Cromford Report

Weekly Market Insights for Agents & Clients!

Stay informed with the latest Cromford Report updates! Each week, we’ll share expert insights helping both agents and clients navigate Arizona’s ever-changing real estate market. Whether you’re buying, selling, or advising others, staying on top of market trends is key to making smart decisions.

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March 2025 - Infographic

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• March 2025

  It’s a Buyer’s Market. Why aren’t prices crashing?

  Could Economic Uncertainty Help the Housing Market?

  For Buyers

  Phoenix has been in a buyer’s market for 3 out of the last 4 months, and it’s continuing into March as of this writing. Some buyers may be surprised to see price measures aren’t showing a decline yet, in fact the median is up 4.3% over last year. Price measures take at least 3-6 months to crack after a shift in the market, and that shift needs to be in effect for at least a season before it starts to hit the price line.

  Why does it take so long? For a number of reasons, but one is the length of the sale. When selling a home, first the seller needs to list it on the open market and possibly wait 30 days before accepting a contract. Then after another 30-45 days in escrow, the price finally records. Then in order to establish a trend, two more months need to be established to show a measurable decline in price. Stocks, in contrast, can be sold and recorded at the push of a button, so volatility and price responses are instantaneous, and crashes are common.

  This is only the 4th buyer’s market for Greater Phoenix over the past 25 years, and the one from 2006 -2008 was a doozy that ignites PTSD for those who suffered through it. Because the housing crash coincided with the Great Recession of 2008, there are some who believe home values are set to crash if another recession should occur in the near future. Historically, this theory is not supported. Typically home values go flat and boring during recessions, or barely rise. Ironically, buyer demand for homes increases during recessions because mortgage rates typically decline. Measures today suggest prices could decline in the coming months if supply continues to rise, but more like a coast or glide, not a crash.

  Most price ranges are currently averaging somewhere around 1-2% appreciation year-over-year, which is less than the rate of inflation. However, condominiums and townhomes under $400K are seeing the most notable declines in value, down -4.2% so far this month, while those between $1M-$1.5M are experiencing the strongest growth at +5.5%. Under these circumstances, any drop in mortgage rates will have significant impacts on a buyer’s purchasing power.

  For Sellers

  Today’s buyer’s market is not due to falling buyer demand. The Cromford® Demand Index is actually rising at the moment. It’s rising supply that’s causing sellers added stress. So far in this year, the Arizona Regional MLS has seen more new listings added to supply than it has in the last 4 years, and the highest total count of active listings since 2015. While buyer demand is improving, it’s not enough to absorb this many added listings. The byproduct is a spike in price reductions over the past 4 weeks (up 58% over last year) and stronger buyer negotiations, even for homes in perfect condition.

  The average list price per square foot tells us that sellers are not pushing the market on price as much as they used to, with measures by price range mostly within 1% of last year, give or take. But added pressure from increased competition is causing some sellers to go the extra mile just to get an offer. That could mean staging their vacant home, or neutralizing paint, upgrading appliances, or more.

  Once they get the offer, price negotiations are shaving off a tad more than they did last year as well. The average price negotiation for listings under $1M is running at 98.3% of the last list price, down from 98.6% last year. On a $500,000 purchase, that’s a negotiation of $8,500 off the sales price vs. $7,000 last year. Negotiations over $1M are averaging 95.4% compared to 96.4% last year. On a $1M home, that’s a downward negotiation of $46,000 vs. $36,000.

  There’s one ray of good news for sellers. Mortgage rates have been trending down since January’s peak of 7.26% and are averaging 6.78% as of this writing per Mortgage News Daily. In the face of perceived chaos and uncertainty over the economy, potential tariffs, and federal government downsizing, the stock market declined as investors moved their money over to more stable investments, including bonds. This pushed down rates on the 10-year treasury, which is closely tied to 30-year mortgage rates. If mortgage rates continue to decline past 6.5%, the market will improve for sellers. 

  Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
  ©2025 Cromford Associates LLC and Tamboer Consulting LLCon text goes here

February 2025 - Infographic

• February 2025

  Fact Check February - Don’t Fall In Love With These 7 Narratives on Housing

  There is no online shortage of armchair quarterbacks when it comes to prognostications on the future of home values and affordability. However, there are narratives that some people, and journalists, stubbornly hold to that are simply outdated or incorrect. Many of them were true a few years ago but are no longer true today. Here are just a few:

  Myth #1 - Buyer demand is declining.
  This was true in 2022 and 2023, but is no longer true today. While mortgage rates have knocked many buyers out of the game, buyer demand is now stable and following last year’s trend with little reaction to rate fluctuations.

  Myth #2 - There is very little to buy under $300K.
  This was definitely true a few years ago, but not today. In February 2022, there were only 90 single family listings active for sale under $300,000 in Maricopa and Pinal County. Today there are 534, mostly in Pinal County. Condo and townhome inventory is even more abundant by comparison. In March 2022, there were only 156 active condo/th listings while today there are more than 1,200, all of which are in Maricopa County.

  Myth #3 - My income is too high to qualify for any homebuyer assistance programs.
  Some grant and downpayment assistance programs correlate to an area, not income. Many have income limits as high as $150,000/year and some don’t have income limits at all. Putting in the research and finding a qualified loan officer to explain these programs could save thousands of dollars.

  Myth #4 - I need to be a first-time homebuyer or renter to qualify for homebuyer assistance programs.
  In most cases, this is not true. They may say first-time home buyer, but if you haven’t owned a home in 3 years or more, you’re a first-time home buyer once again according to HUD’s definition. Also, if you’ve only ever owned a home with a spouse, have a child, and are now divorced, you are also a first-time home buyer. Or, if you’ve only ever owned a mobile home. These are just 3 of the 5 HUD definitions for first-time homebuyer.

  Myth #5 - Mortgage rates are too high, there’s nothing to be done about it.
  57% of January sales between $200,000-$600,000 involved seller-paid incentives, most went towards a temporary buydown of the mortgage rate, and many home builders are providing permanent rate buydowns. Other sellers have FHA or VA loans that are assumable with rates below 5%. In fact, about 10% of all active listings fit this criteria. Some buyer assistance programs even allow grant money to buy down mortgage rates. Again, a little research goes a long way in hacking the affordability issues caused by mortgage rates.

  Myth #6 - Housing is in a bubble and home prices are on the precipice of a crash.
  One could argue that Greater Phoenix already had a bubble and price crash in 2022 when prices rose to their peak by May and declined a whopping 12.3% from May to December that year, with short-term flip investors taking the brunt of the pain. Since then, prices bounced and stabilized with most price ranges seeing less than 2% appreciation year over year today. That is less than the current rate of inflation, and what is expected after nearly a year in a buyer-leaning market. While Greater Phoenix is officially in a buyer’s market, it’s very mild. Under these conditions, sale price measures are showing most non-luxury buyer negotiations at approximately 1.9% below the last list price. That’s a huge improvement over 2022 where sales prices were averaging 2.4% OVER list price. Prices are declining in some areas, but not all, and not by leaps and bounds. Current supply and demand indexes do not support massive declines in sales prices, but shaving 1-2% off lower list prices during negotiations is not out of the question. Sellers are not pushing the market with outrageous list prices. In fact, most are in line or even below last year in some price ranges.

  Myth #7 - I’ll sell my home “as-is” and price it aggressively with buyer incentives.
  This worked in the mild seller’s market of 2023 and first part of 2024, but not now. In a buyer’s market, it’s okay to sell your home “as-is” so long as it “is” in excellent condition. The hierarchy of importance isn’t price first, then buyer incentives, then condition. It’s condition AND price, the importance of additional incentives depends on your area and price range. When everyone is offering low prices and buyer incentives, properties in good condition rise to the top.

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

January 2025 - Infographic

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• January 2025

  Description text goes hereHome Prices Rose 4.7% ... Or Did They?

  What was Hot in December, and What Was Not...

  For Buyers:

  Buyer’s season has begun and new listings for January are the strongest Greater Phoenix has seen since 2020. New listings waned in November and December, so this rebound is a refreshing start for buyers in 2025 as supply is rising and sellers continue to be open to incentives and negotiations.

  Hovering around 7.25%, mortgage rates continue to limit the general buyer pool. Currently, just over 5,600 listings are under contract in the MLS, but normally we expect to see at least 7,000-8,000 at this time of year. On the other hand, supply is around 21,000, the highest entry point for January since 2016-2017, fostering an environment favorable towards qualified buyers.

  These conditions suggest home price projections should remain flat, either at or slightly lower than the rate of inflation annually. However, December price measures were significantly higher than the rate of inflation with a +4.7% growth in the median sales price and +6.7% for price per square foot. How can this be? Well, blame it on the luxury market.

  Mortgage rates suppress buyers on the low end of the price scale, but don’t affect those on the high end. As crypto and stock investments spiked after the 2024 election, luxury sales over $1M over surged +37% over last December compared to just +11% for homes under $1M. This caused December’s data set to be more top heavy in luxury and skewed price appreciation measures high.

  When December sales over $1M are eliminated, the annual appreciation rate per square foot falls from 6.7% to just 2.5%, in line with the rate of inflation. This is expected in a market that bounced between a buyer’s market and balance for most of the year. While mortgage rates are not ideal, they are temporary. Prices are stable, incentives abound, and sellers are negotiable. There’s no harm in getting qualified and taking a look.

  For Sellers:

  January is starting off pretty frigid overall, but not for everyone. When taking a broad look at Greater Phoenix, the gap between supply and demand can seem insurmountable. However, specific target price ranges and areas are lighting up the map with heated activity.

  For example, the West Valley lights up in the first-time home-buyer price ranges between $250K-$400K, specifically Surprise, Waddell, Avondale, Tolleson, and Southwest Phoenix as high builder incentives combat affordability issues. Also lighting up with frenzy activity in this range is Mesa (85204), North Gilbert, and Chandler (85226).

  The Southeast Valley heats up in the $400K-$500K range, as does Tolleson and North Glendale.

  Luxury condo sales over $1.5M are insanely popular in Scottsdale 85251, 85255 and Paradise Valley. However, the condo market in general is under the most stress with many areas seeing zero contract activity and a 67% increase in competing supply under $400K. Condos between $300K-$500K and $600K-$800K rose in value from January-April last year, but those gains disappeared from April-December*. They are now starting 2025 dead even with January 2024 at 0% appreciation.

  Homeowners insurance is going to be a major topic this year, especially for the condo market as many HOAs can no longer shoulder the extra costs without raising dues. More landlords facing increased insurance costs, HOA fees, and lower rents on apartment-style condos are experiencing lower returns and looking for an exit strategy.

  As the housing market enters its high season, things will look up for sellers from now through May. How much contract activity lights up depends mostly on mortgage rates, however. Until then, sellers must continue to offer high incentives to buy down rates, keep their properties in top condition to compete, and resist the urge to press the market on price.

  *using a 3-month moving average, sales price per square foot

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

December 2024 - Infographic

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• December 2024

  Predictions for 2025, What to Expect in Q1

  It’s a Buyer’s Market, Will Prices Drop?

  For Buyers:

  The buyer’s market in Greater Phoenix is still young at just over 5 weeks old but isn’t getting worse thanks to supply stabilizing over the past two weeks. For some, this scenario brings anticipation of a decline in sales prices, however there’s more to this buyer’s market than meets the eye. There have only been 3 other buyer’s markets in Greater Phoenix over the last 25 years, and they are all unique in their circumstances and thus give us little to compare with our current market.

  What can we expect in terms of price trends today with our new baby buyer’s market? That depends on how long the market stays friendly towards buyers. Sales price is the last measure to respond to a shift from a seller advantage to a buyers advantage. The first measure to crack is the seller’s asking price. When that doesn’t improve buyer interest, then buyer incentives increase. If that doesn’t improve sales, then negotiations begin to shave more off of the seller’s asking price. The whole process for sales prices to respond can take 3-6 months; so if the buyer’s market is brief there may be little effect on sales price trends.

  Currently, price measures are flat and buyer incentives are high at 53% of November MLS closings with a median cost to sellers of $10,000. The last 6 months have the highest percentage of concessions ever recorded in Greater Phoenix and double the long term normal concession range of $4,000-$5,000.

  The moral of this story is don’t rely on price measures to reflect the best time to buy. By the time prices hit a bottom the party is already over. Additionally, measures don’t reflect the plethora of “shadow” benefits that happen outside of price during buyer’s markets; like rate buy-downs, loan assumptions, seller acceptance of contingent sales, and major property improvements performed prior to close.

  Will prices drop? Currently, December sales price measures are trending up over November, not down. If we attempt to correlate to the last buyer’s market of 2022 that lasted 4 weeks between November and December, price measures dropped just 2.7% during that time before immediately bouncing up again in January and February when mortgage rates declined to 6%. Buyers who bought at that time have the most appreciation accumulated within the last 3 years.

  For Sellers:

  It continues to be a frigid market for most zip codes in Greater Phoenix with the lowest contract ratio* we’ve seen since January 2015, 10 years ago. Mortgage rates have improved slightly from 7.1% in November to 6.8% as of December 12th, and most national lending experts believe they’ll stagnate for the rest of December. In order to see a notable improvement in demand, these same experts agree that mortgage rates need to drop below 6.5%. Sellers struggling the most are those who have owned for less than 3 years, and especially those who purchased in mid-2022 at the height of market price. Those sellers may need to hold on for another year or so to see enough appreciation to recoup their selling costs and down payment. However, those who have owned for 3.5 years or more still have significant equity to manage the expenses of selling in today’s market.

  Sellers who purchased in 2021 have a possible advantage over those who purchased after them, and that’s a much lower mortgage rate which may be assumable by a buyer. Both VA and FHA mortgages are automatically assumable for a qualified buyer and this option could save the seller thousands of dollars in costly buyer incentives in addition to saving the buyer hundreds per month in their payment.

  After 2.5 years of a challenging housing market, there is one thing sellers can look forward to right now; the Spring buying season that kicks off in mid-January and continues through May every year. The Spring of 2024 saw contracts increase 83% from January through May, and the bounce was 85% in Spring 2023. Pre-Covid 2019, the Spring bounce was 105%. If mortgage rates decline as expected in 2025, this Spring could see similar improvements for sellers.
  
  *listings under contract divided by active listings

  Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
  ©2024 Cromford Associates LLC and Tamboer Consulting LLC