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Phoenix is witnessing the highest housing inventory in nearly a decade, with over 30,000 homes listed for sale in Arizona. Despite this increase, median home prices have fallen, raising concerns about market stability. Experts indicate a potential crisis due to stagnant demand and declining sales, with March home sales dropping 20% below the long-term average. The rental market is also affected, leading to increased homelessness. The average age of first-time homebuyers has reached 38, as affordability issues persist amid evolving market conditions.

Phoenix is currently experiencing the highest housing inventory levels seen in nearly a decade, as over 30,000 homes are listed for sale across Arizona. These figures have raised concerns among some experts about a potential crisis in the housing market, yet local authorities do not indicate that immediate signs of such a crisis are present.

In Metro Phoenix alone, more than 22,000 homes, condos, and apartments were available in March, marking the highest volume in over ten years. Despite this increase, industry experts assert that the market still struggles to meet the needs of buyers, as the number of listings, although rising, does not account for the overall demand in the area.

The median home price in Maricopa County has seen a decrease, currently standing at $534,900 in March, down from $563,000 in May 2023. Similarly, Pinal County has reported a median price of $400,000, a reduction from $411,000 last May. These price adjustments are partly driven by the growing inventory, as well as stagnant demand from potential buyers. The average listing duration for homes has remained consistent at around 52 days.

Contributing factors to the increased inventory include an influx of international property owners and seasonal residents who are selling their homes. Concurrently, the number of construction permits for new single-family homes in the Valley declined by 15% compared to the previous year. This decline in new builds could result in further strain on an already overstocked market.

According to market analysis, buyers currently have more leeway to negotiate with sellers, who are increasingly willing to cover closing costs—an arrangement that has become less common in previous years. Meanwhile, forecasters at the Federal Reserve are anticipating discussions on potential interest rate cuts that could impact the housing market more broadly.

Despite the rising supply of homes, March home sales totaled only 6,400, which is a significant drop—20% below the long-term average and 35% lower than the peak witnessed during the pandemic. This stark discrepancy between rising inventory and declining sales suggests that the real estate market is softening considerably. Professionals in the field have indicated that many homes that may have sold for higher prices during the pandemic are now facing foreclosures that value them significantly lower.

The fallout from the evolving housing situation is not limited to potential buyers; it has also led to broader socioeconomic challenges. Notably, rental prices are soaring, contributing to an increase in homelessness among older adults in Maricopa County. Additionally, the affordable housing sector continues to dwindle, with an alarming 86% loss of rental units priced under $1,000 per month since 2011.

As affordability becomes a primary concern, the average age of first-time homebuyers in Arizona has reached a record high of 38, driven largely by prohibitive home prices that have made purchasing more challenging for younger demographics. The overall market landscape is filled with uncertainty as fluctuations in inventory and prices evolve in tandem with buyer demand.

Current trends indicate that while the Phoenix housing market is undergoing a significant transition, marked by increased listings and declining buyer interest, immediate intervention measures do not appear to be in play. Nonetheless, experts forecast that continued observation of inventory levels and buyer trends will be essential for understanding the future trajectory of the market.

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Author: HERE Phoenix