Metro Phoenix home prices continue to soar to new records, and sales are climbing again.
Corporate investors are buying even more Phoenix-area houses to turn into rentals than they did last year, pushing the housing market to new peaks.
The median Valley home price hit an all-time high of $460,000 in March and is expected to climb to $470,000 during April based on pending sales, according to the Arizona Regional Multiple Listing Service.
Home sales across metro Phoenix jumped 26% in March from February.
The number of homes for sale ticked down about 1.2% in March, making it even tougher for regular buyers to find houses.
Corporate buyers purchased 1,854 houses in the area during the first three months of 2022, out of 23,900 total sales. That's almost 8% of all Valley home sales for this year's first quarter. It's also up 123% from last year's first quarter.
Institutional or corporate buyers are affecting metro Phoenix’s housing affordability as they compete with traditional buyers, said housing expert Tom Ruff of ARMLS’ Information Market group.
Most corporate buyers are paying cash for Phoenix-area investment houses.
“Rising mortgage rates will most likely lead to a pullback in demand by traditional buyers,” Ruff said. “The question then becomes, if traditional buyers do pull back, will this open a running lane for institutional buyers to increase their footprint?”
Ruff’s latest research shows these factors are behind the hot housing market, but some also could create bumps for it.
Mortgage rates jumped during the past few months, something that could slow the housing market.
The average 30-year mortgage rate jumped to 5.1% last week, according to Freddie Mac. A year ago, it was 3.1%.
Two percentage points adds about $450 to the monthly payment on a $450,000 mortgage.
“This week, mortgage rates averaged five percent for the first time in over a decade,” said Sam Khater, Freddie Mac’s chief economist. “As Americans contend with the historically high inflation, the combination of rising mortgage rates, elevated home prices and tight inventory are making the pursuit of homeownership the most expensive in a generation.”
But Ruff said metro Phoenix home prices will continue to climb at least through June.
The Valley’s median could hit $475,000 in mid-May based on pending sales, according to ARMLS.
“Some of the metrics suggest tailwinds to the housing market. Others suggest headwinds,” he said. “Altogether, they tell us it is windy, very windy.”
Reach the reporter at [email protected] or 602-444-8040. Follow her on Twitter @catherinereagor.
Support local journalism. Subscribe to azcentral today.
