Real estate market inventory in Maricopa continues to climb as home sellers drop prices to attract fewer buyers.
In fact, inventory — the number of homes for sale in the city — is probably the highest I have seen since starting to track monthly sales in 2014. In general, higher inventory means sellers have more competition.
As of Aug. 15, 641 homes were for sale, not under contract and looking for offers.
Normal monthly inventory has averaged around 300-325 homes in recent pre-pandemic years, but we are at twice that number.
Maricopa is not the only place with increasing inventory and plateauing prices. The entire Phoenix metro area is in the same boat. I have been keeping in touch with agents throughout the Valley daily, and they are seeing the same trends.
A lot has changed in a year.
In July 2021, a home listed for sale had multiple showings, generally within the first weekend. If the home was decorated well and appealed to buyers, multiple offers were the norm. Offers over asking price were common. Some offers were tens of thousands of dollars higher with an array of buyer concessions to increase appeal to sellers.
A number of factors since then have helped to cool the market — and home prices.
Interest rates have increased. A year ago, the rate on a 30-year fixed mortgage was about 2.75 percent. Today, the rate has doubled to nearly 5.5 percent. (Interest rates, of course, can vary based on the lender, down payment and credit score.) The increase — and its effect on the bottom line — has priced some buyers out of the market.
In July 2021, a $450,000 home could be purchased with a monthly payment (principal and interest) of about $1,873. That same $450,000 home, 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 home was being built for a specific client, why list it if it is already sold? Builders might list a couple 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 builds or somewhere in the building process — from an empty lot to a completed home. Many builders list one of each home to intrigue a buyer looking for specific finishes or timeframe.
A year ago, builders were quoting a 12-month build time that often went even longer. There was a shortage of lumber, concrete and appliances. Today, builders churn out more homes more quickly due to the supply chain opening back up. Some builders even have homes completed for a quick move-in. In 2021, they didn’t exist.
The listing prices of Maricopa homes have also evolved in the past year.
During the period from August 2021 to March 2022, many homes were selling over asking price. First-weekend open houses were busy. (When a home sells, the amount of the sale is tracked and is public information and can be compared to the original listing price.)
From March 2022 to July 2022, it’s been a different story. Open houses are ghost towns, with many listings on the market for weeks with zero showings. Sellers are dropping prices to stimulate interest (below the blue line). But there are twice the number of homes for sale as any “normal year” and some buyers are unable to qualify — or choose not to — due to higher mortgage rates.
Bottom line/look ahead: Although interest rates have risen quickly in the past year, they are still very low historically.
Prices have stabilized, but some would-be buyers remain priced out of the market after interest rate hikes have increased mortgage payments by $400-$600 a month.
Current buyers requiring a mortgage are mostly people “moving by necessity,” perhaps due to job transfers or current leases ending.
Many experts believe the number of homes for sale will continue to inch up. If interest rates follow, prices will continue to be impacted: after the plateau, prices will come down.
Here in Maricopa, sellers have two main competitors: each other and new home builders. Other Valley cities don’t have as much competition from builders since they are built out.
In March, the so-called Market Action Index was at 80, indicative of a “very strong” seller’s market. In the months since, however, the Index has slowly declined to 41, inching closer to a balanced market (30).
Brian Petersheim is a Realtor with Homesmart Success.
Maricopa Real Estate Listings | Maricopa Arizona Homes
This content was first published in the September edition of InMaricopa magazine.