After reaching a high of 8% in October of 2023, mortgage interest rates have been trending downward.
Last month, the rate fell to 6.1%. With the Federal Reserve Chairman Jerome Powell announcing the time for interest rate cuts has arrived, that number should continue to slide.
The monthly payment for a mortgage on the average home in Maricopa, worth $380,000, has dropped $485 a month in the last year.
The lower rates are already having an effect on Maricopa’s market. Our office has seen an uptick in activity.
But will increased activity lead to higher prices and a boom like we saw during the pandemic?
It’s not likely, and here’s why.
While historically low mortgage interest rates fueled the housing market during the COVID lockdowns, worker shortages and supply chain issues also played a role in keeping newly built houses from reaching the market, which gave homeowners looking to sell during that period a monopoly of sorts.
During the pandemic, we had one month where there were just 29 houses on the market in Maricopa. We’re not likely to see that scenario happen again anytime soon. We currently have over 500 active listings on the MLS.
A $485 a month difference in mortgage payments is not an insignificant amount, but for a market that a few years ago saw interest rates in the 2 to 3% range, it’s going to take further reductions to get more buyers and sellers motivated.
Inman Intel and Dig Insights surveyed 3,000 working class adults in July.
Two-thirds said they had no plans of buying a home in the next year. But, if the mortgage rates fell to 5.5%, one-tenth said they’d change their minds. If the interest rates fall to 5% that number doubles to 1 in 5.
It demonstrates the problem from both sides. Buyers want cheaper payments and sellers know they’ll have to become a buyer and give up their 2 to 3% interest rate mortgages.
The good news is that, at 6%, more buyers and sellers will be interested in getting off the sidelines, but it’s not enough to make a difference in price.
The end result is a market equilibrium exists where activity will increase over the next few months, but prices are likely to remain stable.
Dayv Morgan is a Maricopa Realtor and owner of HomeSmart Premier.
480-251-4231
DayvMorgan@gmail.com
MaricopaHomeSmart.com
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