Scottsdale and Phoenix Real Estate Market Update

What is my Scottsdale Home worth?

I attended a  Scottsdale and Phoenix Real Estate Market update given by Michael Orr, Director of Real Estate with the WP School of Real Estate at ASU. I believe Michael Orr has the best pulse on the Phoenix Market. This year for me marks a decade in Real Estate, and what a wild ride it has been. This graph shows the state of the market so accurately:

Market cycle

With the surge in price per square foot rising since 2011, many are asking if we are in another bubble. There are a lot of skeptics out there screaming “The housing recovery is a sham!”, “Banks own a large percentage of homes and are keeping them off the market”, “Ordinary people are not buying homes, its mostly investors with cash” or “Goodbye low mortgage rates, goodbye recovery”.

Well lets get down to the facts. Yes, we have seen significant appreciation since 2011 as you can see by this graph:

august 2013 ppsf

And there are some states posting all time high prices, those states including Alaska, Colorado, Iowa, North Dakota, Texas, and Wyoming. Did you know that Phoenix prices would have to go up another 60% to make a new all-time high?

The truth is we have seen more inventory entering the Scottsdale and Phoenix Real Estate market, which has put downward pressure on demand and has eased appreciation. And keep in mind that markets in Phoenix are local. While certain areas are still high-demand seller markets, other areas in Phoenix are seeing a transition into a more balanced market.

Some buyers have gone on strike, they have been treated like their offers are worthless. Prices risen look to them like too much too soon. Interest rates are no longer at record lows, and the media fives them many reasons to be scares. Maybe they say, we should sit on the sidelines for a while? And we have seen active listings growing fast in many areas. The $300,000 to $400,000 range being the most affected.

Guys and gals, the Scottsdale and Phoenix Real Estate market is moving toward normality. Supply is growing (67% of normal), Demand is weakening (91% of normal), foreclosures are already below normal and short sales are dropping fast. Normal buyers are gaining market share 61%-78%. Financed transactions are increasing, and cash transactions are falling.

There are still some factors that are unusual though. The overall supply of new listings is low, there is a chronic shortage of entry level homes, new home construction is still very low, and jumbo loans are now cheaper than conventional.

Here is a breakdown of the active listing counts in the different price brackets:

august active 100 to 200 august active 200 to 400 august active 400 to 800 august active 800 over

You can see that the price range under 100k has continued to see high demand, low inventory, upward in pricing, and in some areas this price range has disappeared altogether. You can see the higher inventory in the price ranges 200-800k, and a jumbo market over 800k that is still holding strong.

One trend that I found interesting is the fact that we are not building nearly enough homes as we should. Our net population will probably be around 50,000 people, and this year we will only build about 10,0000 homes.

So what is the outlook you may ask for the Phoenix and Scottsdale Real Estate Market? Keep in mind that there is no crystal ball here, but low supply will probably be with us for a long time. Weaker demand may fall to more closely match supply. Prices will continue to rise cause an air-pocket in short term demand. Lond term demand will be controlled by credit standards. Improving credit, loan standards will gradually loosen. Foreclosures eill drop well below normal levels. Short sales will continue for a while but at much lower volumes. The luxury market will continue to improve from the bottom up. Assessed home values will rise very fast in the next 2 years.

And according to Michael Orr, “We are only in the second inning of this housing recovery”! So that is the current Phoenix and Scottsdale Real Estate Market update.

If you would like a more detailed market analysis of your neighborhood, please contact me and I would be happy to provide that for you! Call me today at 480-748-6925 or click here now—> ARIZONA REALTOR