The numbers are coming in hard and fast: the Phoenix real estate market is experiencing the fastest “slowdown” we’ve seen in a very long time. So what’s causing this massive shift?

First, the incredible interest rate spike we’ve seen over the past four months has made buyers take an immediate pause. This was the point: interest rates were increased to try to wrangle inflation and quell the double digit percentage increases we’ve seen in pricing. And it worked! Many buyers got priced out of the houses they thought they could afford, and many more are waiting this out to see what might happen next.

Second, sellers started to worry that they’d missed the peak (they had) and are scrambling to get their houses on the market before prices start falling. Huge increases in inventory over the past several weeks have flooded the market.

So now we have a self-fulfilling prophecy - too many houses on the market and not enough buyers will trigger price decreases, seller concessions, and a balancing out of power that sellers held for quite a while.

Contract Ratio is 59

This measures completed sales contracts relative to supply of active listings. In April this ratio was 230. We still have indication of further drop. 30-60 is considered a balanced market, with enough buyers and sellers to keep the market moving forward. Below 30 we will have a cold (stagnant) market.

Where do we go from here?

Buyers: now is your time. A huge amount of inventory will give you many more choices, and interest rates have stabilized for the moment. Sellers may be willing to buy down your rate to get their house sold at the price they want. Look for an experienced team (US!) to guide you through negotiation strategies as the market continues to shift.

Sellers: change your expectations. You will have fewer showings, you will have maybe one or two offers, and your house will be on the market longer. You need to be very well-priced out of the gate and you need to be willing to price adjust as the market gives you feedback. Your house needs to be in excellent shape - consider a pre-inspection, and staged and photographed well. Now is not the time for discount selling brokerages or newbie agents. You need good advice and excellent (and well-funded) marketing on your side with an experienced team (again, US!)

Please reach out so we can talk about a strategy that works for you on your real estate journey.