Ultimately, though, our city is poised to stay very desirable with a strong housing market.
We have a great number of solid businesses that are making their way to the north and northwest Valley, and Peoria is a draw for buyers from out of state. The school district, “friendly feel” and job opportunities will keep buyers coming.
It is important to note, that the market in Peoria is not a terrible imbalance, stemming more from the lack of inventory than buyer demand. If our inventory had continued to increase as it traditionally does in this “seasonal market,” we would see greater imbalance. Right know we are about 25% lower than what a balanced inventory would look like in Peoria.
Many sellers have fatigue from the lack of showings and contracts and a number have decided to put a pause on selling – at least until after the first of the year – or take their homes off the market altogether. There are others who would like to sell, but won’t trade a 3.5% interest rate for a 6.5% interest rate on a future home, even when we share the options to buy down the rate. The market likes consistency and clarity and we don’t have that right now, so buyers and sellers freeze until they can get comfortable.
Regarding that intertest rate, there are indicators and projections that there is a very good chance they will come down in the February/March timeframe to a more comfortable 5-6% range. That could change the market quite quickly. The under $800,000 home price point has shown, based on statistical data, that buyers purchase homes when the rates are under 6%. If we go under the 6% then we could see those buyers jump off the fence in a big way, and because we have low inventory, that would mean the prices would be steady or possibly increase a bit. The downward price pressure would be relieved even more than it is with the lower inventory now.
Regarding higher-end homes over the $800,000 price point -- they are not as reliant on the interest rates, but those buyers like to find a “good deal” so they come in lower on offer amounts. If it’s the seller who needs to sell and the aggressive buyer who looks for the right deal, then that can impact the values in the higher priced neighborhoods.
Overall, I don’t know if it’s “gut,” or “intuition,” or “optimism” or more than 20 years of experience, but I am extremely confident that Arizona will always be a fantastic place to live. That is why I tell buyers to go find that home now because the negotiation opportunities are great and they may not stay that way.