By Angela Gonzales | Phoenix Business Journal
Rod Cullum, owner of Scottsdale-based Cullum Homes, said his sales team stopped getting calls in May, and didn’t see interest pick up until September.
Much of that was because luxury buyers were taking advantage of their travel plans, he said, but rising interest rates also impacted their businesses and stock portfolios, causing them to pause on big purchases.
But a low supply of inventory in the luxury market is creating more demand, he noted.
Looking at Paradise Valley, there might be one newly constructed finished home and another three under construction, Cullum said.
“If you’re wanting a new home in Paradise Valley, you’re going to have to wait two or three years to build it or buy what’s available,” Cullum said. “The same thing in most of the north Scottsdale luxury market.”
Cullum said he hasn’t seen any price degradation in the luxury market, but many homebuilders are lowering their prices and offering incentives for homes priced under $1 million.
The buying frenzy began to cool over the past several months as mortgage interest rates have doubled since January.
But the current mortgage interest rate hovering around 7% is nothing compared to the 17% interest rate Cullum paid for his first home in the late 1970s.
In fact, he said, the historical average of a 30-year fixed mortgage is 6%.
“Today, most institutions aren’t doing fixed rate loans right now,” he said. “They’re only doing variable adjustables.”
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