Image via Cromford Report November 2024
By Sean Colón
The Arizona real estate market is an ever-shifting landscape, and as a realtor, staying informed is essential to navigating its ebbs and flows. Recent developments in the housing market present both opportunities and challenges for buyers and sellers in Greater Phoenix, making your role as a knowledgeable guide more crucial than ever. Let’s dive into the latest trends, backed by timely data, and explore how realtors can position themselves for success in this dynamic environment.
For Buyers: A New Era for First-Time Homebuyers
Did you know the average age of first-time homebuyers has climbed to 38 years old, an all-time high according to Newsweek? While this statistic might suggest affordability issues, it’s also influenced by the U.S. Department of Housing and Urban Development's (HUD) unique definition of a "first-time homebuyer." This definition includes individuals who:
Have not owned a principal residence in the past three years.
Are single parents who only owned property with a former spouse.
Are displaced homemakers or those whose prior homes did not meet building codes.
This broader classification means many individuals re-enter the market as "first-time buyers," and that opens doors to down payment assistance, closing cost grants, and lower interest rates through various federal, state, and local programs. These resources, previously sidelined due to intense competition in a seller’s market, are now seeing renewed interest as Greater Phoenix has shifted into a buyer’s market.
Why the Buyer’s Market is Significant
“buyers now have a window of opportunity to negotiate better deals”
Buyer’s markets in Phoenix are rare. The last one in 2022 lasted only four weeks, and before that, the most recent was in 2010. With the current spike in active listings exceeding demand, buyers now have a window of opportunity to negotiate better deals, use aid programs, and find properties without the pressure of bidding wars.
For realtors, this is a pivotal moment to educate your clients on the advantages of acting quickly. Mortgage rates hovering between 6.9% and 7% may discourage some buyers, but history has shown that when rates stabilize below 6.5%, demand quickly rebounds. Realtors can leverage this period to help buyers secure properties before competition heats up again.
For Sellers: Strategies to Stay Competitive in a Buyer’s Market
While buyers are enjoying the current market dynamics, sellers are facing new challenges, particularly with elevated mortgage rates that have curbed demand. Greater Phoenix has officially entered a buyer’s market, and to make matters more complicated, it’s happening during the 4th quarter—traditionally the slowest time of year for real estate activity.
What Sellers Need to Know
“For those without urgency, waiting until the 1st quarter of 2025 might be a better strategy”
The key to success in this market is pricing and property condition. Sellers must be proactive and strategic to attract offers. Here’s how:
Invest in Presentation: Homes that are move-in ready will stand out. Simple upgrades, such as new carpet, fresh paint, and a deep clean, can create a positive first impression.
Offer Incentives: Over 62% of sales in the $275K-$500K price range include seller-paid closing costs, averaging $8,000-$10,000. Consider budgeting for rate buy-downs or other incentives to attract buyers.
Set Realistic Expectations: With longer marketing times during the holiday season, sellers should anticipate 30-60 days on the market before receiving an offer.
For those without urgency, waiting until the 1st quarter of 2025 might be a better strategy. Historically, the Arizona market sees increased buyer activity from January to May, fueled by tourism and favorable weather. If mortgage rates decline in early 2025, the market could shift back toward sellers.
Opportunities for Realtors: Providing Value in a Dynamic Market
As a realtor, this market environment presents a unique opportunity to demonstrate your value:
Educate Buyers: Many potential buyers are unaware of the aid programs they qualify for under HUD’s broad first-time homebuyer criteria. Inform your clients about these opportunities and encourage them to act during the current market conditions.
Guide Sellers: Sellers may feel discouraged, but your expertise in pricing strategy, home preparation, and negotiation can help them secure contracts even in a buyer’s market.
Stay Ahead of Trends: Keep an eye on mortgage rate fluctuations, as they will dictate how long this buyer’s market lasts. Prepare both buyers and sellers for potential shifts if rates decline below 6.5%, which could swing momentum back toward sellers.
Closing Thoughts: A Market in Motion
The Arizona housing market is entering a pivotal phase, with unique challenges and opportunities for both buyers and sellers. For buyers, now is the time to take advantage of increased inventory, seller incentives, and aid programs. For sellers, proper preparation and competitive pricing are critical to success in a more relaxed marketplace.
Realtors, your expertise is more important than ever in helping clients navigate these changes. By staying informed and proactive, you can position yourself as a trusted advisor in this dynamic market. Whether you’re guiding buyers through first-time homebuyer programs or helping sellers stand out in a crowded market, your role is vital in shaping their success.
By the way, I help realtors improve their online and social media presence by providing beautiful photos of their listings. That is why I’ve created this FREE HOME PREP LIST for your clients to help your listings look their best. Feel free to share.