Experts Interview - State of the Arizona Housing Market

Jan 20, 2023

Over the last 12 months, the housing market in Arizona has been a whirlwind. Should you buy, sell, or refinance? Or does renting make the most sense? Read on for an update on the current state of the Arizona housing market from two of Arizona Financial's residential lending experts.

According to, rent prices are up 31.4% in Phoenix over the past year, and the average cost of a rental home is $2,045 a month. Average mortgage rates have nearly doubled over the last year. With so many ominous numbers, one can't help but ask, "Should I wait for rates to drop to purchase my dream home?"

We sat down with Greg Thorell, Senior Vice President of Residential Lending, and Laura Chickering, one of our most experienced Mortgage Loan Officers, to update us on the current state of the Arizona housing market and answer our most burning questions.

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Are more people looking to buy right now since rents have increased so much over the last year? 

Laura: Yes, buyers are looking to purchase now because they don't want to spend $1,500 a month on rent. When members reach out to us, we take it as an opportunity to share with them what a potential purchase and monthly payment might look like, and we help create a plan so they can be in a place to purchase a home.

Greg: It's always a good time to purchase a home. People often perceive a home purchase as an investment when, in reality, it's more than an investment. It's where you can raise your family, build your dreams, and make memories for yourself and your family.

Why have rates risen so much?

Greg: The main driver of the rate increase is inflation. The Federal Reserve uses interest rates as the most powerful tool to slow down inflation. 

What do higher rates mean for purchasing power?

Greg: Higher rates typically mean an increase in your monthly payment and a reduction of your purchasing power. The average increase in monthly payment for a 3% interest rate jump is about $350.

Conversely, higher rates have also caused the market to shift to a buyer’s market. Meaning that you likely won't need to offer over the asking price as you did before. 

Are we in a seller's or buyer's market?

Greg: We are currently in a balanced market, meaning supply and demand are about the same. With interest rates continuing to rise, we will likely be in a buyer's market very soon. Some areas of the state have already entered a buyer's market.

For members who wish to purchase a home, where should they begin? 

Laura: You often hear lenders asking solely for an application. Although we also request an application, we take it further by consulting with members.

The consultation helps us understand what the buyer is looking for, their time frame, and their goals to help them be successful in this journey. The mortgage process is complicated, but by laying it out initially, we can prevent pitfalls and problems along the road. 

Once we have the consultation, we encourage buyers to apply. We will, at that time, review income, credit, and assets. 
We always hear about so many different types of mortgage loans. What are the types, and what is their purpose?

Greg: At Arizona Financial, we have several mortgage loan options to meet our members’ needs. We offer: 

  • FHA loans with down payments as low as 3.5% down
  • Conventional loans with down payments of 3%
  • VA loans for servicemembers where they can put as little as no money down
We also offer our portfolio of products, which gives us greater flexibility to help people purchase homes. 

A mortgage loan officer can help point you in the right direction regarding what type of loan best fits your needs. 

What is an adjustable-rate mortgage loan?

Laura: An adjustable-rate mortgage (also known as an ARM) is a home loan with an interest rate that is typically fixed for a set period, such as five, seven, or 10 years and then adjusts over time based on the interest rate environment.

Adjustable Rate Mortgages are not what they used to be when there was no protection against rate hikes. Nowadays, they have implemented rate caps, meaning that your rate can’t go up more than a certain amount on the first adjustment and a total cap over the life of the loan. This ultimately means buyers have more purchasing power than a standard mortgage rate. 

The best time to use an ARM product is when you don't plan to live in a home for more than a certain period. Most families don't live in the same home for 30 years, and most people do not maintain their original 30-year fixed-rate mortgage for 30 years either. Life happens, families grow, and situations change.

When should someone refinance their home?

Greg: I recommend members save about 1% on their interest rate and consider how long they will be in the property, what closing costs are, and how long it will take you to recover those costs.

If you have a large expense coming up or outstanding debt, many people use the equity they've earned in their home to cover those. There are also other reasons why people refinance, such as college expenses or perhaps even divorce. 

By consulting with a mortgage loan officer, they can help you assess whether or not it's the right time to refinance your home. 

What are concessions, and why are sellers offering them? 

Laura: Seller concessions are a way for sellers to encourage buyers to purchase their home. The seller may be willing to help offset some of the costs for the buyer to close on the home. Certain guidelines and restrictions must be followed, but concessions typically come in the way of rate buy-downs, covering the cost of appraisals, or closing costs. These are written in the contract and are negotiated upfront. 

How can a buyer prepare to buy a home in this market? 

Greg: The best way to prepare for your home purchase is to get preapproved. Before you go out in this market, you want to understand what you can buy and, most importantly, increase your negotiating power. Start with a phone call to a mortgage loan officer to understand what you need to do to get preapproved. You want to be in a position of power when you buy a home.

Many people make the mistake of looking at homes before understanding what they can afford and what they are comfortable with, which ultimately leads to disappointment. Start with a phone call to a mortgage loan officer to understand what you need to do to get pre-approved. 

Do you have specific questions about the purchasing process?