Scottsdale Real Estate Market Overview

 

Scottsdale home buyers are starting out 2009 in a real estate market that is tilted very heavily in their favor.  If you click on the chart above, you will get a full-sized version of the report,  that’s a bit easier to read.  Single family home prices (excluding condos) have fallen and are now stagnated, and it’s taking quite a while (on average) to sell a house.

In the following charts, I’ve shown single family home prices for both 2007 and 2008.  I think what is most unexpected in this chart was the notable increase in listing prices.  For Scottsdale single family homes, median list prices started surging in fall of 2007 and continued to rise until warm weather hit in April 2008.  At this point, sellers dropped prices and held them at these lower levels throughout the summer.  This past fall, you can see that prices jumped again, but have tapered off and plateaued.

Scottsdale Single Family Homes - Median List Price Comparison 2007-2008 (Click to see larger chart)

No question that homes are taking longer to sell.  Here, you can see that our upward trajectory continues at a steady pace.

Average Days on Market - 2007-2008 Comparison (Click for larger chart)

Inventory (the number of homes on the market) grew steadily throughout 2007, and has continued to fluctuate throughout 2008.  You see that the end-of-year figures for 2007 and 2008 are very similar.

2007-2008 Comparison - Number of Single Family Homes for Sale (Click for better view)

Market Action for Scottsdale Home Sales - 2007 vs. 2008 (Click for larger view)

It takes a week or so for the previous months sales figures to finalize, and then we will be into the beginning of January.  One of the reasons that I like subscribing to the Altos Research reports is that using listing data gives a glimpse of what may be coming.

I’ll post the corresponding charts for condos tomorrow.

Definition of the Market Action Index, courtesy of Altos Research:

The Market Action Index (MAI) illustrates the balance between supply and demand using a statistical function of the current rate of sale versus current inventory. An MAI value greater than 30 typically indicates a “Seller’s Market” (a.k.a. “Hot Market”) because demand is high enough to quickly gobble up available supply. A hot market will typically cause prices to rise. MAI values below 30 indicate a “Buyer’s Market” (a.k.a. “Cold Market”) where the inventory of already-listed homes is sufficient to last several months at the current rate of sales. A cold market will typically cause prices to fall.

Median Price Change by ZIP Code – Sep 2008

Single Family Detached

Based on information from the Arizona Regional Multiple Listing Service between Jan 1, 2001 and Sep 1, 2008 © 2008 www.cromfordreport.com

Probably one of the most interesting findings from this real estate report is that while the number of home sales started decreasing in 2005, most of the median high sales prices occurred in 2007.

Or going?

I ran the First Responder Run to help the Arizona Autism Support yesterday, planning to run a 5K. Turns out that the 5K and 10K routes shared the same path and I missed the turnaround. Oops! As time progressed, I realized my mistake and decided to flip around, so I wouldn’t hold my family up who was waiting for me at the finish line.

I’ve been training and was really intent on improving my race time, and suddenly my plan was trashed. So I spent some time really enjoying my run and experiencing some of the free-form thinking that comes from being in that space.

Suddenly, I realized that my “mistake” was so similar to some of the real estate feedback that I’m hearing from some buyers who are trying to time the market and buy at the “bottom”. And my question is, have we hit the bottom (in some sense of the word), here in Scottsdale, but maybe missed the signs?

Take a look at this Altos Research chart on for Market Action in Scottsdale. In their proprietary calculation, anything above a 30 signifies a seller’s market. Interesting to see that we in an overall improving market, contrary to what some other areas of Phoenix and the rest of the country may be experiencing.

Changing Scottsdale Market

I have been working with several buyers who’ve decided that now is the time to buy and are closing this week.  One is a first-time buyer, another is purchasing a vacation home, and yet another is relocating to the area for a new job.  Other first-time home buyers and investors are still looking, knowing that now may be an ideal time to negotiate and buy.  As one buyer said last week,  even if the market trends downward for a bit longer, I’m planning on staying here long enough, that it doesn’t really matter to me.

So, the more important question to ask “Is now the right time for you to buy a house, a home, or an investment?”  Opportunities exist in any market, and only you can make the decision that is truly right for you.

It's all about building community.

Being a Realtor, a good one, requires that I keep up on the latest trends, not only in the real estate market, but also in business.  These days, businesses are discovering the value of connecting to their clients through blogs and other social media tools, like Twitter and Flicker.  It’s a way of communicating that is changing in our society.

You will find that when you work with me, that much of our communication is by email (or texting, if you choose).   I am a very early riser, and try to get my blogging and email completed then, before I head out for the day. 

For example, this morning, I emailed a client in Europe to discuss her inspection report and the repairs that she wants the seller to perform.  Another local buyer emailed me with an addendum that needed to be signed and returned to meet her lender’s requirements.  I responded to another inquiry from a buyer on the East Coast and was able to quickly answer her question before she headed to the office.   I still phone my clients, when it’s appropriate.  However, many of my clients prefer using email also, as it allows them to control their time better.

Now for the next evolution. 

Blogging and new media are the reasons I went to BlogWorld.  I like to write, it something I’ve done for years, and with blogging, I finally have a venue to share.  I also like to take photos, and now with a digital camera, I can take lots of photos, so that I have better pictures to share.  And, I guess I really do love to communicate, because twittering suits me just fine. 

So, what did I learn in Vegas, that you might really care about?

I learned about running my business better:

• by creating systems to manage my Internet-based work flow more effectively
• by renaming and tagging my photos consistently so you can find them easier
• and by writing with passion and transparancy, so that you can get to know a little bit about me before we decide to work together. 

I connected with a whole new level of communicators from many other fields of business, and from around the world. 

And what does that mean to you, as a potential buyer or seller of real estate? 

It means that you are working with a Realtor who likes to stay on top of the real estate market, and incorporate time-saving and forward looking business practices.  I like to sell real estate and love to do it well.  My job is much more than listing or showing homes, and more than writing contracts.  It’s really about connecting with my clients, the buyers and sellers of homes, so that I can give you correct, current information about the real estate market in a manner that you understand, so you can make smart choices in this sometimes, complicated world.

I like to share and interact, so if you’d like to contact me for more information about real estate, or blogging, or something about Scottsdale, in general, just do it.  Drop me a line via the contact form in the right hand column, or come see me at Twitter, Flickr, or Linked In.

Finally, I’d like to give credit to some of the presentors that graciously shared knowledge and expertise this past weekend.

Thank you to Mariana Wagner, Teresa Boardman, Pat Kitano, Todd Carpenter, Jeff Turner, and Kelly Kohler - I was so jazzed that I wrote this note on the flight back to Phoenix.

Thank you for RE BlogWorld

photo credit: wadem

As human beings, we have two sides to our brain.  Simplistically, I call them the thinking and feeling sides.  One side we use to crunch numbers, and the other we use to enjoy an aesthetically pleasing (or not) piece of art. 

When I work with home buyers, I remind them to use both sides of their brain when purchasing a home. 

To purchase a home, there’s a lot of number crunching that goes on.  Especially in this market, where a home buyer wants to be sure they are paying a price that will hold up in our changing economy and real estate prices are impacted both directly and indirectly by many factors.  Sometimes, it’s easy to get caught up in the decision making process on which home is the best buy, considering location, price, financing terms, and much, much more.

On the other hand, home buyers actually have to live in the property they purchase, so it’s really important  that they like (or love) the home they are purchasing.  After all, it’s where they are going to be waking up most mornings!

Several years ago, I was working with a younger first-time home buyer.  Her mother had flown out to assist her in her selection.  We all worked well together and narrowed the possibilities down to two condos in the same complex. 

At decision times like this, it can be very overwhelming for a buyer.  They are often often asking (many) others for opinions and recommendations.  The noise is their head can get very loud, making it tough to know what is right for them. 

The buyer and I met again to write a contract, and she was still torn as to which condo to purchase.  In this particular case, I asked her one simple question, “Which house did you imagine waking up in this morning?”  She smiled, and gave me her immediate response.  It was not the one her advisers had been giving her, but it was the one that was right for her.

In the past two weeks, I’ve written a number of contracts for buyers.  In two cases, there was one particular room in the home, that each buyer walked into, and connected with. You could see it in each of these buyers’ eyes.  And, it wasn’t anything that we could necessarily search for in the MLS system.  It wasn’t the fact that it had a great view, or an open kitchen.  It was that each of these buyers could see themselves in the home of their choice.  Plain and simple, they were looking for a space to live in, to accomplish their goals, to feel fulfilled.

So, when you are searching for a home on-line, know that this is just the starting point.  Unless you are an investor, who is looking totally at cash flow and the bottom line, you will want to find a house that works for you, both financially and aesthetically.  Even if the home is a fixer-upper, but has great bones, seeing yourself living there is a critical part of the process when selecting your next home.

Dream a little, work the numbers, and then decide.

I was not able to meet with the reporter since I was already committed to a board-related meeting, but the phone call reminded me that I have been challenged finding a home for one of my buyer clients.  Either the home is wrecked and overpriced, or it’s priced well and under contract before we can get to see it.  A slight exaggeration, but definitely a view of both ends of the spectrum.

Yesterday’s call did prompt me to email my database of potential home sellers in South Scottsdale.  For the most part, homes that are in my client’s price range will be in the zip code 85257, but there are a few in both 85251 and 85250.  I’ve done all sorts of searches, being as creative as possible, to make sure my client has seen what is available in Scottsdale’s real estate market.  So, I sent this email went to home owners in this area, seeing if we could find someone who’s been sitting on the fence, or maybe just found out they are being transferred to another part of the country.

I’ve been working with a well qualified, first-time home buyer, who is looking for a 3+ bedroom home in Scottsdale. Pool is optional, but a nice backyard is important. She can do a little fix-up, like paint and carpet. The kitchen layout is really important to her, as she wants to be able to cook, while still being able to converse with her guests.

Her preferred price range is $175,000 to $200,000.

In the past, you’ve contacted me to do a quick home valuation. Looking through my records, I see that your home might be a possibility, and am contacting you for that reason.

Please call or email me, if you might consider selling at this time and your home is in a condition that matches my client’s preferences.

We’ll see if I get any responses.  If you have a home that you’ve been thinking about selling, or know someone who does, and it matches my client’s needs, could you call or email me?

Thanks!

The same trend is holding for condos, although the shift occurred slightly earlier, in the May time frame.

A bit of positive news for sellers, and a reminder to buyers that this heavily favored buyer’s market will not last forever.