In April, there was a crisis of “crisis” headlines, spurred by unexpected tariffs and market volatility. The end result was mortgage rates rising from 6.6% to 7.1%, which frankly is nothing new for the housing industry. In fact, mortgage rates were higher at 7.2% just last January and even higher last may at 7.3% without any headlines screaming “crisis”.

Unfortunately, this time active buyers froze with indecisiveness and shock, resulting in an 18% drop in weekly accepted contracts for 3 weeks after the tariff announcement. Fortunately, the first few weeks of May saw a small recovery as some buyers woke up and got back to business.

From the mess of chaos erupted a wave of opportunistic negative predictions about the housing market across social media platforms. Even Newsweek ran an article suggesting that homes in Greater Phoenix could drop by 20%.

Buyer’s could swarm the market if property values suddenly dropped… But that’s very slim.

While buyers would certainly swarm the housing market if property values suddenly dropped by 20%, the chance of that happening is slim. While Greater Phoenix is slipping farther into a buyer’s market, it’s not extreme enough for a collapse of that magnitude. Buyer’s markets over the past 25 years, excluding the 2008 sub-prime mortgage collapse, saw prices drop between 5% and 11% year-over-year, and those price declines were enough to pull the market back into a seller’s market each time.

Questions persist about the degree to which Greater Phoenix home are overvalued. To answer this, a basis must be established prior to the 2005-2008 bubble/crash and a “typical home” defined. The median home sold in Maricopa County was 1,600 sq. ft. in 2000 and 1,900 sq. ft. in 2025, so a single family home of 1,500-2,000 sq. ft. is typical for this region.

The annual 2004 ranged from 2.6% to 5.3% with a median of 4.65%. The median rate across 25 years from Q1 2000 to Q1 2025 is 5.3% (high of 32.9% and low of -41.4%). Extrapolating the 4.65% appreciation rate over 25 years supports a price correction of 3% by next year.

However, one could argue that prices are currently in line with where they would’ve been with a 5% annual appreciation rate over 25 years, below the 5.3% long term median and are already undervalued. Either way, the current buyer’s market supports declining prices over the next 3 months; 20% is extreme, but 3% is more reasonable. If mortgage rates move closer to 6.5% or lower, all projections will change again.