Where are we in the real estate cycle today?

Here’s the answer we received from Chat GPT to this question:

The real estate market cycle consists of four phases: Recovery, Expansion, Hyper-Supply, and Recession. Where we are in the cycle today depends on location, economic factors, interest rates, and supply-demand dynamics.

Where We Are Now (2025):

Based on current market trends in many parts of the U.S., including Phoenix, AZ, we appear to be in the Hyper-Supply to Early Recession phase. Here's why:

Rising Inventory & Slower Sales
- Active listings are increasing, meaning more homes are sitting on the market longer.
- The Cromford Market Index in Phoenix recently dropped below 90, signaling a buyer’s market.
- Price reductions are becoming common, showing sellers are adjusting expectations.
High Interest Rates & Reduced Demand
- Mortgage rates have remained elevated, reducing affordability.
- Buyers are more hesitant, leading to weaker demand than in the previous Expansion phase.
Market Volatility & Pricing Trends
- Prices have wobbled over the past year rather than showing a clear upward or downward trend.
- Some areas are still seeing price appreciation, but at a much slower pace.
Economic Uncertainty & Buyer Power
- Inflation and economic uncertainty are keeping some buyers on the sidelines.
- With more inventory and fewer bidding wars, buyers have more negotiating power.

What to Expect Next?

If demand remains soft and inventory continues to rise, prices may decline modestly.
If interest rates ease, we could see a stabilization or slow recovery.
The market may stay in this phase for a while unless major economic shifts occur.

Opportunities for Buyers & Sellers

Buyers: More options, better deals, and negotiating power.
Sellers: Pricing competitively and working with a flat fee realtor (like FlatAZ.com) can save thousands and help move properties faster in a slower market.