As we head into 2026, it’s a good time to step back and look at what really defined the Phoenix real estate market in 2025 — what worked, what changed, and why strategy mattered more than timing.
At a high level, 2025 wasn’t a classic seller’s market or a full buyer’s market. It was what we’d call a strategic market, where pricing, positioning, and early decision-making determined success.
From Seller Momentum to a Strategic Market
Coming out of 2024, many sellers were still used to homes moving quickly with minimal effort. But as 2025 progressed, the market shifted.
Pricing became the single most important factor in whether a home sold — and how long it took. Homes that were priced correctly from the start moved. Homes that missed the mark often sat, regardless of condition or location.
For the first time since 2023, the Phoenix market experienced negative appreciation, largely driven by rising inventory levels.
Key Market Shift in 2025:
- Active listings increased sharply early in the year
- Inventory peaked at nearly a 40% increase year-over-year
- Buyers gained leverage and time to compare options
Days on Market Increased, Especially at Lower Price Points
Homes priced under $300,000 saw some of the most noticeable changes. Average days on market stretched to roughly 63 days, compared to much faster timelines in prior years.
In higher-end areas like Scottsdale, sellers leaned heavily on strategic price adjustments rather than waiting for buyer urgency that never came. By mid to late 2025, much of the Phoenix metro had clearly shifted toward buyer-favorable conditions.
Affordability & Builders (The Positive News)
What Helped:
1) Mortgage rates hit a 10-month low in the second half of 2025
2) Softer pricing combined with lower rates
3) Monthly payments dropped approximately 13–15% year-over-year- for new buyers
This improvement helped keep transactions moving, even as buyers became more selective
New Construction played a big role in 2025
Builders captured over 23% of the Phoenix market, significantly higher than historical norms. In some submarkets, that share was even higher.
Builders remained competitive by:
1) Offering aggressive incentives
2) Using preferred lenders to provide interest rates near 4%
3) Maintaining stable pricing while resale homes adjusted
In several areas, new builds outperformed resale homes as a result.
Which Phoenix Areas Performed Best in 2025?
Market performance varied significantly by location.
Stronger Seller Momentum:
More Buyer-Friendly Areas:
The luxury segment helped carry much of the overall market. Areas like Scottsdale and Paradise Valley saw strong activity driven by teardown and infill projects, which significantly increased price-per-square-foot averages.
Rental Market Shifts and Investor Activity
The rental market also experienced meaningful changes.
Luxury apartments were overbuilt in many areas, leading to:
- Heavy move-in incentives
- Increased competition with single-family rentals
- Downward pressure on rental pricing
While inventory is beginning to normalize, many rental properties today would not lease for the same price they commanded one or two years ago.
At the same time, the return of 100% bonus depreciation brought some investors back into the market — though primarily on the commercial side, with limited impact on residential activity.
Insurance Costs Became a Bigger Factor
One unavoidable change in 2025 was insurance.
Across Arizona — residential and commercial — insurance premiums increased. This became an important consideration for both buyers and owners and will continue to matter as policies renew in 2026.
Staying proactive and reviewing coverage regularly is now more important than ever.
The Biggest Takeaway from 2025: Strategy Beat Timing
The clearest lesson from 2025 is simple:
Strategy mattered more than timing.
On both the sales and rental sides, properties that were priced correctly within the first 7–10 days performed best.
For rentals, properties priced accurately early typically leased within 30 days. Those that missed the window often sat longer and ultimately leased for less.
The same principle applied to home sales. Buyers had more choices, more data, and more patience — and they used it.
Looking Ahead to 2026
As we move forward, we’re continuing to refine how we support clients, improve the tenant experience, and adapt to a more analytical market.
If you have questions about how these trends affect your property, investment strategy, or plans for the year ahead, we’re always happy to connect.
📩 Reach out or schedule a call — we’d love to hear your perspective.