Market Update

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April 2025

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Interest Rate Trends and Financial Outlook

This past week, interest rates increased slightly, signaling an important week ahead for financial markets. This shift is influenced by the potential impact of impending U.S. tariffs on foreign goods which continue to stir uncertainty regarding their effect on the economy and inflation. Despite historical correlations, recent trends show that stock market sell-offs have not led to lower bond yields as expected; instead, bond prices decreased, causing yields to rise.

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Stock and Bond Market Dynamics

The traditional relationship between falling stock prices and declining interest rates has shifted. Last week saw stock prices beginning to stabilize, while bond prices fell and yields increased, marking a significant change in market dynamics.

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Mortgage Market Movements

Despite recent increases, mortgage rates have generally decreased since mid-January, leading to a significant rise in mortgage applications—an 80% increase from January to March. As of late March, the 30-year mortgage rate stood at 6.65%, indicating a year-over-year decrease.

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Local Real Estate Market Trends

Recent shifts in the real estate market favor buyers, with 13 cities showing deteriorated conditions for sellers and only four improving—highlighted by a 12% improvement in Avondale. The overall Cromford® Supply Index has reached a balance point for the first time in nearly 14 years, signaling an end to housing shortages. However, demand remains weak, which could potentially lead to price declines and reduced buyer confidence.

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Debunking Common Myths

1. Buyer Demand: Contrary to past trends, buyer demand is now stable and isn’t swayed much by rate fluctuations.

2. Affordable Housing: There’s a significant increase in available properties under $300K, especially in Pinal County, and over 1,200 condos and townhomes in Maricopa County.

3. Homebuyer Assistance: Many homebuyer assistance programs are available based on area rather than income, with some not having income limits at all.

4. First-time Homebuyers: The term "first-time homebuyer" is broader than most think. If you haven’t owned a home in 3 years, you qualify under HUD’s definition, among other scenarios.

5. Mortgage Rates: Despite high rates, many sales include seller-paid incentives for rate buydowns, and some listings offer assumable loans with rates below 5%.

6. Market Stability: While Phoenix saw a market adjustment in 2022, the market has since stabilized without signs of a severe crash, making it a mild buyer's market currently.

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