Properties
MARKET UPDATE MAR 2014

PARADISE VALLEY

AVERAGE SALES PRICE UP 22% 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 January 2013 and January 2014 with the average price gaining 22% and the average price per square foot up 19%. Although the recovery in Paradise Valley started somewhat later than the rest of the market, 2013 was the best year for luxury home sales since 2006. When we examine luxury home sales in Paradise Valley that closed between November 2013 and January 2014, there are several significant changes we can see compared with the same period in 2012 and 2013:

We see far fewer distressed property sales

  • 67% drop in properties bought at trustee sale – 1 compared with 3 in 2013
  • 82% drop in lender owned homes  – 2 compared with 11 in 2013
  • 100% drop in pre-foreclosure sales -  0 compared with 1 in 2013
  • 75% drop in short sales – 2 compared with 8 in 2013

We now have far more normal transactions

  • normal sales up to 75 in 2014 from 66 in 2013
  • new construction up to43 in 2014 from 1 in 2013
  • investor flips down to 3 in 2014 from 5 in 2013

The huge 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% and the average price per square foot has changed by a little less than the average price, increasing by 19% over the last twelve months. Price increases have started to moderate in late 2013 as supply has 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

$1,337,187

$283.69

95

4,714

193

278

8.8

Change

+22%

+19%

-8%

+2%

-6%

+24%

+36%

2013

$1,628,685

$337.91

87

4,820

181

346

11.9

The average number of days on market for closed sales has dropped 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 February 1, 2013 and February 1, 2014. As a result buyers now have 11.9 months supply to choose from, up 36% from 2012 and fairly typical for Paradise Valley.

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

Nov – Jan 2014

Average $/SF

Non – Jan 2013

Annual

Change

Up to $1m

$262.94

$219.27

+19.9%

$1m to $1.5m

$296.84

$270.25

+9.8%

$1.5m to $2m

$306.62

$309.46

-0.9%

$2m to $3m

$380.51

$340.34

+11.8%

Over $3m

$546.68

$689.40

-20.7%

We note that the weakest price ranges were between $1.5 million and $2 million and above $3 million. Homes above $3 million sell in relatively small numbers. There was only 1 sale between Nov 2012 and Jan 2013, while we saw 5 between Nov 2013 and Jan 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 29% since December 2011.

There were several significant sales that closed between November 2013 and January 2014 including:

Subdivision

Address

Sale Price

Sq. Ft.

$/Sq. Ft.

Built

Lot Size

Stone Canyon 5334 E Solano Dr

$5,950,000

8,499

$701

2007

45,546

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

Paradise Country Club Estates 7510 N Eucalyptus Dr

$3,500,000

6,579

$532

1970

48,052

Metes & Bounds 5057 E Sky Desert Ln

$3,025,000

5,645

$536

1976

122,655

Since 2013 jumbo loans have been much more freely available to well qualified borrowers. 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 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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