The Phoenix metro area's real estate market is clearly weaker than it was a year ago. The large investors who had been snapping up properties have stopped as prices have risen, and normal buyers have less purchasing power as interest rates have increased. The director of ASU's Center for Real Estate Theory and Practice gave a concise, insightful summary of what's happening here.

The real question for us is whether Paradise Valley is following the trend of the wider market? Right now, the demand for super luxury product ($3 million+) is at record levels, as I've reported here in recent weeks. Great properties at great prices sell quickly across the price spectrum in Paradise Valley. However, there isn't indiscriminate buying -- this isn't 2005. So, average properties that are counting on a rising market to lift all boats will just linger on market and become stale.

Every week in this newsletter I include a link to all the single family homes on market in Paradise Valley. There have been over 400 properties for some time now, and last year we were in the low 300's. So, it's time for sellers to realize that the market "is what it is" and they shouldn't be trying to break records with asking prices or they'll just hurt themselves.

Buyers have an opportunity to negotiate more than they've had in the past, especially on fixer upper or problem properties. We're not at a point of a buyer's market now, but it's more balanced.

The exception would be pristine, turnkey properties. Homes that are new or totally remodeled, on great lots, will have buyers competing for them. It will be interesting to see where we go in the fall, and whether PV remains stronger than the overall market or reverts to the mean.

For now, the key on both sides is to pay serious attention to negotiation. Intelligent negotiating strategy is most important in a balanced market, and that's where we are today.

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