Prices have been going up for houses in Phoenix over the last few years. Not drastically, though. Its not 2007 all over again. But prices have been climbing in a healthy manner for a while.
So, you say to yourself, “Self, I don’t think I can purchase a home right now. Those prices are too high!”
But the price is not the whole story. Consider the interest rate!
Here’s what I mean.
In December 2013, according to Freddie Mac, average interest rates were about 4.46%. Had you bought a house in CenPho then, you would have paid about $140/square foot.
Let’s say you purchase a 2,000sf home then. The cost would have been $280,000. At 4.46% interest, your Principle + Interest (P&I) would be $1,412.07. (This does not count fees, taxes and insurance. We are not mortgage brokers, so check with them for those details.)
Okay, so fast forward to today. Average prices are over $200/sf in Cenpho. That same 2,000sf home will cost $360,000. At 3.57% interest, that’s $1,630.66, P&I.
To which you say, “Hey, that’s definitely more expensive.”
Yes, but had that loan been at 4.46% interest, the house would have cost $1,815.52, P&I.
Another way to look at it is that you could have purchased a $320,000 home for roughly the same monthly cost with rates at 3.57% as a $280,000 home when rates were at 4.46%.
Does that mean you can afford that house? Maybe. Maybe not. But you are definitely saving $200 per month over where it was when homes were selling for $140/sf.
Interest rates are lower right now and they will not always stay low. On the other hand, there is not much room for new homes in CenPho, other than condos and townhouses, which are not being built in great enough numbers. So, those prices are likely to go up further before they go down. Your chances of getting a home while the interest rates are lower and the prices are lower may be slipping away.
We can help you think through your options. Buy now? Rent for a while longer? Purchase in a different area?
We can help you buy or sell your home. Please give us a call at 602-456-9388.