Home prices in Phoenix are ticking back up — should you rent instead?

Home prices are ticking back up in metro Phoenix and across the country, according to the S&P CoreLogic Case-Shiller Indices released April 30.

With mortgage interest rates still hovering around 7%, many first-time homebuyers don't have the financial depth to afford the purchase of a home.

However, not everyone wants to buy a home, said Randy Grudzinski, partner and head of capital markets for Scottsdale-based Empire Group of Cos., which is developing thousands of rental units in metro Phoenix.

"You have the renter by necessity and the renter by choice — two different segments of the market," Grudzinski said. "Our urban people want to be in this hip, urban walkable neighborhood. Sometimes these penthouses are $5,000 a month. They could buy a house if they're paying those kinds of rents."

Phoenix rents increased 0.2% in April, compared with a 0.5% increase nationwide, according to the latest research from Apartment List. Year-over-year, however, rents in metro Phoenix are down 3.9%.

Meanwhile, home price growth is up 4.9% year-over-year, according to the newest Case-Shiller report.

Even so, Greg Hague, CEO of Scottsdale-based residential real estate agency 72Sold, said home ownership makes more sense.

"If you are debating whether buying or renting a home is more economically sensible, consider this question: 'Should I save a nickel today if it costs me a dollar tomorrow?' Obviously, the answer is no," he said. "This would be a quick path to financial ruin. Your cost in lost equity from paying down your loan's principal while your home simultaneously appreciates in value should far exceed your monthly rental savings — making renting a poor economic decision."

Renting leaves you at the mercy of a landlord who can raise your rent or evict you to sell the property at the end of your lease, Hague said.

Hague said he believes so deeply in the advantages of owning a home that his company just launched a statewide program to help first-time homebuyers.

"One of our agents will assist you in purchasing your first home and waive back 100% of any commission they earn to help cover your closing costs and supplement your first few loan payments," he said. "My advice: Don't save nickels today to lose dollars tomorrow. Buy a home now."

Home prices in Phoenix continue to move up in line with the national trends, said Selma Hepp, chief economist for CoreLogic.

"However, on top of all the appreciation Phoenix experienced over the last few years, it remains a difficult market for first-time homebuyers, particularly as mortgage rates remain high and inventory shortages persist," she said. "Still, with continual addition of newly built homes, Phoenix remains relatively more affordable that some other Western markets surrounding it."

As with many economic indicators, the road to normalizing housing markets remains windy, Hepp said.

"While home sales and inventories are improving over last year’s bottom, higher mortgage rates continue to challenge affordability and keep many potential buyers on the sidelines," she said. "Still, given the persistent imbalance between buyers and sellers, home price growth remains solid and monthly gains march higher despite slowing of annual acceleration which simply reflects comparison with particularly strong gains in spring of 2023."