By Zonda
With mortgage rates poised to climb to fresh highs, there are concerns that this will further constrict the supply of existing homes as the spread between older vintage mortgages and the current market widens.
Phoenix builders will likely continue to benefit as demand favors new builds. When mortgage rates previously exceeded 7%, sales crashed until builders were able to address affordability concerns with price cuts, mortgage rate buydowns, and incentives.
However, profit margins are already under pressure and could run thinner as the median existing-home price trends lower and even apartment rents retreat from recent highs.
Strengths
Large investments by Intel and Taiwan Semiconductor Manufacturing Co. (TSMC) have bolstered local manufacturing job growth. Intel’s $20 billion and TSMC’s $40 billion investments will have added a combined 7,500 new jobs as well as spur thousands more in additional jobs from ancillary suppliers.
Weaknesses
The unemployment rate in Phoenix has been moving higher. While they remain well below 5%, WARN notices have been running much faster year to date than a year ago. Major employers like Lucid have announced layoffs affecting nearly 1,000 workers.
