Navigating Arizona's Shifting Real Estate Market in 2024: Key Insights for Buyers and Sellers

The Arizona real estate market is experiencing a period of transition in 2024. Fluctuating mortgage rates, evolving buyer preferences, and a shifting supply-demand dynamic are impacting both buyers and sellers. Understanding these changes is crucial for navigating this evolving landscape and making informed decisions.

Mortgage Rates and Demand

Since early May, mortgage rates have hovered between 7% and 7.25%, a slight improvement from the 7.25% to 7.5% range seen earlier in the year. While these rates are still higher than the historically low levels of 2020 and 2021, they have led to a significant decrease in demand compared to the previous year. Listings are down 7% overall and nearly 10% lower than May 2023.

Rising Supply and Market Trends

The supply of available homes is slowly increasing, which could potentially favor buyers in the near future. This trend is particularly evident in resale markets, where competition from new construction is also playing a role.

One notable trend is the growing preference for move-in-ready homes over fixer-uppers. This shift in buyer behavior benefits fix-and-flip investors, offering opportunities with less competition from traditional buyers. However, rising costs due to inflation can eat into those profits, requiring careful consideration of the overall investment strategy.

Market Index and City Highlights

The Phoenix housing market has shown surprising resilience despite the rate fluctuations. The overall Market Index, which uses a scale of 1-100 to indicate market conditions (buyer's market below 90, balanced market 90-100, seller's market above 100), remains just above the balanced zone.

While five cities saw an increase in their market index this past month, twelve have declined. Paradise Valley, Fountain Hills, and Goodyear are leaning towards a seller's market, while Tempe, Glendale, Gilbert, and Maricopa are shifting towards a buyer's market. Interestingly, Chandler has lost some steam, while Fountain Hills has seen a significant increase (up 20%), potentially signaling a new leader in the coming months.

Current Market Status

Currently, 11 out of 17 major cities in Arizona are in a seller's market, although most are soft/weak sellers markets nearing balance. Goodyear is the only balanced market, and five cities are leaning towards a buyer's market. Areas closer to the center of the valley still have tight supply, favoring sellers. However, resale markets like Maricopa, Buckeye, and San Tan Valley are experiencing strong competition from new homes, creating a buyer-friendly environment.

Advice for Buyers

If you're a buyer in the Arizona market, there are several reasons to be optimistic:

• Less Competition: High mortgage rates have kept many buyers away, leading to fewer bidding wars and a more relaxed buying process.
• More Homes to Choose From: The increase in available listings provides a wider range of options and greater flexibility for buyers.
• Seller Flexibility: Sellers are often more willing to negotiate and consider offers in this market.
• Longer Listing Times: Homes are typically staying on the market for longer, giving buyers more time to find the right property.
• Increased Price Cuts: Sellers are increasingly willing to offer concessions and price reductions to attract buyers.

New construction also presents a unique opportunity for buyers, as many builders are offering attractive incentives like low interest rates and closing cost assistance. These deals can significantly improve affordability and make homeownership more accessible.

Advice for Sellers

The market is shifting towards a balanced or buyer's market in many areas. Gone are the days of selling homes "as-is" with numerous issues. Buyers prioritize move-in-ready homes in good condition, and sellers need to adapt their strategies accordingly.

Here are some key steps for sellers to consider:

• Prepare Your Home: Clean, update, and fix any problems to make your property more appealing to buyers.
• Price Strategically: Research the market and set a realistic price based on current conditions and comparable listings.
• Market Effectively: Utilize professional photography, staging, and marketing strategies to showcase your home's best features.
• Be Flexible: Be open to negotiations and consider offering concessions to attract buyers.

Alternatively, renting out your property can be a viable option. This allows you to keep your low interest rate and cost basis, while generating income and benefiting from long-term appreciation, leverage, and tax advantages.

In Summary

The Arizona real estate market is undergoing a period of change, and understanding the current dynamics is crucial for both buyers and sellers.

• Buyers: Take advantage of the current market conditions to find your dream home with less competition, more options, and greater flexibility.
• Sellers: Adapt your strategy to the shifting market, prepare your home for sale, and be open to negotiations to attract buyers.

Remember, real estate is a long-term investment. By staying informed and making informed decisions, you can navigate the changing landscape and achieve your goals in the Arizona market.

Additional Resources

• Schedule time below for a personalized consultation and to discuss your specific situation.