Price Reductions Rise as Prescott Market Recalibrates

Written by:

Steve Marcinuk

Date:

02 Jan 2026

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The Prescott, Arizona, real estate market shows what happens when pandemic-era price surges meet current buyer realities. With 43 percent of listings now seeing price reductions and median prices dropping from $690,000 to $585,000, the market is undergoing a significant adjustment—but according to one local agent, it is not a crisis.

“We’re recovering from a false market,” says Erin Carmona, Realtor with RealtyONE Group Mountain Desert in Prescott. “A 25 percent increase in equity over 18 months is not sustainable. We had a huge influx of people, we had a demand shortage which drove prices up, and now we’re trying to recover from that.”

Carmona argues that many sellers are only now realizing that the COVID-era market created temporary price conditions that could not last. Prescott, ranked among the top five retirement destinations in the country, experienced a surge in relocating buyers during the pandemic. This surge pushed prices far above historical norms and local economic fundamentals.

The Recalibration Process

The current correction, Carmona says, is a necessary market recalibration rather than a collapse. “The price cuts, that’s because we’re trying to figure out what the market will bear,” she explains. “It got crazy during COVID, and it just wasn’t sustainable. I think it’s a re-education of the market, of what the market will bear.”

Sellers who anchored expectations to peak pandemic pricing are now facing a difficult adjustment. Over the past 12 to 18 months, Carmona and other agents have tried to counsel sellers on realistic pricing, but many have had to learn the hard way when properties sit unsold. “This last 12 to 18 months has really been about agents trying to advise sellers and sellers just being like little children and having to learn the error on their own,” she says.

The result has been widespread price reductions as properties linger on the market and sellers gradually accept that their initial asking prices were unrealistic. Carmona believes this process, though frustrating, is necessary for long-term market stability.

Why Arizona and Florida Lead the Nation

Arizona and Florida have seen the highest rates of price reductions because they absorbed the most significant numbers of pandemic-era migrants. “Arizona and Florida are leading the country right now in price reductions because we’re where everybody went when they left California,” Carmona says. “During COVID, that’s what happened. We had a great influx of people, and now we’re trying to adjust for that.”

This correction is concentrated in areas that experienced the sharpest spikes in demand. As migration slows and demand returns to more typical levels, these markets are now working through the fallout, with sellers forced to adjust expectations.

Prescott’s current inventory stands at about 4.5 months, which Carmona describes as “fairly healthy” as long as asking prices settle at levels buyers are willing to pay. She notes that new construction in the area remains balanced, avoiding the oversupply that triggered deeper problems during the 2008-2009 downturn. “I think that new construction is healthy here, and it still allows for a great market in resale,” Carmona says.

The Comping Challenge

One practical issue with this correction is the difficulty of establishing reliable comparable sales. “It’s getting harder at this point to comp a property, because some are sitting on the market for a long time. Some are going quickly. Some are going at list price. Some are taking huge price cuts,” Carmona explains.

This inconsistency reflects a market in transition, with motivated sellers accepting lower prices while others hold out. Carmona believes this phase is temporary. “Now sellers are seeing that three houses around them that sold took significant price drops before they sold, and so now we have enough price drop comps to help re-educate the seller that there is a realistic, fair market value.”

Looking Ahead to Spring 2026

Carmona expects the spring 2026 selling season to reveal whether the market has fully absorbed the correction. She anticipates increased inventory as sellers who previously canceled or withdrew listings return with more realistic expectations.

“I think we’re going to see more houses go up for sale in the spring, and I think that buyers are getting more comfortable,” Carmona says. “I think that in 2026 we’re going to see sellers coming on the market with more realistic expectations of what they can get for their house.”

If this plays out as Carmona predicts, it would indicate that Prescott—and similar markets in Arizona and Florida—have moved from pandemic-driven distortion to a more stable footing. The 43 percent price reduction, rather than indicating a market collapse, reflects a necessary adjustment that allows the market to function normally again.

The broader takeaway is that markets experiencing similar corrections should view this as a sign of maturation, not crisis. While the process is complicated for sellers in the short term, it is essential for creating long-term market health.