Market Update February 3rd, 2025

The real estate market has taken a noticeable turn compared to last week, with conditions shifting in favor of buyers in several cities. Currently, eight cities have seen a decline in seller-friendly conditions over the past month, with Paradise Valley, Cave Creek, and Glendale joining the five cities that had already begun moving in that direction. While nine cities have shown some improvement, the overall market trend is slowing down. The average change in the Cromford Market Index (CMI) over the past month is now -0.2%, a stark contrast to last week's positive 4.3% increase. Despite this shift, the Southeast Valley remains the strongest region, with Mesa and Gilbert seeing a 10% rise in CMI, Queen Creek up 8%, and Tempe and Chandler still showing positive momentum. Phoenix, though struggling, holds onto a marginal 1% gain, while Goodyear, Peoria, and Scottsdale remain on an upward trajectory.

At the lower end of the market, buyers in certain areas are gaining significant leverage. Maricopa, in particular, has seen conditions deteriorate sharply for sellers, slipping well below a CMI of 50. Buckeye and Surprise are also showing signs of becoming increasingly favorable to buyers, making negotiations tougher for sellers. These shifts indicate a clear imbalance in market conditions, particularly in areas where inventory levels are rising faster than demand.

Maricopa's struggles are largely driven by a surplus of active listings and a declining closing rate. Currently, there are 635 active single-family detached homes on the market without a contract, equating to 132 days of inventory at the annual closing rate. However, the situation is even more concerning when looking at the past month's sales data, with only 75 listings closing, creating a supply of approximately nine months. Such an extensive inventory level is reminiscent of the market downturn in 2008, particularly troubling for an affordable area like Maricopa. As a result, home prices in the area are declining, with the median sales price dropping to $355,000—far below the all-time high of $419,990 recorded in May 2022. Negative equity is likely to become an issue, especially for homeowners who purchased after August 2021.

In contrast, Chandler presents a far more stable and promising outlook for sellers. With only 3.8 months of supply based on the most recent sales rate, the market in Chandler remains competitive, and inventory is expected to tighten further. As February brings increased closing activity, the supply level is likely to dip below three months, reinforcing Chandler's strength as a seller’s market. Overall, the broader market currently consists of nine seller's markets, three balanced markets, and five buyer's markets, reflecting a landscape that is shifting but still offering opportunities for both buyers and sellers, depending on location.

Remember this is an analysis of the whole Valley! If you want a specific breakdown of your neighborhood reply back to this email, I would be more than happy to help!

"It is never too late to be what you might have been."
–George Eliot

Have a great week everyone!