Phoenix Metro Update - January 2025

Home Prices Rose 4.7% ... Or Did They?
By Bret Johnson

Recent data suggests a nuanced picture of price trends in the ever-evolving housing market. December's numbers point to a 4.7% growth in the median sales price and a 6.7% rise in price per square foot, but is this truly reflective of market conditions? Let’s unpack the details and closely examine what was hot in December—and what was not.

For Buyers

Buyer’s season has officially begun, with January 2025 seeing the strongest surge in new listings since 2020. After a slowdown in November and December, this rebound offers renewed hope for buyers as supply increases and sellers remain open to negotiations and incentives.

However, with mortgage rates hovering around 7.25%, the general buyer pool remains constrained. Currently, only 5,600 listings are under contract in the MLS, significantly lower than the usual 7,000-8,000 at this time of year. On the bright side, supply levels are around 21,000—the highest January starting point since 2016-2017—creating favorable conditions for qualified buyers.

Key Insights for Buyers:

• Stable Prices: Projections suggest home prices will remain flat or grow at rates slightly below inflation annually.
• Luxury Market Impact: Luxury market activity heavily influenced December’s price appreciation, with sales over $1M surging at +37% year-over-year compared to +11% for homes under $1M. Excluding luxury sales, the annual appreciation rate per square foot aligns with inflation at 2.5%.
• Opportunity for Action: Despite less-than-ideal mortgage rates, buyers can benefit from stable prices, increased inventory, and seller incentives.

For Sellers

January may be off to a slow start overall, but certain pockets of the Greater Phoenix market are experiencing heated activity. Targeted price ranges and regions defy the broader trend, offering opportunities for savvy sellers.

Hot Markets for Sellers:

1. First-Time Buyer Price Ranges ($250K-$400K):
• Areas like Surprise, Waddell, Avondale, Tolleson, and Southwest Phoenix.
• Builders are offering significant incentives to combat affordability challenges.
2. Mid-Range Homes ($400K-$500K):
• Popular in Mesa (85204), North Gilbert, Chandler (85226), and parts of the Southeast Valley.
3. Luxury Condos Over $1.5M:
• Scottsdale (85251, 85255) and Paradise Valley remain hotspots.

Challenges for Sellers:

• Condo Market Stress:
• Many areas face zero contract activity for condos under $400K, with supply increasing by 67%.
• Homeowner's insurance costs and rising HOA fees pressure landlords to exit the market.
• Competition and Incentives:
• Sellers must offer competitive incentives, such as rate buy-downs, and maintain properties in top condition to stand out.

Conclusion

As the housing market heads into its high season, conditions are expected to improve for sellers, particularly through May. Buyers, meanwhile, can take advantage of rising inventory and motivated sellers. While the luxury market has skewed December’s price appreciation figures, underlying trends suggest a balanced environment for both sides.

For More Information:
For detailed insights or guidance on navigating the Greater Phoenix real estate market, feel free to contact Bret Johnson at 480-775-7700 or bret@renetgroup.com. 

Reference:

This summary is based on insight commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report.
©2025 Cromford Associates LLC and Tamboer Consulting LLC