Decreased Phoenix Real Estate Demand Lowers Home Refiancings

Thanks to high demand for Phoenix real estate and low mortgage rates that survived for nearly five years, refinancings and home equity loans were made easily available. Because of rapidly appreciating Phoenix real estate prices, “the average household extracted $26,700 in equity with each refinancing.” Local homeowners then used this newfound wealth to pay off old debts, add to savings and even contribute to the increase in consumer spending.

But interest rates are finally beginning to increase and the Phoenix real estate market is beginning to see demand dampen and construction activity and mortgage lending soften. All of these signs suggest that Phoenix real estate price appreciation is in for a slowdown. No longer are refinancings and home equity loans a boon to homeowners, which may prove damaging to consumer spending on the local and national level.