Properties
MARKET UPDATE NOV 2013

PARADISE VALLEY

SALES UP 37% FROM THIRD QUARTER OF 2012

Luxury market has strongest third quarter since 2006

PRESENTED BY THE KARAS GROUP

In the last two years we have witnessed an impressive turnaround for the housing market in the Greater Phoenix area. At first the luxury market’s recovery was relatively hesitant compared with the rest of the market, but during the first nine months of 2013 it has gained strength. The third quarter is usually a fairly quiet period for luxury sales, but this year we have seen the largest number of  sales since 2006.When we examine luxury home sales in Paradise Valley that closed between July and September, there are several dramatic changes we can see comparing 2013 with the two prior years:

We see far fewer distressed property sales

  • 50% drop in properties bought at trustee sale compared with 2011
  • 79% drop in lender owned homes compared with 2011
  • 67% drop in pre-foreclosure sales compared with 2011
  • 71% drop in short sales compared with 2011
  • 40% drop in investor flip sales compared with 2011

We now have far more normal transactions

  • normal sales up 37% compared with 2011
  • new construction up from 2 in 2011 to 4 in 2012 and 4 in 2013

The fall in distressed sales has had a positive impact on the average sales price. An increase of 3% from $1.511m to $1.553m between 2012 and 2013 under-states  the increase in home values, because the average square feet of living space decreased by 4%. If we look instead at the average price per square foot this has increased by 7%. Though less than we measured during the spring, this is still a significant change in a single year when inflation is running at an annual rate under 2%. However we must remember that the market is bouncing back from a severe over-correction following the bursting of the housing bubble.

PARADISE VALLEY SINGLE FAMILY HOMES – JUL – SEP, 2013

AVERAGE

AVERAGE

NUMBER

AVERAGE

AVG DAYS

ACTIVE

MONTHS OF

SALE PRICE

PRICE / SQ FT

OF SALES

SQ FT

ON MARKET

LISTINGS

SUPPLY

2012

$1,511,146

$312.48

71

4,836

181

253

10.7

Change

+3%

+7%

+37%

-4%

-2%

+4%

-24%

2013

$1,553,493

$333.85

97

4,653

176

262

8.1

We note that the average number of days on market for closed sales has dropped by 5 days compared with last year. We can also see that the improving market has seen a remarkable 37% increase in the number of completed sales transactions during the quarter. There has also been a 4% increase in the number of active listings, when comparing October 1, 2012 with October 1, 2013. 8.1 months of supply is a relatively low reading for Paradise Valley, implying a healthy market.

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

Jul-Sep 2013

Average $/SF

Jul-Sep 2012

Annual

Change

Up to $1m

$225.78

$237.43

-4.9%

$1m to $1.5m

$297.63

$285.12

+4.4%

$1.5m to $2m

$382.21

$334.02

+14.4%

$2m to $3m

$386.34

$357.91

+7.9%

Over $3m

$471.11

$384.41

+22.6%

We note that the weakest price range is between $0.5 million and $1 million, but homes over $1.5 million did much better in 2013 compared with 2012. There were just 2 sales over $3 million in Jul-Sep 2013 and the same number in Jul-Sep 2012. The third quarter is usually a very quiet period for sales of homes over $3 million and with such small samples the pricing can fluctuate a great deal.

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 almost 22% since December 2011.

There were a number of significant sales that closed in the period from July to September 2013 including:

Subdivision

Address

Sale Price

Sq. Ft.

$/Sq. Ft.

Built

Lot Size

Panorama Estates 7150 N 64th Pl

$2,812,000

9,800

$287

2007

62,706

None 6633 E McDonald Dr

$2,850,000

7,521

$379

1953

104,675

Bret Hills 6246 E Bret Hills Dr

$2,995,000

8.288

$361

2011

49,305

Palo Verde Foothills 6216 N 38th Pl

$4,900,000

11,097

$442

2006

59,551

Nauni Valley Ranch 5625 E Nauni Valley Rd

$7,600,000

15,436

$492

2005

96,884

For some time after the housing crash, jumbo home loans were extremely rare, but they are now becoming 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. The increased availability of jumbo loans, together with the very attractive pricing of Paradise Valley compared with other luxury areas outside Arizona, is helping to offset a widespread decline in housing demand since July.

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 © 2013

Market Report Graph v131016