North Scottsdale real estate trends are pointing at a solid market comeback. June was the new April, or at least that is what many of us in Scottsdale real estate are thinking now that June is over and we have a chance to reflect on market activity. While COVID-19 had a short-term negative impact on the market in March and April, pent up demand drove potential buyers back to our market in significant numbers starting in June. The question now is, will the market continue to be healthy? The wildcard that makes this question impossible to answer is the impact of the latest surge of COVID cases here in Arizona. As you will see as you read on, we are already starting to see a bit of a downturn in showing activity.
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WHAT THE NUMBERS ARE TELLING US ABOUT SCOTTSDALE REAL ESTATE
Let’s first examine what the sales numbers show. In general, North Scottsdale sales year to date compared to last year are generally flat, which given what we have been through the past few months, is encouraging. Since the beginning of the year, 1,003 homes have sold in North Scottsdale, priced above $500,000 compared to 1,032 during the same period last year. Inventory is down year over year, and new listings are not coming to market as quickly as in previous years, which starts to add up to a seller’s market.
A SELLER’S MARKET – DEMAND FOR SOME HOMES IN SCOTTSDALE OUTSTRIPS SUPPLY
Looking at the entire Phoenix metro market, inventory is at an all-time low. If no more homes came to market, at all price points there would be no more homes for sale in less than 30 days. Additionally, one of the most important measures of market strength called the contract ratio, which is the number of homes under contract divided by the total number of homes available, reached a record high. In North Scottsdale, the contract ratio for homes listed above $500,000 is 43.3 percent. For the entire metro market, it is an astounding 164.3 percent. What this contract ratio indicates is that more people are trying to buy homes than the market has available. At lower price points, we see things that have not occurred in some time; multiple offers, no contingency offers, buyers waiving inspections and appraisals. Anyone slow about making an offer in the sub $500,000 market is likely to find they don’t get the home they want.
A LOOK AT NORTH SCOTTSDALE REAL ESTATE ACTIVITY
When looking at the North Scottsdale market and homes priced above $500,000, the year-over-year numbers through June 30th are quite encouraging, especially given the pandemic impact. The median home price has risen to $865,000 from $850,000, which is close to a two percent increase. The average number of days a home is on the market before selling has dropped by nearly 20 percent to 122 days, and on average, homes are selling for about 3% off their original list price, a slight improvement from last year.
SCOTTSDALE REAL ESTATE ACTIVITY BY ZIP CODE
North Scottsdale Zip Code – 85255 – Real Estate
The 85255 zip code is perhaps the strongest of the three North Scottsdale zip codes that we track. The median price point for the zip was up 8.1 percent year-over-year through June 30th, and the average price per square foot went up 3.6 percent. The average number of days on the market fell by nearly 13 percent to only 109 days, and one more home sold this year than during the same period in 2019.
North Scottsdale Zip Code 85262 – Real Estate
The 85262 area also showed improvement over last year, with the median home price increasing 1.4%, and the average price per square foot also increasing slightly to $305 per square foot. Days on the market were also down by 15.5 percent to 158 days.
North Scottsdale Zip Code 85266 – Real Estate
Rounding out the three zip codes in North Scottsdale is 85266 with a 6.5 percent increase in median price rising to $825,000, but a significant increase in price per square foot of 4.2 percent to $275. Again days on market fell most at the highest rate of the three zip codes down to 101 days from 157 days last year.
WHAT IS THE IMPACT OF THE COVID SURGE ON REAL ESTATE IN ARIZONA
As we mentioned at the beginning of this post, the wildcard right now is the surge we see in new COVID cases in Arizona. We know by looking at the data from earlier in the pandemic is that showing activity falls dramatically when consumer concern increases. We are seeing a similar pattern in showing activity in all of Scottsdale that we saw in late March. We have tracked this data since early in the year and you can view recent reports on our main blog page. The number of showings is falling, and the moving average is falling as well. The graphs below show the data for the entire Scottsdale market. The first chart is all homes listed above $250,00, and the second is homes listed at $1,000,000 or more. As you can see in the chart below that tracks activity at two price points, there is a definite decrease in showing activity based on the latest surge. While showing activity tends to decrease at this time of year, especially at the higher price points, the timing of the change, and the speed at which it is happening are worth noting and likely due to increased consumer concern over the spread of the virus.
SO WHAT DOES ALL THIS DATA MEAN IF YOU ARE LOOKING TO BUY OR SELL SCOTTSDALE REAL ESTATE?
For Scottsdale Sellers
If you are considering selling a home, this is an excellent time to consider listing it. When there are more sellers than inventory, if you have an attractive home and it is priced to the market, it is likely to sell quickly. We see the most activity in the sub $500,000 market, but there are also tremendous sales opportunities between $1,000,000 and $1,500,000. Higher priced inventory is also moving well, but between $600,000 and $1,500,000, the market is extremely hot, with the average home taking only 82 days from listing to close.
Sellers also need to be prepared for their homes to close quickly. There are some simple steps we take with the sellers we represent that can ensure when the offer comes in, everything is smooth sailing. We work with sellers to do extensive due diligence on the offer, the buyer, and their financing (if they are financing) or if they are cash buyers, ensuring there are liquid funds available to close. We encourage many of our sellers to have a pre-inspection. By pre-inspecting the home, we can determine what items may raise buyer concern and prepare a plan to address the issues an inspector might find. Finally, developing the right pricing strategy is critical. If a buyer is financing, the last thing a seller wants to have occur is for the home not to appraise at value.
For Scottsdale Buyers
Scottsdale Buyers need to align themselves with the market and be prepared to act swiftly when they find the home they want. We write offers with short acceptance windows and when appropriate, aggressively position the offer to prompt the seller to move on our buyer’s offer. We encourage our buyers to be pre-approved (not just pre-qualified) and to have all the financial elements in good order so that it is easy to present a winning offer. The fewer contingencies that an offer contains, the higher the likelihood of getting a seller to accept it. An offer contingent on the sale of a home that is not on the market is likely to gain minimal traction with any buyer right now. If you need to submit an offer that is contingent, the more you can button it up, the better. For example, have a solid offer in hand, be through the inspection, and possibly the appraisal. Also, work with a lender that can deliver documents on time and make sure their underwriting department can deliver on their promises.
THERE IS MUCH TO CONSIDER IN WHEN CONSIDERING SCOTTSDALE REAL ESTATE
Buying or selling real estate in Scottsdale at any time is complicated. When the market is in flux, as it is now, it takes a strong strategic focus and plan. The team at The Lifestyle Collection are business and real estate experts, with the strategic and negotiation experience to help our buyers and sellers succeed in meeting their objectives. If you would like to learn more about your specific market and home, we encourage you to schedule a fifteen-minute phone call to discuss your particular needs. No single plan fits everyone, but we know we can design one that will suit your situation.