Why interest rate drops!? - Arizona Housing Market Update

A stalling job market make this is one of the reason makes the Fed cut rate. Wall Street now is seeing 91% chance that the rate cut is because of this of the labor of the job market cut." The speaker notes that job growth dropped significantly: "As of august of 2025 is only 6.5% growth... we're talking about may is about 7.1% and they already have the dow trend since then... very steady job market and there's no growth there so we that is the main reason why federal cut rate last week."

The impact on buyers has been substantial: "In fact the average mortgage payment has dropped about $250 since may imagine instead of paying $2,500 you only have to pay $2,250 for your house." Looking forward, predictions show: "12.7% of the organization say there's going to be at least 1 cut toward the end of the year... 48.5% say that 2 cuts. 37.9% is only 3 cuts. Obviously, you see that the majority is predicting from a 2 to 3 times... 2 or 3 more times that the federal is going to cut rate towards the end of the year."

This week, the comfort market index rose by an average of 5.9%. It's still positive, but down from about 7.6% of last week." The city breakdown shows: "It's 14 cities actually in the trending toward the sellers. Only 3 that is improved for the buyers. The same 3 that we saw last week is actually favoring the buyers, which is Paradise Valley, Glendale and Maricopa." Paradise Valley specifically has challenges: "Paradise Valley is actually a surprise... It's going down so fast. The main reason is that supply is active, available listing on the market.

Right now, Paradise Valley is up 40% compared to a month ago. This is the reason why the buyer has more options." Meanwhile, "Fountain Hills, now no longer the 2nd place. It's already taken over Paradise Valley as the #1 seller-friendly market." Other strong areas include: "Some of the cities that are taking a good strong momentum like Scottsdale, Gilbert, Peoria, Surprise, and Avondale." The overall distribution shows: "Overall, we see that there are 7 markets, 7 sellers market, 4 of the buyers market and 6... 4 of the balance market and 6 of the buyers market."

It's interesting because lower interest rates are actually creating a double-edged effect. In 1 side, it creates more buyers. More buyers become available on the market because interest rates are getting lower. But at the same time, more sellers are also entering the part of the market. You know why? Because they have been stuck in the high market, high interest rate market for a long time. Now there's their chance... Their chance to go to the market because the interest rate get lower and get a new house, more updated or maybe upside house... and that's exactly the reason the new listings are also coming on the market... right now we see both demand is higher and supply is also higher."

For buyers, the advice is clear: "If you are shopping for the price that less than $500K, you have to act quick... this is time for you to negotiate hard and get a good price refinance get the lower interest later on."

For the seller momentum is still in your favor especially in the fountain hills got there and Gilbert and Chandler of course right but remember competition is growing more and more people also want to sell a house because they want to buy another house or a newer better area or maybe another state... pricing strategy is a key and presentation matter.

The mortgage rate is now about 6.3% for the 30 years rate... this has helped boost the activity the contract activity especially for the higher end." In the mid-range: "$500K to $1M range... contract is up 5% this is a show a steady demand in this in this range."

For luxury homes: "Home over $1M are selling sell a strong game 6.4% compared to last year and up a record 20.8% compared to 2023." The standout performer is clear: "From $1M to $1.5M range. This is a this is a very good year over year. 16%, 16% year over year." Even ultra-luxury performs well: "Ultra-luxury, $10M or above... Performed very well with only 10 homes under contract in Arizona... But it's actually 30% more compared to last year at this time." However, entry-level struggles: "The only price range that's a little bit struggling is $500K to $1M. Well, even though it's struggling, but obviously it's to steady demand growth. So it's actually the 1 less than $500K is the 1 that's struggling. We see that demand is weak, even though the prices is being lower than 2023 and 2024. But the demand is still low. The first time homebuyer is still sitting on the sideline.

Obviously we see a lot of people believe that the rate is going to go down. That, in fact, is going to give the buyers a lot and a lot of advantage to buy for sure in terms of affordability. But in terms of competition, that's not helping seller buyers." The urgency for buyers is clear: "I think right now is the best time for buyers who's been waiting on the side to make the decision whether you want to all in, which I recommend, or you want to back out... if you don't want to back out just keep renting for a while and keep paying someone else mortgage."

For first-time buyers specifically: "I wouldn't recommend the first time homebuyer to wait too much longer, too much longer. If you wait too much longer, then you obviously do not take advantage. When you come back... When you come back, then you will be competing with a lot of people, a lot of people. competition on the market." The market balance has shifted: "We see that there's somewhat imbalance, more and more sellers market. Remember, if you remember last time is way more balanced than today. So today there's more sellers market than the buyer market already. So buyers watch out because if you're still waiting, you may be late to the game."