First-Time Homebuyer Payments Are Down: What This Means for Phoenix Buyers and Sellers

The Greater Phoenix market has seen meaningful shifts this fall, especially for first-time homebuyers searching under $400,000. With prices easing, mortgage rates dipping, and new loan-product conversations gaining attention, affordability is improving in ways we haven’t seen in years.

As a REALTOR® in the Phoenix Metro area, I’ve been watching the data closely, and there’s a real opportunity emerging for both buyers and sellers. Here’s what’s happening and what it means for you.

Understanding the 50-Year Mortgage Buzz

In November, President Trump floated the idea of a 50-year mortgage as a potential solution to affordability. That sparked industry-wide debate and creativity. Lenders are exploring new loan options to help reduce monthly payments without stretching repayment over five decades.

For comparison:

• $400,000 loan at 6.25%:
• 30-year mortgage: $2,463 PI payment
• 50-year mortgage: $2,180 PI payment
• Difference: $283/month (11.5% savings)

But those savings come at a cost: drastically slower equity gain.

• After 3 years:
• 30-year borrower pays down ~$15,000
• 50-year borrower pays down ~$3,800
• It takes 9–10 years on a 50-year term to reach the same equity payoff you’d get in 3 years on a 30-year.

This makes long-term appreciation essential and may limit flexibility for things like HELOCs or major repairs early in ownership.

Step 1: Why Affordability Is Improving Without a 50-Year Mortgage

Here’s the real story: many Phoenix-area buyers may not need extended mortgage terms at all.

Key improvements for buyers under $400K:

• Prices down 10%–14% from the 2022 peak
• Prices down 3%–5% just in the last year
• Rates down 1% from early 2025, now around 6.25%
• Lower rates alone reduce payments 5%–10%
• Combined rate and price drops bring payments down 13%–15% year over year
• Many sellers (60%–70% in this price segment) are offering temporary buydowns of ~20% off the first year’s payments
• Supply under $300K is up 39%, providing more options
• October sales up 21%, November contracts up 32%

And perhaps most importantly:

• Wages in Phoenix are up 12% over the past two years
• Local inflation rose only 3.3% during that same time

The gap between income and inflation is finally working in favor of buyers.

For Sellers: The Best Q4 in Three Years

It took some time for buyers to respond, but demand is now picking up.

Here’s what sellers should know:

• Listings under contract are up 15% year over year
• Most vigorous activity under $300K and over $1M
• October closings increased 3.3% despite government shutdown delays
• Delayed FHA and VA closings are boosting November’s numbers

Even better:

• The Federal Reserve cut the Federal Funds Rate by 0.25%
• The Fed is ending its balance sheet reduction starting December 1
• This should help stabilize mortgage rates moving into 2026

This is welcome news for homeowners preparing to list.

Luxury Market Momentum Is Back

High-income buyers are reengaging, thanks to strong:

• Stock market performance
• Corporate profits
• Cryptocurrency values

As a result:

• Contracts between $1M–$2M are up 25% over the past 5 weeks
• Contracts over $2M are up 25% over 9 weeks
• Retirement communities (Sun City, Sun Lakes, Sun City West) remain steady year over year

What’s Next? Seasonal Price Reductions Are Here

Historically, contract activity slows right after Thanksgiving, and we’re seeing that pattern again.

Here’s what to expect:

• A wave of price reductions just before Thanksgiving
• Fewer reductions through December
• Another wave in early January as new listings hit the market

With supply still rising, most Phoenix cities remain in either a balanced or a buyer’s market, keeping pricing under pressure.

Buyers are focused on value, and competition is especially tight in areas competing with new-build subdivisions.

Final Thoughts: Opportunity in a Shifting Market

Whether you’re buying or selling, the Phoenix Metro market is offering opportunities we haven’t seen in years:

• Buyers are getting meaningful payment relief.
• Sellers are seeing more vigorous contract activity.
• Rates are stabilizing.
• Supply remains manageable.

If you’re navigating this evolving market and want guidance tailored to your situation, we are always here to help. Reach out anytime, call Bret Johnson, 📞 602-502-6468, or email 📧 bret@renetgroup.com

Let’s make your next real estate move a confident one.

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