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?

Location, condition, and setting the right price are key, of course!

While sellers don’t want to “give their house away”, once they’ve made the decision to do it, getting the house sold is definitely the goal. The sooner the better.

Here are a few tips (all short videos) for Scottsdale home sellers:

How much is your Scottsdale home worth?

Common Home Seller Mistakes

What is home staging? Re-staging? Web staging?

Marketing Your Home Online

The dots in this chart above reflect the number of Scottsdale home sales in the previous 12 months. From cumulative sales of 5,086 in January 2001, to a peak of 6,915 in March 2005, and then a valley of 2,938 that extended from February 2008 to April 2009, the total number surpassed the 5,000 mark in November 2011.

Definitely good news for local real estate.

Taking a closer look, you’ll see that the Scottsdale real estate market has a seasonal fluctuation that peaks in the spring selling season.  Here you can see that from 2001 through 2011, the peak selling months in Scottsdale initially averaged about 600 home sales, peaking in 2003 at about 750, plummeting to a peak of just over 300 in 2007, finally approaching “normal” as of 2011.

2012 just may be the year that 600+ homes are sold in the peak month.

With the huge amount of business that seems to be flowing to me and the other agents that I work with in Scottsdale and the surrounding cities, it seems that this spring is could be a significant turning point in our market.

We can hope!

From a broader perspective, the trend is definitely to the positive, with a few intermittent months of plus-side appreciation, but still running in the negative overall.

Sellers need to keep this perspective in mind as they list their homes to sell in over the next couple of months.  Spring is Scottsdale’s biggest selling season and buyers are definitely keeping on top of the market. Writing offers that hold tight to what their perception of the local real estate market is today.

During the past four days, 45 single family homes were listed in Scottsdale:

Scottsdale Single Family Homes – New to Market Listings

and 41 price reductions took place:

Scottsdale Single Family Homes – Price Reductions

Many people assume that real estate transactions slow down over the holidays, but in reality, the sellers that are listing over the holidays are motivated, and so are the buyers. As of this morning, 12 new contracts are showing up for Scottsdale in the MLS, and that number will probably increase as the day goes on.

So while the rest of the country focuses on the retail markets, maybe it’s really time to focus on real estate, and you can start your Scottsdale Real Estate Search here!