🔔The Numbers Don’t Lie: Buyer’s Market Could Be Over by November

A Year of Buyer Power May Be Ending

Be aware, the market is turning. Reading the Cromford® Market Index (CMI) for Greater Phoenix, a measure under 90 is a buyer’s market and 90-110 is a balanced market. The index has been indicating a buyer’s market since November 2024 and hit bottom at a measure of 72 before turning mid-July. Two months later the index is up 9 points to 81. At this rate, it could surpass 90 and enter a balanced state by November, potentially ending a year-long buyer’s market and stabilizing prices.

Buyers may not have as much time as they think to purchase under the favorable negotiating conditions of a buyer’s market. Asking prices for homes have been declining for 4 months, but appear to have stalled over the past couple of weeks. Mortgage rates in January were 7.26% per Mortgage News Daily, and are now nearly a full percent lower. Meanwhile, active mid-range listings between $300K-$600K have dropped nearly 2% in asking prices. What does this mean?

Let’s do the math. With every 1% drop in mortgage rate, all principle and interest payment measures across all loan amounts drop by 10%. So if a buyer was quoted a $2,400 monthly payment in January on a $350,000 loan at 7.26%, that PI payment would be $2,160 at 6.26%, saving $240/month. Combine that with a 2% drop in the asking price of the home, that saves another 2% off the payment, bringing the total savings to $288 and a payment of $2,112, a 12% discount compared to January.

That’s not all. In this buyer’s market, more than 60% of sales between $225K-$600K have sellers paying for the buyer’s closing costs, which often include a 2/1 rate buydown. This drops the buyer’s payment by another 20% in the first year, and 10% in the second, bringing the first-year payment down to $1,690 and second-year payment to $1,900 before taxes and insurance.

Over the next few months, sales prices will begin to show the decline active list prices have already endured. However, if mortgage rates stay low and the Cromford® Market Index continues to climb out of a buyer’s market, buyers may see their negotiating advantage dwindle. For now, all properties are officially “on sale”.

If you're curious about the current state of the market, don't hesitate to reach out by scheduling a quick call with me or contact me here.