For anyone who has attempted to purchase a home in recent years, the experience has likely been nothing short of frustrating. The real estate market has been a rollercoaster of emotions—dominated by bidding wars, sky-high prices, limited inventory, and the crushing disappointment of offer after offer being rejected.
For many, the dream of owning a home seemed to fade into the distance, replaced by frustrating rental searches or the decision to simply 'wait it out.' The landscape was defined by intense competition, driven by factors like historically low interest rates that boosted buyer demand and a severe shortage of homes for sale. Sellers held all the cards, receiving multiple offers the moment their properties hit the market, often far above their asking price. Buyers were pushed to make risky moves, like skipping home inspections or waiving appraisal contingencies, just to be considered. It was a frantic, often disheartening time to be on the buyer side of the equation.
Many potential homeowners simply gave up, deciding to wait for a more favorable market. That wait may finally be over.
While we haven't completely shifted to a buyer's market yet, and real estate is always local, significant changes are occurring that suggest the scales are beginning to balance. The housing landscape is evolving in ways that provide genuine opportunities for those who may have been sidelined in the past few years. Let's explore the major shifts happening right now and why this might be the perfect time to dust off those homeownership dreams that you might have given up on.
The Perfect Storm: How We Got Here
Before diving into the current opportunities, it's worth understanding how we arrived at this turning point. The post-pandemic housing market was shaped by a unique combination of factors: historically low interest rates, a sudden desire for more space as remote work became normalized, and severely limited housing inventory. This created a seller's paradise where homes sold in days (sometimes hours) with multiple offers well above asking price.
But markets inevitably seek balance. The Federal Reserve's inflation-fighting interest rate hikes cooled demand, construction slowly increased, and many homeowners who had been reluctant to sell during the pandemic finally listed their properties. Economic uncertainty also forced some investors to reconsider their real estate holdings.
The result? A market that's beginning to offer breathing room for buyers. Here's how this transformation is playing out.
1. Sellers Are Sweetening the Deal with Concessions
Remember when sellers wouldn't even consider an offer unless it waived inspections, appraisals, and every other protection a buyer might want? Those days are increasingly behind us.
According to recent Redfin data, nearly half (44%) of home sellers offered some form of concession in early 2025—approaching the highest level ever recorded. These concessions take various forms:
Closing cost assistance: Sellers covering thousands of dollars in loan origination fees, title insurance, and other expenses that traditionally fall on buyers.
Mortgage rate buydowns: With interest rates still higher than many buyers prefer, sellers are increasingly offering to "buy down" the rate for an initial period (or even permanently), potentially saving buyers hundreds of dollars monthly.
Repair credits: Rather than refusing to address inspection issues, sellers are now offering monetary credits to handle necessary repairs. This will be dependent on your mortgage provider, but it can usually be worked into the purchase contract.
Most sellers are still paying Buyer Agent fees: Many people I've spoken to, whether they're in the market or not, think that buyers now have to pay their Buyer Agents' fee, and they usually put a specific rate on it. Most home sellers are still paying the Buyer Agent fees and these fees should be negotiable.
Flexible closing timelines: Sellers are more accommodating to buyers' scheduling needs rather than demanding quick closings on their terms.
For a real-world perspective, consider Jennifer and Marcus from Denver, who received a $15,000 closing cost credit and a 2-1 buydown (reducing their interest rate by 2% the first year and 1% the second year) when purchasing their first home. "Six months earlier, we couldn't even get sellers to return our calls," Jennifer explains. "Suddenly, we had options and leverage we never expected."
This shift represents a fundamental change in the psychology of the market. Sellers recognize they can no longer dictate all terms and must compete for qualified buyers.
2. Down Payment Requirements Are Becoming More Accessible
The financial barrier to homeownership has long been the substantial down payment required. Recent years saw this barrier grow even higher as cash offers and 20%+ down payments became standard in competitive markets.
That trend is finally reversing. Redfin reports that the typical down payment has decreased by 1% compared to last year—the first annual decline in nearly two years. While the average remains around 15% of the purchase price (approximately $62,468), this represents an important psychological and practical shift.
Several factors are driving this change:
Increased use of FHA and VA loans: Government-backed mortgage programs requiring as little as 3.5% down (FHA) or zero down (VA) are gaining acceptance again after being largely shunned during the hyper-competitive market.
Down payment assistance programs: State and local programs helping first-time buyers are seeing increased utilization, with some offering grants or forgivable loans up to $25,000.
Shift toward more affordable properties:Buyers are strategically choosing homes with lower price points to maintain manageable monthly payments despite higher interest rates.
Family gifting: More buyers are leveraging financial gifts from family members to enter the market, with lenders becoming increasingly flexible about these arrangements.
Financial advisor Sophia Rodriguez notes, "We're seeing clients successfully purchase homes with 5-10% down payments again, which simply wasn't viable during the peak frenzy. This opens doors for people who have good incomes but haven't been able to save enormous amounts for down payments."
3. Builders Are Actively Courting Buyers with Price Cuts and Incentives
New construction represents a significant opportunity in today's shifting market. After ramping up building in response to the housing shortage, builders now find themselves with growing inventory and fewer buyers due to interest rate sensitivity.
According to the National Association of Home Builders, 37% of homebuilders reported cutting prices in June 2025—the highest percentage since they began tracking this metric monthly in 2022. Additionally, an impressive 62% of builders now offer some form of sales incentive.
These incentives include:
Price reductions: Outright cuts of $15,000-$50,000 from original asking prices, particularly on homes that have been completed but remain unsold.
Closing cost coverage: Builders offering to pay several thousand dollars toward closing costs.
Designer upgrades included: Premium flooring, fixtures, appliances, and finishes that would typically cost extra are now included at the base price.
Rate buydowns: Temporary or permanent interest rate reductions subsidized by the builder, sometimes bringing rates down by as much as 1.5-2%.
Extended warranties: Enhanced protection packages for major systems and structural elements.
Michael Chen, who recently purchased a new construction home in Austin, Texas, shares: "The builder initially listed our floor plan at $525,000, but by the time we signed, they'd reduced it to $489,000 and thrown in $15,000 in free upgrades plus paid most of our closing costs. It was a completely different experience from when we first started looking six months earlier."
This builder flexibility creates negotiating opportunities that simply didn't exist during the height of the market. As a side note for sellers, those located near new construction are having a tough time competing with builder packages. I remember when it was more expensive for a buyer, especially a first-timer, to build new. That is changing in many areas.
And if you don't want new construction, especially having to wait for a home to be completed, you might be able to purchase the same or a similar floor plan in an existing home nearby. Not good for sellers in these growing areas, but great for buyers.
4. Housing Inventory Has Reached Multi-Year Highs
Perhaps the most fundamental change benefiting buyers is the simple increase in available homes. After years of severe inventory shortages, the number of properties for sale has expanded significantly.
According to Realtor.com data, active listings in the U.S. recently surpassed one million—representing a 31.5% increase year-over-year and reaching the highest level since 2019. While still below pre-pandemic norms, this dramatic improvement gives buyers actual choices rather than forcing desperate competition for whatever happens to be available. Buyers finally have a choice in many areas for the first time in years!
This inventory growth varies by region and price point:
Entry-level homes: While still the most competitive segment, inventory has improved by 22% year-over-year. With my 42 years in real estate, the lower prices were always the most competitive, no matter what kind of market.
Mid-priced homes: Inventory up 35%, providing substantial relief for move-up buyers.
Luxury segment: Inventory has increased by over 40% in many markets, creating genuine buyer's market conditions at higher price points.
The psychological impact of this inventory growth cannot be overstated. Buyers can now take time to consider options, schedule second showings, and make decisions based on thorough evaluation rather than fear-driven impulse. They can conduct home inspections and expect certain repairs to be done by sellers. And they shouldn't have to consider having to pay for the difference between the contract price and a low appraisal, although there still might be a fight with unrealistic sellers.
5. Investor Retreat Creates Space for Individual Buyers
During the pandemic housing boom, traditional buyers faced formidable competition from investors armed with cash and the ability to close quickly. These investors—ranging from large Wall Street-backed firms to individual landlords—often outbid families looking for homes to live in. This was prominent with Scottsdale real estate and other Phoenix areas.
That dynamic is changing dramatically. In 2024, a record 10.8% of all homes sold were sold by investors, according to Realtor.com data. This investor pullback stems from several factors:
Cooling rental markets: Rent growth has slowed or reversed in many areas, making the investment math less attractive.
Higher carrying costs: Increased interest rates and property taxes have eroded potential returns.
Better alternative investments: With high yields available in bonds and other instruments, real estate's relative appeal has diminished.
Portfolio rebalancing: Many investors who accumulated properties during the boom are now diversifying their holdings.
This investor retreat benefits everyday buyers in multiple ways. First, it reduces competition for available properties. Second, it returns many single-family homes to the owner-occupant market that had been converted to rentals. And third, it helps normalize pricing in neighborhoods that saw artificial price inflation due to investor activity.
Practical Steps for Today's Homebuyers
Given these market shifts, what should potential homebuyers do to capitalize on the improving conditions?
1. Reevaluate your budget and loan options: Speak with multiple lenders to explore the expanding range of mortgage products, including those with lower down payment requirements. Find out if you can qualify for different home buying programs, usually for first-time or low-income buyers. There are programs in Phoenix, Maricopa County, and statewide in Arizona. Not all lenders are set up to offer every program out there, so you might have to shop around if you think you could qualify.
2. Consider new construction: With builders offering significant incentives, new homes may be more affordable than they first appear, as mentioned above (#3).
3. Be strategic with contingencies: While you can now include inspection and financing contingencies without automatically losing out, be thoughtful about which protections matter most.
4. Negotiate confidently: Request seller concessions that address your specific needs, whether that's closing cost assistance or repair credits.
5. Expand your search parameters: With more inventory available, consider neighborhoods or home styles you might have previously overlooked.
6. Take your time: The days of making decisions in hours are largely over, which is how it should be. Use this breathing room to thoroughly evaluate properties. There is sometimes buyer's remorse, no matter what kind of market real estate is in. But I think we have seen more of that remorse since the past wild and crazy Seller's Market, where buyers were happy to get an offer accepted. It might have been one of many offers that were made, and it was probably not their first choice.
Looking Ahead: Is This the New Normal?
While conditions have improved for buyers, it's important to maintain perspective. Housing remains fundamentally undersupplied in America, with estimates suggesting we're still millions of units short of meeting demand. Additionally, demographic factors like millennials entering prime homebuying years continue to create baseline demand.
What we're experiencing isn't a collapse but rather a rebalancing—a return to more normal market dynamics after an unprecedented period of seller advantage. Interest rates remain a wild card; any significant decrease could quickly reignite competition, particularly in desirable areas.
The Bottom Line: Opportunity Knocks
For those who have been waiting on the sidelines, frustrated by the extreme seller's market of recent years, today's conditions represent a genuine window of opportunity. More inventory, motivated sellers, builder incentives, and reduced investor competition have combined to create the most favorable buying environment in several years.
While challenges remain—particularly around affordability in many markets—the playing field has leveled significantly. Buyers now have options, time to make decisions, and actual negotiating power.
If you've been waiting for the market to shift in your favor before pursuing homeownership, it might be time to take another look. The tide is indeed turning.
Posted by Judy Orr on
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