As inventory continues to grow, sellers are finding a need to adjust their expectations if they want to get their property sold, let alone at a premium price. Sellers always want to challenge a marketplace and achieve highest and best pricing. Although that is a solid objective, now is a time to recognize that you cannot be outside the expectations of the buyer base, and that the dynamics of the residential market are very localized. As they say in the car ads, your mileage may vary.
Inventories are as high as they’ve been in year, although the current environment is quite different. In 2016, for example, we were still burning through a lot of REO inventory from deals that had gone into foreclosure—something that is not happening currently in significant volume. The hardest-hit areas include exurban communities such as Buckeye, Goodyear, Avondale, Queen Creek, and areas of the far north Valley. In general, these are newer communities where homes were bought on an affordability basis when interest rates were low during the pandemic. Several years later, outlying areas have not necessarily appreciated the way that interior areas have.
January to February 2025, the supply-demand index decreased from 90.6 to 84.7, with a whopping 8.7 point increase from 84.2 to 92.9 in supply. The demand index rose from 76.3 to 78.7, but it wasn’t enough to offset the rise in inventory—putting Greater Phoenix back into a buyer’s market. This means the local housing market has been in a buyer’s market for 3 out of the past 4 months, but it’s been in a buyer’s advantage (overall index under 100) for 6 months. The beginning stages of a buyer’s market typically involve sustained prices and an increase in buyer incentives. The more a buyer’s market is prolonged, the higher probability of a downward glide in price measures, as negotiations slice a little more off the list price. While buyer demand is low, it’s not declining overall. Current market conditions are driven by a level of new listings entering the market not seen since 2019, which is providing existing buyers a plethora of quality choices.
You can read all the details in the R.O.I. Properties “Real State – Residential” newsletter, with additional statistics, market trends and information, but here’s a quick peek at the highlights:
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