Is Our Housing Market Officially Better for Buyers than Sellers?

By Arizona Home Group

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As we enter the new year, we see the market shift to a buyer’s market for the first time in many years. What does this mean for you? We will break down how this affects you when entering the market.

What is a buyer’s market? Our area usually needs about 18,000 homes to have a balanced market. If there are fewer than 15,000 homes, it becomes a seller’s market. For example, in 2021 and 2022, we had only about 5,000 homes available, leading to houses selling quickly, with many people making offers above the asking price.

We’ve really been feeling the slowdown in buyer demand, which started in the latter part of 2022 when interest rates went up. The market shifted from a seller’s to a balanced market throughout 2023 and stayed that way for most of 2024. But at the end of the year, inventory reached levels that hadn’t been seen in many years.

We currently have around 22,000 homes, which means we are in a buyer’s market. This is good news for buyers like you because it gives you more negotiating power.

What does this mean for homebuyers? This market shift brings opportunities for homebuyers. Because there’s a surplus of houses on the market, you can use that to negotiate better prices, terms, and closing costs from sellers.

We are also seeing many seller concessions. About 50% of all closings have had sellers contributing to buyers’ closing costs, the highest percentage we’ve seen in almost 20 years. Buyers can use these concessions to keep more money in their pockets by reducing closing costs or buying their rate down.

Today’s rates are still in the mid-sixes, so rate buydowns allow buyers to lower their rates to fours and fives, positively affecting their monthly payments. In addition, home prices have stabilized, making them more affordable.

If you’re a buyer waiting on the sidelines to jump in and get a great deal on a home, now is the right time for you.

How does this affect home sellers? If you’re a seller, you might think, “This doesn’t sound great to me.” But it’s not all bad news. Selling during a buyer’s market can be challenging, especially if you need to sell to buy. You might sell your home at a reasonable price but then struggle to find your next one amidst multiple offers.

Here’s the silver lining: in a buyer’s market, selling and buying at the same price becomes less of a concern. If you sell for a little less, it’s more of an awash because you’ll likely buy for a lower price as well. Plus, buyers now have the luxury of time. They can take their time finding the right home without feeling rushed.

Sellers can also ask for contingent offers, which wasn’t an option during the seller’s market. Now, sellers are more open to those contingencies, giving concessions and better terms, making the process easier for everyone involved.

The housing market in 2025 is off to a good start for buyers and sellers, and we’re excited to see how this year will pan out. As always, if you have questions or want to learn more about how to find your way through this new market, don’t hesitate to reach out at (602) 571-3730 or AHGadmin@gmail.com.