Raised Interest Rates Impact On Phoenix Housing Market
As expected, the Federal Reserve this past week raised interest rates – but what kind of impact might that have on the Valley’s housing market?
The Phoenix-area’s housing market has been pretty strong of late, and Mike Orr said a higher interest rate should have less of an effect on that than other factors.
Orr, who founded the Cromford Report, which is a resource for the Phoenix housing market, said the loan approval rate is often more important. And that has seen a major uptick over the past year. Orr said the real impact might be on what kind of house buyers can afford, and where. He explained that developers would be smart to look down-market.
"That’s where the unsatisfied demand is, and as interest rates rise, people will be limited by their income to quite possibly a smaller or less expensive home, because more of their payment is going to be eaten up by interest," Orr said.
Orr said it’s also possible current homeowners might be reluctant to move, if the interest rate on their current home is less than what they’d be able to get on a new one.