By Shelley Sakala
In this month’s real estate column, local realtor Shelley Sakala answers a reader’s timely question. North Phoenix resident Annie B. asks, “It seems like the war in Ukraine is affecting things like gas and grocery prices. Are home prices going to rise even more, too?”
The Expert Answer
If you’ve filled up a gas tank or a shopping cart any time over the past couple of months, you are painfully aware that things have gotten more expensive. Inflation appears to be the main culprit, not to mention the ongoing issues related to shortages, manufacturing, and the supply chain. This has not only affected the price of groceries and gasoline, but also big ticket items like new cars and houses.
Yes, the already expensive housing market isn’t getting any cheaper. And the war in Ukraine isn’t helping. Uncertainty about world events has created volatility in the U.S. mortgage industry, causing mortgage interest rates to rise. According to Freddie Mac, the average rate on the 30-year fixed-rate mortgage climbed nine basis points in one week in early March (one basis point is equal to 0.01 percentage points, or 1% of 1%). That’s an extra $20-$50 a month on a mortgage payment – a relatively small increase, but one that will ultimately push some buyers out of the market.
Hardest hit will be first-time home buyers who are already scraping and scratching to put in a competitive bid in a hyper competitive real estate market. Plus, let’s not forget that the price of everything else is higher this year. Coming up with an extra $50 a month is the last thing anyone needs right now.
While it is my hope that the war is over by the time you read this article, there is a chance that the conflict will continue deeper into the year. And even if the war ends soon, we still might see additional rate increases this year as strategy by the Federal Reserve to fight inflation. With this in mind, I recommend that anyone planning to purchase a home this year is both mentally and financially prepared for rising interest rates that could affect one’s overall house payment.
Do you have a question for next month’s issue of “North Phoenix News”? E-mail Shelley at email@example.com.
Shelley Sakala is a local realtor and owner of The Sakala Group Real Estate. Learn more at shelleysakala.com.