Image via Cromford Report June 2024
By Sean Colón
The Arizona real estate market in 2024 is presenting unique challenges and opportunities for both buyers and sellers. With the Federal Reserve maintaining steady interest rates and the Consumer Price Index (CPI) showing a decline in annual inflation, the landscape is shifting. This blog provides a comprehensive overview of the current market conditions in Greater Phoenix, offering actionable insights and expert advice for realtors to help their clients navigate this evolving environment.
For Buyers:
Understanding the Market Dynamics
It's beginning to feel like "Groundhog Day" in Greater Phoenix's housing market. The Federal Reserve has kept the Federal Funds Rate steady for the past 12 months. However, recent announcements suggest a potential rate cut later this year, possibly in September, which could result in a mortgage rate drop in late summer.
Current Mortgage Rate Trends
Despite a slight drop in conventional mortgage rates from 7.16% to 6.98%, rates remain high, limiting a major boost in demand. Yet, with supply 54% higher than last year, buyers are experiencing the most accommodating market in a decade. This has led to increased price negotiations, particularly in the mid-range market.
Mid-Range Market ( $300,000-$500,000 )
Price Negotiations: The closing price in this range typically lands around 98.7% of the asking price, down slightly from 99.0% last year. This equates to a $5,200 reduction on a $400,000 home.
Seller Incentives: A significant trend is the rise in seller incentives. About 55% of sales now include seller incentives to assist with buyer payments, up from 49% last June. The median incentive has increased to $9,400, bringing the true ratio of sale price to list price to approximately 96.4% for a $400,000 home.
Luxury Market ( Over $1M )
Price Negotiations: Buyers in this range are less influenced by mortgage rates and concessions. Currently, price negotiations close at 94.9% of the list price, equating to a $51,000 reduction on a $1M purchase, up from $36,000 last year.
For Sellers:
Adapting to Current Market Conditions
While there's hope for lower mortgage rates in the latter half of 2024, sellers must focus on current market realities. The rising supply throughout the year has led to increased competition, with 12 cities in Greater Phoenix now experiencing balanced or buyer's markets.
Impact on Listings
Condition Matters: Homes requiring extensive repairs or with delayed maintenance are struggling. These properties may not even attract showings, regardless of their list prices.
Marketing Time: Even well-maintained homes are seeing longer marketing times. The median time on the market before a contract has grown from 3 to 4 weeks, and over half of the listings will likely need at least one price reduction during this period.
Managing Expectations
Sellers need to manage expectations carefully. The market hasn't seen such a supply/demand ratio since 2014-2015. Patience and strategic pricing are crucial for achieving successful sales in this environment.
Current Seller Statistics
Closing Price: Sellers are averaging 97.8% of their last list price at close of escrow.
Seller-Paid Costs: Closing cost assistance has decreased by 2%, with 44% of sales including seller-paid costs.
Median Sales Price: The median sales price has increased to $444,900, up 6% from last year.
The Arizona real estate market in 2024 is challenging but filled with opportunities for those who adapt strategically. For buyers, it's a prime time to negotiate and benefit from increased seller incentives. For sellers, understanding market conditions and maintaining realistic expectations is key to success. Realtors play a pivotal role in guiding their clients through these nuanced dynamics, ensuring informed decisions and optimal outcomes.
By staying informed and adaptable, realtors can turn market challenges into opportunities, leading to successful transactions and satisfied clients.
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.