Properties
MARKET UPDATE JAN 2014

PARADISE VALLEY

QUARTERLY SALES UP 12% IN NOVEMBER

Average home sold was 9% larger than in 2012

PRESENTED BY THE KARAS GROUP

The luxury home market’s recovery has been impressive during the first eleven months of 2013. Although the recovery started later than the rest of the market, 2013 has been the best year for luxury home sales since 2006. The autumn is usually much quieter than the spring but this year we saw sales grow 12% over last year with average prices up 10%, though the market started to slow down in November. When we examine luxury home sales in Paradise Valley that closed between September and November, there are several significant changes we can see comparing 2013 with the two prior years:

We see far fewer distressed property sales

  • 33% drop in properties bought at trustee sale compared with 2011
  • 78% drop in lender owned homes compared with 2011
  • 67% drop in pre-foreclosure sales compared with 2011
  • 75% drop in short sales compared with 2011

We now have far more normal transactions

  • normal sales up from 56 in 2011 to 57 in 2012 and 77 in 2013
  • new construction up from 2 in 2011 to 4 in 2012 but only 1 in 2013
  • investor flips bouncing back from 4 in 2011 to 2 in 2012 and 4 in 2013

The fall in distressed sales means they are no longer having much impact on the average sales price which has increased from $1.507m to $1.652m between 2012 and 2013. The average square feet of living space increased by 9%, so the average price per square foot has changed very little between autumn last year and now. Price increases have started to moderate as supply improves and demand settles back to normal after a busy spring and summer.

PARADISE VALLEY SINGLE FAMILY HOMES – SEP – NOV, 2013    

AVERAGE

AVERAGE

NUMBER

AVERAGE

AVG DAYS

ACTIVE

MONTHS OF

SALE PRICE

PRICE / SQ FT

OF SALES

SQ FT

ON MARKET

LISTINGS

SUPPLY

2012

$1,507,078

$328.58

80

4,587

241

266

10.0

Change

+10%

+0%

+12%

+9%

-12%

+11%

-1%

2013

$1,652,167

$329.06

90

5,021

158

296

9.9

The average number of days on market for closed sales has dropped sharply compared with last year. We can also see that the improving market has brought out more sellers. We have seen an 11% increase in active listings. This is in line with the 12% increase in sales so 9.9 months of supply is similar to the 10.0 we measured in 2012. 9.9 months of supply is still lower than average for Paradise Valley, implying the market remains healthy despite the seasonal slowdown..

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

Sep-Nov 2013

Average $/SF

Sep-Nov 2012

Annual

Change

Up to $1m

$244.72

$235.42

+3.9%

$1m to $1.5m

$299.45

$268.09

+11.7%

$1.5m to $2m

$304.03

$351.08

-13.4%

$2m to $3m

$361.19

$422.44

-14.5%

Over $3m

$503.56

$586.48

-14.1%

We note that the weakest price range was above $1.5 million, but homes below $1.5 million did better in 2013 compared with 2012. There were 4 sales over $3 million in Sep-Nov 2013, the same as in Sep-Nov 2012. The third quarter is usually a quiet period for sales of luxury homes and indeed all but 1 of these 8 sales occurred in October.

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 already improved by about 26% since December 2011.

There were several significant sales that closed in the period from September to November 2013 including:

Subdivision

Address

Sale Price

Sq. Ft.

$/Sq. Ft.

Built

Lot Size

Finisterre 6001 E Naumann Dr

$3,000,000

8,762

$342

1989

51,097

Camelback Ranchos 6101 N 51st Pl

$3,150,000

6,282

$501

2011

41,839

Mummy Mountain Estates 5747 E Mockingbird Ln

$4,070,000

14,098

$289

1997

213,765

Judson 6617 E Cactus Wren Rd

$4,613,067

8.638

$534

2005

56,047

Tilyou Ranchito 6240 N 59th Pl

$9,200,000

12,751

$722

2006

96,986

During 2012, jumbo home loans were scarce and many buyers resorted to cash for their purchases. In 2013 jumbo loans are 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. With the stock market also doing well in 2013, the increased availability of jumbo loans has helped to maintain a healthy demand for homes in Paradise Valley.

Date 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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