The current median home sale price of $443,800 is rising slowly at just 2.1% YoY. Moreover, homes have been sitting on the market for 53 days. This indicates that the real estate market in the Copper State is now slightly less competitive.
Additionally, only 8,256 homes were sold in July 2024, down from 7,882 in the previous year. Despite the market’s competitive nature, recent developments, such as the NAR settlement, have caused some hesitation among sellers, leading to concerns about selling prices and agents’ compensation.
The NAR settlement has removed the buyers’ agent compensation from the MLS. This may drive down home prices further. As a result, buyers will have improved affordability and low mortgage rates.
Here are some tips for you to sustain in Arizona’s housing market:
- If You Are a Home Buyer: With an inventory of 37K properties and the potential for further price drops, now is a good time to buy your new home. The low interest rates at 6.0%-6.9% are also in your favor. Consider negotiating for seller concessions to further benefit from the purchase.
- If You Are a Home Seller: The correction in the home prices is long overdue. In the wake of the NAR settlement, home prices may drop slightly more. If you’re a seller, you can still make profits on home sales before prices potentially drop.
So, How Is the Real Estate Market in Arizona?
Balanced!
The number of homes for sale increased by 32.1% in July 2024 compared to the previous year. This is the 6th consecutive month the housing market has witnessed such growth. Single-family homes for sale are up by 28.7%, and condos by 37.8%.
- Median Days on Market: The median days on the market for homes are 53 days, up by 11 days YoY. This trend suggests a cooling demand in the Arizona real estate market.
- Housing Inventory and Supply: As a buyer, you have more options now as the housing inventory is up by 32.1%. There are 35K homes for sale in Arizona, with an average supply of 3 months.
- Average Home Prices: The median home price in Arizona is $443,800. But, it is expected to decrease due to a rise in inventory in the latter half of 2024. The sale-to-list price ratio is 98.20%, dropping by 0.4 pt YoY.
- Home Sales: As per July 2024 data, home sales increased by 4.7% YoY! Only 8,256 homes were sold, compared to 7,882 last year.
- Average Rent Prices: Rental costs vary statewide. An average tenant in Flagstaff pays $1,996, while the one living in Glendale pays $1,464. You should check the local rates in your region.
Why Is Arizona a Buyer’s Market Now?
Buyers have more options to explore. Additional housing supply can balance the Arizona real estate market and stabilize home prices. Let’s look at some more facts:
- More Days on the Market: Homes spend more days on the market. This is visible in metro cities like Show Low and Fountain Hills where the average days on the market are between 52 and 56.
- Low Housing Demand: The demand in Fountain Hills is low, with only 35 homes sold in July, down from 43 last year. Similarly, only 34 homes were sold in Show Low, a significant 5.6% decrease from the previous year.
- More Homes Have Price Drops: In July, 32.7% of homes experienced price drops, compared to 25.8% last year. This trend indicates a gradual shift toward a buyer’s market.
- Low Mortgage Rates: Mortgage rates remain near historic lows, ranging between 6.0%-6.9%. So, this is a great time to lock in a low rate and get pre-approved for a mortgage now.
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Arizona Real Estate Market Predictions
Here are the predictions for Arizona’s housing market in the remaining months of 2024 and 2025:
- Number of Home Buyers Will Increase: As inventory grows and homes stay on the market, more home shoppers are expected to re-enter the market.
- Interest Rates are Expected to Drop: Mortgage rates hit 6.34% in July 2024. NAR predicts the national average interest rate will drop to 6.3% by year-end. This will encourage more buyers to apply for loans across all states.
- New Home Constructions Will Shoot Up: As per Building Permits Survey, 36,282 new private housing units were authorized, in July 2024. Arizona’s housing market’s high demand will be served with the new constructions.
- Home Prices Will Drop: After a period of sluggish growth, home prices are expected to begin a gradual decline.
- iBuyers Will Continue to Make Lowball Offers: iBuyers like Opendoor and Offerpad, which once offered 104.1% of market value in 2021, now offer around 70%. Such lowball offers to sellers will increase opportunities for individual buyers.
Bonus Predictions: Buyer Broker Commissions Will Be Zero!
In a shocking turn of events, the NAR settlement has completely eliminated buyer agent fees from the MLS. Let’s understand its impact:
- Buyer Agents Will Be Affected: With buyers now responsible for directly paying their agents, many may choose to find their homes on their own. This may very soon render buyer agents obsolete.
- Seller Concession Will Increase: Without the obligation to pay buyer agent commissions, sellers might see increased requests for seller concessions and offline transactions. Additionally, builders are offering significant concessions to attract buyers, further influencing the market dynamics.
- Builders Will Compete More: Home builders are persuading buyers to buy new construction homes with mortgage buydowns worth $30K!
- Sellers May Offer Fees for Services: Sellers may offer at least 1%-2% fees to the buyer agents in order to sell their homes quickly. Increasing competition from builders may also cause sellers to pay extra fees to buyer agents.
Curious what the NAR lawsuit is about?
Check out our video to find out why NAR chose to settle and eliminate the buyer-broker compensation rule.
Is the Housing Market in Arizona Going to Crash?
A housing market crash in Arizona is unlikely.
Arizona’s cost of living is 6% lower than the national average. The average cost of living in Arizona is $44,875, significantly lower than the national average of $61,334.
Additionally, Arizona has a high median household income of $69,056. The unemployment rate was 3.4% in July, lower than the national rate of 4.3%.
This affordability, combined with strong economic fundamentals, makes a housing market crash in Arizona unlikely.
2024: Is It a Buyers’ or Sellers’ Market Now?
The housing market is expected to lean more in favor of the buyers in the latter half of 2024. Home prices are rising slowly, and the number of homes for sale has increased by 32.1% YoY. Buyers now have more choices.
With mortgage rates around 5.70%, buyers also have more purchasing power. Consequently, more homeowners are likely to list their homes on Arizona MLS. The 5.3% increase in new active home listings in Arizona has brought back home shoppers.
So, whether you are looking for a condo in Flagstaff or a single-family home in Chandler, you will find your dream home in the coming months.
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Disclaimer: This article is for informational purposes only. It does not constitute an offer, solicitation of an offer, or any advice or recommendation. Houzeo doesn’t provide any legal or financial advice. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Houzeo Corp., its affiliates, or its employees. However, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness, nor does the author recommend that the attached information serve as the basis of any investment decision.
Frequently Asked Questions About the AZ Real Estate Market
Is the housing market going to crash in Arizona?
Not for the next few years. Arizona's housing market will not crash in 2024. Despite low housing demand and modest home prices, Arizona's market is afloat.
What are the real estate housing market 2024 predictions for Arizona?
2024 is a balanced market with 3 months of supply. Here's our forecast for Arizona's housing market in 2024: (1) Home buyers will return to the market. (2) Housing inventory will increase. (3) Property prices in Arizona will increase marginally.
Are home prices dropping in Arizona?
Not yet! Currently, the property prices in Arizona are increasing but at a slow pace of 2.1% YOY. However, you can still find the cheapest places to live in Arizona. You can find the value of your favorite homes on Houzeo's home value estimator.
Is it a good time to buy a house in Arizona?
Yes! Currently, the homes for sale are at around 35K which is up by 32.1% YoY. Low home prices and low mortgage payments have made buying a home affordable. More buyers will return in the second half of 2024, so we'd recommend you buy a house now.
