Why This Market Isn't What Most People Think It Is

Why This Market Isn't What Most People Think It Is

If you've been watching the Phoenix housing market lately and wondering whether something is wrong — you're not alone. Contracts are down nearly 20% year-over-year. Inventory just crossed 20,000 active listings for the first time all year. Buyers are pulling back. The headlines are loud.

But here's what the headlines are missing.

What the October Data Actually Shows

Active listings are up 9.26% year-over-year and contracts are down 18.13%. On the surface that looks like a market in trouble. But dig one level deeper and a more interesting story emerges.

Days on market dropped to 80 in October — down from 85 in September and back to where it was in the spring. In a market with over 20,000 active listings that shouldn't be happening. Unless you understand what's actually driving it.

The homes that are priced and positioned correctly are still moving and moving well. The ones that aren't are sitting, getting reduced, or getting pulled. When you average those two experiences together the number comes out lower than you'd expect. The gap between a well-priced home and a poorly-priced one is wider right now than it has been all year.

Months of supply tells the same story. The 0 to 500K range jumped from 4.08 in September to 5.01 in October. The 500K to 1M range went from 4.11 to 5.48. Buyers have more options than at any point this year. That changes what it takes to sell — and what buyers can ask for.

What One of the Top Housing Economists in the Country Is Saying

We recently had exclusive access to a market presentation from Mark Fleming, the Chief Economist for First American Financial Corporation. What he shared reframed how I'm thinking about this market entirely.

His message was direct. This is not a crash. It's a new normal.

For about 20 years falling mortgage rates fueled home sales. That tailwind is gone. What's left is what has always powered housing underneath — life events. Marriage. Babies. Divorce. Job changes. Aging. Those things don't wait for rates to drop and they never have.

Mark expects mortgage rates to settle around 7.5% to 8% over the next 6 to 12 months regardless of what the Fed does. And here's the part worth sitting with — 6% to 7% is historically normal. The sub-3% era was the anomaly. We got used to something that was never supposed to last.

The market has found its floor. Existing home sales have held at roughly 4 million a year for three straight years. That's the life-event floor — the number of people who move because they have to, not because rates are perfect. We're not falling further.

For Phoenix specifically the picture is more encouraging than the national story. Affordability here is improving faster than nationally because prices dipped modestly. Phoenix is attracting younger households, building across every price tier, and is still relatively affordable compared to much of the West. With $13 trillion in homeowner equity nationally there is no bubble. There are no forced sales coming.

Stop waiting for 3% rates. They're not coming back. The market that exists right now is the market — and it has more opportunity in it than most people realize.

What This Means for Sellers

Over 20,000 active listings means buyers have choices and more leverage than they've had all year. Pricing right from the start isn't a strategy — it's a requirement. And expect concessions. Rate buydowns, closing cost contributions, repairs — buyers need help in this rate environment. The sellers having the smoothest transactions right now are the ones who understood that going in.

What This Means for Buyers

Life events don't wait for perfect rates. If you're ready to move — growing family, job change, whatever your reason — waiting for 3% rates is not a plan. There is more inventory and more negotiating room right now than at any point this year. Phoenix is one of the better places in the country to be buying. If the numbers work for your situation, this market has more opportunity in it than the headlines suggest.

The data gives us direction. Your strategy is always personal and always local.

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