PHOENIX – Home values fell by 2.8% in metro Phoenix over the last year, one of the biggest drops in the country. Does that mean the Valley is now a buyer’s market?
Price isn’t the only indicator shifting in buyers’ favor, with inventory up and mortgage costs down. Still, many potential Phoenix homebuyers are choosing to wait.
“The number of homes on the market is up almost 38% from last year in Phoenix, and that’s almost double what we see nationally,” Kara Ng, a Zillow senior economist, said Tuesday.
Ng noted that Phoenix buyers now have more homes to choose from than at any point since 2019, but pending sales are down nearly 5% year over year.
“Both home values and mortgage rates were down compared to last April, so that the typical mortgage payment is down about 5% from last year, yet despite more options and better affordability, buyers did not bite,” she said.
Ng said widespread economic uncertainty in April likely contributed to the decline in sales, which was seen across the county.
“Many households didn’t know what was next for their jobs or investment portfolios or budgets, and as a result some potential buyers sat on the sidelines,” she said.
Taking a closer look at Valley home value data
Only Austin (-5.1%), Tampa (-5%), San Antonio (-3.2%) and Dallas (-3%) saw larger drops in home value than Phoenix over the last year, according to Zillow’s most recent market report.
The report shows Phoenix with a 0.3% increase in home values from March to April, also the fifth-lowest figure in the nation.
However, Tina Tamboer, senior housing analyst with the Cromford Report, explained that the dip in Valley home values might be deceiving.
“In the times of turmoil or volatility, you tend to see the luxury market takes a pause. And so, you’ll see what would appear to be a large drop in price, but what it really is is a shift in market share,” Tamboer told KTAR News 92.3 FM’s Arizona’s Morning News on Wednesday.
She further explained that with luxury buyers taking a break over the last few months, values appear to be falling more than they are.
“It makes it look like there’s a big drop, but there’s really not much of a drop,” she said.
Experts mixed about whether Phoenix is a buyer’s market
Still, Tamboer believes the Valley has been in buyer’s market mode for seven months.
“The inventory’s been crawling up for quite some time, but I wouldn’t say we’re at any kind of alarming level, and we’ve actually started to see it level off over the last three or four weeks,” she said.
That could indicate some sellers are waiting for conditions to improve in their favor.
Ng, however, wouldn’t classify the Valley as a buyer’s market — at least not yet.
“It is a balanced market. Buyer and seller negotiation power is roughly balanced, and it’s a first for an April going back to 2018.” she said.
For Phoenix buyers to really have an edge, they would need even more options, time to buy and negotiating power.
Tamboer is more optimistic about the conditions for buyers and said demand has been increasing. She also noted that metro Phoenix has seen only four buyer’s markets in the last 25 years.
“I think the best thing for buyers is to get out there and at least look at what the inventory is instead of waiting for the prices to come down, because by the time we start reporting on that, oftentimes it’s already shifted,” she said.
