Quarterly Northeast Valley Market Update – July 2014

As reported in DS News, “Most sellers nationally don’t seem to have gotten the memo with 40% still planning to list their homes above market value as sales figures continue to fall compared to last year and home price increases level off.” Even in our local market where statistics are a bit better than the national statistics, inventories are continuing to grow and the volume of sales continues to drop. Although in both Paradise Valley and Scottsdale, we are seeing increases in the per square foot sales price, considering that real estate is driven by supply and demand, we are bound to see a leveling off if not a drop in the per square foot sales price in both markets.
So . . . let’s take a closer look at how our local markets are responding to the new real estate economics: In Paradise Valley we are seeing a 23% increase in inventory with the majority of the increase in homes priced below $3,000,000. And, there has been a slight decrease in the number of homes sold from 184 last year to 180 sold in the first half of this year. With respect to prices, we have seen a steady increase in sales price per square foot with moderate gains in properties listed below $2,000,000 and more impressive gains of as much as 15.8% in the properties priced between $3,000,000 and $5,000,000.
In contrast, Scottsdale has seen a 42% increase in inventory from 365 homes listed in 2013 to 520 currently listed. The majority of the gains has been in homes listed below $800,000. With regard to the volume of sales, there has been a 10% decrease in the number of homes sold, again with the majority of the decrease being in homes priced below $800,000. We are still seeing an increase in sales price per square foot with moderate growth in the market of homes priced below $1,200,000 and a more substantial increase in the homes priced above $1,200,000.
The Biltmore is an enigma. One would think that a wonderful market with a plethora of guard-gated communities and outstanding product, we would have seen more aggressive growth. In contrast to the other upper-end markets, we have seen a 70% increase in inventory of homes listed and an overall 46% decrease in the number of homes sold. The segment that has been most affected are the homes priced above $1,200,000. Since the beginning of the year, there have only been 2 homes sold. As for the per square foot price point, there have been moderate increases with the highest price point increases in the $600,000 to $800,000 market segment. Perhaps the problem in the Biltmore may be due to the fact that many of the buyers are either second home buyers or consumers buying down. If they cannot sell their homes, they cannot move down.
The more aggressive price increases stated in both Paradise Valley and Scottsdale with minor gains in the lower priced homes makes sense. The wealthier buyers are probably starting to take gains from a very bullish stock market, selling stock and putting the money into real estate whereas the buyers of the more moderately priced homes are having trouble obtaining loans and putting together enough funds for a down payment. In order for the more modestly priced homes to begin to see growth in the sales price per square foot, the economics of our country will have to do a bit more healing.
Our advice . . . if you are considering selling your home, you should watch the comps and make sure that you price your property at or slightly below market and quickly respond to how the prospective buyers are viewing your list price. In this way, unless the market takes a quick turnaround, you will maximize the return on your investment by leading the market and setting the new price per square foot rather than helping your neighbor sell their home by overpricing yours. It is a time to be watchful and responsive. Remember each home is priced differently so if you or one of your friends, family members or associates have an interest in selling or buying a home in the next 6 months, give us a call. We will provide a free review of their options with no obligation. We believe that an informed consumer is our best customer. You can reach us at 602.920.9899 or email us at ekatz@azkatzgroup.com.

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