House in Scottsdale, Arizona
In Scottsdale, Arizona, residents swing golf clubs, sunbathe, and indulge in luxury shopping. Make no mistake, though – this high-rent area is seeing its share of real estate turbulence.
“Scottsdale certainly has not been immune to the downturn,” Heather Tawes Nelson, an associate broker with Arizona Realty One Group in Scottsdale, says. “We have our fair share of short sales and foreclosures.”
According to the Arizona Regional Multiple Listing Service, Scottsdale had 4,800 homes on the market as of mid-July. Of those listings, 962 (20%) were short sales, while 300 (6%) were foreclosures. Short sales were up compared to the first quarter 2009, in which 497 (13%) of the 3,938 active listings were in pre-foreclosure status. However, the amount of foreclosures on the market dropped slightly compared to the first quarter, in which there were 264 (7%) out of the total listings.
In June, Arizona State University’s realty studies department reported that foreclosures sales were surging in Scottsdale, accounting more than a quarter of the 590 homes and 31% of the 285 condominiums sold during the month.
“As in other parts of the Valley (of the Sun), lender-owned homes are being snapped up if they are in decent condition,” Tawes Nelson says. “Typically, lender-owned sales are a lot easier and a lot less complicated than trying to purchase a short sale.”
Home Values Down, Home Sales Increasing
According to local expert Michael Orr’s Cromford Report, which distills figures from the ARMLS, the median sales price for single-family homes in Scottsdale as of late June was $425,000. That’s down from $439,000 a month earlier, which in turn was down from $468,250 during the first quarter. In June 2008, the median price was $577,500, and in June 2007 it was $640,000.
“Our home values, percentage-wise, have not declined as much as some of the other cities, particularly those in the (most distant) areas, but they have definitely taken a hit,” Tawes Nelson says. “Since we had such an incredible run-up in values during the boom, we have seen equally large price drops during the downturn. There are a lot of great deals out there right now.”
However, home sales are on the rise – albeit helped by the number of foreclosure and short-sale listings on the market.
“Sales and pending sales for single-family homes in Scottsdale have really been picking up over the last several months,” Tawes Nelson says. “We are seeing pending sales at huge levels, and sales figures are very strong. We are not seeing a lot of price appreciation, but things seem to be leveling off somewhat.”
According to the Cromford Report, there were 409 sales of single-family homes in Scottsdale during June, up from 339 the previous month. That is also up from June 2008, when there were 311 sales.
Scottsdale’s luxury market has been most heavily impacted in terms of sales due to excess inventory as well as difficulty in securing jumbo loans, according to Tawes Nelson.
“Since many homes in Scottsdale are over the $417,000 conforming-loan amount, many people are having issues finding financing for these homes,” she says. “On the flip side, there are some really good deals out there on luxury homes and pricing for these homes should continue to drop for the time being.”
Looking Toward the Future
Tawes Nelson says she’s continuing to see Scottsdale grow, if at a slightly slower pace than during the boom years. “We are still getting a lot of people coming from more expensive markets who get more ‘bang for their buck’ here,” she says. “We are also seeing a lot of folks who want to retire here or have a second home to escape to during the winter.”
She says Scottsdale’s climate and lifestyle are two major draws for prospective residents and investors. “We have more than three hundred days of sun per year and mild winters. Plus, we are not prone to natural disasters such as hurricanes, earthquakes, and so on. If you are a golfer or an outdoor enthusiast, this is a great place to live.”
She believes that sales of homes priced $350,000 and lower will be brisk, barring any increases in interest rates.
“If interest rates to do not continue to rise, I think the Scottsdale market in general will continue to recover in the short-term,” she says. “However, the increase in the number of short sales and lender-owned homes is putting downward pressure on the median price.”
Tawes Nelson says interest rates are also a concern in the long term.
“Ideally, the Scottsdale market will have recovered by that time and we will be seeing modest appreciation,” she says. “However, many economists are predicting significant inflation and high interest rates. If that happens, the market will again be facing challenges.”
