The real estate market in Phoenix has been on fire over the last few years but it has recently started to cool and balance due to increasing interest rates. While homebuyers in Phoenix previously lacked control and were constantly stuck in bidding wars, the tides have officially turned, and buyer power is relatively back. Indications of a buyer’s market include above average days on market, decreasing population, declining job growth, and increased buyer incentives such as closing costs and paying points.
What is buyer power?
Buyer power exists when a buyer has a leg up in negotiations. Thanks to increasing inventory, Metro Phoenix homebuyers can easily move to a different deal if a seller can’t meet their needs. Therefore, buyers can demand home inspections, put in offers at or below list price and negotiate terms such as closing costs and repairs without fear of missing out on the house.
Who currently has the upper hand?
Although buyer power is increasing, the market is still leaning in favor of sellers. According to Redfin, inventory in September rose to a two months’ supply and average days on market for homes sold in September 2022 was 32, up 13 year over year. These trends are expected to continue as the market rebalances.
Phoenix is one of the fastest growing cities in the country, a trend that is not expected to slow down any time soon. As population rapidly increases, it may be hard for the market to keep up with the rising demand.
Predictions for the next year
As the national housing market continues to balance, buyers can expect to have more options and negotiation power. Rising inventories will lead to less competition and an increase of seller incentives. Prices will likely continue to rise in Phoenix but at a much slower rate. Working with a trusted real estate agent will help to navigate the changes in the market.
Author: Rich La Rue is the Designated Broker for HomeSmart Phoenix, the flagship brokerage operation in the HomeSmart system. For more information, visit www.richlarue.com.