Home price growth in the Valley continues to leave the rest of the country behind. The Phoenix area saw year-over-year gains of 17.4% in February at a time when the national price gain was only 12%.
According to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, San Diego wasn’t too far behind Phoenix, at 17% growth, followed by Seattle with a 15.4% annual gain in February.
The national composite’s 12% gain is the highest recorded since February 2006, said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.
Mortgage rates had moved up slightly higher but they have come back down a bit, he said.
Favor said 3.125% is the current rate for a 30-year fixed rate conforming mortgage on the secondary market.
“Even when they went up a bit higher these are historic lows,” Faver said. “These are extremely low interest rates, which by the way, is helping people afford these more expensive homes.”
The low interest rates also are helping to keep demand strong.
“As a whole, we expect mortgage rates to inch up slightly by the end of the year, but realistically, not very much. We don’t see any big increases this year in mortgage rates — at this point.”
What surprised Faver was that home price growth across the country also occurred in markets that have been part of a strong exodus to metro Phoenix, including New York.
“There is substantial demand for homes with an extremely low supply,” Faver said. “That is creating bidding wars that are driving up the cost of homes.”
He’s seeing homebuyers submitting all-cash offers that aren’t contingent upon appraisals and inspections.
“It’s kind of hard to beat something like that,” he said. “It’s making competition very fierce.”
When Faver put his own home on the market 1.5 months ago, he received eight offers — all with escalators that promised to pay $1,000 more than the top offer. His home sold within a day.
“That’s the kind of volume you’re getting,” he said. “Homes are going on the market immediately have offers.”