With nearly a 3 year supply of million dollar homes for sale in Scottsdale, AZ, [1,572 actives, 46 solds in the past month] something’s gotta give. What is giving is asking prices.
M noted this trend:
Here’s an interesting search I set up a few months ago. As you know Scottsdale has a glut of 1M+ homes, although it has shown "improvement" lately. This is not because of an increase in sales however, but rather a decrease in the number of 1m+ homes.
This search:
Original list price: greater than $1,000,000
Current list price: less than $1,000,000
These are homes that were at one time listed at or over $1,000,000, but now listed at or under $1,000,000. The number of homes in this search increases every month. There are currently at 208.
Expect to see that number increase- tighter lending and fewer buyers is making higher end homes a tougher sell.
[Many thanks to M for this one!]
Why not start tracking million dollar REDUCTIONS?? Two new houses right around the corner from me on Cochise (near Frank Lloud Wright/Shea):
1. 5.3 million to 3.9 in one year.
2. 4.3 million to 3.1 in one year.
Many other houses that are the same size and only 4 to 8 years old are listed from 1.1 mil. for a foreclosure to about 2.3 mil.
WHAT ARE THESE PEOPLE SMOKING??
Sorry, that’s “Frank Lloyd Wright”.
Well, as we all know, $ 30K / year just don’t buy what it used to.
(No reference intended or implied toward venetiancafe!)
Venetiancafe-
While it’s true that Scottsdale has always been able to command more for comparable homes located elsewhere in the Valley, there were a lot of folks during the boom who figured that a Scottsdale zip code made their little shack a million dollar luxury home. Then there were the folks with the luxury homes who thought they were multimillionaires.
Obviously many of them are having to rethink that.
Did your neighbors with the million dollar price drops ever sell?
Where is Greg Swann and his 21 reasons realestate in the Phoenix metro will not go down?
I will give thee Rs credit though that is an innovative idea to bring down months of supply over 1M
Where is Swann? He’s writing for the Republic:
When L saw this one, he pointed out to me that there are currently 8265 active rental listings on the MLS in the Valley. Why would more wannabe landlords in the market be a good thing?
L’s comment:
Sadly, knowing what you are talking about is not a prerequisite for writing for the Republic.
I am constantly amused at the RE emails I get with the words “MAGIC 85254 ZIP CODE” somewhere in the title, subject or headline.
I lived in that area and worked there about 20 years ago. I’ve driven around there a bit in the last couple years, and I have yet to feel a magic “tingle” when I think of it or go through it.
Nothing wrong 85254 that I’m aware of… but “MAGIC?”
Maybe it’s like Lance Burton’s kinda “magic.”
Perception, entertainment and illusion.
Asset Hunter-
The home that I sold in 2005 in Gilbert was by Astante [Continental] who had a similar subdivision to mine off of Shea. My same model was $200K more up there, had a smaller lot, and you had to yell to be heard in the backyard from the traffic noise.
Mr. Twist and I decided that you must be paying the $200K difference for the chance to put a Scottsdale zip code on your return address, and it just wasn’t worth it to us. We weren’t feeling the magic either.
I have to say I have a couple looking to buy in Scotsdale (north) and they are having a very hard time still trying to find something under 300k with no pool! Unbelieveable. Scottsdale is holding value better than most areas.
You can’t find anything decent even in South Scottsdale for under 300K…matter of fact,nothing in most of core Phoenix metro unless you head to Queen Creek and other such netherworlds,
As for Scottsdale holding value, all I see are thousands of FOR SALE Scottsdale homes sitting in a limbo holding pattern.
Regarding, MAGIC 85254, it look and feels more and more like Nassau county in NYs Long Island, without the decent pizza and Chinese food.
aaaaudio, I know of a couple who just signed a one year lease for a 3 bed 2,100 sq ft new home in a gated North Scottsdale community (77th st and Pinnacle Peak) for $1,700. Desert behind it with a pool. Maybe your friends might consider this for a time and see how the market shakes out.
Twist,
These two were spec houses. One was completed 1 year ago and the other about 6 months ago. The one completed 1 year ago went from 4.3 mil to about 3.1 mil today. The other one went from 5.3 to 3.9 today; that’s 1.4 mil. reduction in 6 months. No, they don’t look sold. But if one has sold in the last few days, I wouldn’t be able to tell since one is over 9,000 sq ft and the oppupant may be holed up in the luxury, completely separated apartment with its own 2 car garage in the back. Maybe he/she is in the lap pool or waiting by the helicopter pad for a trip to Saks. The point is that the level of stupidity, greed, and over consumption are off the charts. This isn’t new, but still revolting.
Prices between now and the end of the year are going to decline at a faster rate. Why??
1. Massive job lay-offs.
2. High number of re-sets in adjustable mortgages.
3. Tighter credit and lending standards.
4. Higher housing inventories.
5. Higher prices of necessary items (ie.fuel and food.
6. Higher foreclosures because of the items listed above.
Am I forgetting anything?
2. Increase in foreclosures due to job loss and higher adjustable rate
Does anyone have any insight as to why a buyer would spend $3,4 or 5 mil for a house in Scottsdale, (and even more in Paradise Valley),when for the same money, they could buy in some of the best locales of say, Southern California, ie.,Rancho Santa Fe or Santa Barbara?
Raven-
I suppose your $3M-5M goes further in AZ, and it’s a better commute if you happen to work in Phoenix.
Then strange as it seems, some of us like AZ better.
That said, paying that kind of money for a place that pricey in Paradise Valley [or anyplace, for that matter never made much sense to me.
Igor says, “no money”. Rub it in Igor. I suppose that’s one of the reasons I won’t be making a purchase like that. : )
I am wondering what happens to new construction when the resale price there will be still dropping. Complete standstill and builders will be only living on remodeling ?
Despite their margin went down from 30% the builders were asking even 2 y ago, the inflation and commodities prices will not allow building below certain price level.
This is of interest to me: I came to Phx end 2003 focused on new construction and never won a builder’s lottery (thanks God, I know) and in the end purchased a close 300k lot for custom home. By the time the plans were ready, I let the permit slip due to cost increases, this was the time of peak. I am astonished with the number of the listings in the community which btw start above $1mil (and there is the relation to this article) and where still comparable lots are offerd for multiple I paid: http://www.ancalahoa.org/listingpro/?action=list&start=10&order=2
Currently renting acceptable 3600sft house for $2400 on the other side of Taliesin.
Twist, maybe I will follow you to Austin, the oldest kid eyes the university there and will keep the lot for retirement.
Opinions welcomed. David
“Am I forgetting anything?”
A possible “event” or lock up in the credit markets.
Duad, glad you’re renting. If the credit crisis becomes severe enough houses will be dumped below already depressed replacement costs for those with cash.
Daud-
The move has been good for the family,and at the moment, when I get homesick, I just check the weather back home in Phoenix. [My kids are laughing at their friends complaining about temperatures in the high 90s.]
With two college age kids of my own, I’m looking forward to January- the out-of-state tuition is a killer.
There are some great rental deals now in Austin. Sales are down, inventory up, foreclosures up, denial remains high. My neighbor is a developer who says that he and his investor friends are picking up land cheap with the intent to hold for five years, but I remain a cowardly fence-sitter.
if i had a nickel for every well-intentioned know-nothing realtor/mortgage broker who told me real estate in scottsdale would never go down, i would be retired and living on a beach in kauai.
Kid-
M sent me some interesting data that I would have posted, except I didn’t want to do two Scottsdale posts two days in a row. Check out the number of rentals:
Scottsdale 2,323
Tempe 201
Mesa 472
Chandler 373
Gilbert 294
Phoenix 1,783
I think the Population of Phoenix is about 1.4M, Scottsdale just over 200K, Mesa over 400K.
My best explanation for the number of rentals in Scottsdale is that there is less acceptance of market conditions in Scottsdale than any other Valley city. Owners either can’t or won’t accept price reductions.
twist,
single family homes, for rent, correct?
Just driving around Tempe last week, it seemed I saw all the 201 For Rent sign/banners posted at apartment complexes.
Raven-
All MLS includes condos and townhomes. They are mostly single family though.
thanks twist. that number would be one higher except i just signed a new 12-month lease.
you would not believe the number of scottsdale for-rent listings that are $2500 per month or more. it is astounding. who can afford that, in particular with $4+ gallon gas, the employment picture, declining inmigration, etc?
yet another set of facts underscoring the notion that fundamentally, the real estate market is still way too high.
Scottsdale pricing is about 57% of peak. Sounds horrible, but better than the 52% that WSJ reports for Phoenix as a whole. Check http://www.metrohousingreports.com