In last month’s newsletter, I wrote about the steady shift into a buyer’s market as the balance has tipped, with excessive supply and too few buyers to absorb the current listings. In February, we broke down numbers to show the increase in active listings in the first four weeks of the year, so this month I thought we would revisit the topic and evaluate the numbers now 20 weeks into the year, as this trend has not only continued it has accelerated. To quickly reiterate a point I made last month, it’s important to say again that the demand side of the equation is not too considerably different from what it has been for the previous few years. With the persistently inflated mortgage rates, many buyers continue to stay sidelined while they wait (correctly or incorrectly) for rates & prices to come down. The supply side of the equation, on the other hand, is quite a different story. We haven’t seen the excess inventory we have today in well over a decade, which is the primary driver of the shift into a buyer’s market and why I’m writing about it again.
On January 1st of this year, the Greater Phoenix Metro area had 20,061 active listings compared to 15,312 in 2024, which is an increase of 31%. This was a substantially higher baseline to start the new year off, especially considering that the active listing count tends to grow throughout the first half of the year. As of today’s writing, the active listing count stands at 26,689 compared to 17,772 in 2024, up 51% from last year and up 33% since January 1st. With this increase in supply and an already weakened demand, the Market Index has dropped from 90.5, the low end of balance, to 75.1, which is conclusively a buyer’s market. At the risk of sounding redundant to last month’s newsletter, I must stress that this information is essential to understand for anyone considering whether or not to sell now or to wait some period of time. It is also greatly important for anyone currently listed for sale who may be hesitant to reduce their price. My team and I speak with sellers every day who are weighing their options, and some believe that if they just wait a few months or even for a year, prices will bounce back, and say they will sell then. It can certainly be said that no one has a crystal ball and we can’t predict the future, but we do have very reliable tools that provide us with decades worth of data. This information helps us to forecast, and while we may not know the precise numbers or percentages, it is increasingly unlikely that homes selling this time next year will be worth any more than they are today, and will quite likely be worth less.
If you are one of the many sellers currently on the market or considering selling, you might be asking, What should I do? The best way I know to answer this question is with a metaphor. Look at it as if you were trying to catch a Slinky going down the stairs. If you are standing on the step behind the Slinky, you’ll never catch it. Even if you’re on the same step as the Slinky, you’ll still be unlikely to catch it. To be successful, you must get in front of it and catch the Slinky from the step below. When home values are on the rise, overpricing is less of a risk because the market could possibly catch up. When values are flat, you should be priced very close to recent sales. When values are going down, however, your price needs to be one step below the market, just like the Slinky. This is, of course, a balance because you don’t want to underprice and leave money on the table, but if you don’t get in front of it, you’ll either never sell or you’ll end up taking less than you could have gotten because you waited too long and missed the market. The more rapid the decrease, the more in front of it you need to be. To be clear, we are not in anything close to resembling a collapsing market; we’re in a correcting market, so this isn’t anything to panic about, and homes should not be sold in “fire sale” fashion. So, if you’re considering selling your home and would like to discuss your specific situation, please give me a call. I’d love to talk nerdy with you :)