Market Data - October 2018

We are looking at single family homes priced from $500,000 upwards in all areas of the Northeast Valley, including Scottsdale, Paradise Valley, Fountain Hills, Rio Verde, Arcadia, Biltmore, Cave Creek and Carefree.

Supply

On October 1st, 2018 we had 2,418 active listings over $500,000. This is a 5% increase from last month and 10% fewer listings than we saw on October 1st, 2017. Luxury listings are still in relatively good supply compared with the rest of market. However, we have seen reductions over the past two years and the supply trend is now moving clearly downwards rather than up as it was between 2014 and 2016. This downward trend has also gained momentum over the past few months. One exception is the price range over $3 million which is up 2% compared to a year ago. Every other luxury price range has fallen by at least 5% year-over-year. That between $500,000 and $600,000 is down 21%. 98% of active listings are normal with 30 short sales / pre-foreclosures and thirteen lender-owned properties. Normally luxury listing counts reach their minimum at the beginning of September and then rise until April and we have no reason to believe this year will be any different.

Demand – Sales

September 2018 gave us 314 closed transactions though ARMLS. This is down 7% from September 2017, when we saw 338. It is the first weak month after a run of nine strong ones. This is in part due to September 2018 only having nineteen working days, compared with twenty in September 2017. However, it was still down 2% year over year after adjusting for the number of working days. Two price ranges saw an annual increase over September 2017, homes over $3 million which jumped from five to twelve and homes between $1.5 million and $2 million which rose from 22 to 32. The range from $500,000 to $600,000 dropped 32% which may be partly due to the declining inventory at that price level.

Demand – Under Contract

We can anticipate future sales by looking at homes under contract. In fact, last month gave us early warning that September sales would be weaker. We started October 2018 with 514 listings under contract, which is up less than 1% from the 511 of October 1st, 2017. This is effectively flat and suggests that year over year sales growth is likely to be modest in October and November. Most of the weakness is concentrated in the low end from $500,000 to $600,000, down 20% from 114 to 91. The range from $1 million to $3 million is looking strong, up 18% from 141 to 167. The price range over $3 million dropped from twenty to nine. Normal sales comprise 97% of luxury homes in escrow, up from 95% last year.

Sales Pricing

Due to relatively low volumes and a wide range of price points, the Northeast Valley luxury market can display a lot of volatility if measured on a monthly basis. We therefore prefer to measure over a longer period in order to identify trends more accurately. Since the market low of $219 in 1Q 2012 we have seen the twelve-month average move upwards to around $279 per sq. ft. which is an increase of 27%. Luxury home pricing first peaked in August 2015 when the twelve-month average price per sq. ft. hit $269 and finally exceeded that level nine months ago. The twelve-month average currently stands at $279, up 3% from $270 in September 2017. The six-month average has climbed to $277, up from $267 in September 2017 and the three-month average stands at $270, up from $262 in September 2017.

Overall luxury pricing has established a rising price trend again over the last nine months, having moved sideways between 2015 and 2017. However, there has been only modest change between May and September 2018 thanks to the usual seasonal pattern in which the third quarter is weak.

Under Contract Pricing

We have seen a slight rise in sales pricing over the past twelve months, but little progress in the last four months. Under contract pricing is showing no increase over the past month, so we expect little change in sales pricing next month.

The average under contract price for normal listings is $283 per sq. ft. The average for (the very few) lender owned homes is $180 per sq. ft and short sales average $204 per sq. ft.

Area Reports - October 2018

Although we publish montly reports for the following five communities, we track sales in all areas of the Northeast Valley. If you have questions about a specific area that is not covered in the areas below, please call us at 480-991-2050 and we can provide you with up-to-date market information.

Paradise Valley

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Scottsdale

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Arcadia

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Biltmore

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Fountain Hills

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