Properties
MARKET UPDATE FEB 2014

PARADISE VALLEY

AVERAGE SALES PRICE UP 18% IN 2013 OVER 2012

14% 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 2012 and 2013 with the average price gaining 18% and the average price per square foot up 15%. Although the recovery in Paradise Valley started somewhat later than the rest of the market, 2013 has been the best year for luxury home sales since 2006. When we examine luxury home sales in Paradise Valley that closed in 2013, there are several significant changes we can see compared with 2012:

We see far fewer distressed property sales

  • 58% drop in properties bought at trustee sale – 5 compared with 12 in 2012
  • 18% drop in lender owned homes  – 18 compared with 22 in 2012
  • 43% drop in pre-foreclosure sales -  8 compared with 14 in 2012
  • 57% drop in short sales – 10 compared with 23 in 2011

We now have far more normal transactions

  • normal sales up to 317 in 2013 from 291 in 2012
  • new construction up to 13 in 2013 from 11 in 2012
  • investor flips up to 22 in 2013 from 13 in 2012

The fall in distressed sales means they are no longer having much impact on the average sales price. The average square feet of living space increased by 2%, so the average price per square foot has changed by a little less than the average price. Price increases have started to moderate in late 2013 as supply improved and demand settled back to normal after a busy spring and summer.

PARADISE VALLEY SINGLE FAMILY HOMES – 2013 VERSUS 2012    

AVERAGE

AVERAGE

NUMBER

AVERAGE

AVG DAYS

ACTIVE

MONTHS OF

SALE PRICE

PRICE / SQ FT

OF SALES

SQ FT

ON MARKET

LISTINGS

SUPPLY

2012

$1,410,678

$288.32

386

4,893

203

248

7.7

Change

+18%

+15%

+2%

+2%

-18%

+14%

+12%

2013

$1,657,971

$332.73

393

4,983

167

283

8.6

The average number of days on market for closed sales has dropped sharply compared with 2012. We can also see that the improving market has brought out more sellers. We have seen a 14% increase in active listings between January 1, 2013 and January 1, 2014. As a result buyers now have 8.6 months supply, up 12% from 2012 but still a little lower than typical for Paradise Valley. These numbers are based on the annual sales rate so they eliminate the seasonal variation that usually affects monthly and quarterly statistics.

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

2013

Average $/SF

2012

Annual

Change

Up to $1m

$243.99

$210.70

+15.8%

$1m to $1.5m

$286.44

$256.72

+11.6%

$1.5m to $2m

$328.09

$311.48

+5.3%

$2m to $3m

$350.50

$359.76

-2.6%

Over $3m

$561.81

$440.69

+27.5%

We note that the weakest price ranges were above $1.5 million and below $3 million. Homes above $3 million sell in relatively small numbers. There were 18 sales in 2012 including 3 foreclosures, while we saw 25 in 2013, none of which were foreclosures. The presence of the 3 foreclosures in 2012, including 3 of the 4 highest price transactions, caused the big jump in average $/SF.

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 27% since December 2011.

There were several significant sales that closed in 2013 including:

Subdivision

Address

Sale Price

Sq. Ft.

$/Sq. Ft.

Built

Lot Size

Tilyou Ranchito 6240 N 59th Pl

$9,200,000

12,751

$722

2006

96,986

Jokake Camelback Properties 5540 N Saguaro Rd

$8,000,000

11,963

$669

1998

209,128

Nauni Valley Ranch 5625 E Nauni Valley Rd

$7,600,000

15,436

$492

2005

96,884

Paradise Valley Estates 5227 E Arroyo Rd

$6,800,000

13,963

$487

2009

62,370

Mummy Mtn Park 5880 E Foothill Dr

$6,100,000

8,726

$699

2001

83,835

Stone Canyon 5334 E Solano Dr

$5,950,000

8,499

$700

2007

45,546

During 2012, jumbo home loans were scarce and many buyers resorted to cash for their purchases. In 2013 jumbo loans are much more freely available to well qualified borrowers. For the first time in living memory, the interest rates on these jumbo loans are sometimes lower than for conventional loans and the interest rates sometimes go even lower for higher loan amounts. If the stock market continues to do well in 2014, then the housing market in Paradise Valley is likely to follow suit.

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

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