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.

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

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.

Today’s Altos Research reports show that my experience is pretty much in alignment with the rest of the Scottsdale real estate market. Altos has a proprietary formula, called the Market Action Index, which they use to monitor the market.  If the figure is above 30, it’s a seller’s market.  Below 30 is a buyers’ market. 

Scottsdale has been hovering in the 9-16 range for most of the summer, from mid-March through the end of July.  Beginning in August the market action started taking off, most significantly in the first quadrant of housing, which is the highest 25% priced homes on the market.  You can see that there’s significant improvement for all price ranges, with the lowest 25% of homes on the market leading the pack.

I did some further digging and have discovered that in South Scottsdale, the entry level of the market is doing VERY well.  I know from personal experience that there is very little inventory in the lower price ranges, and that homes in good condition, priced well, are selling quickly.  Last week, one of my clients lost out on a house with multiple offers. The house was on the market three days.  Excellent condition. Priced very well. 

The chart above represents market activity for entry level homes in the four most southern Scottsdale zip codes, 85257, 85251, 85250, 85258.  As you can see, entry level homes in 85257 (southernmost Scottsdale) and 85258 (McCormick Ranch) are seeing significant improvement, and we are approaching a much more balanced market in these areas.

Looking a bit more closely at the entry level home market in 85257, you can see that market activity has jumped as median home listing prices have dropped.  Three bedroom, 2 bath homes are now listed in this area under $200,000.  First time home owners and investors are back in the market.

We are approaching our fall months, where in years past we experience our second busiest home selling season of the year.  From the looks of things, I’d suggest that we are positioned for a great market for home buyers, where interest rates and home prices are still low.  It’s important to know that as the number of homes for sale continues to drop, selection will become more limited, and there will be more competition for homes that are priced well for their condition and location. This competition will determine where the bottom of the market is.  If you are a buyer, thinking about a purchase, please talk to your lender to see what loan programs are available, so you are ready to make your offer when you find a home. 

I do believe that this fall will be much more active, and that we’ll be seeing continued improvement in the Scottsdale real estate market.  For a real-time real estate update in your Scottsdale zip code, check out the up-to-date market report (Real Estate Statistics for Scottsdale 852xx) just to the right of this column.

Stay tuned. 

It’s a combination of all that, and more.

A couple months ago, I had a transaction fall apart on the day of closing. For all my efforts, I couldn’t save it. If you’ve ever skied, you’ll be familiar with being “on your heels”, not a good place to have your center of gravity when going down hill. Anyway, I can honestly say that I’ve been on my heels, afraid to offend, afraid to make a mistake, and stuffing a sock in my mouth not to share anything about what’s been going on in my world. All out of fear.

Fear is not any way to lead a life. Run a business. Be a parent. Write.

Which takes me right into my second reason for being so quiet on the keyboard. I have a son with autism, who was not diagnosed until he was well into his teens, after receiving special services and education since he was three years old. I left my successful corporate career over ten years ago, so I could be closer to home, to guide his development and education. At the time I resigned my position, my son was 95% unintelligible. Quite a talker, but no one, except his parents, could understand a word he said. We used American Sign Language, and I became quite proficient at augmentative communication devices. And, over time, Matt’s speech cleared, and his other challenges became more apparent.

Leave it to say that transitions are sometimes very difficult for him. School started mid August, and he is just now getting into his rhythm. Any parent with a child that has any kind of sensory sensitivities, OCD, or other social behavioral issues, will tell you that there are times that you just have to drop everything, and figure out what’s going with your child who lives in a different time-space continuum. Because, nothing else will move forward, until peace and harmony are achieved. At least that’s the way it is, in our house.

And then the third possibility I considered, was that I was just getting bored with blogging about real estate. So much has (not) happened in real estate over the summer. Yes, buyer assistance programs were voted out of existence (for now). And, we have a government assisted recovery plan, that includes a no-interest loan disguised as a home buyer’s tax credit. Buyers are still nervous. Home prices are still going down. Not much has really changed over the summer, or so it seems.

I considered that I might really have a stale outlook, but then thought of the many new clients that I have, the true adventures we’ve been experienced viewing homes, all the offers that we’ve been writing, and I realize that I’m not really bored. I’m just underwhelmed.

We all want something to change for the better. We do.

How we got here is old news. Where we are going is what people want to know. Now.

Sellers are pricing better. Buyers are making offers, with the market in mind. And agents are positioning real estate offers more.

This real estate market absolutely requires us all to be better communicators. The reality of a real estate transaction in Arizona is that the buyer and seller most likely will never meet or talk to each other. Real estate agents provide real-time, street-wise real estate knowledge and expertise, craft the offer, procure a contract acceptance, and manage a closing. Negotiating a contract to a mutually agreeable result and completion, requires communication, creativity, flexibility, and finesse, ultimately resulting in a meeting of the minds. And today more than ever, negotiation is a core skill that is needed, must be refined, and leads to a completed home purchase or sale.

We all need to work together. Today, I showed one of my listings to two separate couples, represented by another agent, who called me in a panic. She was out of town. My listing was perfect for both of her clients, and time was running short, they were ready to make a decision. Could I help her out? I have a motivated seller, in a short sale situation, so yes, I did work my schedule so I could show the house.

At the same time, I was negotiating two contracts. One for a buyer who has been looking for a home in Scottsdale for over a year. And another who is relocating to the Phoenix area for a new job. Both are very motivated.

(Some much for the holiday. I guess that’s why they call it Labor Day.)

Back to my original question….why do I write?

I write because I have things to share. Information that will help buyers and sellers make real estate choices more easily when they are armed with good, solid information. My mom raised me to “not say anything, unless I had something nice to say”, and I have to confess, this statement really pretty much defines who I am, 99% of the time. And with all the havoc in the real estate industry, I sometimes just hunker down and plow ahead, knowing that there are brighter skies ahead.

And when the skies clear, and there’s something promising, or insightful, or just plain cool, you can count on hearing from me. I’ll always have something positive to say.

Dear Seller,

I appreciate your feedback that I have undervalued your Scottsdale home.  I just want to take a moment to clarify my preliminary estimate of the selling price of your home, which can be very different than the market value of your home. 

My approximation of selling price is based on a number of variables, that include the experience that I have representing a good number of home sellers and buyers in this very tough market.  Even homes that are have high values are going at reduced rates, simply due to the extreme amount of competition.  Buyers expect to get a good price at a value that will hold fairly well in a depreciating market, so for the most part, they bargain hard.  If they do not find a middle ground with one seller, they just move on. 

It’s not the way any of us would like it necessarily, but more the reality of the current Scottsdale real estate market.  If you must sell your house in this market, and have found an agent who is confident that they can sell your house at the price you are looking for, then you’ve found a match.  I view my priority in working for a client to sell their house, not simply market it, and then request a series of price reductions until the current market value is found. 

In the end, neither the seller, nor their listing agent decide what a property is worth, it is the buyer, who makes an offer for what they are willing to pay, who decides the price and market value of the home.