What’s the one thing that almost every Arizonan has in common? They are not from Arizona! The Valley of the Sun is a (nearly literal) melting pot of people from around the country and around the globe. Whether for a job, health, the climate, or just a change of scenery, people have flocked to the Valley for the last several decades. As this burgeoning city grows and matures, we will certainly begin to see the culture develop into a life of its own! Scottsdale is full of dynamic personalities, friendly faces, and blossoming new friendships. Recommended Scottsdale Family Communities: Desert Mountain, McDoweel Mountain Ranch, Buenavante, 85254
Phoenix, as a city, was designed for efficiency. Credit the city’s modernity, forward thinking founders, or just chance…any way you slice it, there is no city in the world that is so expansive, yet so easy to navigate and so convenient. Scottsdale, being the most desirable suburb of Phoenix is absolutely perfectly positioned for both convenience and seclusion. In just a few minutes, one can easily travel from their home in Scottsdale to almost any section of Phoenix. Eat your heart out, Los Angeles! Recommended Convenient Scottsdale Communities: Buenavante, Sweetwater Ranch, Scottsdsale Ranch, McDowell Mountain Ranch
The shopping in Scottsdale is truly world class. When it comes to shopping, you will only be limited by your imagination and your pocket book!
1st stop: Scottsdale Fashion Square – with all of its glitz and glamour, this is shopping at its finest. You will find everything from the big department stores such as Nordstrom and Macy’s, to high-end boutiques and everything in between.
2nd Stop: The Borgata – featuring small-scale, high-end shops with all of the charm you could ask for. While at The Borgata, be sure to visit The Shops and Hilton Village. You will find a one of a kind shopping experience along with delicious eateries and plenty of places to pamper yourself.
3rd Stop: KierlandCommons – If you still haven’t found what you’re looking for, head north to Kierland Commons, a unique and tasteful outdoor urban shopping experience. This high-energy sidewalk shopping environment will certainly be the perfect ending to your magical day of shopping. Recommended Scottsdale Shopping Communities: Kierland, Gainey Ranch, McCormick Ranch, Windsong
Scottsdale boasts some of the finest resorts in the world. Luxurious getaway destinations include The Phoenician, Xona Resort, Boulders, Hyatt Regency Gainey Ranch, and The Scottsdale Resort (just to name a few). Along with these high-end resorts come world class amenities. Spas, fine dining, music, golf, relaxation, sparkling pools with cabanas, gondola rides…the list goes on and on. Locals also take advantage of these amenities. Many of the resorts offer discounts for Scottsdale residents to come and use their spas and other facilities. It’s like living at a resort! Recommended Scottsdale Resort Communities: The Boulders, Desert Mountain, Artesia, Legend Trail, The Reserve
Known as “the best run city in the world,” Scottsdale maintains a sense of safety, security and cleanliness unmatched in Arizona. Scottsdale City Managers have taken great care to maintain the features and virtues that have made this city great. Billboards and other advertising eye-sores are not allowed in city limits. Development must adhere to strict guidelines in order to insure that Scottsdale residents will be able to enjoy this fantastic city for years to come. HOAs also do their part to maintain the highest standards in Scottsdale communities. Recommended Scottsdale HOA Communities: The Trails, Ancala, Desert Mountain, Pinnacle Peak
Scottsdale is world-renowned for its fantastic golfing. Locals like PGA legend, Phil Mickelson have helped to turn Scottsdale into Golfdale. With more than 25 public golf courses and dozens more private ones, there are enough links for everyone. Vacationers travel to Scottsdale for their amazing resorts, shopping, relaxation, and GOLF. It’s not uncommon to spot a celebrity like Alice Cooper or Michael Jordan playing at one of the local courses. It’s no wonders why the Phoenix Open has become the single largest golf event in the world! Recommended Scottsdale Golf Communities: Wildfire, Whisper Rock, Troon Village, Desert Highlands, Estancia
Scottsdale’s nightlife is unmatched in Arizona. Old Town Scottsdale is a nightlife mecca for visitors and residents alike. Featuring world class restaurants, trendy bars, and fabulous night clubs, Old Town is a one stop shop for a good time. For those who still want to get out and have fun, but want to keep it low key, there are plenty of hidden gems throughout Scottsdale. Authentic, western themed hot spots like Greasewood Flats and Pinnacle Peak Patio can be found in Scottsdale along with chic and modern spots like Kierland. There’s something for everyone here! Recommended Scottsdale Nightlife Communities: Kierland, Old Town Scottsdale, Woodleaf, Pinnacle Peak Estates
I’ve heard it said that Scottsdale real estate is the safest investment in town. Even in economically uncertain times, Scottsdale remains one of the most desirable places to live. All of the individual attributes that make Scottsdale so unique also keep property values at a premium. Recommended Property Value Communities: 85254, DC Ranch, Scottsdale Horizons
Early on in Scottsdale’s history, residents knew what a gem this city was. There was something almost magical that made this city special. In the spirit of the West, they developed the land and replaced dirt with grass, cactus with trees, and deserts with lakes. High-end Master Planned Communities and world-class golf courses began to pop up in this picturesque city. Southwestern architecture took precedence and the man-made beauty abounded even more. Recommended Scottsdale Lake Communities: Gainey Ranch, McCormick Ranch, Scottsdale Ranch
From the Boulders in Carefree to the McDowell Mountains to the vast Sonoran Desert, Scottsdale is full of natural beauty. Residents covet the breathtaking mountain views that accompany many of the high end homes in Scottsdale. Because much of Scottsdale is higher in elevation the rest of the Valley, it is not uncommon to find a home with one view looking up at the McDowell Mountains and another view looking down at the Phoenix city lights. Recommended Scottsdale View Communities: Troon Village, The Boulders, Ancala, Desert Mountain, Pinnacle Peak Village, Grayhawk
In a perfect world, a local real estate market would be a balance of buyer and seller supply and demand, with reasonable annual appreciation. The Phoenix and Scottsdale area has had a consistent six-year run of just such a market between May 2014 and June 2020.
Then, in early 2020, we had a global pandemic and predictably, per all of us experts anyway, real estate values declined – for all of 2-3 months. I’m not just talking about Phoenix, Arizona, but nationwide as well.
At that point, the market decided to release its foot off the breaks and apply the pedal to the metal, sort of like popping a wheelie, and laying rubber simultaneously to hit new pricing records within two years. It went from a reasonably healthy and consistent market to one that’s out of control. It had also become unaffordable.
Brakes Applied Again!
Over the past few months since spring, the breaks have once again been applied. A slowing market has returned, and we have now entered a balanced market. But not everywhere. Per the Cromford Report, Surprise, Gilbert, Tempe, Maricopa, Litchfield Park, Buckeye, Queen Creek & San Tan Valley are buyer’s markets, while Fountain Hills, Paradise Valley, Scottsdale and Cave Creek are seller’s markets.
If you check out our weekly Cromford Market Index today, which takes into account our entire Phoenix Metro area, you’ll see that we have fallen just below 110. A rating of 90-110 is a balanced market.
The question now is where we’ll go from here? Can this be a sustained slower growth market, or a quick touch and go back to a rabid seller’s market as we did 30 months ago? It’s also very possible that we continue slowing into a full-fledged buyer’s market. This is a possible scenario, although there are some indications that the slowing is slowing. Either way, the rate of downward pricing will still be felt for a while, especially in the trailing sales price numbers.
No one can deny that we have now seen price corrections in the Phoenix metro market. On the street level I myself have seen weaker demand affect our listings. We have three different listings which we’ve now got under contract, that I am confident we could have got at least $20,000 to $50,000 more for if we had listed two or three months earlier.
While this is good news for buyers, there is also some good news for sellers, though it might be underwhelming.
What’s the good news?
It’s getting worse much more slowly! “Well Jonathan, that doesn’t seem very exciting…” Hear me out. Over the last two or three months, we have had weekly deluges of new listings hitting the market. At the same time, demand dropped big time.
Over the last two or three weeks however, new listings have begun hitting the market at a much slower pace, easing the rapid inventory increase. In fact, when I checked the MLS this morning for single family listings, the amount was almost the same as last week. I should note that when factoring in all the other housing types, the total amount rose. This may suggest that the situation for single family homes is healthier than other sectors of the market.
In addition to this, while demand is still dropping, it looks like it may be balancing out. In some zip codes, we have seen a slight increase in demand over last week and the week before. One example is Cave Creek, which is in a better place market wise than it was a few weeks ago.
To my view, it looks like we may be nearing the bottom of a curve in terms of the overall supply and demand issue.
But this is just one potential. There are many variables that can tip this either way. What are some of those variables?
Affordability
As far as we can tell, overall affordability is the largest factor in the current demand reduction.
Interest Rates: They’ve been fluctuating up and down pretty erratically over the last few weeks, and we don’t really know where they will be going. If they spike higher again, that may cure me of my delusions all too quickly. If they edge lower we believe a new wave of buying could be opened up.
Price drops: The recent price drops we’ve been experiencing, as well as seller’s willingness to now help out with a buyer’s closing costs is helping out with affordability for buyers. There is a returning trend right now of sellers helping buyers to buy down their interest rates, which can help lower payments significantly.
Inventory
The overall supply is still a little below what we would say is average for the phoenix market, but it’s not far from that.
Homeowner Panic: Will sellers panic and rush to sell, trying to cash out while prices remain high? Maybe, but my big question is, where would they go? Renting isn’t a very attractive option right now either, and if they just go buy another home, unless it’s out of state, the market here won’t be much affected.
Institutional investor panic: While they’ve slowed down and not paying top dollar anymore, the ibuyers, as we call them, are still buying. We haven’t yet seen a mass selloff. Rents have come down, but overall still much higher than they were a few short years ago. Phoenix real estate seems to remain a valid choice for investors.
Small investors. If there is a big sell-off, we think it would most likely come from ordinary folks that have one or two investment properties, trying to offload them.
The reality is we are still in a chapter of change for Phoenix Area Real Estate. It seems to me the chapter is about to end, but there is another chapter coming. I’m hopeful it will be a boring chapter unlike the last one, but stay tuned to find out!
The current talk of course, is all about the Phoenix (as well as the country’s) real estate market dropping in value – and it is. See article out today here.
Question? If you’re a renter, should you renew your lease (continue to rent) or opt into the more buyer friendly market happening now?
At some point, you’re going to buy a house, that much you know. You tried this past year and got turned off by the mega-competition offering on homes for sale, so you signed a lease on a home or apartment, because trying to rent a house, was just as competitively bad as buying.
It’s tempting to wait and renew that lease for another year. After all, your wise landlord should be done raising your rates for now, seeing that the rental market is softening as well. And home sales prices continue to trend downward in pricing. On the one hand you would not be faulted to sign a year’s lease and stay where you are, unless of course, the Geico renters upstairs are forever dance clogging LoL:
But things have changed, radically and quickly. (See Numbers Below) Now what should you do as your lease comes up for renewal?
All that said, or danced to, there’s a strong case for house shopping sooner than later. Remember, with over 45 years in the residential real estate market, I’ve been to a few real estate market rodeos. One thing about Phoenix residential real estate, predictable it’s not. There’s no smart money to bet on here.
There are however some things to think about:
Due to inherently strong Phoenix demand, demand will return
When demand returns, and it could be soon, competitive bidding returns
When competitive bidding returns, you’re back to square one.
With over 100 homes coming on the market each day – You have choices
Currently, unless a deal comes up that’s a real deal, you may (probably) are the only one ready to make an offer.
Sellers are much more open to lower than asking prices and terms
Contingencies, such as selling a home first, are also considered, especially if your home is already under contract.
What would it take to flip the script back to a seller’s market? Not much. For one, an interest rate dropping to 4% would, in my opinion re-open the flood gates. Just as sellers are now bemoaning missing the top of the price market, buyers will likewise become very disappointed for not taking advantage of this window of opportunity now. But will that happen in a few months or a few years, or ever? The Lord knows!
There is however, a really strong case for getting back into the buyer market now: If you actually find the home of your dreams that you can see yourself enjoying for many years to come, and you’re able to secure that home and begin that enjoyment now, what is the value of that?
The “Dog Days of August” are upon us. With that delightful news, let’s take a look at the Phoenix Metro “Dog Days of Data,” which, if you’re in the Buyer’s camp, the trending good news continues. If you’re in the Seller’s camp, well, compared with one year ago, your home’s value has risen over 10%. This is over twice the annual average appreciation of the last 25 years!
The not-so-great news is that the top of the market has peaked. It’s in the rear-view-mirror. Put that out of your mind. Adios!
When did it peak? Back in May. (The Cromford Report) On May 22nd, the average sales price per square foot (See Chart below) topped out at $306 per square foot (PSF). Last week according the to the chart, we were at $290 PSF – a 5% drop in two months. Actually, the market peaked 30 days before that (mid-April), due to typical 30 day closing lag time.
Now there’s a caveat to what I just expressed. You’ve heard us say for years, that ‘all real estate is local.’ The data we generally use is the ‘Phoenix Metro’ single family residential real estate market. Every zip code is different. Every community within a zip code is different. And finally, every residence within a community is different.
Interestingly, some higher end markets are currently the slowest to be dropping, including Paradise Valley, Fountain Hills and Cave Creek. Along with those cities, Scottsdale, Avondale, Goodyear, and Mesa are still technically in a Seller’s Market, but are heading towards balance shortly. Currently in balance are Phoenix, Glendale, Peoria, Chandler, Surprise, Tempe, and Gilbert. Most of these in balance will be in a buyer’s market next week at the current rate of price drops. This is how quickly the market is adjusting.
Communities that are now in a firm Buyer’s Market are Buckeye, Queen Creek and the town of Maricopa.
So, to end with a positive spin, buyers, your time to get back into the market is soon, if not now. Let’s get you set up with a daily automated list of homes to view online – available supply of homes are increasing daily. Mortgage rates have actually dropped as well. We’ve also seen a large drop for the price of gas at the pump, which may mean lower inflation, which could mean even lower rates ahead.
The Cromford Report reports that on March 16th, of this year, the Greater Phoenix Metro cities totaled 4,367 listings. Just over 4 months later, we now total 16,235 current listings and growing. The following housing styles and their listing supply increase:
Single-family Detached – up 344%
Townhouse – up 370%
Apartment-style – up 288%
Gemini / Twin – up 130%
Loft-style – up 240%
Patio Home – up 257%
Mobile Home – up 65%
Modular / Manufactured – up 20%
Many of our cities are now in the “Balanced Market Zone” and some, including Buckeye and Queen Creek are now in a “Buyer’s Market.” This incredible speed from Seller to Buyer’s market is historic.
Good news continues for prospective Scottsdale and Phoenix renters who haven’t gotten much of a break over the last few years. The long-term rental supply is growing… QUICKLY! There are over 2,900 active rental listings (on our local MLS). This is an 18% increase in just one month, up from 2,463 rental listings last month.
This means that renters will have more choice with less competitive bidding. And if you’re looking for single family detached (SFD) homes to rent, those numbers are increasing the fastest. 2,088 of the 2900 total rentals listed, per the Cromford Report, are in the SFD category.
And what about rental pricing? Pricing is on the downward slide as well. The average rental asking price in the MLS is down to $1.57 per square foot (PSF), compared with $1.63 PSF last month and $1.94 one year ago.
It’s really important to get the word out to folks about the changing rental market. Many may believe that the market is what it was 6 months ago. Not so. This is a radical change occurring as we speak .
Terrific communities encompass the 85259 Zip Code. If we were speaking geographically abou tit we would say that it’s located in the East Central part of Scottsdale. Some folks may wonder then, why we include the 85259-zip code in North Scottsdale? The same folks rightly ask the question about 85254, 85258, and 85260 as well? After all, if you look at the long (32 miles) city of Scottsdale, you’d see it to be more central or South Central than north.
It was not too long in Scottsdale’s past (1960’s) that if you lived around Shea Blvd, that was considered “nose-bleed” country. Even McCormick Ranch (85258) was considered pretty far north from Old Town.
So the answer seems to be that for many of us who have been here for awhile, these zip code communities were a part of North Scottsdale.
85259 Zip Code contains numerous upscale communities, such as Stonegate, The Ancala Country Club, portions of Scottsdale Ranch, Scottsdale Mountain, Cactus Gates, Rancho Trinidad, Hidden Hills, and Bella Montagna.
Mountain and City light views, terrific convenience to recreation, shopping, golf, and health facilities abound. In fact, some folks refer to the Shea Blvd N/S dividing line as the “Medical Mile” with Honor hospital and the Mayo clinic plus hundreds of all types of medical offices within a few miles.
Schools are excellent in the 85259 community which includes Desert Mountain High and Middle public school. One of the highest rated schools in the country is the Basis Charter School encompassing grades 5-12. Anasazi Elementary is another excellent choice.
As of the summer of 2022, 71 homes were listed for sale at an average list price per square foot (PSF) of $480. Under Contract listings average list prices PSF are $430, while closed median sales over the past 6 months averaged $1.085M.
Our market is changing. When updated in July, we’ll see greater listings and fewer sales, reflecting a Valley and National trend.
85259 Real Estate as of June 1st 2022
Today Last Month Last Year 1 Year Change
Active Listings: 71 60 66 +08%
Listings Under Contract 49 48 60 -18%
Sales Per Month 42 55 57 -26%
Sales Per Year 541 556 598 -10%
Months of Supply 1.1 0.7 0.7 +4 Months
Annual Appreciation Median 23% 21% 19% -4%
Median Annual Sales Price $1.085M $1.050 $880K +23%
Considering Buying or Selling in North Scottsdale or the Northeast Valley. Give Mike a call at 602.689.3100 or send an email to: [email protected].
The “short-term” outlook for our Phoenix Metro residential real estate market seems determined to continue a steep drop in sales and a downward adjustment of pricing. This is due to the meteoric rise in listing inventory caused in large part by the doubling of mortgage rates in less than a year along with the huge rise in home values. As usual, most of our data supplied is with much thanks to The Cromford Report.
First, we must look at the supply of unsold listings. We have 15,500 active listings currently unsold. The inventory market peaked, or in this case, shall we say, bottomed out, in March which had about 4500 listings. This translates to an increase of nearly 250%. While we are still lower than the long term average in terms of total active listings, that could change soon at the current rate of change.
The number of downward weekly price changes is astounding. Historic. At the beginning of the year, the number of weekly price changes were under 400. For the week ending January 30th, for example, there were 374 price changes. Less than 6 months later, this last week, has seen 3703 listing price reductions. That is a 900% increase! (See Chart below)
And what about pricing? Though it’s still early before we can really get a firm grip on this, we can nonetheless already see downward pricing movement. Remember, final sales price, or final sales price per square foot (PSF) is a lagging indicator. The monthly average PSF peaked at $306 on May 22, 2022. Within two months, it’s dropped to $290 PSF, or 5%. With the record number of price reductions happening, we can count on a additional downward pressure on values.
Well Mike, what’s the “mixed” part of the message? Looks like a seller’s downer to me. Glad you asked, I think.
Based on current listings that are in a “pending” status, which means they are under contract, in escrow, Cromford is predicting a short-term bump in values to $295 PSF, due to current higher priced of the homes under contract. But this is short term.
In a rising and heated sales market, almost any agent can look like a genius sales guru. You may mess up inputting your data into the MLS, you could take house photos with a 10-year-old cell phone, you could fail to follow up with phone calls to your client, fellow agents, and the buying public, and not even get a “for sale sign” on the property for 5 days, and still, you’ll be deluged with a dozen or more offers on the property, with many of them over asking price. Agent is hero. And sadly, many of these “agents” believe their own self-imagined press releases.
It’s been a market where gimmicky sales approaches will thrive, then dive. 5 Star agent google ratings will plummet from the skyscraper to the basement – assuming they are ever shown to the public. If you thought you weren’t hearing from your agent very often before, you ain’t seen nuthin yet.
Advantage of Experience and the Longview
One advantage of having been an active and productive real estate sales professional for over 45 years is that I’ve seen it all – that is until the next thing that I’ve never seen before comes along. These days, that could be yesterday. 😉
But now the market is changing. Supply (listings) are rising quickly, (see chart below). Demand is diminishing. Pending sales, closed sales and listing prices are dropping.
“And as a sure sign of the Apocalypse, builders are cuddling up to Realtors to get us to bring our buyers back to them.”
We’re now seeing layoffs happening. Re/Max, one of the largest franchises in the country is laying off 17% of their support staff. (https://www.marketwatch.com/story/remax-to-cut-17-of-its-workforce-2022-07-07) The mortgage industry has now laid off hundreds of thousands of jobs nationwide. Title companies are shedding thousands of jobs. And as a sure sign of the Apocalypse, builders are cuddling up to Realtors to get us to bring our buyers back to them.
Before we engage in our Phoenix Metro market discussion, let’s take a look at June’s stats to get you somewhat up-to-date, though with the way the market’s so quickly moving, we might be out of date before the fireworks fly this evening. And oh, by the way HAPPY 4TH OF JULY!!!
Compared to last year at this time, listings are up 153%. Listings under contract have dropped 16% from last month and are down 24% versus a year ago.
According to the Cromford Report, “The rise in supply has been faster than ever seen before…the change in demand was equally stunning.”Compared to last year at this time, listings are up 153%. Listings under contract have dropped 16% from last month and are down 24% versus a year ago. In addition, monthly sales are down 21% from one year ago, and 8% compared with last month. That monthly sales number will drop more next month.
Keep in mind, that “pending” and “sold” stats are “lagging indicators.” Pending deals went under contract over the past several months, and a number of them had “locked” mortgage rates that enabled them to close at a lower than current lower rate. Sold deals went under contract 3-4 months prior to now. Next month and beyond we’ll see more of the reality of the market.
One segment of the market, per Cromford, that has upheld sales has been the iBuyer market, which are large companies (Offerpad, Opendoor, etc) still buying. This will, or should change, or we’ll see continued heavy losses by these companies. These companies create two deals for each house they buy, as they turn around to try and quickly sell it. This contributes to a higher skewing in sales numbers.
Builders are again being nice to Realtors, inviting us to bring our clients their way which is a stark difference over the past few years. They’ve gone from rationing their product only a few months ago to needing incentives such as mortgage rate buy-downs to coax buyers to sign up or keep their existing orders. Alas, there is nothing new under the sun.
According to Cromford’s “Contract Ratio,” our market has now entered the top of the “balance range.” At the current rate of downward speed, it’s anyone’s guess if (when) we re-enter a “buyer’s market,” but it’s likely to happen sooner than later.
