Phoenix Metro Real Estate Update: Mixed Conditions as 2024 Unfolds

This Month’s Market Trends

1. Mixed Performance Across Cities

• Six cities in the Phoenix metro area showed an increase in their CMI over the past month, while 11 experienced a decline.
• The average CMI change over the last month was -2.1%, a slight improvement from last week’s -3.5%.

Although the market is generally weakening for sellers, there’s a silver lining: falling supply levels, a typical seasonal trend seen in December, are starting to provide some relief.

2. Top Performers and Struggles

• Paradise Valley was the standout performer, with a 14% increase in its CMI, signaling improved conditions for sellers in this luxury market.
• Tempe also showed notable strength, with a 7% increase, moving from a balanced market to a seller’s market.

On the other hand:

• Fountain Hills experienced the sharpest decline, losing 16% of its CMI.
• Cities like Buckeye, Surprise, Maricopa, Peoria, Cave Creek, and Mesa saw significant declines of 6% or more, highlighting challenges in these areas.

Current Market Conditions by City

• Seller’s Markets: Six cities are seller’s markets, but four are considered very weak seller’s markets, with CMIs below 120.
• Balanced Markets: Six cities fall into the balanced category, offering opportunities for both buyers and sellers.
• Buyer’s Markets: Five cities remain buyer’s markets, with Maricopa and Buckeye showing the weakest performance due to excess inventory and low demand.

Key Observations

1. Outlying Areas Face Challenges

Cities on the outskirts, like Buckeye and Maricopa, are struggling with an oversupply of homes relative to demand. This trend makes these markets favorable for buyers, especially those looking for affordability.

2. Central and High-End Markets Hold Steady

Central areas and high-end markets, like Paradise Valley, continue to perform better than their outlying counterparts. However, the improvement is not dramatic, suggesting a more measured recovery.

3. Seasonal Trends Provide Perspective

While falling supply levels are offering some relief to sellers, this is a typical seasonal trend for December. Still, it’s reassuring to see that market patterns remain consistent, even in 2024.

What This Means for Buyers and Sellers

• For Buyers:
  If you’re looking for value, consider exploring markets in outlying areas like Maricopa and Buckeye, where inventory levels create opportunities for negotiation.

• For Sellers:
  Those in central locations or higher-end markets like Paradise Valley or Tempe may find conditions slightly more favorable. However, pricing your home competitively remains critical in today’s market.

The Takeaway

The Phoenix metro real estate market is experiencing mixed conditions, with central and high-end areas showing resilience and outlying cities facing challenges. Whether you’re buying or selling, understanding these nuances is key to navigating the current landscape.

Contact Craig Bennett at Sotheby’s International Realty for expert insights and personalized guidance on how to succeed in today’s real estate market.