Last week, a client and friend emailed me a great and timely question, and yesterday the answer came. First, his question:
“Hello Mike, Obviously buying anything now is anything but easy, but are there any areas…of town whose prices haven’t gone as far to the moon as the rest or is it all equally bad?”
His question is probably on the minds of many these days. So, we look to Cromford’s Ranking Table published yesterday, March 13th, 2022 which ranks the 40 cities of Phoenix Metro. The Annual Average Price Per Square Foot (PSF) is what is compared with the previous PSF at the same time last year. It is ranked from highest PSF to lowest. Important to note is that these ranked homes are single family detached – not condo, townhouse, etc.
What sticks out to me is, and has been no surprise for many years, is the Northeast Valley, which is the highest priced geographical quadrant in Metro Phoenix. Paradise Valley, one year ago had a PSF of $471 (numbers rounded). It rose 30% to $613 presently – a 30% increase. Scottsdale follows with a 29% PSF increase ($410 vs $318). Carefree, Rio Verde (NE Scottsdale), Fountain Hills and Cave Creek round out the top 6 cities – the only cities priced over $300 PSF – all rose over 25%!
The other non-surprise is that many of the most affordable cities per PSF, are those located out of town. Seven more distant cities that are priced under $200 PSF are those further out. Interestingly, the two highest PSF increases were out there in Coolidge and Tonopah – at 40% and 42% respectively.
Oh yea, Tonopah, (aka East L.A.) is near the place that Bill Gates guy bought 25,000 acres in 2017 to develop a “Smart City” known as Belmont. Oh, and isn’t that area right near the proposed Interstate 11 which will traverse from Mexico to Canada some century? Hmm.
Our market is providing mixed messages. Here are the basic numbers as reported by the Cromford Report last week comparing March 1, 2022 and March 1, 2021 forall areas & types:
Active Listings: 4,588 vs 4,491 last year – up 2.2% – but down 5.9% vs 4,876 last month
Under Contract Listings: 12,050 vs 12,630 last year – down 4.6% – but up 6.6% vs 11,302 last month
Monthly Sales: 8,000 vs 8,035 last year – down 0.4% – but up 12.7% vs 7,096 last month
Monthly Average Sales Price per Sq. Ft: $285 versus $231 last year – up 23.1% – and up 3.6% from $274.70 last month
Monthly Median Sales Price: $445,000 vs $349,000 last year – up 27.5% – and up 2.7% vs $433,500 last month
Days of Inventory: 17 vs 16 last year vs 39 two years ago
First off, the supply of active listings, though up 2.2% from one year ago, fell 5.9% from last month. This limited inventory continues to spell bad news for buyers. Under Contract Listings dropped 4.6% compared to last year but were up 6.6% from last month. Sales dropped slightly from last year but were up a whopping 12.7% compared to last month.
And for those hoping there would be moderation in pricing, it’s not happening yet. The average monthly sales price per square foot (PSF), now at $285 PSF, was up (just?) 23.1% from last year, but launched upward 3.6% since last month. Calculating that on an annualized basis, that would be an increase of 43%. The monthly median sales price was up 27.5% from one year ago, and up 2.7% since the previous month – an annualized increase of 32%.
Rental Market Showing Signs of Softening?
Cromford reported over the weekend that the ARMLS (Arizona Regional MLS) rental supply has increased 39% compared to one year ago. (1543 to 2138 units) It should be noted that most rentals do not appear on ARMLS, but the numbers are significant enough to look at trends.
Supply is arriving faster. New rental listings are up 20% compared to 2021. In the last 4 weeks alone, there has been a 26% increase in new rental listings. The average lease list price shows a drop of $1.80 PSF from $1.93 one year ago. Single family detached homes to rent are up 99% – a significant increase, but apartments to rent are down 33%
Cromford further notes that the most likely supply of single-family homes to buy could come from wary investors finding it more difficult to rent the homes. This could happen if they’re finding it difficult to get tenants or the rent pricing falls.
On the other hand, the latest ARMLS PSF for places actually rented has now hit a new record of $1.38.
Well today is the near Ultimate Twosday, 2-22-22. I suppose the ultimate, ultimate Twosday would be 2-22-2222. But, hey, this is close enough.
So here’s your Bodeen chuckle for the week. Let’s go back to 1969, with that one hit wonder from Zager and Evans: “In the Year 2525.”
Enjoy:
Now I’m not implying that our market will reach “normal” in 200 or 503 years, but it won’t be anytime soon, either. We’re showing two charts today with converse directions: The Greater Phoenix Metro current market “median sales price,” and “Days of Inventory.”
First we’ll look at our current median sales price:
According to the Cromford Report, our Median Sales Price continues to rise to a present day $445,500, which is up from $350,000 one year ago – a 27% increase. Will this change? Yes, it will, but the change will look like 2001 to 2004, where there was a 21% change – over three years — or, 7% per year. And it could take a while to commence that line. 6 months? A year? Longer, before that modest annual increase sets in?
Can we begin to see when the market will change? Yes. “Days of Inventory” is probably the best leading indicator we have of a changing market.
Our market will change in favor of buyers as the days of inventory increase. As listings stay on the market longer, this will work in tandem with increased listings on the market, bringing greater supply. Supply must increase! Supply can of course increase due to a number of factors, such as pricing and mortgage rates getting too high. Affordability, or lack of it will bring more listings.
Also, having worked in this industry since the creation of dirt, I’ve seen a few things. Historically, when prospective home sellers believe that that market has hit it’s peak, they will put their home on the market to try and catch the top. This is truer of investors which currently own over 200,000 rentals in Phoenix. If major corporate rental owners liquidated their holdings, we’d see a mass market shift. That will not happen. Investors (landlords) saw rents rise in the 20% plus range. And the rental market is as tight as the buying market. They’ve got a hugely good gig going. Investors are still buying.
“The dream of homeownership has grown more out of reach for many middle-class Americans during the pandemic.” This is the opening line from an article in the Wall Street Journal one week ago. Check out that Article here. The exact title is “Middle Class Gets Priced out of Homes.”
That National Association of Realtors released a recent study, in which the article stated that at the end of 2019, there was one available listing that was affordable for every 24 households in the income bracket of $75,000 to $100,000. By December 2021, the figure was one listing for every 65 households! Per the WSJ, the study “found that housing affordability worsened over the past two years for all but the very wealthiest Americans, and the shrinking number of homes on the market made home buying more difficult in every income bracket.”
Metro Phoenix and Scottsdale becoming unaffordable?
As we’ve been sharing for a while now, Phoenix-Metro is becoming unaffordable with only worse prospects in (at least) the near future. Whereas just a few years ago, we were considered an affordable relocation for companies looking to move here, but that has now all but disappeared. More and more, we will be seeing articles such as: “Phoenix Ranks among the least affordable American Cities.” Check out that Article here.
Less than two years ago, the median sales price of a home in Phoenix Metro was $180 per square foot. Today it is $280 psf. Homes currently under contract continue to show further price increases as well.
To compound matters, the article accurately points out that in many areas, rents are quickly rising also, having made it more difficult for folks to save up for a down payment. This is a cruel reward for prospective buyers wanting to do the right thing to get into a house affordably.
This is certainly true of Phoenix Metro. The double whammy of rent and purchase price increases is truly eliminating any good options for our local middle class.
North Scottsdale’s 85262 zip code is home to some of the most prestigious communities in all of Arizona, which include:
Troon North
Estancia
Desert Mountain
Mirabel Club
Carefree Ranch
Pinnacle Canyon
Merit Crossing
Rio Verde
Legend Trail
Candlewood Estates
THIS is “North” Scottsdale! Higher elevations, gorgeous desert, city light, golf, and mountain views show off the beautiful Sonoran Desert. 85262 is one of those zips that many think (dream) about when you mention “north Scottsdale.” Just off the beaten path, it’s still close to amazing North Scottsdale shopping, dining and entertainment in Kierland, Scottsdale Quarter, and DC Ranch.
Desert Mountain, the amazing luxury golf mecca is home to some of Arizona’s most beautiful homes. Rio Verde is getting well known for large acre-plus homesites, rural living, amazing mountain / Four Peaks views, quiet and solitary living in a Covid-Post Covid era.
Troon’s name is all you have to say with nationally acclaimed golf and resort living in one of the desert’s most incredible settings.
Single Family Detached Home Pricing:
Current home prices start at $375,000 up to $19,500,000. The average list price is $2.46M. The average home sale price in the past 6 months is $1.37M. There are good home values under a Million, however, with a sale of one home at $299,000. There are 55 homes currently priced between $375,000 and $1,000,000.
Up to Date 85262 Real Estate as of October 23rd, 2020
Today
Last Month
Last Year
1 Year Change
Active Listings:
340
307
353
-4%
Pending Listings
59
64
44
+34%
Sales Per Month
68
57
27
+152%
Sales Per Year
635
594
549
-%
Months of Supply
5.0
5.4
13.1
– 8.1 Months
Appreciation – Median*
10%
7%
11%
+1%
Average Price – Sales**
$1.19M
$1,173M
$824K
+16%
Median Price – Sales***
$900K
$880K
$818K
+10%
*Annual Median
**Annual Average
***Annual Median
RECORD ARIZONA HOME SALE IN NORTH SCOTTSDALE
Ten Bathrooms? In my opinion, not the best lead-in for this AZ Central article describing the most expensive home sale in Arizona’s history. Being a guy, I’d probably lead with the amazing 17 acre parcel in DC Ranch’s Silverleaf with the 10 car garage, followed by 29,700 Sq Ft
Scottsdale’s 85260 Zip Code is located in the desirable NE Valley. It is bordered by Bell Rd and Frank Lloyd Wright on the North, Shea Rd on the South, Scottsdale Rd on the west, and Thompson Peak Parkway on the East.
Notable neighborhoods in this desirable community include:
Bent Tree
Buenavante
Rancho San Carlos
Desert Fairways
McDowell Ranchos
Mountainview Ranch
Paradise Valley Ranchos
Patterson Ranch
Pima Crossing
Much of the 85260 community is made up of larger near-acre lots – horse acres are what we call them, as many of these neighborhoods allow horses. Great schools and convenience shopping are nearby. Freeway access is very convenient too. Just a few minutes to the Loop #101 Pima Freeway, and 7-8 minutes to State Route 51.
Great Schools Ratings
One of the finest K-12 Charter schools in the 85260 Zip is Great Hearts Academy, with two locations also including a 5th – 12th. Cheyanne Traditional Elementary is also a top rated PK-8. There are a number of excellent College prep (Notre Dame Prep) and Christian schools (Thunderbird Christian Elementary in 85260.
Style of Homes
Many of the homes in the 85260 Zip were built in the 80’s. Modern home designs include Santa Barbara and Territorial style homes with vaulted or raised ceilings, many with larger lots, and many
with private pools. Many are family oriented two story homes.
Up to Date Real Estate as of October 1st, 2020
Today Last Month Last Year 1 Year Change
Active Listings: 90 87 116 -8%
Pending Listings 32 34 28 +14%
Sales Per Month 53 42 42 +26%
Sales Per Year 520 509 575 -10%
Months of Supply 1.7 2.1 2.8 -1.1 Months
Appreciation – Median* 11% 09% 06% +5%
Average Price – Sales** $738k $717K $628K +18%
Median Price – Sales*** $770K $750K $685K +12%
*Annual Median
**Annual Average
***Annual Median
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].
