Real estate market inventory in Maricopa continues to rise as home sellers lower prices to attract fewer buyers.
In fact, inventory – the number of homes for sale in the city – is probably the highest I’ve seen since I started tracking monthly sales in 2014. In general, higher inventory means that sellers have more competition.
As of August 15, 641 homes were for sale, not under contract and seeking offers.
Normal monthly inventory has averaged around 300-325 homes over the past few pre-pandemic years, but we are at double that number.
Maricopa isn’t the only place where inventory is rising and prices are plateauing. The entire Phoenix metro area is in the same boat. I’ve been in daily contact with agents across the valley and they’re seeing the same trends.
A lot has changed in a year.
In July 2021, a home listed for sale had multiple viewings, usually during the first weekend. While the home was well decorated and appealing to buyers, multiple offers were the norm. Bids above the asking price were common. Some offers were tens of thousands of dollars higher with an array of concessions for buyers to increase the appeal for sellers.
Since then, a number of factors have helped cool the market – and home prices.
Interest rates have gone up. A year ago, the rate on a 30-year fixed mortgage was around 2.75%. Today, the rate has doubled to almost 5.5%. (Interest rates, of course, can vary depending on lender, down payment and credit rating.) The increase — and its effect on the bottom line — has pushed some buyers out of the market.
In July 2021, a $450,000 home could be purchased with a monthly payment (principal and interest) of around $1,873. That same $450,000 house, in July 2022, would require a monthly payment of $2,555.
A year ago, builders weren’t putting many homes on the Multiple Listing Service. If a house was being built for a specific client, why list it if it’s already sold? Builders may list a few of each model and sell a different lot based on a similar listing. Currently, of the 625 homes for sale, 152 of them are new construction or somewhere in the construction process – from an empty lot to a completed home. Many builders list one home of every home to intrigue a buyer looking for specific finishes or deadlines.
A year ago builders were quoting a build time of 12 months which often went even longer. There was a shortage of wood, concrete and household appliances. Today, builders are producing more homes faster due to the reopening of the supply chain. Some builders even have finished homes for quick move-in. In 2021, they did not exist.
Maricopa home listing prices have also evolved over the past year.
During the period August 2021 to March 2022, many homes were selling above asking price. The open days of the first weekend were busy. (When a home sells, the sale amount is tracked and is public information and can be compared to the original listing price.)
From March 2022 to July 2022, it’s a different story. Open days are ghost towns, with many listings on the market for weeks without any showings. Sellers lower prices to stimulate interest (below the blue line). But there are twice as many homes for sale as a “normal year” and some buyers can’t qualify – or choose not to – because of higher mortgage rates.
Assessment/forecast: Although interest rates have risen rapidly over the past year, they are still historically very low.
Prices have stabilized, but some potential buyers remain shut out of the market after interest rate hikes raised mortgage payments by $400 to $600 a month.
Current buyers who need a mortgage are mostly people who are “moving out of necessity”, perhaps due to job transfers or the end of current leases.
Many experts believe that the number of homes for sale will continue to increase. If interest rates follow, prices will continue to be impacted: after the plateau, prices will come down.
Here at Maricopa, sellers have two main competitors: each other and new home builders. The other towns in the valley don’t have as much competition from builders since they were built.
In March, the so-called Market Action Index was at 80, indicating a “very strong” seller’s market. In the months that followed, however, the index slowly declined to 41, gradually approaching a balanced market (30).
Brian Petersheim is a realtor at Homesmart Success.
This content first appeared in the September issue of In Maricopa magazine.