By Jaki Underwood, Editor-in-Chief
As mortgage rates climb and market demand ebbs and flows, Arizona’s real estate landscape is undergoing subtle shifts. With the 30-year fixed rate back up to 6.91% this week from last week’s 6.68%, buyers and sellers are feeling the impact. Local housing demand, measured by the Cromford® Market Index (CMI), varies significantly across Arizona. While Phoenix and a few neighboring cities continue to show a bounce back, other areas are seeing softer demand shaping the Valley’s housing market.
Rising Mortgage Rates Create New Buyer Pressures
The recent rise in the 30-year fixed rate to 6.91% may feel like a setback, especially for buyers aiming for more affordable borrowing. With rates trending upward, housing affordability is increasingly strained, which might prompt some potential buyers to hold off or adjust their plans. However, higher rates could mean a less competitive environment, possibly offering an opening they might not have had during the market’s most frenzied period.
Phoenix Stays Strong Amid Market Adjustments
Despite shifts, Phoenix has re-entered the list of cities with rising CMI, signaling it’s holding steady. This stability reassures the local market since Phoenix makes up about 25% of all real estate transactions in the region. Buyers can find a wealth of options within this strong market, while sellers may feel more confident knowing the city’s demand for properties.
Paradise Valley: A Luxury Market Pause
Paradise Valley is seeing a significant cooling-off period, with a 30% drop in its CMI over the last month, suggesting a shift in the luxury market. This reflects changing priorities among high-end buyers or a natural adjustment after several years of rapid price appreciation. Buyers in the luxury market might find themselves in a better negotiating position, while sellers may benefit from setting competitive pricing that aligns with these recent shifts.
Southwest Cities Face Declines, But Opportunity Remains
Avondale, Goodyear, and Buckeye are experiencing a decline in CMI. This softening suggests the area is feeling the impact of broader market conditions, with buyer demand cooling somewhat. For buyers, these areas might represent an opportunity to explore more affordable options as prices adjust. On the other hand, sellers are going to consider timing or carefully preparing for slightly longer market times.
Gains in Tempe and Cave Creek Show Selective Demand
Not all parts of the Valley are experiencing declines. Tempe and Cave Creek posted solid gains of over 7% in CMI, signaling continued demand in these areas. This means that buyers are still attracted to specific locations, often due to their amenities, access, or lifestyle advantages. Sellers in these cities may see more vital interest, while buyers should be ready for a competitive market environment in these areas.
Takeaways for November 2024’s Market
The current market reminds us how highly localized real estate conditions can be, down to neighborhoods and property types. Buyers and sellers should closely monitor mortgage rate trends and city-specific demand metrics like the CMI to make informed decisions. While shifting conditions may require extra flexibility, being proactive can reveal opportunities that align with your real estate goals.
