The economic chaos of the pandemic presented unexpected perks to those able to stay afloat. In particular, we saw how low interest rates made buying a home on a long-term mortgage extremely cheap. There was a sudden rush for property throughout the US, and with demand low, prices started to rise.

This was very apparent in Arizona, where housing prices appreciated by almost 30% year-on-year. This has been a staggering rise and, while it has calmed somewhat, prices are still going up.

Initially, this created a buyers’ market in Arizona. Homes were affordable with record low mortgage rates. It also became easier than ever to get an online home insurance quote you could actually afford. New homeowners did face the potential for high construction prices if they wanted to make major renovations, although most left that to be a later consideration.

As we head into July 2022, are we still in a buyers’ market in Arizona? If not, are we in a sellers’ market?

Rate hikes turned the tide

The simple answer is that we’re not in a buyers’ market and haven’t been for a while. It is, however, more complicated when we try to identify when that changed. At what point did housing prices get so high that even low mortgage rates did not help?

It’s impossible to pinpoint a particular moment, but the change was certainly assured by the first rate hikes. Due to the record inflation we have seen since towards the end of 2021, the Federal Reserve has been raising interest rates. Consequently, mortgage rates have gone up, to the extent that they are now higher than they were before the pandemic.

This means that even if you were to buy a home at 2019 values today, you would pay higher monthly payments than you would have back then. In the reality of 2022, that home may well have a sales price that is $100,000 higher.

So, while prices in Arizona are still technically rising, that does not seem likely to last. As such, this may be the worst time to buy a home, considering that you are paying a premium and prices may be at their peak. It is certainly not a buyers’ market.

But does that mean it’s a sellers’ market?

The Arizona housing market is unbalanced

In theory, we are in a sellers’ market and have been for the past year or so. There is not enough supply to meet demand, and buyers have therefore had to pay higher prices than ever. However, this may not last.

The soaring prices of the past two years have left many homes way overvalued. This has not yet stopped people from buying homes, but as rates continue to go up, this is likely to change. Sellers may then have to lower prices again, potentially still struggling to find buyers.

The past two years have left the Arizona housing market unbalanced. Unfortunately, this is the worst time for such an imbalance. With a recession likely on the way (or potentially in progress), people are unlikely to have the money or stability to buy homes.

Ultimately, this means that we are in neither a buyers’ or sellers’ market. At the moment, it looks like we are at the top of our ascent and gravity is about to start pulling us down.

Unpredictability has become the norm

A crash may sound inevitable, but that belies the fact that the property market over the past couple of years has defied expectations time and time again. It has acted so unpredictably that we have become accustomed to no longer trusting our own instincts.

The problem is that, whereas two years ago there were mitigating factors, the world of 2022 is only becoming more chaotic. Russia’s war in Ukraine threw us all into a state of pandemonium, and the whole world is struggling with high fuel prices, high inflation, and potential food shortages.

If you’re wondering whether right now is the best time to buy or sell your Arizona home, you should probably hold back on making a decision. We can’t be sure what will happen, but things do not look good for either buyers or sellers, not just in Arizona but throughout the country.