What's really going on in the Phoenix Real Estate market?

Added: 2026-05-31

[00:00:00]What is really going on in the Phoenix real estate market? That's what we are talking about today. I am going to share with you guys some of my favorite stats that I look at that help me keep a pulse on what is happening in the market. I also had a question from my video last week that I want to answer today and uh an a post that I saw on Reddit that is so insanely incorrect it's not even funny. We're going to talk about that, too. So, um, I first want to start out with the CMI because this relates to what I saw on Reddit. Okay, I usually show you guys the CMI on the dials. And this is a CMI comparing the supply versus demand trend lines in the Phoenix metro area from 2001 to today. And for those of you who don't know, the CMI is the Croford Market Index. They're always measuring supply versus demand in the Phoenix metro area to help us understand if we're in a buyer market, a balanced market, or a sellers market. And the blue line is the supply line. The red line is the demand line. You can see that we have more supply than we do demand. Now, what I want you to realize is that this is not the craziest supply versus demand gap we have ever seen in all of the history of Phoenix Metro. And yet someone on Twitter that got posted to Reddit decided to say that Phoenix is in full collapse. Okay? Not just like there's some difference in buyers and sellers. Phoenix is in full collapse.

[00:01:30]Okay? So moral of the story, be careful where you're getting your news because they could not be more far off with this statement. This was posted a month ago.

[00:01:41]So, you know, I've been here posting every week as of a month ago. I was never saying Phoenix is in full collapse. What they're looking at is Red Fin data that allowed them to filter to Phoenix, showing sellers and buyers.

[00:01:56]Now, I would have to read through how Redfin actually determines how many buyers are in the market because I think that's a pretty difficult statistic to actually find like the exact number of buyers, right? There's nothing that tracks every time a buyer enters the market, but they're likely looking at number of homes going under contract in relation to the amount of inventory, which is really what the CMI looks like.

[00:02:19]Uh, in addition to some other factors most likely, I don't know the algorithm that they use, but um, this difference apparently is 78% as of a month ago.

[00:02:30]Now, that looks stark, right? Um, and then you pair it with someone taking their own uh, you know, wording by saying that we're in full collapse. This is a very scary headline to see. When we really look at the CMI and supply and demand, this gap is not that significant. Do we have more supply than demand? Absolutely. But are we in a place where we should be concerned about the over supply and lack of demand?

[00:02:58]Absolutely not. When we saw that, that was back here. That's what that looks like. 2006, 2007, 2008, supply absolutely skyrocketed.

[00:03:10]Um, we had demand that absolutely tanked and the gap was significant. And then after that time frame, we saw supply and demand come back together. And then we had the opposite situation where we had more demand and less supply. So that put us into a sellers market. Um then we flip-flopped again. We kind of flip-flop here and there. Um by uh we met here supply and demand in 2014. So the last time we were in a normal range, it's this yellow highlight here 100 uh is normal was 2014 um where supply and demand were in that normal range together. It was this 2014 to 2015 time frame just on the very edge. Ever since then, we've either had supply or demand in the normal range, but both of them meeting together um outside of normal, right? So, in September of 2022, we hit a balanced market, but it was while our supply and demand were both below normal for our market. We also hit another balanced market in October of 2024.

[00:04:17]Again, supply and demand both being below normal. Now we're in a situation where we have our supply and demand that are not matching. So we're not technically balanced where they meet, but they are close enough to where we're not seeing something like this. And we do have our supply actually just outside of normal and demand just below normal.

[00:04:42]So saying that we are in a full market collapse is so far off it's not even funny. when you look at supply and demand factors. Now, of course, this is not the only thing, right? There are economic events, there's mortgage rates, there's things that can come out of left field that could change the real estate market, but when we look at whether we're in a buyer market or sellers market due to supply and demand, we are not anywhere where we should be super concerned. Now, I did have some comments about active listings last week. And so I want to address that because active listings today are at 29,775 roughly at the time of this video. And if we look at 2025, we were just about the same. Um I've been mentioning that our active listings have actually been coming down a little bit, which is pretty surprising. Um because every year previous to this, we have seen active listings uh higher the following year, right? So 2024 we had listings lower than 2025. If we look at 2023, the listings were lower than 2024. So every year we're gaining a number of active listings until this year. We finally dipped below the previous year. We've had some crazy times since 2020. You guys know this. The pandemic started and supply went down significantly. And then we started to see supply start to climb back up after mortgage rates increased in the summer of 2022. So if we look back the last 6 years, supply is much higher than it was in 2020. But 2020 was not normal. We were heading into a very uh a very aggressive sellers market with the pandemic. And we didn't know that at the time, but that's what was about to happen. So supply was going down, demand was coming up. 2019, 2018, 2017, we were still in a sellers market. We just weren't in the crazy bananas pandemic market, okay, of a sellers market. So, if you see where we were at with our listings during that time, listings were somewhat low. Let me take these off here because we were still in a sellers market. So, in 2017, we had 25,000 listings on the market. But remember, remember when I showed you when we were in a balanced market in the normal range back in 2014? If we look at where our active listings were at then, we were actually at 30,000 active listings um and 26,000 throughout the year. So, let's compare 2014 to today. And you know, I realize our population has changed. You know, there's there's differences. It's not absolute apples to apples, but we are following a similar trend as far as number of active listings are concerned to 2014, which is when we were in a balanced market. If we go back here, not only were we in balance, but we were right about in the normal range, just kind of a little bit on the lower side, right? So, um the the CMI overall was about 90, getting close to 100. We didn't quite make it there, but you can see how this correlates, right? active listings being at 26,000 like they are today um or 27,000, we're still actually below where we were in 2014 when our population was lower actually. So, while the headlines have shown that our active listings have increased, they're absolutely right. But is it at a level where we should be concerned? No. We're just in a buyer market and in some areas in a balanced market. Now, let's compare the number of active listings that we had during that time when we were in the great financial crisis, 2006 to 2000. Let's take it to 2009. Let's see what those active listings looked like at that time. We had 06, 07, 08, 09, all significantly above where we're at today. and in 2014.

[00:08:39]So, these numbers, 55,000 active listings, um we would need another 25,000 active listings to be close to where we were at during the great financial crisis. Um and seeing just a complete drop in demand in combination with that. Now, the supply is only one side of the story. So, we also have to look at demand. And like I said, buyers aren't registering every time they're out there looking. So, we can't track demand in that way. But the Crawford report looks at demand through a number of factors. One being the listings under contract because this is showing buyers actually making offers on properties.

[00:09:15]And we can see today that our listings under contract is actually higher than it was in 2025, which has surprised me because our number of active listings has remained the same like we were just looking at. has even dipped below last year, but the number of listings under contracts has actually increased and kind of pulled away from our standard of last year. So, this means that we're actually seeing a little bit more demand than we were last year. And we have seen less supply, just ever so slightly, than we saw last year. So, again, a full market collapse is just absolutely not even close to what we're seeing at the moment. Now, is there a little bit of weakness in the market or opportunity for buyers to get a deal? Yes, absolutely. And as I say every week, this varies with different parts of the valley. So, different cities have a different amount of demand or supply which creates a different buyer market, seller market, balanced market, right?

[00:10:13]But there are a lot of listings that are spending a long time on market, not selling. They've been priced too high.

[00:10:19]Sellers have to take price reductions.

[00:10:21]In fact, one of the top searches on Reddit right now is why is my house not selling? And it's increased 50% from February. So, when we look at the number of price changes per week, we can see that they have been elevated, but they've actually been going down. We've seen fewer price changes. These are all price cuts. Um, in the last few weeks, throughout the last month, um, the number of price changes per week has actually decreased. Now, with that, we've also seen the amount of supply decrease as well. So that could be correlated in that way. It also likely depends on the distribution of where a lot of these listings are. Are they in areas that are taking a longer time to sell or are they in areas that are a little bit faster? Now, since a lot of sellers are pricing their homes possibly too high, which is accounting for longer days on market, it is accounting for price adjustments. Where are they actually falling when they actually close? How much of the list price did they achieve? And right now the sales price to list price ratio is at about 97.1%.

[00:11:24]And this is taking the sales price to list price ratio from the most recent advertised price. Right? So let's say you listed your home for 500,000 and you price reduced to 490 and then 4.85 and then you finally close at450.

[00:11:42]This data is giving us the difference between 4.85 85 the last list price and 450 the actual closing price. So 97.18% is uh where we're trending right now.

[00:11:54]Now obviously different areas are going to see a little bit of a difference.

[00:11:58]Different price ranges are also seeing a difference here too. In fact, luxury is doing really really well. So this varies as well, but you can see sellers in general are getting about 97% of their last listed price. Now what happens with this as well is not just price reductions but sellers are also giving concessions whether it be concessions to help the buyer buy down their rate to cover their closing costs or if it's in lie of repairs that were negotiated.

[00:12:25]About 53.7% of closings have seller concessions.

[00:12:29]This is within the last 30 days. So that means about half of sales are negotiating concessions. So in addition to those price reductions sellers are also giving concessions. Now, if we look back to 2014, 2015, 2016, this amount was about 35 38% somewhere in there um throughout those years. And so, it was actually lower in terms of seller concessions at that time. Then we get into 2020 and the pandemic time and it goes way down all the way down to 10% seller paid concessions at the low end.

[00:13:01]Um and the median concession amount was $3,000. Um it was about 42.84 84 it says for those years. So around $4,000 um in the last um balanced market that we saw back in 2014 1516 time frame and now today 53% and the median is about $10,000 in seller concessions. So this looks different today for sure like the number of concessions that are be giving being given is definitely on the higher end as compared to what we saw in the last balanced market. So, a lot more negotiating seems to be taking place today. Now, if sellers are reducing their price, they're giving concessions.

[00:13:39]We know that they're getting about 97% of their list price on average. How successful are they in actually closing?

[00:13:46]And the listing success rate today is about 73%. If we look back to 2016, it was 73% as well. It climbed as the market picked up and we got more into a sellers market. completely dipped when we went into a buyer market and kind of the when someone slammed on the brakes in 2022 when rates went up uh and then uh have come down over the last few years back to about 73%. So all of these are really the byproduct of what's happening with supply and demand in our market, how negotiable things are or not negotiable depending on what's actually happening. And one of the things that is easy to track and look at is this contract ratio, which shows us how many homes are actually listed for sale and how many of those are actually under contract. And I had a question last week that asked how we could see the contract ratio in different price ranges. And we can definitely filter for those. So let's take a look at what we're doing under 300,000. So the contract ratio for homes under 300,000 is currently at 33.

[00:14:47]33 is considered a balanced, warm market. anything between 30 to 60. So, it's on the lower end of that. If we look at the uh price ranges altogether, um we're actually sitting at about 37.7.

[00:15:00]So, in reference to the overall average right now, everything under 300,000 is just slightly weaker. It's on the lower end of that warm balanced market. If we look at that middle section of the market, like 400 to 800,000, this the contract ratio here is about 39.5. So a little bit higher uh still in that warm balanced area but a little bit higher.

[00:15:23]Then if we look between 1 million and 3 million there is uh 34.8 as the contract ratio. So again still in that same range. Everything above the uh 3 million range. Let's take a look at where we're at there. That is actually sitting at 21.6 or 23.2 too, which is interesting because the luxury market is actually seeing price appreciation much more than other price ranges. But also the data set within this luxury market is so much smaller, especially over 3 million.

[00:15:56]There are fewer homes that are actually available and meet that mark um and fewer buyers of course as well. Now, if you're interested in seeing the contract ratio in a particular city, zip code or price range, check the description below. You can request that information.

[00:16:10]So, what is happening with mortgage rates? because that of course affects our market as well. We have mortgage rates today at about 6.61%, it's come down from the 6.75% that we saw last week, but it is still elevated and really the highest that we've seen um since last summer. Now, Mortgage News Daily is saying that the improvement in rates was due to news over the weekend that the US and Iran are even closer to agreeing on a framework that would end the war. But this remains a key source of volatility for rates and other financial markets. We also had inflation come in a little bit hotter than expected. So that does not bode well for where interest rates are heading.

[00:16:50]According to this article, the Fed officials see a rate hike ahead if inflation stays elevated. That's according to the Fed meeting minutes.

[00:16:57]Now, I know not everyone bases their home buying decision on mortgage rates, but there are a lot of people who do and are looking at payment and affordability in that way. And so as rates continue to climb, their affordability decreases and that can bring down buyer demand, obviously making it tougher for sellers to actually get an offer and sell their home. I talked through a lot of stats in this video today and I hope all of this is helpful for you. If you want to know specifically what is going on with the active listings in your area or the price cuts in your area, I also have a link below where you can request that information. Now, whatever you do, don't think that the Phoenix market is in a fullon collapse just because of something that you read on Reddit.

[00:17:34]Please do me that favor and I will see you guys next week on my next market update.