A Shift to a Buyer’s Market in Phoenix
The Phoenix real estate market is experiencing a remarkable transformation, presenting buyers with one of the most favorable opportunities in over two decades. Currently, the market is in a buyers’ market, a rare occurrence that has only happened three times in the past 23 years. The combination of rising supply and lower demand, coupled with the high interest rates, which are still hovering around 7%, is favoring buyers. Its a buyers market right now! Buying now until February is most likely going to be your best bet to find a deal on a home.
Market Snapshot
- Supply: Up 39.2% year-over-year (YOY) with a Supply Index at 85.8. While inventory remains 14% below normal, it has steadily increased by 6.5 points over the past month.
- Demand: Stabilizing at 23% below normal, with a Demand Index of 76.7 (a modest +1.8 points over 30 days).
This shift rivals previous buyer-friendly periods like 2014 and 2022, creating prime opportunities for buyers.
Pricing Insights
Average List Price per Square Foot:
- All Listings: $356.61
- Listings Under $1M: $262.56
Average Sales Price per Square Foot:
- Overall: $291.10 (down -1.8% YOY)
- Homes Under 2,500 SF: $266.41 (up +0.6% YOY, representing 80% of sales)
- Homes Over 2,500 SF: $338.97 (down -5.6% YOY, representing 20% of sales)
Median Sales Price:
- Overall: $450,000 (up +2.3% YOY)
- Homes 1,200–1,500 SF: $375,000
- Homes 1,500–2,000 SF: $430,000
Challenges and Opportunities for Sellers
- Rising Supply: New listings surged 13.5% YOY, reaching 8,712 in October.
- Sales Activity: Closed sales climbed +12.1% YOY, with listings under contract also up +12% YOY.
- Price Adjustments:
- 54% of October sales included seller concessions (median: $10,000, up $1,000 YOY).
- Price reductions rose 11.8% YOY, affecting 9,020 listings last month.
Buyer’s Market Highlights
- Median Days on Market: Homes are staying on the market for 41 days, compared to the historical norm of 26–29 days.
- Price Negotiations: Sellers received 97.8% of their asking price, slightly lower than last year (-0.2% YOY).
- Luxury Market Slowdown: Homes priced over $1M are moving slower, with a contract ratio of 40.7% and a success rate of 55%.
Local Market Strength
While the overall market trends favor buyers, some cities remain strongholds for sellers, including:
- Fountain Hills
- Chandler
- Scottsdale
- Gold Canyon
- El Mirage
- Tolleson
These areas are bucking the broader buyer’s market trend, making them competitive for both buyers and sellers.
What This Means for You
- For Buyers: With increasing supply and more frequent price reductions, the current market offers excellent opportunities to secure a deal. A true buyers market has only happened 4X’s in the past 20 years, and some of those periods were 3 months like we saw in 2022.
- For Sellers: To stand out in a crowded market, competitive pricing and strategic marketing will be essential. Check out my selling page, here.
Looking Ahead
While the holidays may bring a seasonal dip in supply, buyer-friendly conditions are expected to continue into the new year. Whether you’re buying or selling, understanding these trends is key to making the most of Phoenix’s evolving real estate market.
✨ Let’s craft your winning strategy—reach out today!
Visit jaybrugroup.com or call me at 480-466-4917 to get started.
Mortgage rates have experienced fluctuations recently. Although they’ve declined from their peak, they remain elevated compared to historical lows. Therefore, it’s crucial for buyers and refinancers to remain vigilant and seek professional advice from a lender.
The significant gap between current mortgage rates and Treasury yields suggests potential for future rate decreases. However, it's important to remember that other economic factors can influence mortgage rates.
The chart shows that inflation, as measured by the PCE Price Index, has decreased significantly from its peak of 7% to 2.1% in September. The Federal Reserve is committed to maintaining price stability and returning inflation to its 2% target.
The HUD HOC Reference Guide provides information for first-time homebuyers. It redefines what constitutes a first-time homebuyer and includes criteria such as not owning a principal residence in the past three years and meeting income limits.
Despite the persistent upward pressure on rental prices, it remains challenging to increase rental rates significantly. The current median lease price for a 1,200 to 1,500 square foot single-family rental unit is $1,998.
The graph shows the percentage of home closings with seller-paid concessions. There was a significant increase in concessions in 2022, peaking at 48% in October. While concessions have decreased since then, they are still at a higher level than in 2019. As of November 2023, 51% of closings involved seller concessions.
The Greater Phoenix housing market has shifted in favor of buyers over the past year. Key indicators like average and median sales prices, sales over asking price, and seller concessions have all improved for buyers.
The median days on market at contract in Greater Phoenix have increased and fall is typically a hard time to sell a property.
The number of weekly price reductions in Greater Phoenix peaked in 2022 with 11,000 changes. In 2023, the number decreased to 7,300. As of November 2023, there have been 6,021 price reductions over the past four weeks.
The table shows an increase in home listings in Greater Phoenix from November 2023 to November 2024. The largest percentage increase is in the 1,500-2,000 square foot single-family home category, with a 29.0% increase. Overall, the total number of listings increased by 39.6%.
The percentage of listings under contract in Greater Phoenix has decreased by 7.6% compared to the previous year. Additionally, the supply of homes on the market has increased by 39.6% year-over-year. This indicates a less competitive market for sellers.
The contract ratio in Greater Phoenix significantly increased from 2015 to 2021. However, a sharp decline occurred in 2022, followed by a more gradual decrease in 2023 and 2024. This indicates a less competitive seller's market compared to previous years.
The contract ratio in Greater Phoenix has significantly declined from 2022 to 2024. In 2022, the peak was at 47%, meaning 47% of active listings went under contract. By 2024, the ratio dropped to 20%, indicating a less competitive seller's market.
The average sales price per square foot in Greater Phoenix has fluctuated over time. But prices have maintained strong even though interest rates have remained high, i wonder what would happen if interest rates dropped?
The median sales price in Greater Phoenix has increased significantly over the past few years. However, there has been a slight decline since November 2022. As of November 2024, the median sales price is $455,000.
There has only been 4 times in the past 23 years where there was a buyers market and one is right now, they only last a brief moment sometimes.
The Cromford Market Index shows that the market has only been this favorable for buyers 3 times over the last 24 years: 2006-2008, 2010-16, and 2022-2024. The current favorable market conditions have lasted for 3 weeks so far.
The current market conditions favor buyers, with decreasing demand and increasing supply.
The market is currently in a buyer's market with a strong supply and decreasing demand.
The chart shows that a 1% decrease in interest rates can lead to a 10% reduction in monthly principal and interest payments on a mortgage. For example, on a $300,000 loan, a 1% decrease in the interest rate from 7.9% to 6.9% would result in a monthly savings of $107.
The median sales price of a starter home (1,500-2,000 sq ft) in Greater Phoenix has fluctuated over the past year. It peaked in November 2022 at $419,000 and has since declined to $408,000 in November 2024.
The median sales price of a starter home (1,200-1,500 sq ft) in Greater Phoenix peaked in November 2022 at $460,000 and has since declined to $403,000 in November 2024.
If you have questions about your neighborhood or city, let me get you that data, every city differs! And please pass this onto someone you may know that is looking to buy or sell, i’d love to help!
Stay Blessed
Jay Bru
480-466-4917
jay@jaybrugroup.com
www.jaybrugroup.com
