Is the Phoenix Housing Market Slow or Just Back to Normal?

By Jason Penrose

Jason has been licensed since 1999, and is currently one of the top 20 agents in Arizona for homes sold.

Across the Valley, a common belief is that the housing market has slowed to a crawl. After roughly 27 years in real estate, I see the market returning to the conditions that have defined most of my career.

Higher rates reshaped buyer affordability. Today’s market traces back to what changed after COVID. The Federal Reserve raised rates through 2022 and 2023, and that pressure carried directly into mortgages. Rates climbed from roughly 3% to 8% and now sit in the 7% range. As affordability declined, the pool of buyers shrank, and property values have been adjusting toward a new norm. Prices have softened a bit, yet none of this resembles 2007 and 2008.

Inventory in Phoenix remains surprisingly tight. Headlines keep pointing to the widest gap between buyers and sellers ever recorded, yet the supply picture tells a more grounded story. In some neighborhoods, months of supply sits at three to four months. It isn’t running at 12, 15, or 18 months. Seller behavior plays a part here. Homeowners who genuinely need to sell adjust their price to make it happen, while those who don’t simply pull their homes off the market. As a result, listings don’t linger and clog the market with unsellable inventory.

Today’s pace reflects a normal market. Some people insist this isn’t a good market, often because they define a good market as five or six offers and paying more than appraised value for a home. Throughout my career, the market has moved in bursts. From 2004 to 2006, it ran hot with multiple offers and bidding wars. A correction followed from 2007 to roughly 2012 before prices ground back up. Another boom arrived from 2020 to 2022, then conditions slowed again.

Sixty only feels slow after 100. I liken it to driving down the freeway at 100 miles an hour, spotting a police officer, and easing back to 60. You feel like you’re crawling, even though you’re simply doing the speed limit. Real estate behaves the same way. When the market runs hot, everyone expects multiple offers, rising prices, and homes that sell immediately. Once it cools, homes sit on the market for 30, 60, or 90 days, take a price reduction or two, and buyers want to negotiate. Transactions take more work to close, and people assume something is wrong. In my experience, this is how the market behaves about 80% of the time, while the other 20% is the super-hot, frenzied stretch everyone remembers.

Inexperience fuels the bad-market story. Many agents enter the business during a hot market and come to see it as normal. When conditions return to a true normal market, they’re unprepared, and telling clients it isn’t a good market becomes a self-fulfilling prophecy. Measured against the 18% mortgage rates of the 1980s, today’s market looks very different. Roughly 7,000 homes are under contract across the Valley at any given time. To me, that hardly describes a bad market.

Buyers have real options again. For buyers, the conversation centers on affordability. The first step is talking with a lender to explore which loan programs can deliveran affordable payment. From there, the advantage is choice. In many cases, this is a buyer’s market, with homes to compare and sellers who are willing to negotiate. I consider this a great time to buy.

Sellers must accept today’s pricing. For sellers, one of the biggest challenges is reconciling today’s value with what it might have brought during COVID. Some have already accepted current pricing, while others are still adjusting their expectations. Much of my work involves explaining what changed and helping them see what today’s market really is.

Whether you’re preparing to sell or ready to explore your options as a buyer, I’d be glad to walk you through what today’s Phoenix market means for your plans. Call me at (602) 738-9943, email me at jason@thepenroseteam.com, or visit buyaztoday.com. I look forward to hearing from you.