Mortgage rate increases could cool red hot Tucson market
TUCSON, Ariz. (KOLD News 13) - Mortgage rates are beginning to inch up again reaching 4.16%, the highest in nearly four years, and are expected to go higher.
What that portends for the housing market isn’t quite clear, although it may cool a red hot market in Tucson where prices are rising between 5% and 6% per month.
“I put in four offers for four different clients and every house had six other offers on it,” said Tanner Herbert, a Tucson real estate agent. “It was an intense weekend for sure.”
Even though prices are rising at a rapid pace, home sales have not slowed even in the face of higher rates. It’s a seller’s market right now.
“People are getting more than asking price generally,” Herbert said. “The last month it was 101.9 percent of asking prices, everyone was averaging more than their list price.”
Even with the rates increasing, they are still at historic lows, according to Herbert.
But as they rise, it could have an impact because interest rates can have more of an effect on a person’s decision whether to buy or not.
“The interest rate affecting what the monthly payment is, is more of a concern to most buyers than the price being $50,000 more than it was six months ago,” he said.
A one point rise in the rates can have a profound impact on how much home a buyer can afford.
“A point of interest rate for most buyers means about $30,000 in buying power,” Herbert said. “So if you’re qualified at $300,000, if it goes up a point, you’re now qualified for only $270,000.”
So, the question of whether to lock in now or wait for more market fluctuation is being answered by the buyers seeking to get in the market.
“We’ve been much busier this month than the month prior just because all the news was interest rates could go up, they did go up,” he said. “So everyone on the fence rushed out to purchase to lock in a lower interest rate.”
The median price of a home in Tucson has reached $368,000.
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