Last week, I read the headline to this article, Scottsdale home prices remain in a freefall, and shook my head. Regardless of the content of the article, I felt the headline was just "too much drama".
- Yes, Scottsdale is a different real estate market than the rest of the valley. It did not experience the dramatic drops in the past several years that much of the rest of the valley did.
- Yes, Scottsdale home prices have declined.
- Yes, Scottsdale has too many foreclosures and short sales, but they no where near the numbers found in many of the outlying area of metropolitan Phoenix.
Now that the Cromford Report is back in full production after a devastating fire, I’ll share some charts, and you can come to your own conclusions. For the this conversation, I’ll compare Scottsdale and Phoenix.
In 2007, when home prices started dropping , you can see that Scottsdale (the heavy line) and Phoenix (the lighter weight line) followed approximately the same path. These charts map out annual appreciation, based on the monthly average sales price / square foot. At the beginning of the year, properties in both cities were appreciating annually about 2.5% , but by the end of the year, properties were depreciating about 4-5%.
Moving ahead to 2008, you can see the dramatic depreciation that both Scottsdale and Phoenix were on a steady decline, with Phoenix depreciating at a much greater pace, ending the year at -50%, while Scottsdale was closer to -30%.
Then in 2009, depreciation continued, but started easing up significantly in Phoenix in March of that year. It’s significant, jumping from -60% to less than -10%. One could look at that and call it the beginning of a recovery.
And Scottsdale, experienced improvement too, and you will see that while real estate values started the year depreciating at a rate of 30% and rose to better than -10%, the city really never got hit as hard as Phoenix did.
This year, Phoenix real estate values has continued to improve. Prices per square feet are appreciating, from 5% depreciation rate to consistently appreciating at an annual rate of over 20% since March. Scottsdale continue to hobble along, depreciating at an annual rate of somewhere between 5-10%.
While Scottsdale price are still depreciating, they are by no means in a freefall, at least in my opinion. Competition is still pretty fierce in the lower price ranges, which has helped Phoenix much more than Scottsdale. At the same time, Scottsdale has not experienced the huge depreciation that Phoenix did.
I believe we’ll continue see bits and pieces of improvement throughout the rest of this year, but by no means do I feel the Scottsdale real estate market is in jeopardy.
Now, tell me, what do you think?
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