If you bought your home before 2005, it may finally be worth what you paid for it - if you don't factor in inflation. Arizona Public Radio's Howard Fischer explains.
The Federal Housing Finance Agency says home prices in Arizona ticked up 5.1% between the first and second quarters of the year. That translates to a boost of more than 18 percent from a year earlier, and puts prices at about where they were in the first quarter of 2004. but, those who jumped into the market in 2006, in the middle of the bubble, still have a long way to go to break even: Average home prices here are still about 32% below where they were then. The improvement comes as interest rates are rising.
But economist Michael Orr of Arizona State University said he does not think it will put a damper on the recovery. He said there was an uptick in sales in July as people sought to close before rates went any higher. "I think you'll then get a little bit of a hold in August and September," Orr said. "I think those will be quieter because some people brought their purchases forward and because other people are going to be put off by the thing. But," Orr said, "by the time you get to October it'll be all over and it'll be back to normal."
Orr also said he's not concerned that higher interest rates will leave many people locked out of the market. He said, "what lenders are going to do is get fed up with not having as many loans to process, because that's how they make their money. And they'll start getting less strict. I think you're already seeing a few signs of that."
For the record, the best post-bubble time to have bought a home was 2 years ago.