This year’s Valley housing market has kept REALTORS® on their toes. What began with cautious optimism after a slow 2023 quickly gave way to a more uncertain landscape, driven by delayed Federal Reserve rate cuts and increasing prices. Add to that a presidential election, and many prospective buyers and sellers found themselves in a holding pattern, waiting for the dust to settle.

Realtors are now beginning to get a clearer picture of what 2025 will bring. While no one has a crystal ball, one thing is clear: The market reluctance we saw in 2024 is starting to thaw.

With an expected uptick in activity, Realtors should proactively prepare to advise their buyer and seller clients who plan to re-enter the market, from staying up to date on regional economic trends to adapting to consumer needs.

The state of the Valley’s residential real estate market

A big piece of the puzzle when it comes to preparing clients for a possible 2025 home sale or purchase: understanding how the Valley’s real estate market is tracking. Buyers have options, and sellers can fetch a substantial price.

Phoenix REALTORS® data from October shows a robust inventory of homes on the market — nearly 19,000. That, coupled with a median sales price of $475,000, ensures plenty of new options for buyers and the potential for lucrative sales. Homes also came off the market one day earlier compared to last year for an average of 65 days.

Even so, the number of both closed and pending sales is down year over year, largely due to 2024’s market uncertainties.

While “cooling” trends linger, some relief can be expected as lower interest rates make it financially feasible for more people to buy a house.

Emerging trends shaping 2025’s Phoenix real estate landscape

Beyond the data, trends in shifting buyer demographics, the labor market and geographic areas of opportunity will surely contribute to buying and selling activity:

· A shifting first-time homebuyer profile: With rising home prices, younger buyers are increasingly finding it difficult to enter the market. Many first-time buyers are now in their late 30s or early 40s, having built wealth and a career to afford the home. Younger prospective buyers may be more likely to seek financial support from parents or other family members to start building generational wealth today, rather than waiting for it to be passed on.

· Bang for their buck: With affordability being a chief concern, buyers have looked toward maximizing their purchasing power, and that comes on the edges of the Phoenix metro area, namely towns in Pinal County that command, on average, a 23% less median sales price than the more urban and suburban Maricopa County.

· Following current and future employment trends: Buyers may have to weigh a more affordable home against a longer commute time. With employer return-to-office pushes becoming increasingly common, housing choices in central city locations will be in high demand for those looking to limit long commutes to and from work, but they will come at a cost. Even so, top office employment corridors like Phoenix, Scottsdale and Tempe now have a noticeably deeper pool of housing choices on the market this year compared to last.

· Increasing opportunity in the West Valley: The arrival of Taiwan Semiconductor Manufacturing Company’s (TSMC) $65 billion plant to north Phoenix at Interstate 17 and Loop 303, along with other major employment parks, opens a gateway to the West Valley. With tens of thousands of employees flocking to the corridor daily over the coming decades, West Valley cities along the Loop 303 stretch will become a more attractive option.

Looking ahead to 2025: Market momentum and strategic opportunities

The outlook for 2025 suggests a potential uptick in market activity. With interest rates set to decrease and election uncertainties behind us, buyer and seller engagement is likely to grow.

While broader market forces remain beyond our control, one thing is for certain: Realtors play a pivotal role in helping clients find their perfect home and maximizing their return when it’s time to sell. To successfully navigate this market transition, Realtors must prioritize education and professional development.

By staying attuned to economic trends, agents can offer buyers valuable insights, guide them toward informed decisions and help them weather market nuances. First-time buyers, particularly those seeking multigenerational support, may benefit from buyer counseling and financial planning services.

For those representing sellers, strategic pricing is crucial, and attractive staging can significantly improve the chances of a quick sale.

As the market continues to evolve, agents who adapt to changing circumstances and offer exceptional service will be well-positioned for success in 2025 and beyond.

Sheryl Bowden is president of the Board of Directors of Phoenix REALTORS®, a member-first organization serving more than 11,000 real estate sales professionals in the Valley. More at PhoenixRealtors.com.