Phoenix-Real-Estate-Market-Update Market Mayhem, Yes? Not for Housing in Phoenix and the surrounding areas!
- Brad Daniels
- Apr 14
- 7 min read
New Contracts Spike Between $250K-$500K
For the Phoenix Metro Area
For Buyers
It’s not easy to make predictions, even for just a month or two. Home values typically don’t turn on a dime, so for a shift in supply or demand to have a lasting effect on home values, it must last for more than a few months. When a prediction is made regarding the housing market, it’s based on a level of expectation that current scenarios will continue. However, volatile trends in both the stock and bond markets have been changing by the hour due to abrupt and dramatic global trade negotiations, sending mortgage rates low and then high over the course of just a week. It’s like doing hard turns back and forth on the rudder of a large cargo ship; it’s a bumpy ride, but there’s minimal actual turning until the rudder commits to a position.
Fortunately, or unfortunately, volatility in the housing market has not been new over the last five years. From extremely low mortgage rates, high demand, and astronomical appreciation from 2020-2021 to extremely high mortgage rates, falling demand, and depreciation in 2022 to moderately high mortgage rates, low-but-stable demand, and flat appreciation from 2023-2025, real estate professionals have guided their clients through it all.
Emotions remain high in the news media headlines and consumer sentiment polls, but buyers continue to buy homes based on their personal needs, lifestyle, and financial situation. As of this writing, overall buyer demand in Greater Phoenix is holding steady, just about even with this time last year, with one unexpected spike in new contracts between $250K-$500K in late March. This coincided with a national 6% spike in FHA mortgage applications as qualified buyers took advantage of down-payment assistance and grant funds before regulations change regarding who may utilize them.
Supply continues to rise, putting buyers in a good position during negotiations, and prices remain stable, with the median up only 1.7% from last year. Negotiations are averaging 97.7% of the previous list price, down from 97.8% in April last year, but it varies by price range. Negotiations are still 99% of the list on a $ 300- $ 400 K single-family home and 98.6% for $400K-$500K. On a home listed for $450,000, that’s a $6,300 negotiation to $443,700 on top of another $10,000 in median costs toward seller-paid closing costs.
For Sellers
One segment of housing demand that does not care for the volatility in the markets is luxury buyers. Listings under contract over $1M have been drifting down for six weeks now as buyers take a pause to wait for some form of certainty to move forward. Despite this recent trend, contract activity remains the third-best Greater Phoenix has ever seen, behind 2022 and 2024. Supply in this price range is also at record levels, offsets the added demand, and keeps prices modest. Phoenix Real Estate Market Update:
· 11 cities in Greater Phoenix are in very weak seller’s markets: Paradise Valley, Scottsdale, Fountain Hills, Phoenix, Anthem, El Mirage, Glendale, Avondale, Apache Junction, Chandler, Gilbert
· Four cities are in balanced markets: Cave Creek, Tolleson, Tempe, Mesa
· 14 cities are in buyer’s markets: Peoria, Goodyear, Surprise, Buckeye, Laveen, Sun City, Sun City West, Litchfield Park, Queen Creek, Sun Lakes, Maricopa, Gold Canyon, Arizona City, Casa Grande
A weak seller’s market will not look too different from a balanced market; it only means that price appreciation will be slightly higher than the rate of inflation, which is just 2.4% per the most recent CPI measure. Sellers are constantly testing the top price boundaries for a given, but they are routinely denied in a buyer’s market. This is reflected in the number of price reductions, up 68% compared to last year and at levels not seen since 2022. This is true even in seller’s markets of the Northeast Valley, with price reduction counts not seen since 2017. As a result, very few sellers are “greedy” in their asking prices as they are often lower or even lower than last year’s asking price per square foot. As with any buyer’s market, condition and pricing are top priorities for sellers. In some cases, that may be as simple as neutralizing kid’s room paint or accent walls, or as complicated as a new roof or major repairs before list.
*Cromford Market Index™ is a value that provides a short-term forecast for the balance of the market. It is derived from the pending, active, and sold listings trends compared with historical data over the previous four years. Values below 100 indicate a buyer's market, while values above 100 indicate a seller's market. A value of 100 indicates a balanced market
Mortgage Market and Economic Update – Week Ending 04/04/2025
It was a wild week, with stock and bond markets moving violently up and down in response to Trump's tariffs, China’s retaliation, and growing recession fears. Let’s take a look.
Global Reciprocal Tariffs Announced
Last week, President Trump announced a new 10% "baseline" tariff on imports and country-specific tariffs set at roughly half the rates those countries charge on US exports. These sweeping new tariffs have created significant market uncertainty, as how other nations will respond remains unclear.
In the short term, the announcement sparked a sharp selloff in stocks, with bonds (including mortgage-backed securities) benefiting from a flight to safety. Given the fluid nature of these ongoing market dynamics, I will continue to monitor developments closely in the days and weeks ahead.
March Sees Stronger Job Growth, But With Caveats
March delivered a surprising upside in job growth, with 228,000 new positions added – significantly exceeding the expected 135,000 to 140,000, according to the Bureau of Labor Statistics (BLS). However, this headline figure may be subject to revision in the coming months, as January and February saw downward adjustments totaling 48,000 fewer jobs.
Additionally, a closer look at the March data reveals some underlying weaknesses. The unemployment rate ticked slightly from 4.1% to 4.2%, and average weekly earnings only increased 0.3% from February and 3.2% year-over-year – down from 3.7% in the prior report. Hours worked also remained at 34.2 for a second straight month, just above the lowest level since 2010 outside of the COVID-19 period.
Furthermore, the job gains were also concentrated in specific age groups, with 20-24-year-olds and those 55 and over seeing the most significant increases, while those in the prime earning ages of 25-54 lost 107,000 jobs.
What’s the bottom line? While the headline job growth figure was stronger than expected, the March employment report has several essential caveats suggesting underlying weakness in the labor market. Private Payrolls Rebound
In March, the private sector exceeded expectations, adding 155,000 new jobs – well above the forecasted 105,000. Gains were seen across companies of all sizes, with small businesses adding a notable 52,000 positions after several months of weak or negative growth.
While the bulk of hiring occurred in the service sector (+132,000 jobs), there were also positive signs on the goods side, as manufacturing delivered stronger-than-average job gains for the second consecutive month.
Wage growth remained solid, though it dipped slightly for existing employees (from 4.7% to 4.6%). Those changing jobs saw a larger decline (from 6.8% to 6.5%), and the pay premium for job transitions matched a series low at 1.9%, suggesting less poaching and enticement to switch roles.
What’s the bottom line? ADP's chief economist Nela Richardson said, "Despite policy uncertainty and downbeat consumers, the bottom line is this: The March top line number was a good one for the economy and employers of all sizes, if not all sectors."
Job Openings Fall in February
The number of open jobs declined modestly in February, down from 7.76 million in January to 7.57 million, falling short of estimates. The drop was particularly pronounced in the trade, finance, leisure, and hospitality sectors.
The hiring rate (3.4%) and quit rate (2%) remained near decade lows, excluding the COVID-19 period. The low hiring rate poses challenges for the unemployed seeking new roles. In contrast, the soft quit rate indicates diminished confidence in the job market, aligning with ADP data showing lower pay premium incentives for switching jobs.
What’s the bottom line? Job openings continue a downward trend, well below the 2022 peak of 1.2 million. Remote work has also led to posting job listings across multiple states, potentially inflating the JOLTS data and indicating even fewer openings than reported. Additionally, the ratio of job openings to unemployed persons has significantly decreased from over 2 in 2022 to 1.1, another signal of underlying labor market weakness.
Continuing Jobless Claims Reach 3-Year Peak.
Weekly initial jobless claims declined slightly to 219,000, staying low historically. However, the more concerning indicator is the persistent rise in continuing unemployment claims, which increased by 56,000 to reach 1.9 million – the highest level since November 2021.
Additionally, recent data from Challenger, Gray & Christmas showed a 60% surge in job cut announcements in March, reaching 275,240 - the third highest monthly total on record. These cuts were concentrated in the federal government sector. Furthermore, hiring totals in the first quarter were the lowest since 2012.
What’s the bottom line? While new unemployment filings have mostly stayed muted, the elevated continuing claims, surging job cut announcements, and declining hiring collectively point to ongoing challenges in the employment landscape.
Mortgage Market
We can’t manage to keep mortgage rates lower for very long. Something always happens. In this case, it looks like a combination of the risk-off trade (selling stocks to buy bonds, pushing yields lower) reversing & something like a liquidity squeeze prompting investors to sell US treasuries.
Here’s what the Fed Funds Rate futures market is currently pricing for rate cuts. The current Fed Funds Rate policy range is 4.25–4.50%.
May 7 FOMC Meeting: 78% probability that the policy rate will remain at 4.25–4.50% (down from 88% last week)! 22% probability of a 25 bps cut (25 bps = 0.25% = a quarter percentage point) to 4.00–4.25%.
June 18 FOMC Meeting: 17% probability that the policy rate will remain at 4.25–4.50% (down big from 34% last week). There is a 66% probability that the policy rate will be 25 bps below the current rate (which implies one rate cut on either May 7 or June 18). 17% probability that rates will be 50 bps below current.
Housing Market
ICE reports more than 1/4 of major housing markets have pre-pandemic inventory, with 18 running a surplus of 15% or more.
ICE also reports slowing home price growth in the majority of markets. Still, 35% of markets show growth rates above their 30-year average.
Mortgage demand jumped 20% last week as rates briefly dropped. Purchase apps rose 9% for the week and 24% year over year.
Economy
Last week's tariff announcement, followed by this week's news of a 90-day pause on some of those tariffs, sent markets into a tailspin.
The Consumer Price Index showed cooling inflation in February. Many economists remain concerned about a tariff-induced increase.
Minutes from the Fed's last meeting showed concerns about stagflation, a period of slowing economic growth paired with rising inflation.
Comments