Phoenix Metro Real Estate Market Update: Trends, Insights, and Opportunities - January 2025

Phoenix Metro Area Market Update - January 2025

Mortgage Rate Overview

• 2025 Mortgage Rate Predictions:

  • Most analysts predict rates to hover in the 6% range for the year.

  • Optimistic projections suggest lows near 5.75%, while higher estimates reach 7.25%.

  • This stability in rates is expected to provide more predictability for buyers and sellers alike.

Cromford Market Index (CMI)

• Seller’s Markets:

  • Chandler leads the seller’s market with a CMI of 160.8, up 15% from last month.

  • Other strong seller’s markets include Fountain Hills (146.6, +6%) and Paradise Valley (144.6, +23%).

  • Anthem (167.6) and El Mirage (167.4) rank as the highest-performing seller’s markets overall.

• Balanced Markets:

  • Peoria shows a balanced trend with a CMI of 105.5, up 14%.

  • Other balanced areas include Gold Canyon (90.8) and Laveen (98.0).

• Buyer’s Markets:

  • Buckeye (53.0) and Maricopa (56.8) continue to favor buyers, with limited price pressure and negotiation opportunities.

Sales Activity by Price Range

• January 2025 sales rose 12.2% year-over-year, totaling 2,285 closings compared to 2,037 in January 2024.

• Significant increases in higher price brackets:

  • $1M - $1.5M: +86.1%

  • $1.5M - $2M: +80%

  • $2M - $3M: +104%

  • Over $3M: +86.4%

• Lower-priced homes under $300K saw a 6% decline, reflecting inventory shortages and higher competition.

Median Home Prices and Market Value

• Median Sales Price:

  • January 2025: $459,500, up 5.6% from January 2024.

• Average Sales Price per SqFt:

  • Increased 11.2% year-over-year to $322.93.

• Market Overvaluation:

  • Compared to a 5% annual appreciation trend, current prices are slightly above the long-term trajectory but still within a sustainable range for most areas.

Days on Market

• Median Days on Market (DOM):

  • Increased to 50 days in January 2025, up from 39 days in January 2024.

  • Reflects a slightly slower market but still active compared to historical norms.

Seller Concessions

• Percent of Closings with Concessions:

  • January 2025: 46.5%, similar to 47% in January 2024.

  • Consistent concession trends indicate buyers’ continued negotiation leverage.

Relocation Trends

• Top Age Groups Moving to Arizona:

  • Ages 25-34 make up 19.8% of new residents, followed by 18-24 (16.8%) and 35-44 (10.5%).

  • Top States Contributing to In-Migration:

    • California: 334,915 new residents over the last 5 years.

    • Illinois, Texas, and Colorado also show strong relocation activity.

Key Takeaways

• For Sellers:

  • The market remains favorable in many areas, particularly in high-demand regions like Chandler and Paradise Valley. Luxury homes are seeing significant growth, with substantial activity in price brackets over $1M.

• For Buyers:

  • Slower market conditions and stable mortgage rates offer opportunities to negotiate and secure favorable deals. Consider focusing on balanced or buyer-friendly markets like Peoria, Buckeye, or Maricopa.

• For Investors:

  • With rising home prices and solid activity in luxury markets, now is an excellent time to explore investment opportunities in high-demand neighborhoods.

This dynamic market environment offers both challenges and opportunities. Stay informed and partner with a trusted real estate professional to navigate the complexities effectively.

Want to chat about your specific scenario? Feel free to reach out to me directly at our convenience.