Paradise Valley is a real estate microcosm. Homes are much larger and median prices are significantly higher than anywhere else in the Phoenix area, including it’s neighbor, Scottsdale.
Commonly call “PV”, this city has irregular boundaries, that extend from Camelback Road on the south, to Shea Boulevard on the north. The area is filled with acre plus lots, beautiful homes, and magnificent views of Camelback and Mummy Mountains. Some homes border the Phoenix Mountain preserve.
The city of Paradise Valley shouldn’t be confused with the geographical area to the Northwest that is home to the Paradise Valley School district. This area is home to a number of private and charter schools, as well as sitting in mostly in Scottsdale Unified School District.
The number of homes for sale in Paradise Valley has been at an all-time high, but you can see that since April, there has been a drop of almost 20%. In August, the number of listings dropped below 500, for the first time since October 2008.
One of the other changes occurring in the PV market is that time that the number of days of inventory (how long it would take to sell current home listings at the current sales rate) started has been decreasing since May of this year.
Paradise Valley has relatively few properties identified as short sales, and even fewer that are bank-owned (foreclosures). These properties however are impacting the local real estate market since they are being listed at significantly lower prices, around $300/square foot, as compared to $500/square foot for a typical listing. When it comes to actual sales, short sales and foreclosures account for more than 25% of the sale in July. Sales prices for typical sales are averaging almost $350/square foot, while short sales and foreclosures are selling at an average of $100/square foot less.
Taking a more historical look at the Paradise Valley sales price trends, you will see that the annualized average sales price per square foot has steadily decreased from $450 per square foot a year ago. Comparing last year’s average sales price to this year’s (on a per square foot basis) shows that depreciation has been 19%. Recent trends, comparing last month to this year, do shows that depreciation is slowing slightly.
A few definitions (courtesy of the Cromford Report) that may help you further understand the charts above:
- REOs or lender-owned properties have already been through the foreclosure process and completed their trustee sale. These properties were sold by the trustee to the beneficiary (lender). In a few trustee sales (typically less than 5% at the moment), the property may be sold to an investor or wholesaler who is prepared to bid higher than the bank. These properties are not classified as lender-owned. The lenders use the ARMLS system quite heavily to market their inventory of homes and compete aggressively on price. At the moment we lender-owned properties constituting a significant share of the homes listed for sale, and an even large proportion of the homes sold.
- The Pre-foreclosure category includes those properties that have started the foreclosure process but have not yet had the trustee sale. We also include those which are being marketed in a short-sale situation, even if a notice of trustee sale has not been issued. In a full pre-foreclosure situation, the owner(s) have received a notice of trustee sale and the property is being marketed in order to try to sell the home before foreclosure completes. Many of pre-foreclosures are in a “short sale” situation, where the price asked is lower than the outstanding debt secured by the home. Such sales require the approval of the lender. A few may also (or instead) be the subject of bankruptcy proceedings and the sale may require approval by the court. We generally refer to all these situations as “distressed sales”
- Normal sales are those where the owner has the unencumbered right to sell the property without requiring approval from a lender, court or external corporation of any kind, and the owner is not a financial institution. In a normal market these constitute the vast majority of all listings and sales. The degree to which these sales become a smaller proportion of all sales indicates the level of distress being felt in the market.