photo credit: Dru Bloomfield – At Home in Scottsdale
I’ve been pretty quiet on the blog-front this past month and a half. However, it’s been six weeks of massive action, and an introduction to the world of bank-owned (REO) properties, where the majority of home buying and selling appears to be occurring in the Phoenix metropolitan real estate market.
Last year, most of my business was in Scottsdale. In the past, I’ve worked in a much broader area, and this year will be similar. I currently have homes listed all over the Valley of the Sun, and about 75% of them are foreclosures, priced at $200,000 and under.
Our market has changed, and, in my opinion, Scottsdale is out of sync. Granted, it’s a unique city, land-locked, with many beautiful homes. Foreclosures are few and far between. Short sales are becoming much more common. However, as a whole, it’s not a moving market.
While home sales demand is increasing in Phoenix, Glendale, Mesa, and Goodyear, in Scottsdale it’s decreasing.
Click for full-size view of Scottsdale real estate supply demand graph
Click for full-size view of Scottsdale real estate supply index graph
And when you look at the appreciation rates, comparing the City of Phoenix with Scottsdale, you can see that Scottsdale has experienced a much lower rate of depreciation, appearing to bottom out at about 20%. In Phoenix, the depreciation is much greater hovering at 40%.
Click chart for full-size view of Scottsdale vs. Phoenix Home Appreciation / Depreciation Rates
So, I’ve been pondering the reason that Scottsdale is experiencing a different real estate market. Do you think it’s because:
- Fewer number of foreclosures in the city, and many buyers are only looking at bank-owned properties, thinking they will get a better deal.
- Reluctance of Scottsdale home sellers to reduce home listing prices to incent on-the-fence buyers to make a buying decision.
- First time home buyers are looking to other communities where they can buy a larger and newer house for the same price.
- A trend towards smaller is better.
- Challenges in getting a jumbo loan (greater than $417K)
- General uncertainty and conservatism in spending.
I’m curious. What do you think?
{ 2 trackbacks }
{ 5 comments… read them below or add one }
I agree with you Drew! In my 19 years selling real estate, I have worked most of the valley and with the addition of our great freeways, it is much more accessible. Working Scottsdale with three buyer recently in the last six months has been an interesting experience. Yes, sellers, including REO’s, (with a few exceptions) do not get the real price they need to be at. This is similar to the complaints we hear about CEO’s and the Government on their out of touch reality to what is going on. I recently find prices coming down only because they have been on the market for 180+ days. REO’s and short sales are a reality there and on the rise.
All of it, Dru, but mostly the fact that buyers are embarrassed to buy anything now that isn’t a foreclosure since there are so many on the market. Also, Scottsdale is never viewed as a bargain. I’ve been looking for a foreclosure or short sale in downtown Scottsdale for my business partner all year, near the W hotel, and haven’t seen anyone lower their price to where I think it makes sense for him. In north Scottsdale, it is different; there you have the jumbo loan problem. And many of those were second homes, and that’s a market that isn’t moving anywhere. The work for an agent is in starter homes and foreclosures.
My guess is 2. As Russell Shaw says, if it’s in the MLS and not sold, it isn’t priced right. There likely are a variety of reasons the Scottsdale sellers haven’t re-calibrated their pricing expectations as fast as the surrounding market, but the supply and demand numbers you’re showing indicate pricing will be changing soon.
Michael Wurzer’s last blog post..Photo Tours: To Auto Rotate (Pan and Zoom) or Not
The Tempe market supply/demand is almost identical to Scottsdale, and other data show the price declines have been significantly less dramatic in our two cities. Majority of my contacts are looking for distressed properties and pricing generally lower than Tempe or Scottsdale have to offer. Michael is right, until price points drop to competitive ranges, buyers will look elsewhere unless there’s an overriding need to be in a specific location.
Things are a little different in my neck of the “Scottsdale” woods. In my area, Rio Verde Foothills, we have a Scottsdale address (and reported as such in the MLS) but are outside the city limits in Maricopa county. Our sales are booming compared to last year – a 37% increase. However, 81% of the sales are distressed and the average sale has dropped from $842,590 LY to $390,516 TY (1/1 thru 3/23, last year vs this year).
Claudia Jordan’s last blog post..Festival of the West