In the City of Phoenix, it’s very clear that prices are on the rise, with annual appreciation based on the monthly average of price per square foot, rising from almost –20% in June 2011 to +20 in April 2012.  That’s a 40% improvement!

Mesa has improved from the negative to the positive also, with current appreciation rates bouncing between 5 and 15% annually.

Tempe is showing huge gains, too. With prices steadily improving from almost –30% in February 2011 to about 15% currently.

Chandler is also on the rise, showing annual appreciation of over 20% in the past year.

However, the picture is not so clear in Scottsdale. In 2011, the market jumped from negative to positive appreciation twice! And has continued to improve for the early months of 2012. While the gains are almost as striking as the nearby cities, it’s not a consistent improvement, and has dropped off in the second quarter.

So, while appreciation in Scottsdale remains slightly positive, it still has not reached the double digit improvements seen nearby.  So, essentially, it looks like there’s an opportunity for researching and investing in the Scottsdale real market while it lags behind.  I’ll clearly state that I have no idea what the futures holds, but it is possible that Scottsdale homes will begin to see appreciation that other cities in Metro Phoenix have already experienced. Prices were slower to drop in Scottsdale, so it is quite possible that they’ll be slower to rebound.

More on Scottsdale and Phoenix real estate:

• Yes, the real estate market is crazy in Phoenix. Again.
• Phoenix Real Estate Update: “Absolute positive signs of what’s happening on the price front”
• Scottsdale Real Estate Update: “I only want to buy a short sale or a foreclosure”

Listen to Jim Sexton, Designated Broker of Realty One Group, share his real estate market insights for March 2012.

Some of his notable quotes:

• “Hot, hot, hot”
• “I could sell houses if I could find them, if they were on the market”
• “2 months supply of inventory”
• “Look for a continued strong market”
• “Absolute positive signs of what’s happening on the price front”
• Prices increased significantly in March

Recent updates on the Phoenix and Scottsdale real estate markets:

• Severe shortage of homes for sale in Phoenix
• Phoenix Real Estate Appraisers Having a Hard Time Keeping Up with Appreciating Home Prices
• Yes, It’s a Seller’s Market in Phoenix Real Estate

I had two phone call back-to-back this week.  Both potential buyers said that they only wanted to look at short sales and foreclosures Scottsdale.

While I tried to explain the realities of the current Scottsdale real estate market, I don’t think that buyers understand just how few houses are for sale, and how many buyers are competing for this limited inventory.  And that by eliminating 75% of the properties for sale, buyers are going to be challenged to find and win the bidding war for this limited pool of homes.

That’s not to say that it can’t be done. Or that it will be easy.

But, I do think buyers needs to know the facts about our real estate market.

Housing inventory in Scottsdale has dropped by 50% over the past 2 years.

Appreciation is now in the positive ranges, approaching 8% in late March.

Buyer are anxious to get in the market. With about 50% of the buyers paying cash, the appraisal contingency is no longer in play, and many of those buyers are more willing to go over the listing price. Buyers who assume that they can offer less, because they are paying cash, are not up-to-date on the current realities of the market.

So, if you want to buy a house in Scottsdale, I recommend that you look at all the properties that are on the market. Then, write a very strong offer when you find the house you want.

For more on getting your offer accepted in Scottsdale’s competitive real estate market, read:  Ten Ways to Get an Offer Accepted

From the Cromford Report:

March 8 – As home prices rise at an accelerating rate, we today hit $125,000 for the monthly median sales price (all areas and types) for the first time since August 12, 2010. The lowest monthly median recorded was $107,000. This was measured on February 24, 2011 and again on August 17 and 18, 2011. So the monthly median sales price has risen 16.8% in less than 7 months and looks likely to rise considerably more in the coming months. Appraisers are finding it hard to keep pace with this rate of increase as comps are out of date within a couple of weeks. This is similar to 2005 except we are starting with prices a very long way below 2005 levels.

From personal experience, I can tell you that it’s really an interesting and challenging time in the Phoenix real estate market.

As an example, I listed a Scottsdale townhouse in January, which had multiple showings, and an almost full-price offer within the week.  The buyers loved the house, but not enough to pay the difference when the house appraised at $7,000 less than the purchase price. The house went back on the market, and a second buyer placed the same offer almost immediately.  When his appraisal came in several weeks later, the house appraised for OVER the purchase price.

If I put that same townhouse on the market today, I suspect that it wouldn’t last a day, it would have multiple offers, and that at least one of them would be over the listing price.

One of the really good side effects of the appreciation is that owners, with homes that are borderline short sales, are now able to see the light and start planning to sell, without the repercussions of a short sale.

It’s a crazy time to be a buyer, or a real estate agent for that matter, but in the grand scheme of things, this appreciation is very welcome and another step on the road to a more balanced market.

It’s very much a seller’s market in the more affordable price ranges in Phoenix. Homes are flying off the shelf, and it’s difficult for home buyers with financing to compete with those paying cash.

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?