The Villages of Rancho El Dorado Dave Morgan
Mortgage interest rates have been on a downward trend since reaching a high of 8% in October 2023.
Last month, it fell to 6.1%. That number should continue to decline as Federal Reserve Chairman Jerome Powell announced that the time has come to cut interest rates.
The monthly mortgage payment for the average home in Maricopa, worth $380,000, has decreased by $485 per month in the last year.
Lower interest rates are already having an impact on Maricopa’s market. There has been an uptick in activity in our office.
But will increased activity like the one seen during the pandemic lead to higher prices and a boom?
That’s unlikely, and here’s why.
While historically low mortgage rates stimulated the housing market during the coronavirus lockdown, labor shortages and supply chain issues also kept new homes off the market, with many looking to sell during the period. The homeowners who owned the property had a kind of monopoly.
During the pandemic, there were some months when there were just 29 homes for sale in Maricopa. Such a scenario is unlikely to occur again anytime soon. There are currently over 500 active listings in MLS.
A difference of $485 per month in mortgage payments is not a small amount, but in a market where interest rates were in the 2-3% range a few years ago, it would take a lot more to motivate more buyers and sellers. A reduction will be necessary.
Inman Intel and Dig Insights surveyed 3,000 working-class adults in July.
Two-thirds said they had no plans to buy a home next year. However, one-in-ten said they would change their mind if mortgage rates fell to 5.5%. If interest rates fell to 5%, that number would double to 1 in 5 people.
It shows the problem from both sides. Buyers want lower payments, but sellers know they will have to become buyers and forgo mortgages with 2-3% interest rates.
The good news is that at 6%, more buyers and sellers will be interested in coming off the sidelines, but it won’t be enough to make a difference in prices.
Eventually, a market equilibrium will form and activity will increase in the coming months, but prices are likely to remain stable.
Dayv Morgan is a Maricopa real estate agent and owner of HomeSmart Premier.
480-251-4231
DayvMorgan@gmail.com
MaricopaHomeSmart.com
Sponsored content
