More Buying Power, Less Competition: This Quarter Belongs to Buyers in Phoenix, Arizona

This Quarter Belongs to Buyers in Phoenix, Arizona

For Buyers

Mortgage rates dropped over 2 months from July 15th (6.85%) to September 16th (6.1%), dropping payments by 7.5% across the board and reaching the lowest rate in over a year. Real estate professionals swung open the gates and awaited a stampede of buyers to arrive. But, while there was a wave of refinances, purchase applications were stubborn. This is a common phenomenon. While rates are actively dropping, it’s human nature to wait and see where they stabilize before taking action, hoping to save even just a few extra dollars off a payment. Rates ultimately bounced and settled around 6.3%, and after 3 weeks of stability buyer activity finally ticked up to a level better than the past three years for October.

Mortgage rates weren’t the only measure dropping over the past 5 months, so were list prices. Listings under $1M saw asking prices drop an average of 2.5% from May to August, then stabilize in September and October. These properties do not yet have contracts on them, but when they do they will likely be closing in November and December, and possibly at the lowest closing price recorded all year.

The biggest price declines have been seen in the first-time homebuyer price ranges. Since July, sales prices for condos between $250K-$300K in Maricopa County (around 1,000sqft) have dropped 4.3% and are 15% below the peak prices of 2022. Single family homes in Pinal County between $300K-$400K (around 1,700sqft) are down 6.7% from last April, and are also 15% down from the peak of 2022. Single family homes in Maricopa County between $300K-$400K (around 1,500sqft) are down 2.9% from last year and down 13% from the peak of 2022. All of this is happening while the overall median price measure is showing just a mild increase year-over-year for the metro area, and just 4.5% below the peak of 2022. This is a prime example of how broad price measures spanning a large area are not always reflective of specific segments and can be skewed by better performing areas and price ranges.

Seller-paid concessions hit another high for September with 56% of MLS closings involving some form of closing cost assistance at a median cost of $10,000, which often includes a temporary rate buydown. This has been a unique hallmark of this housing cycle since rates skyrocketed in 2022. A tool typically used by builders to incentivize buyers has been adopted by everyday sellers and lenders in the resale market in order to compete. As appreciation has been stunted for the past 3-4 years and values declined this year, the number of sellers who can shoulder the cost of these incentives may diminish going forward.

If lower prices, lower mortgage rates, and a high share of seller incentives isn’t enough, seasonally the 4th quarter is the best time to be a buyer in Greater Phoenix. Supply tends to rise right before the holidays, but the rush of buyers doesn’t follow until after the 1st of the year. As a result, there’s a last hurrah of price reductions before Thanksgiving followed by heavier price negotiations and builder incentives as sellers aim to get under contract or close before the end of the year.

It’s common for buyers to get caught up waiting for evidence that it’s the “perfect time” to act, and delaying an affordable purchase in order to land some unicorn price and mortgage rate. Real estate is typically a long-term investment, however. The longer one holds a property, the more equity is built, appreciation accumulated, and risk of loss mitigated.

For Sellers

 This year has been a slog for sellers (and their agents) to say the least with stock market fluctuations at the beginning of the year stalling luxury sales, and volatility in mortgage rates. But there are signs things have gotten better. Lower mortgage rates and lower prices have stimulated demand in unexpected places. While homebuyer demand between $300K-$500K has been anemic, homes between $500K-$1.5M saw a boost of sales in September, up 19% year-over-year, which increased the market share from 36% to 38% of sales, and increased both the median price and average price per square foot measures for the Valley. The reason could be linked to jumbo mortgage rates dropping below 30-year conventional rates for the first time in 2 years, but also the popularity among high-wage buyers of adjustable-rate mortgages, which are currently averaging 5.8%.

While Greater Phoenix remains in a buyer’s market overall, the Northeast Valley including Fountain Hills, Paradise Valley, and Scottsdale are top seller’s markets, reflecting a drop in supply and sustained demand in these cities. Also seller’s markets: Anthem, El Mirage, Avondale, Chandler, Gilbert, Apache Junction, and Sun Lakes. Balanced markets include Phoenix, Glendale, Sun City West, Tolleson, Mesa, and Tempe. Buyer’s markets are mostly on the edges and outskirts where there is more new home development. They include Peoria (barely), Sun City, Surprise, Goodyear, Litchfield Park, Laveen, Buckeye, Gold Canyon, San Tan Valley, Queen Creek, Maricopa, Arizona City, and Casa Grande.

The 4th quarter is not the best time to be a seller, but going in with the right mindset, patience, and price strategy will go a long way towards obtaining a contract before the end of the year. For those who wish to wait, the 1st quarter comes with both a wave of new competing listings from January through March, and increased contract activity that lasts through May.

*Cromford Market Index™ is a value that provides a short term forecast for the balance of the market. It is derived from the trends in pending, active and sold listings 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.

---

Arizona’s Business Boom: A State Moving at the Speed of Innovation

Phoenix and the surrounding cities in Arizona continues to prove why it’s one of the most dynamic and business-friendly states in the nation. The Arizona Commerce Authority recently shared some impressive updates highlighting how our state’s strong economic foundation and forward-thinking policies are fueling growth across industries—from manufacturing and logistics to data centers and semiconductor innovation.

World-Class Business Climate

Arizona offers a powerful combination of advantages for both established companies and new investments. With a sunny, steady, and predictable business climate, our state delivers:

• Lower taxes and a streamlined regulatory environment

• Modern infrastructure connecting global markets through air, rail, and highway systems

• Top talent and a growing workforce supported by leading universities and technical programs

Economic Highlights

• #1 Most Competitive State in the Mountain Region (Site Selection Magazine, 2025)

• Top 4 Best State for Business (Chief Executive Magazine, 2024)

• 2.5% Flat Income Tax — the lowest in the U.S.

• 4.9% Corporate Tax Rate — among the lowest nationwide

• No franchise, inventory, estate, or gross receipts taxes

Driving Innovation

Arizona’s leadership in advanced manufacturing and semiconductors continues to attract global attention. Events like Arizona Semiconductor Leadership Day and expansions in logistics, R&D, and data centers underscore our role as a hub for next-generation technology and investment.

Smart Growth & Sustainable Future

Even with record development, Arizona continues to prioritize secure water management—storing nearly 3 trillion gallons underground for future use and requiring developers to prove a 100-year water supply before building. That balance of growth and sustainability keeps our communities strong and our economy resilient.

With over 456 projects, 127,000+ jobs, and nearly $180 billion in capital investment in the pipeline, Arizona is truly moving at the speed of business.

---

The Calm After the Cut: Treasury Yields Dip, Mortgage Rates Edge Toward 6%

The data vacuum continues with the ongoing shutdown. We didn’t get retail sales this week, but we will get CPI next week. Meanwhile, commentary from Jerome Powell and other Fed members helped 10-year treasury yields drop below 4% and 30-year mortgage rates approach 6%.  Let’s take a look.

Fed Minutes Reveal Deep Divide

Minutes from the Fed’s September 17 meeting highlight differing views among officials on the direction of interest rates, the pace of inflation, and the strength of the labor market.

At that meeting, the Fed delivered a widely expected 25-basis-point rate cut – its first of the year – after holding rates steady through its previous five meetings. The move reflects the Fed's ongoing effort to balance persistent inflation with growing concerns about a weakening labor market.

Reminder: The Fed Funds Rate is what banks charge each other for overnight loans. While it doesn’t directly set mortgage rates, it influences borrowing costs across the economy.

What’s the bottom line? 

The Fed is navigating a tough balancing act: inflation remains above target, but economic momentum is clearly slowing. High inflation limits the Fed’s ability to cut rates, while signs of softness – especially in jobs – may prompt more action.

Chair Jerome Powell underscored the complexity, saying there’s “no risk-free path” as the Fed weighs its next move.

Complicating matters further, the government shutdown has delayed key inflation and employment reports the Fed typically relies on – leaving policymakers with less data and even less consensus heading into the next meeting on October 29.

Powell says QT could stop soon

Quantitative tightening (the Fed selling assets) is the reverse of quantitative easing (the Fed buying assets). QE was about bidding up bond prices to keep yields/interest rates lower to support the economy. QT has been about unwinding that stimulus, and that exerts a downward influence on bond prices and keeps yields higher than they might be otherwise. QT has been happening since 2022. Powell suggested it could end in the next few months. He also had the following to say about QE:

“With the clarity of hindsight, we could have — and perhaps should have — stopped asset purchases sooner.” — Jerome Powell, Federal Reserve Chairman

Why Homeownership Remains a Smart Investment

According to Cotality’s latest Home Price Insights report, home values declined by just 0.3% in August. However, they were still up 1.3% year-over-year – a slight slowdown from July’s 1.4% annual growth.

Meanwhile, ICE’s data for September showed a 0.17% monthly increase in home prices (seasonally adjusted), with a 1.2% annual gain – up from 1% in August. This marked the first acceleration in home price appreciation in eight months, signaling renewed strength in the market.

What’s the bottom line? Home prices are always driven by supply and demand, and both sides are currently contributing to market strength.

On the demand side, falling mortgage rates have helped improve affordability to the best levels in 2.5 years, according to ICE. This has brought more buyers back into the market, as seen in the uptick in contract signings for both new and existing homes, as well as increased mortgage application activity. Many of these buyers represent pent-up demand that had been waiting for more favorable conditions.

On the supply side, inventory is tightening. ICE has reported a decline in new listings along with an increase in sellers pulling their homes off the market. With more buyers entering and fewer homes available, these conditions are putting upward pressure on prices.

Looking ahead, Cotality forecasts a 3.9% increase in home values over the next 12 months. This outlook likely reflects expectations for continued lower rates, strong underlying demand, and tighter inventory levels heading into the fall and winter.

Real estate remains one of the most reliable ways to build long-term wealth. For example, a $500,000 home appreciating at 4% annually would gain $20,000 in just one year – underscoring the strong return potential of homeownership.

Bond and Mortgage Market

As I write this note, the yield on the 10-year US Treasury has moved below 4%. If we apply the historically typical spread of 1.5%-2.0% (between 30-year mortgage rates and the 10Y UST), we’d get a 30-yr mortgage rate estimate of 5.5%-6.0%. We’re at 6.27% today. I have zero doubt that mortgage rates in the 5% range would bring life roaring back into the housing market — which has been stuck at 4 million unit sales pace for nearly 3 years.

Note: The Fed Funds Rate policy range is now 4.00–4.25%. These probabilities come from CME Group website and are implied from the Fed Funds Rate futures market.

• October 29 FOMC Meeting: 99% probability that rates will be 25 bps below current (was 95% last week). In other words, a second 25 bps rate cut on October 29.

• December 10 FOMC Meeting: 97% probability that rates will be at least 50 bps below current (was 82% last week). 57% probability that rate will be 75 bps below current — in other words, a 25 bps cut on October 29 and a 50 bps cut on December 10. A jumbo rate cut in December? Now that’s new!

---

Market in a Minute...National View

Housing Market

• According to ICE, the average credit score for purchasers locking their rates was 736 in September, the highest in 6 years of tracking.

• Purchase apps fell for the 3rd straight week but remain 20% above last year as rising inventory keeps some buyers engaged.

• In a Realtor.com survey, 82% of Gen Z respondents believed homebuying is harder for their generation. Affordability was the top life concern for 18%.

Economy

• After a few months of calm, tensions between the U.S. and China reignited in recent weeks, sparking new concerns over trade and tariffs.

• The government shutdown is in its 3rd week with no end in sight, limiting key data on the labor market and economy.

• Fed Chair Powell said quantitative tightening might wrap up soon, potentially limiting the supply of mortgage bonds and driving down rates.

---

Weather

Helping people move to (or from) the desert is my specialty!

If you know someone thinking of relocating to Arizona — maybe escaping the snow or chasing more sunshine — send them my way. I’ll help make their transition smooth and stress-free. ☀️ Real estate advice, relocation tips, and warm Arizona welcomes — that’s what I do best. #RelocateToAZ #CallBradToSellYourPad