The real estate market in the Valley has been in a neutral state for some time now, which means it’s not heavily favoring either buyers or sellers. With high-interest rates, many sellers are cautious about trading their current low-rate mortgage for a higher one, while buyers are finding their purchasing power reduced. This has led to fewer transactions overall.
However, there are encouraging signs on the horizon. On August 5th, interest rates dipped to around 6.5%. Although this may not seem like a significant drop for sellers with 3% mortgages, it’s a noticeable improvement from April’s 7.5% rate. For buyers, even a 1% reduction in interest rates can make a substantial difference, effectively lowering monthly payments just like a 10% drop in home prices. Yet, the psychology of the market is complex—despite the drop, mortgage applications only rose by 1%. Many potential buyers are holding out, hoping rates might dip further, as some experts suggest.
For sellers, this market may feel less balanced due to fewer showings, longer times on the market, and more demands for concessions. It’s important to remember that balance doesn’t necessarily mean normal. Historically, our market has often favored sellers. According to the Cromford Market Report, “Over the past 24 years, we have mostly been in a seller’s market. When we’re not, it’s usually a buyer’s market where homes can sit for a hundred days or more.” Since a balanced market is rare, it might feel “worse than normal” because our typical “normal” has leaned towards sellers.
The good news is that there are subtle signs of improvement for sellers. While changes are happening slowly, the market trend is beginning to shift favorably. The Cromford Report notes, “The change is still slow but it is real. The trend has reversed, but hasn’t gained significant momentum yet. The market is starting to improve for sellers, and hopefully, buyers have taken advantage of the opportunity to negotiate more over the past few months.”
We’re seeing the most significant gains in areas like Cave Creek, Paradise Valley, Buckeye, and Fountain Hills. Other markets, such as Scottsdale, Gilbert, Maricopa, Goodyear, and Peoria, have also shown positive movement recently. Meanwhile, some declines persist in the Southeast Valley—particularly in Tempe, Chandler, and Mesa—as well as Avondale.
Currently, 9 out of 17 cities in the Valley are still seller’s markets. Three are balanced, and the remaining five are buyer’s markets.
While prices have only seen a modest average increase of 1.9% over the past year, this stability can be encouraging for both buyers and sellers. Sellers might expect longer marketing times and fewer offers for now, but as the market slowly gains momentum, conditions could become more favorable. For buyers, now might be a great time to negotiate, with fewer competitors in the market. If rates fall further, demand could spike without an increase in supply, making it harder to find a good deal.
Navigating these subtle market shifts requires expertise. Having an agent with strong negotiation skills and deep market knowledge can be a game-changer. Even small changes in the market can be strategically significant when guided by an experienced professional.
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