Properties
MARKET UPDATE APR 2014

PARADISE VALLEY

AVERAGE SALES PRICE UP 28% OVER LAST YEAR

24% increase in number of homes listed for sale

PRESENTED BY THE KARAS GROUP

The luxury home market in Paradise Valley staged a strong recovery in price between February 2013 and February 2014 with the average price gaining 28%. However the average size of the homes sold also increased by 9% so the average price per square foot increased by a somewhat lower percentage (17%). Although the recovery in Paradise Valley started somewhat later than the rest of the market, 2013 was the best year for luxury home sales in Paradise Valley since 2006. When we examine home sales that closed between December 2013 and February 2014, there are several significant changes we can see compared with the same three month period a year earlier:

We see far fewer distressed property sales

  • 33% drop in properties bought at trustee sale – 2 compared with 3 a year earlier
  • 75% drop in lender owned homes  – 3 compared with 12 a year earlier
  • 33% drop in short sales and pre-foreclosures -  4 compared with 6 a year earlier

We now have far more normal transactions

  • normal sales up to 74 in 2014 from 60 in 2013
  • new construction up to 3 in 2014 from 0 in 2013
  • investor flips down to 2 in 2014 from 7 in 2013

The fall in distressed sales means they are no longer having much impact on the average sales price. Price increases started to moderate in late 2013 as supply has increased and demand settled back to more a normal level after a busy spring and summer in 2013.

 PARADISE VALLEY SINGLE FAMILY HOMES – DEC to FEB    

AVERAGE

AVERAGE

NUMBER

AVERAGE

AVG DAYS

ACTIVE

MONTHS OF

SALE PRICE

PRICE / SQ FT

OF SALES

SQ FT

ON MARKET

LISTINGS

SUPPLY

2013

$1,370,186

$288.82

95

4,744

179

303

10.8

Change

+28%

+17%

-8%

+9%

-3%

+24%

+26%

2014

$1,749,719

$339.20

89

5,158

173

376

13.6

The average number of days on market for closed sales has dropped slightly compared with 2013. However, we expect that trend to reverse fairly soon as far more homes are now coming onto the market. There has been a 24% increase in active listings between March 1, 2013 and March 1, 2014. As a result buyers now have 13.6 months of supply to choose from, up 26% from twelve months ago and offering a wide choice although distressed bargains are now few and far between. Demand has cooled a little, especially for the lower price ranges, though demand for homes over $2,000,000 has increased since last year.

As in most areas, the average price per square foot in Paradise Valley tends to increase as we move up the price scale.

PRICE RANGE

Average $/SF

Dec – Feb 2014

Average $/SF

Dec – Feb 2013

Annual

Change

Up to $1m

$251.86

$234.94

+7.2%

$1m to $1.5m

$291.10

$283.90

+2.5%

$1.5m to $2m

$323.20

$301.23

+7.3%

$2m to $3m

$356.62

$323.61

+10.2%

Over $3m

$483.59

$423.04

+14.3%

We note that the weakest price ranges were below $1.5 million. This is in contrast with what we saw in 2013 when the lower price ranges were strongest. We also observe that sales volume has grown in the higher ranges and weakened in the lower ranges. This pushes both the overall average price per square foot and average sales price much higher. Homes above $3 million usually sell in relatively small numbers. There were 4 sales between Dec 2012 and Feb 2013, while we saw 9 between Dec 2013 and Feb 2014.

Looking back over the long term annual average price per square foot we can see that prices in Paradise Valley peaked in 2008 and fell by about 43% before recovering. The annual average $/SF is now catching up to the more volatile short term averages but has improved by about 31% since December 2011.

There were several significant sales that closed between December 2013 and February 2014 including:

Subdivision

Address

Sale Price

Sq. Ft.

$/Sq. Ft.

Built

Lot Size

Stone Canyon 5334 E Solano Dr

$5,950,000

8,514

$699

2007

45,546

Jacoby Estates 8270 N Coconino Rd

$5,437,500

10,501

$518

2007

78,537

Martingale Farms 9201 Martingale Rd

$4,950,000

10,119

$489

1982

136,071

Medicine Man Ridge 6447 N Palo Cristi Rd

$4,000,000

6,547

$611

1987

240,049

Metes & Bounds 6307 N Mockingbird Ln

$3,875,000

9,955

$389

2008

59,049

Since 2013 jumbo loans have been much more freely available to well qualified borrowers with attractive terms. This has driven stronger demand in the luxury market. If the stock market continues to do well in 2014, then the housing market in Paradise Valley is likely to continue to do well. However the increase in supply will keep prices from rising too far as sellers find themselves in greater competition with each other.

Data prepared by Mike Orr, Founder of the Cromford Report and Director of the Center for Real Estate Theory and Practice, W P Carey School of Business, ASU.Information contained in this report has been prepared exclusively for The Karas Group. All other use is expressly forbidden. The Karas Group © 2014

Market Report Graph v140319