Phoenix Real Estate Market Update: What Buyers and Sellers Need to Know in 2025

It’s a Buyer’s Market. Why aren’t

prices crashing?

For Buyers

Phoenix has been in a buyer’s market for three of the past four months, and as of this writing, that trend continues into March. Some buyers might be surprised that home prices haven’t declined yet—the median price is up 4.3% year-over-year. However, price shifts typically take 3–6 months to reflect market changes, as the shift needs to be sustained for at least a season before impacting pricing.

Why does it take so long? One key reason is the time it takes to complete a sale. First, a home is listed, often spending about 30 days on the market before going under contract. Then, after another 30–45 days in escrow, the final sale price is recorded. At least two additional months of data are needed to establish a trend. In contrast, stocks can be bought and sold instantly, making them far more volatile.

This is only the fourth buyer’s market in Greater Phoenix over the past 25 years. The one from 2006–2008 was particularly severe, leaving lasting concerns among those who experienced it. Because that housing crash coincided with the Great Recession, some fear home values could crash if another recession occurs. However, history suggests otherwise—home prices typically flatten or see slow growth during recessions rather than plummeting. Demand often increases as mortgage rates decline. Current indicators suggest that if supply rises, home prices may decrease in the coming months, but more like a gradual dip rather than a dramatic crash.

Most price ranges currently see 1–2% appreciation year-over-year, below the inflation rate. However, not all segments are behaving the same way. Condos and townhomes under $400K have seen the steepest declines, down 4.2% so far this month, while homes priced between $1M—$1.5M are experiencing the strongest growth at +5.5%. Under these conditions, even a tiny drop in mortgage rates could significantly impact a buyer’s purchasing power.

For Sellers

Today’s buyer’s market isn’t the result of falling demand. The Cromford® Demand Index is currently rising. Instead, the increase in supply is creating challenges for sellers. So far this year, the Arizona Regional MLS has recorded more new listings than in the past four years, resulting in the highest active listing count since 2015. While demand is improving, it’s not enough to absorb the surge in inventory. As a result, price reductions have jumped 58% compared to last year, and buyers are negotiating more aggressively—even for move-in-ready homes.

Sellers are also being more realistic with pricing. The average list price per square foot is mostly within 1% of last year. Still, competition pushes some sellers to go the extra mile—whether by staging vacant homes, updating appliances, or making cosmetic improvements like neutralizing paint.

Negotiations are a bit tougher once an offer is secured than last year. For homes under $1M, final sale prices are averaging 98.3% of the previous list price, down slightly from 98.6% last year. On a $500,000 home, that equates to a $8,500 price reduction compared to $7,000 last year. For homes over $1M, final sale prices are averaging 95.4% of the previous list price, down from 96.4%—meaning a $46,000 price reduction on a $1M home compared to $36,000 last year.

Some good news for sellers: mortgage rates have been declining since their January peak of 7.26% and are currently averaging 6.78% (per Mortgage News Daily). Recent economic uncertainty, potential tariffs, and government downsizing have caused investors to shift money into more stable assets like bonds, which has lowered the 10-year Treasury yield, which is closely tied to 30-year mortgage rates. If rates drop below 6.5%, the market will likely become more favorable for sellers.

Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2025 Cromford Associates LLC and Tamboer Consulting LLC

Housing Market

• Lennar and Icon, a 3D technology company, partnered to 3D print 100 homes in Georgetown, Texas. About 75% of them have already sold.

• Though rates were no longer falling, total mortgage apps jumped 11% last week. Purchase apps rose 7% for the week and 4% year over year.

• Pending home sales ticked up for the week but were slightly lower than a year ago. Unsold inventory is up 28% nationwide from last year.

Economy

• After rising in January, wholesale prices remained unchanged in February. Markets are concerned tariffs may lead to future increases.

• The CPI showed slowing inflation in February. The drop-off is not expected to trigger policy rate cuts at next week's Fed meeting.

• Job openings rose to 7.74 million in January, signaling employer optimism amid ongoing labor market concerns.

  
  

Relocating to Arizona?

Here are ten key pointers for anyone relocating to Arizona from out of state from relocation specialist Brad Daniels.

1. Understanding Arizona’s Climate

• Arizona is known for its hot summers and mild winters. Be prepared for triple-digit temperatures in the summer, and invest in good air conditioning.

• Monsoon season (June–September) can bring heavy rains and dust storms (haboobs), so familiarize yourself with safety measures.

2. Cost of Living & Housing

• Arizona offers a lower living cost than states like California, but prices have risen in recent years. Research property taxes, HOA fees, and utility costs.

• If you’re moving from a humid climate, be aware that evaporative cooling is less effective, and you’ll likely rely on air conditioning year-round.

3. Choosing the Right Area

• Phoenix Metro: Offers urban and suburban living, with cities like Scottsdale, Gilbert, and Chandler providing excellent schools and amenities.

• Tucson: A more laid-back atmosphere with a strong university presence.

• Northern Arizona: Flagstaff and Prescott provide cooler temperatures and mountainous landscapes.

4. Employment & Job Market

• Key industries include healthcare, technology, education, and aerospace. Many companies have relocated here due to Arizona’s business-friendly environment.

• Remote work is popular, but check internet provider options in your area, as some rural parts have limited connectivity.

5. Transportation & Commuting

• Arizona is car-dependent, especially in the Phoenix area, where public transportation is limited. Consider commute times and traffic patterns when choosing a home.

• If moving to a desert or rural area, a vehicle with good air conditioning and reliable tires is essential.

6. Taxes & Financial Considerations

• Arizona has a lower income tax than states like California, making it an attractive destination for retirees and remote workers.

• No tax on Social Security benefits, which is beneficial for retirees.

7. Utilities & Water Usage

• Water conservation is a significant concern in Arizona. Be mindful of usage and consider xeriscaping (low-water landscaping).

• APS and SRP are the two primary electric providers in the Phoenix area, and summer electric bills can be high—look into energy-efficient home options.

8. Lifestyle & Recreation

• Arizona offers incredible outdoor activities, from hiking in the Superstition Mountains to boating in Lake Pleasant.

• The state has a strong sports culture, with major teams in football (Cardinals), basketball (Suns), and baseball (Diamondbacks).

9. Schools & Education

• Arizona has a mix of public, charter, and private schools, with charter schools being a popular choice. Research local school ratings if moving with kids.

• Higher education options include Arizona State University (ASU), University of Arizona (UofA), and Northern Arizona University (NAU).

10. Getting Settled

• Register your vehicle with the Arizona MVD within 30 days of moving. Arizona does require emissions testing in some counties.

• Update your driver’s license and consider getting an Arizona Real ID if you plan to fly domestically.

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