by Dru Bloomfield on March 9, 2009
photo credit: Dru Bloomfield – At Home in Scottsdale
I’ve been pretty quiet on the blog-front this past month and a half. However, it’s been six weeks of massive action, and an introduction to the world of bank-owned (REO) properties, where the majority of home buying and selling appears to be occurring in the Phoenix metropolitan real estate market.
Last year, most of my business was in Scottsdale. In the past, I’ve worked in a much broader area, and this year will be similar. I currently have homes listed all over the Valley of the Sun, and about 75% of them are foreclosures, priced at $200,000 and under.
Our market has changed, and, in my opinion, Scottsdale is out of sync. Granted, it’s a unique city, land-locked, with many beautiful homes. Foreclosures are few and far between. Short sales are becoming much more common. However, as a whole, it’s not a moving market.
While home sales demand is increasing in Phoenix, Glendale, Mesa, and Goodyear, in Scottsdale it’s decreasing.
Click for full-size view of Scottsdale real estate supply demand graph
And, supply, or the number of homes on the market, is increasing.
Click for full-size view of Scottsdale real estate supply index graph
And when you look at the appreciation rates, comparing the City of Phoenix with Scottsdale, you can see that Scottsdale has experienced a much lower rate of depreciation, appearing to bottom out at about 20%. In Phoenix, the depreciation is much greater hovering at 40%.
Click chart for full-size view of Scottsdale vs. Phoenix Home Appreciation / Depreciation Rates
So, I’ve been pondering the reason that Scottsdale is experiencing a different real estate market. Do you think it’s because:
- Fewer number of foreclosures in the city, and many buyers are only looking at bank-owned properties, thinking they will get a better deal.
- Reluctance of Scottsdale home sellers to reduce home listing prices to incent on-the-fence buyers to make a buying decision.
- First time home buyers are looking to other communities where they can buy a larger and newer house for the same price.
- A trend towards smaller is better.
- Challenges in getting a jumbo loan (greater than $417K)
- General uncertainty and conservatism in spending.
I’m curious. What do you think?
by Dru Bloomfield on January 1, 2009
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)
Finally, you will see that while the Scottsdale area approached a more balanced market in the spring of 2007, it quickly changed into a very strong buyer’s market. That buyer’s market continued through 2007 and 2008. At times, it’s appeared that the market was improving. Sales were up in the fall, but that momentum does not appear to have been sustained in December.
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.
by Dru Bloomfield on December 8, 2008
Mike Orr at the Cromford Report continues to publish some of the best real estate sales data around for the Scottsdale and Phoenix areas. Today, I’m preparing a contract for a buyer and wanted to make sure I really had my finger on the pulse what sales prices have been doing in the area surrounding the home the buyers are planning to purchase. In completing my research, I pulled the following information out of one of the reports that ranks median price changes for each zip code in the valley. Here are the rankings for Scottdale single family homes:
Median Price Change by ZIP Code – Sep 2008
Single Family Detached
|
Ranking
|
Zip
|
Highest Annual Median
|
Date of High Median
|
Current Annual Median
|
% Difference
|
|
10
|
85255
|
$810,000
|
Oct-06
|
$716,500
|
-11.5%
|
|
14
|
85260
|
$570,000
|
Feb-08
|
$499,700
|
-12.3%
|
|
19
|
85262
|
$965,000
|
Feb-07
|
$819,500
|
-15.1%
|
|
23
|
85258
|
$651,250
|
Sep-07
|
$550,000
|
-15.5%
|
|
31
|
85257
|
$297,250
|
Jan-07
|
$245,000
|
-17.6%
|
|
32
|
85250
|
$387,500
|
Mar-07
|
$319,000
|
-17.7%
|
|
39
|
85259
|
$836,900
|
Dec-07
|
$680,000
|
-18.7%
|
|
47
|
85254
|
$529,900
|
Oct-06
|
$425,000
|
-19.8%
|
|
48
|
85251
|
$374,225
|
Aug-07
|
$300,000
|
-19.8%
|
|
77
|
85266
|
$960,000
|
Oct-07
|
$721,500
|
-24.8%
|
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.
by Dru Bloomfield on November 7, 2008
The Cromford Report is packed full of excellent real estate data for the Phoenix market. I’ll be incorporating this home sales information from Scottsdale periodically, since it highlights the current condition of our real estate market here in the Valley of the Sun.
Monthly Sales Analysis - Scottsdale, Arizona
You can see that the number of Scottsdale home sales have improved a bit recently. In September, we matched last year’s sales, and in October surpassed last year’s figure. From these year over year charts, you can see the huge highs from 2004, and what we hope is our five year low in October 2007. Seasonally, we are entering a slower sales period, so I do really hope this is a promising trend that continues moving forward.
by Dru Bloomfield on November 3, 2008
From Saturday’s Arizona Republic:
Bank of America, which last summer bought the nation’s largest subprime lender, Countrywide, has suspended foreclosure notices pending against nearly 2,000 homes across the Valley in the past week in an effort to help homeowners hold on to their property. And relief for even more homeowners is expected to follow.
Read the rest of the story at Bank of America agrees to halt 2,000 foreclosures in the Valley.
I’ve been working with a steady stream of buyers this year, and have shown a lot of homes and sold a good number. Some are short sales, others are foreclosures, and the remainder are owners selling because it’s time. Everyone is impacted by our current real estate market, so taking sometime to slowdown the foreclosures in the Phoenix area and possibly come up with some alternative actions is a positive one.
