How Phoenix homebuyers can stay competitive and afford a home despite rising mortgage rates
As seen on 12News, August 2023.
Mortgage rates in Phoenix have climbed to around 7%–7.5%, the highest levels in decades, causing many buyers to pause or reconsider entering the housing market. Compared to previous years, today’s higher borrowing costs are forcing buyers to rethink affordability, budgets, and timing.
According to Farid Farbod, rising rates have pushed some buyers to the sidelines, with many choosing to rent while waiting for better conditions.
Trevor Halpern explains how the market reacts to these changes:
“Anytime we see a ratchet up into a new percentage rate like from 5 to 6, 6 to 7, we see the marketplace respond accordingly. The buyers that were active at that previous interest rate, tend to slow down their activity.”
He also highlights the direct impact on affordability:
“When you see a higher interest rate go up… your monthly cost goes up. So, you may have to re-budget, you may have to revisit.”
Despite these challenges, buyers still have several strategies to make homeownership possible. These include negotiating seller concessions to buy down the interest rate, paying upfront to reduce long-term costs, increasing down payments to secure better loan terms, exploring government-backed loan programs, and improving credit scores.
Halpern emphasizes that solutions exist even in a high-rate environment:
“Can you have the seller help you buy the interest rate down? Can you give the lender some money upfront, so that they can lower your interest rate?”
He adds:
“There are a bunch of mechanisms and tools that we can use in this marketplace to help buyers compress their interest rates, to keep affordability in the mix for them.”