2011 was definitely a turning point for the local real estate market.

Home prices are now on the upturn in greater Phoenix area, known as the Phoenix-Scottsdale-Mesa MSA (Metropolitan Statistical Area).

Last year locally, the median real estate price for existing single family homes dropped 10.2% from 4th quarter 2010 to 4th quarter 2011, making the Phoenix-Scottsdale-Mesa area 29th on the list of largest price declines in the U.S.

But then, look at what happened to local home prices in the 4th quarter of 2011, and you will see a huge improvement.

The Phoenix-Scottsdale-Mesa MSA is #4 on the list of  markets with price increases when comparing the 3rd quarter of 2011 to the 4th quarter of 2011.  Median home prices for existing single family homes increased 4.5% in the last 3 months of 2011.

Pretty amazing, but if you talk to any working Realtor, you’ll hear the same story. Lots of buyers and not enough homes on the market to satisfy the demand.

• Scottsdale Real Estate: Cash Buyers and Lack of Inventory Are Driving Home Prices Up
• Full Price Offer in 20 Minutes: Is a Seller’s Market Heading our Way?
• Phoenix Real Estate Market Update – Prices are up & inventory is still falling
• NO! The sky is not falling in Phoenix real estate

First, median home prices in Scottsdale are significantly higher than the rest of metropolitan Phoenix.  And this is a trend that’s held true over the past ten years. 

Median home prices in Scottsdale are currently in the $400K range, while Phoenix and other surrounding cities range from $100-200K.

The other interesting fact that for you to know is that Scottsdale weathered the downturn better than most surrounding cities.  While median home sales price in Scottsdale was about $300,000 in 2001, it’s still 33% higher than than 10-plus years later.  In comparison, Phoenix has dropped slightly over that time period.

Buyers often asked where they should purchase a home so that they can maximize their investment with the greatest appreciation. And while, none of us have a crystal ball, historical, Scottsdale home values have held their own and then some.

More on Scottsdale real estate and home prices:

• Scottsdale Real Estate Update: A Historical Look at Supply and Demand
• Get out your real estate crystal ball
• Where’s my Crystal Ball? Rent or Buy?

The dots in this chart above reflect the number of Scottsdale home sales in the previous 12 months. From cumulative sales of 5,086 in January 2001, to a peak of 6,915 in March 2005, and then a valley of 2,938 that extended from February 2008 to April 2009, the total number surpassed the 5,000 mark in November 2011.

Definitely good news for local real estate.

Taking a closer look, you’ll see that the Scottsdale real estate market has a seasonal fluctuation that peaks in the spring selling season.  Here you can see that from 2001 through 2011, the peak selling months in Scottsdale initially averaged about 600 home sales, peaking in 2003 at about 750, plummeting to a peak of just over 300 in 2007, finally approaching “normal” as of 2011.

2012 just may be the year that 600+ homes are sold in the peak month.

With the huge amount of business that seems to be flowing to me and the other agents that I work with in Scottsdale and the surrounding cities, it seems that this spring is could be a significant turning point in our market.

We can hope!

From a broader perspective, the trend is definitely to the positive, with a few intermittent months of plus-side appreciation, but still running in the negative overall.

Sellers need to keep this perspective in mind as they list their homes to sell in over the next couple of months.  Spring is Scottsdale’s biggest selling season and buyers are definitely keeping on top of the market. Writing offers that hold tight to what their perception of the local real estate market is today.

• Total sales exceeded 100,000 transactions up, exceeding our last “normal” years in 2002, 2003, and 2004.
• Total new listings of 121,041 also approached the pre-boom years.
• Months supply of inventory is also righting itself, and now hovers about 4-4 1/2 months.
• Pending foreclosures dropped significantly, and are now 60% below the decade high.
• Distressed sales (short sales and foreclosures) dropped from 70% of total sales to just under 60% for each of the final two months of the year.
• Short sales now exceed foreclosures.
• Median sales price increased about 5%, while average sales price inched up 3%.
• Unemployment started the year at over 9%, and dropped almost 1.5% through Novembers estimates.

All in all, these numbers paint a picture of a Phoenix real estate market that is strengthening and gaining steam.  Seems that 2012 is going to be a pretty good year!

Credit goes to the Arizona Regional MLS for these stats.  If you’d like to see their full report, complete with some very helpful charts, click here:  Stat 2011 Year in Review

Look at this chart for a striking view of the amazing free fall of total home inventory in Phoenix during 2011.  The heavier line shows that from a high of 42,881 in January to a low of 24, 712 in December, housing inventory has dropped over 40%.

No wonder buyers are saying things like, “I never knew it’d be so hard to find a home.” Well-priced homes are attracting buyers, and in some cases, houses are going over list. Really.  One of my clients offered 15% over list on an entry-level townhouse. Multiple offers. And his bid was not accepted.

Lack of inventory will create an interesting environment. While the last time around, the lack of inventory created a buying and selling frenzy, driving home prices sky high, this time around, both buyers and sellers are taking more time to make decisions and not rushing into a sale.

To read the full report: ARMLS Stat Report – January 2012

Here’s the latest Phoenix real estate market update from the Cromford Report:

• Except above $800,000, sales prices in $/SF are now higher than a year ago.
• Inventory is falling again for all price ranges.
• Above $400,000 demand remains relatively weak.
• Lender-owned inventory is still falling and REOs are losing market share in sales.
• Active short sales are fewer in number, with normal listings gaining market share.

And more specifically, by price range:

1. Homes under $100,000 – Low supply conditions heavily influencing the market. Sales prices are now 6.9% higher than last year.
2. Homes Between $100,000 and $200,000 -  Supply and demand both move lower. Pricing is still moving up.
3. Homes Between $200,000 and $400,000 – Supply has fallen and sales are perking up. Pricing remains extremely stable.
4. Homes Between $400,000 and $800,000 – Supply is down but demand not very strong. Prices stable.
5. Homes over $800,000 – Supply has stopped growing but demand remains weak. Prices remain remarkably stable.

For the full report, click here: The Cromford Report™ – Monthly Market Review – Dec 28, 2011