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”

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

Yes, I think the Scottsdale real estate market is insane. And not just Scottsdale, it’s Phoenix, Chandler, Mesa, Gilbert, and all the rest of the Valley of the Sun.

I’ve been working like a maniac for the month of March, and have seen so much craziness.  I feel for buyers who are totally challenged to find a home in our low inventory situation, and then who have to overbid to get one of the very few homes available.

Sellers on the other hand are starting to come out of the closet. And being surprised to find that they may not have to give their home away. That they actually have a product, their home, that’s in demand.

It’s total craziness.

For example:

• One of my home buying clients sent me their short list of homes on Friday afternoon, so I can set up showings for Saturday. I schedule the showings, and then Saturday morning, I check the MLS, just to make sure that all of the homes they wanted to view were still available. Three of the six homes they wanted to see were under contract, overnight.
• This same client now jokes cynically that if a house has been on the market over 20 days, there just must be something wrong with it.
• Another home buyer is telling that searching for her first home is like another full time job. Her frustration level has escalated, too.

Sellers, on the other hand, are calling the shots.  Setting a price to today’s market, one that’s realistic for the home’s condition and location, will almost guarantee multiple offers.

• Last night, I called to set up a showing for a Scottsdale home that went on the market a couple days ago.  The first allowed showings were for today.  As of last night, the selling agent said he had ten showing appointments scheduled for today, and that three buyers were ready to make offers, sight unseen. He was sure that the house would sell for over list price.

If that isn’t insanity, what is?

On the plus side, home prices are appreciating. Sellers who thought they would have to short sale,  and aren’t terribly “under water” can see that some day they may have a home with some value.

• I was able to help a seller last month, who thought she was going to have to short sale her Scottsdale townhouse.  We priced the home so that she could walk away without have to bring any cash to the closing table.  She got her first offer within days, and when the home didn’t appraise, she took a second offer that did appraise over the very same price two weeks later!
• And for another potential home seller, who thought she was going to have to short sell, we found that the estimated selling price of her home increased over 5% in just a couple weeks.

Nuts!

Some of my comments here are tongue-in-cheek. But, seriously, buying  a home should really be a highlight, not a chore, or a battle, or even a second job.

If you’re a home seller, call me! Let me tell you what I think the value of your home is today. And then, give you some ideas of what the market is doing in your neighborhood.

If you are a home buyer, yes, please call me, too. I will counsel you on what you need to do before you start your home search, and then also on strategies to get your offer accepted.

The real estate market is always changing, here in Scottsdale, as well as the rest of the world. We were hoping for a balanced market and looked how quickly it’s changed back to a seller’s market. And in only seven short years.

Amazing!

The number of homes for sale in Scottsdale has remained much more stable than other parts of the valley.  Due in part the the typical sales price of a Scottsdale single home, which is higher than all other cities in Phoenix Metro.

What I think is most interesting to note in this chart is that it shows that the inventory (i.e. number of homes actively for sale) for Scottsdale single family homes, is the dominated by typical homes for sale.  Green are the normal sales, blue signifies short sales, and red denotes lender-owned/REO properties.

Most buyers, just getting started, assume that they are going to get their best deal buying a foreclosure or a short sale. But as you can see, there just aren’t many on the market. And since the demand for these properties is high, it can make it difficult to purchase at previous bargain prices.

In our market, multiple offers are very common. And the number of days that it’s taking to sell a house is dropping like crazy. In Scottsdale, the typical days on market has dropped from 172 to 127 in the past year. Two years ago, Scottsdale had a 11-month supply of housing inventory, and today, it’s just 6 months.

So with the dominance of normal single family homes for sale in Scottsdale, as well as the steady supply, it makes sense for buyers to really focus on their needs and wants, regardless of the type of  listing it is.

For some tips home buying in Scottsdale, you can watch these short videos:

• First Steps for Scottsdale Home Buyers

• You found the perfect house – now what?

• Home buyers ask: “What happens after my offer is accepted?”

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?

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?