Scottsdale has a serious shortage of homes for sale right now. And cash buyers are out in droves.  In 2011, 47% of the more 100,000 home purchases in Phoenix were cash transactions.

I can talk through the past couple of days with you, just to illustrate the real situations that buyers are encountering.

Buyer made a full-price offer on a bank owned property that had been on the market for a LONG time (over 6 months). However, the bank had just took another major price reduction, so the property finally caught my clients’ attention. We wrote an offer.  The bank received multiple offers, so Best & Final offer was requested,  and while the buyer increased their offer to over list price, but other cash buyer went even higher. 

So we went on to Plan B, which in actuality was more like Plan J, based on the number of houses that they’d tried to purchase.  I call to set up showing for this property, but occupant says that she thinks the house might be under contract.  I call the agent who says, “Yes, we got six offers the first day the house was on the market, three were cash, all over list price.”

Needless to say, my client is now VERY frustrated.

I get an email and a call yesterday afternoon.  She says, “New house on the market today. We want it. Write the contract now.” I did and we negotiated to acceptable terms within the next six hours. Today, I hear that property has a  cash offer in backup position.

When we were in the boom years, people threw contracts at houses, with escalation clauses, and more and more money. And it’s not much different right now, and that seems really odd.

Interest rates are incredibly low.

There aren’t many houses on the market.

Prices are in almost the same place they were before the boom.

People still want to buy houses, yet have a much more conservative mindset.

Buyers are wanting to make sure they get a good value, but finding very quickly that values really are appreciating, and demand is very, very high for an inventory that is very, very low.

Sellers are getting savvy, and removing the appraisal contingency on purchase contracts. When this happens and the buyer is getting a loan, they must come up with any difference between the appraisal and the purchase price, if there is one. And in some cases, buyers are complying.

We’ve all been wondering when home prices would start to appreciate. Last year, we saw just over 6% appreciation in homes priced under $100,000.

Based on the dramatic change in buyer and seller perception over the past several weeks and months, it sure looks like me may see that appreciation creep up into higher price ranges.

As prices increase, more sellers will consider selling which will add to a desperately low inventory, and give some of these buyers who have been writing 5-10 offers, just to get one accepted, some hope that they may actually be able to buy a home. 

And in part, they will have some of the cash buyers who beat them out of their first home buying attempts to thank. Odd, isn’t it?

I was recently asked to share my experience with a relatively new national home search database provided to real estate agents who are members of the National Association of Realtors. Named Realtors Property Resource, or RPR for short, the database has an incredible amount of current and historical real estate information available.

For me, RPR proved to be invaluable when I was working with an international client, owning out-of-state property.  Using the system, I was able to quickly come up with an estimated value of his stateside property. And then, I discovered there was much more to the system than I knew.

RPR is another way that I can help buyers and sellers make smart decision in their real estate transactions.  If you’d like a Market Report for your home and neighborhood, just let me know.

Other home search options:

• Starting with a map
• Starting with a basic search
• Search for neighborhoods
• Search for new homes in Scottsdale

The number of active listings (housing inventory) continues to drop significantly in Scottsdale.

On April 27, 2011, the number of active listings in Scottsdale was 2,623 and thirty days later, the number had dropped to 2,409. This equates to a reduction on 8.7% in that time period.  Taking a longer term look, Scottsdale inventory for single family homes has dropped 22% in the last year.

And while home prices are not on the rise yet, there are some subtle indications that the Scottsdale housing market has stabilized, where the recent monthly average matches the annual average.

Buyer activity in Scottsdale remains high, even as we go into the heat of the summer months.  I have record number of clients flying in to town to purchase and I’m hearing the same from my fellow real estate agents.  We don’t have stats to document buyer interest, yet this is truly the first step in the home buying process.  Lookers turned into buyers pretty quickly in a active market like we are experiencing now.

I haven’t done a market report on Scottsdale 85258, home to the “Ranches”…. McCormick, Gainey, and Scottsdale.  In January, I posted this same chart in the post: McCormick Ranch Real Estate – Least Distressed Area of Scottsdale.

A few changes have occurred in past ten months, while some metrics stayed the same.

What you will see when you compare now and then:

1. The percentage of homes on the market that are foreclosures or short sales remain under 25% and in approximately the same ratio, with more short sales than foreclosures.
2. The percentage of sold properties that are short sales or foreclosures are about the same, approaching 33%.  However, foreclosures now make up a greater portion of those sales.  Even more importantly, 67% of the homes sold today in this part of Scottsdale are traditional sale, with no bank involvement.
3. The biggest differences you will see are in price. 
   • Homes were being listed at an average of $200-300 per square foot at the beginning of the year.  Now, that range is $175-250/sf.
   • Sold prices are averaging in the $150-200 per square foot range, while earlier this year, they were $175-275.  The biggest change has been in the short sales.

What is missing here are the number of sales that are being used to calculate these statistics.  I’ll be taking a look at those figures in the future.

For now, know that the McCormick Ranch is fairly stable, even though average home prices have dropped considerably.

Inventory (number of houses for sale) is decreasing steadily. However, looking at the Days Inventory, you can see that based on annual sales, it would take 367 days to sell all the current homes on the market.  Based on the recent increased sales volume, days inventory, based on monthly sales, is much lower at 227 days.  Could be a trend, but it will take more time to tell for sure.

Scottsdale home prices (based on a per square foot basis) continue to drop, and depreciation seems to be more extreme in the past two months.  These lower prices are fueling the increased sales, so while the local real estate market is moving, it’s not yet stabilized.

Scottsdale has lagged behind most of the rest of the valley in seeing these major price reductions, so it will be very interesting to see how the market fares over the next several months.

Related Post:  Scottsdale Real Estate – Out of Sync?