The town of Maricopa is an example of the self-propogating nature of this down market on a community.
Indeed, Maricopa real estate has been one of the hardest hit areas of the Valley in terms of the downturn in the local housing market. But to really understand the impact of the downturn, here is an example of a home that is approximately 2,500 square feet, single level, built by Fulton Homes in Cobblestone Farms.
In early 2006, this home sold for $352,000.
It just closed in September 2008 for $201,000 - a 42% drop in value!
More broadly, homes are trending in Maricopa at 40%-55% of their 2006 value. The comparison above is the best way to understand the percentage decline in home values as averages and median prices don’t accurately reflect the true decline experienced in Maricopa.
Why did Maricopa home values get hit so hard?
The first Maricopa foreclosures were likely due to the ratcheting up of mortgage payments as adjustable interest rates ratcheted up and the financial exhaustion of homeowners. This evolved to include residents whose mortgage payments became harder to meet when high gas prices began to take their toll. Given Maricopa’s location, you need food, water, shelter, and gas to survive.
As the foreclosures and short sales continued to increase, prices started to freefall. They were already declining with the market but now they were accelerated at an amazing pace. This is when the self-propogation of the foreclosure market took hold.
The Seller’s Dilemma
Because much of Maricopa is new development that took place in the past 5 years, homeowners inevitably paid higher values for their homes. As prices have cratered, sellers are faced with a simple, unfortunate reality—if they have to sell their home, they will not be able to do so without performing a short sale or letting the property foreclose. Most homeowners won’t have near enough equity in their homes to offset the losses they would incur and sell outright.
Simply put, in Maricopa and similar communities across the Valley, a heavy level of short sales and foreclosures drop prices to a point where they fuel more short sales and foreclosures.
Will this get better in the future?
Ironically, as I reported in April, the Maricopa real estate market has been one of the hottest real estate markets in the Valley in terms of the number of active properties currently under contract for purchase. The low prices have proven an incentive to buyers interested in snatching up cheap deals.
That trend continues today. In April, 19% of available Maricopa homes were under contract for sale. That figure has risen to 21% today. This is just slightly lower than results for Queen Creek. Other Valley cities average in the 15% range.
We will have to watch over the next few months if buyer interest continues to gain traction and absorption figures rise from 21%.
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