John Burns Real Estate Consulting has a couple of great graphs showing the impact higher interest rates will have on your monthly payment.
If prices stayed flat and mortgage rates inched up 1 percentage point from 4.5% to 5.5%, the same house would cost you 12% more per month to buy. A movement from 4.5% to 6.5% would increase your mortgage payment by 25%.
Phoenix home affordability
My point is that now is likely the bottom of both Phoenix home prices and mortgage interest rates. Home affordability is spectacular!
If you need a home in most parts of metro Phoenix, I feel, you should definitely buy now instead of waiting for something to happen.
Most things that could happen, especially interest rate increases, will increase your monthly payments on the exact same house.
And, of course, as the Phoenix median home price increases from it’s current bottom, your monthly payments will increase as well.
Downside to current Phoenix real estate market
Of course, there’s a downside (they would kick me out of the Economist Club if I didn’t say, “On the other hand”).
The number of Phoenix homes up for sale is incredibly low so you won’t have a great selection of Phoenix homes to choose from.
Because Phoenix home prices are so incredibly low (in most areas) and Phoenix home sales are so incredibly high, you have an unusually limited selection of Phoenix homes for sale to choose from right now.
So you better start looking right away and you better be ready to pull the trigger right away when you find a right home.