The Phoenix Market is Starting to Turn

Sales were up in Sept. Way up. But it is just the gift programs right? Wrong. The first half of October is 15% ahead of the first half of September sans gift programs. January of 08 was the bottom in sales numbers. Less than 3000. That was the lowest number in over a decade. 10 years ago we had more than 1 million fewer people in the valley so that tells you something right there! In Sept we were over 6000. A big turn from January. Every month since May has been over 5000.

Based on absortion rates, we had a 19.83 month supply in Jan 08. As of Sept we had an 8.83 month supply at current absorption rates. We only had 6000 fewer homes on the market but the number of buyers had more than doubled. Anything over 7 months supply is considered a buyers market. Which we are definitely in. But a buyers market with 8.83 months supply is not the same as one with 19.83 months supply.

If we segment the market by price, it is even more extreme. Below 400k, homes are moving very, very quickly. Over 500k they are not. Queen Creek is actually no longer considered a buyers market right now according to the number of homes on the market, coming on the market and sold. It has bottomed. Anyone local in Arizona knows Queen Creek is probably the least expensive (and most distant) part of the city. Buckeye is a close second. The west valley's sales are up over 400% since January. WOW! Now let us look at the other end of the market.

Scottsdale is one of the local markets where sales numbers are DECREASING every month unlike the rest of the valley. The reason for this is the price point is much higher in Scottsdale and Paradise Valley. Over 500k in Scottsdale and well over 1 Million in P.V. North Scottsdale currently has a 4 years supply of inventory. Paradise Valley's is well over 2 years and rapidly climbing. Nothing is moving in Paradise Valley. The luxury home builders bought up older homes and tore them down left and right in 05 and 06 and they are now finishing them and there is a huge glut.

So what does this mean?

It means the luxury market is where the real bargains can be had right now. Where low balling and finding distressed properties is the name of the game. The rest of the valley was in that spot last fall. At that time the high end market was doing better than the low end. Not anymore. With Wall Street in the dumper, I wouldn't expect the lux market to turn for a while.

Essentially it comes down to once again, Real Estate is local. My block, or yours, is not the same as the one two blocks over.

Right now you can low ball all day long over 500k in Scottsdale and you will be successful. Over 2 million in Paradise Valley, or especially over 5 million in Paradise Valley. The blood is now flowing in the McMansion and Mansion neighborhoods....rather than in the average man's neighborhoods as it was last year.

Marc