“In my primary market, which is Phoenix, a balanced market is 38,000 in inventory,” Melton noted. “We were down to 6,000 or 7,000 for a very, very long time. Rates were 2%, and people were falling out of the trees trying to buy homes. I’d tell them, ‘Great. If you can find one, I can do your mortgage. Your mortgage is going to be easy. The hardest part is finding the house.
“It used to be that the hardest part was the mortgage, and the easy part was finding the house. So that was a challenge during those times. And now we’re back up to about 20,000, so we’re getting more into a balanced, stable market.”
Melton categorizes current homebuyers into three categories: those ready to buy regardless of the rate, those who could buy but won’t until rates drop, and those who need to buy but struggle to qualify.
“The first group is ready to buy right now,” she said. “They’re qualified, they’re ready to pull the trigger, and they don’t care about interest rates. Most of our first-time homebuyers don’t know what it’s like to have a 3% rate. They just want to know what the payment is. The second group says, ‘I’m not buying a house at a 6% interest rate. I’m waiting for rates to go down.’”
It’s the third group that Melton really feels for, as they’re the group most struggling with the current affordability challenges.