The Phoenix Housing Market Isn’t Crashing—It’s Evolving
Right now, downtown Phoenix is giving away four months of free rent. Entire buildings are sitting empty, and developers are panicking just to get people through the door. At first glance, this looks like the beginning of a crash. But go just 10 miles north and the story flips, rents are rising, concessions are gone, and in some zip codes, you can’t even find a unit available.
So what the hell is going on?
I’ve been investing in Arizona for over 30 years. I made it through the 2008 collapse and came out stronger on the other side. And let me tell you, this market is sending the clearest warning signs I’ve seen since then. But this isn’t just a downturn… it’s a test. And a lot of investors are going to fail.
The Tale of Two Phoenixes
If you only read the headlines, you’d assume the Phoenix housing market is falling apart: inventory is up, rents are softening, developers are offering free parking and months of rent just to stay afloat.
But here’s the truth. Phoenix is actually two markets right now.
In areas like downtown Phoenix, developers overbuilt. Back in 2021 and 2022, money was cheap, rents were soaring, and everyone assumed the good times would last forever. So they built. Fast forward to 2025, those buildings are finally opening… right into an oversupplied market.
The result? A full-blown price war. Free rent, heavy concessions, and buildings competing for the exact same pool of tenants. It’s not generosity, it’s survival.
Meanwhile, markets like Tempe, Scottsdale, Chandler, and Gilbert are showing the opposite trend: tight supply, strong demand, and minimal concessions. These cities didn’t rubber-stamp every new apartment project. And because of that, rents are holding steady or even climbing.
The Developer’s Dilemma
Developers made three major miscalculations:
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Interest Rates Climbed: Construction loans got more expensive, far exceeding original budget projections.
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Incentives Skyrocketed: To attract renters, owners are offering deep discounts that cut into profits.
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Revenue Stalled or Fell: Projected rent growth didn’t materialize, throwing off their entire underwriting model.
So now you’ve got higher mortgage payments, higher marketing costs, and lower-than-expected revenue. That’s a triple threat. And it’s forcing developers and owners to sell, often below replacement cost.
That’s where savvy investors come in.
Why I’m Buying—Not Selling
In the last six months, we’ve picked up two nearly brand-new properties, both in lease-up, both offering concessions, both underperforming.
Why? Because we bought below replacement cost.
These are beautiful Class A buildings. The only problem? They were underwritten using fantasy rent projections. But the fundamentals of the market are still strong, Phoenix is growing, demand will return, and this moment won’t last forever.
If you can ride out the next 12 to 24 months, you’ll be holding assets in a rent-constrained market where affordability keeps homeownership out of reach for many renters. That’s long-term wealth.
The Airbnb Oversupply Problem
Let’s not forget the other curveball: Airbnb.
Phoenix and Scottsdale became Airbnb goldmines during the pandemic. People were pulling in $10K–$20K a month. That’s the only reason many of those deals penciled out.
But now the market is oversaturated. Those homes are sitting empty, fully furnished, fully renovated, and bleeding cash. Many of them are being dumped into the long-term rental market, competing directly with traditional landlords and softening rents even more.
I recently heard of an experienced Airbnb investor who walked away from a long-term lease after just two years. That tells you everything.
This Isn’t a Crash, It’s a Cleanse
What we’re seeing isn’t a collapse. It’s a market cleanse.
Rising interest rates have washed out the easy money. Flippers are stuck. Airbnb owners are panicking. Bad underwriting is being exposed. The TikTok investors are quiet.
This is what separates professionals from amateurs.
The fundamentals haven’t changed. People are still moving to Phoenix. Jobs are still being created. We still have a housing shortage. But the froth is gone, and discipline is back.
The Opportunity Right Now
If you’re a renter, now’s your moment. Shop around. Negotiate. You’ve got the upper hand, especially downtown.
But if you’re an investor? Now is the time to sharpen your pencil and start looking. The best opportunities are showing up in strong submarkets with limited supply. Stay away from anything that only makes sense if rents keep skyrocketing. Buy on math, not emotion.
Because this isn’t a crash. It’s the beginning of a new phase, and for those who know what they’re doing, it’s the best time to buy in years.
If you’d like to learn more about why I’m investing in submarkets over big cities, download this guide!
