The State of the Residential Real Estate Market in 2025

By Jeff Hernandez, Realtor & Attorney — The Connie Colla Group at RETSY

As we move further into 2025, staying informed about the current state of the residential real estate market is more important than ever. With my experience as a Realtor® and attorney focusing on luxury properties in Scottsdale and Phoenix, I’ve been lucky to witness firsthand the changes and trends shaping today’s housing scene.

Market Trends Overview

Inventory Surge & Pricing Pressure

One of the most notable shifts in 2025 is the significant increase in housing inventory, up approximately 30% compared to 2024. According to recent Zillow data, unsold listings have risen by nearly 20%. This means buyers now have greater options and negotiating leverage, particularly in metro areas such as Phoenix and Scottsdale, where luxury buyers can often secure more advantageous deals.

Mortgage Rates & Affordability

Mortgage rates remain elevated, hovering around the high 6% range. This shift has notably impacted affordability, particularly in mid-level markets. Monthly payments for typical mortgages have reached around $2,800, prompting some buyers to reconsider their strategies and prioritize value-driven purchases.

Regional & Demographic Shifts

We're also observing notable shifts in buyer preferences toward specific markets. Scottsdale, renowned for its luxury amenities and attractive lifestyle, continues to draw buyers from areas such as California, the Northwest, and Colorado. Meanwhile, some traditionally strong markets are experiencing slower sales due to higher inventory levels and more cautious buyer sentiment.

Economic & Structural Forces

Macro Forecasts

Experts from J.P. Morgan predict subdued but steady economic growth, roughly 3%, through the remainder of 2025. This balanced outlook suggests a stable, albeit careful, real estate environment. Buyers and sellers alike should anticipate a cautious but steadily improving market in the latter half of the year.

Equity & Starter Home Crisis

For existing homeowners, equity levels remain high, giving sellers leverage in negotiations. However, the affordability of starter homes has become a significant issue, with many markets pricing out new buyers from entry-level properties. This situation often drives younger buyers to the fringes of Maricopa County, where homes are more affordable but further away from central hubs like downtown Phoenix and Scottsdale.  Younger, wealthy buyers are also continuing to move to markets like Scottsdale, where long-term value and quality of life justify higher prices.

Buyer & Seller Behavior

Buyers in 2025 are cautious but well-informed, making strategic choices based on detailed market insights. Meanwhile, sellers are more pragmatic, adjusting expectations to match realistic market conditions. The sellers who don't will typically sit on the market longer and ride the market down.  As always, pricing the home correctly is paramount to selling a home sooner rather than later. 

In Scottsdale’s luxury market, sellers increasingly rely on detailed analytics and professional marketing strategies to reach their goals; services I provide regularly to support my clients' success.

Sustainability, Equity & Policy Considerations

Today's buyers are also more focused on sustainability. Properties with energy-efficient upgrades, solar panels, and eco-friendly designs are highly desirable. Scottsdale’s upscale developments are increasingly integrating these features, which enhance long-term value and attractiveness.

Future Outlook & Predictions

Looking ahead, we anticipate steady and moderate growth. Mortgage rates are projected to remain stable. Scottsdale’s appeal as a luxury destination ensures strong long-term demand, providing ongoing opportunities for strategic investments.

Conclusion

Understanding the complexities of the 2025 residential real estate market calls for expert guidance. With my dual background as a Realtor® and attorney focusing on Scottsdale and Phoenix luxury properties, I am well-equipped to offer clients informed advice, strategic planning, and personalized support.

At Jeff Hernandez, Esq., Scottsdale Real Estate Agent & Attorney, I am committed to making your real estate journey smooth, successful, and highly satisfying. If you're ready to act or need expert guidance, contact me at 602-550-1114. I'm here to help you make confident, informed decisions in today's evolving market.