The Current Real Estate Market in Maricopa County: Inventory Lows, Rising Prices, and How the Summer Season Affects Sales

We're in interesting times in this real estate market. Despite rising interest rates, existing home sales are up, supply is down, and the rental supply in Maricopa County is growing (i.e., the rental market is softening).

Nationwide, a meager 1% of homes swapped owners in the first half of this year, marking the lowest turnover rate in at least a decade. The statistics are slightly more promising in Maricopa County, but not by much.

The Cromford Report reveals that there are 1,163,978 single-family homes in the county. As of May this year, a mere 21,135 homes, or 1.8% of the total, had changed hands. To put this in perspective, the turnover rate for the county was a far healthier 5.6% last year (not including new construction).

So, what's triggering this stasis in the housing market? For one thing, with rates teetering around 7%, homeowners enjoying their mortgage interest rates of 2%, 3%, or even 4% are choosing not to list their properties. The prospect of incurring a higher interest rate is proving too daunting.  Why make a move and pay double the interest rate unless you absolutely have to? 

The inventory challenge is further amplified by the season. Summer, notorious for its recent sizzling 118-degree temperatures, is traditionally a slow period for real estate in the Valley.  Buyers are simply not interested in driving around town to see the few homes that are available on the market during the hottest time of the year when inventory happens to be the lowest it has been since the pandemic.

And sellers aren't exempt from the need to adapt. At the beginning of 2023, inventory was higher, demand was lower, and sellers made more buyer concessions to get deals across the finish line.  That trend is slowing.  According to leading metrics noted by the Cromford Report for the third week of July 2023, “the greater Phoenix seller’s market is stable, and prices should continue to rise, but not so fast.” Indeed, there are only two markets in the entire county that are considered balanced (Buckeye and Casa Grande), while all others are considered seller’s markets.  The need for sellers to make concessions appears to be waning since December 2022, with seller concessions down 9% overall (41% of all sales in July 2023 versus 50% of all sales in December 2022).

But here's the good news – the current state of the new home market is remarkably robust. A growing number of buyers are favoring new homes, and builders are more than eager to accommodate their needs by offering incentives and upgrades, provided the buyers can afford these properties. The financial reports from public homebuilders reveal impressive figures, with strong sales volumes, rising prices, and healthy profit margins. This stark difference between the resale and new home markets is unprecedented and highlights the increasing appeal of newly constructed homes among buyers.

For existing homes, the market is still ripe for well-priced, updated homes. What I continue to see in this market are homes that sell quickly if they are updated and are turnkey.  Multiple offers over asking price are becoming commonplace once again, which will not likely change for the foreseeable future while inventory remains low.

Next week, the Federal Reserve is expected to raise interest rates another quarter point, which will continue to put pressure on housing and will likely slow down the rate of absorption of current inventory throughout Maricopa County.

Whether you're a buyer or a seller, understanding the landscape, adjusting your expectations, and being strategic with your decisions is paramount to navigating these challenging times successfully. We at the Connie Colla Group are here to answer your real estate questions and provide timely statistics and leading indicators to help you make informed decisions today.  Call us anytime with your real estate questions.