Phoenix Real Estate Market Slows as Mortgage Rates Near 7 Percent

Few markets have shown such frenzied demand and growth as the Phoenix real estate market. The boom in Phoenix real estate sales and values generated 10 percent yearly gains for homeowners and sellers, and even with consistently escalating prices, there was no shortage of buyers. However, with mortgage rates on the rise, it finally looks like the overheated Phoenix real estate market will be cooling off.

Economists surveyed by Blue Chip Economic Indicators believe mortgage rates will hit 7 percent by early 2006, bringing a 5 percent decrease in housing starts and sales. On a positive note, economists aren’t expecting Phoenix real estate prices to plummet. Thanks to good job and income growth and a strong economy, prices are expected to stay where they are or increase slowly.