for short-term savings could really set you back in the long run.
When you buy, you build equity with each mortgage payment, especially as your home increases in value. This can significantly surpass any savings you might achieve from renting, making buying the smarter financial choice in the long term.
Renting can put you in a vulnerable position, as landlords have the ability to increase your rent or evict you to sell the property at the end of your lease, Hague said.
Hague is so convinced of the benefits of homeownership that his company has recently launched a new program across the state, aimed at assisting first-time homebuyers.
“One of our representatives will assist you throughout acquiring your first home and will waive 100% of their fee to assist with your closing rates and help your initial loan payments,” he explained.
He deeply recommends, “Don’t save nickels today only to lose dollars tomorrow. Consider buying a home now.”
Selma Hepp, chief economist for CoreLogic, noted that home prices in Phoenix are rising, consistent with national trends.
“Regardless of significant inflation in recent years, Phoenix still offers confronts for first-time homebuyers, specifically with extreme mortgage rates and constant inventory shortages,” she explained. “However, the steady influx of new construction keeps Phoenix more affordable compared to other Western markets nearby.”
Selma Hepp noted that, like many economic indicators, the path to stabilizing the housing market is complex and unpredictable.
Selma Hepp observed that although home sales and inventories are showing improvement compared to last year’s low, high mortgage rates still pose challenges to affordability, keeping many prospective buyers out of the market.
“Despite this, due to the ongoing imbalance between buyers and sellers, home price growth remains robust. Monthly gains continue to increase, even though the rate of annual growth has slowed, primarily due to comparisons with the unusually strong gains seen in the spring of 2023,” she explained.
