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Pima County land trust holds homebuyer workshops amid 'cooling' market

A handful of Pima County residents gathered virtually Tuesday evening for a homebuyer workshop that touched on the importance of credit, budgeting and financial terms such as predatory lending.

Tuesday’s course was the first of two that the Pima County Community Land Trust will hold this week for aspiring homeowners, who may have more opportunities as Tucson’s housing market appears to be slowing. Thursday’s meeting is set to cover the process behind purchasing a home.

The workshop provided information on resources available for Tucsonans looking to improve their finances or who may be in a tough situation already.

“There's a lot of people out there to help guys, so don't take it in all yourselves,” said Frances Villa, the land trust’s compliance coordinator.

During Tuesday's session, Villa and housing counselor Elias Garcia presented two aspects of financial basics titled, “Why Credit Matters” and “Budgeting for Success: How to Manage Your Money.”

The credit portion focused on the benefits of good credit like financial flexibility and an easier time renting, as well as the risks that come with credit like over borrowing. Individuals should never borrow more than 20% of their annual take-home earnings and cap their credit card debt at roughly 30% of the card’s limit, Garcia said.

“Even just one late payment on your credit cards can increase your interest rate, can cause you additional fees and also in return affect your credit and your capability of borrowing in the future as well,” he said.

In the budgeting portion of the class participants were asked to reflect on their current financial situation. Money can be saved with small steps, such as eating out less or calling around for better car insurance rates,Villa said.

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Spending less can help people save money for the future. A solid savings account has a minimum of three months' salary, Garcia said.

Those looking to buy a home should make that the goal of their budgeting efforts, he said.

“So set your goals to purchase a home,” he said. “Where do you need to cut back? Where can you save some money? And apply that to purchasing a home.”

Thursday’s class will dive directly into homebuying, with a session on the pre-purchase process and the different mortgages available to buyers.

Tucson’s slowing market

Interest rates remain historically low, but they have increased by nearly 3% in a year and a half, said Jodi Koch, president of the Tucson Association of Realtors. Home interest rates have increased from roughly 3% to 5.99%, according to Koch, a real estate agent for 23 years.

There are more houses on the market today than in previous months, with negotiating room and price reductions on some homes that remain listed for a few weeks, she said, which is supported by Multiple Listing Service data.

“After two years of record-setting activity, there are signs the housing market might be cooling,” according to MLS data. The May report said the number of homes sold in Tucson has declined since March due to increased “homeownership costs.”

Buyers are getting “less house for more money” due to increased interest rates and home prices in the past year. Monthly mortgage payments have increased by as much as $800, Koch said. She has told some clients to wait on buying a home.

“I’ve asked some of my buyers to wait, to just breath,” Koch said. “Find a six-month lease, watch what the market does.”

The increased interest rates will likely not “have a drastic change” on Tucson’s housing shortage because as home buying slows, selling likely will as well. Additionally, more people will continue moving to Southern Arizona in large numbers, Koch said.

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A “comfortable market” has four to six months of homes available, but Tucson only has about eight weeks of inventory available, said Koch.

The Federal Reserve announced a .75% increase in interest rates on June 15 to combat inflation. Further increases in interest rates are expected, according to Jerome Powell, chair of the Federal Reserve.

Prospective buyers should interview buyer’s agents so the agent gets to know the individual and their particular need, Koch said.

Additionally, there is still money available for down payment and closing cost assistance if individuals partner with a knowledgeable agent, she said. The Essential Workers Housing Fund is a program that offers such assistance.

Many people qualify for these funds, she said. “But the key word is if they qualify and many many do, so very many are in the right price brackets and in the right FICO scores and in the right industries."

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Jacob Owens/TucsonSentinel.com

Property sits for sale off Snyder Road on Tuesday, June 21, 2022.