PHOENIX — A new report showed the average homeowner has a historically large amount of equity in their home, coining the term 'equity rich.' This is happening as Arizonans looking to buy a home are battling the highest interest rates in more than 20 years.
Greg Hague, 72Sold CEO, said more Arizonans have a lot of tappable equity in their home. But when it comes to buying, the high interest rates are not giving any relief to prospective homeowners.
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A new report from Black Knight, a mortgage and real estate data and software provider, revealed the average mortgage holder has about $200,000 dollars of tappable equity in their homes, making them equity rich.
Hague said he predicts home prices will set new equity records soon in Arizona and nationwide.
"I’m predicting first quarter of next year, new records in tappable home equity," Hague said.
However, high interest rates are making it tough on Arizonans who want to buy a home. Current rates are in the sevens, leading to a stalemate. Rates are going up so fast homeowners don’t want to sell, even though they might want to, and it's tougher for buyers to qualify.
The amount of supply dropped faster than demand, so demand still exceeds supply today even with the high interest rates.
“My tip for homebuyers is there's nothing on the horizon that seems to indicate things will change," Hague said. "The Fed is probably going to keep rates high for a while to get inflation in check. And so consequently home prices are likely to continue to rise.”
Another problem, the supply in Arizona is low. Hague said there are typically 20,000 to 25,000 homes on the Phoenix market. But now, there are only about 10,000 homes for sale. That's out of about 2,000,000 homes in the Phoenix-area, Hague said. He offered advice for both current homeowners and first-timers looking to buy.
“Home prices are going to continue to go up, supply is going to continue to stay low," Hague said. "Rates are probably going to stay about where they are for a while. And the homebuyer who doesn’t buy today will pay more next year."
According to Redfin, the average price of a home in Phoenix is nearly $437,000 dollars. That’s down slightly over last year, but real estate experts are recommending those interested to buy now before cost goes up again.
The low inventory is creating a slightly favorable sellers market too even though buyer demand is lower than a year ago.
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