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Phoenix Real Estate – End of High Season Update

Now that I’m back mentally from my big bubble project, I wanted to dive into the Phoenix real estate market.

Most of the price action that happens with metro Phoenix home prices happens in the first half of the year, the high season.

Home sales are a bit slower the second half of the year and home prices have a strong tendency to move sideways in the second half.

My Phoenix Real Estate Market at a Glance graph is always great but let’s look at some other graphs from The Cromford Report (available to licensed real estate agents who are paid subscribers).

For metro Phoenix, the price per square foot is up 6% in mid-June compared to a year earlier. 

Price Per Square Foot

That’s nice but the story this year isn’t about good appreciation.

The story this year is two stories;

  • Some less expensive zip codes are appreciating fast, but
  • Prices in some of the most expensive zip codes are actually falling.

Northeast Valley

Scottsdale Price Per Square Foot

It looks like Scottsdale home prices have been moving sideways for a couple of years but that’s misleading.

Northeast Valley: Mar-May 2016 vs 2015, $/SF

  • 85266 (Carefree) -10%
  • 85251 (Old Town Scottsdale) +12%

Glendale

Glendale Price Per Square Foot

It looks like Glendale has seen good appreciation but it all depends on the zip code.

Glendale: Mar-May 2016 vs 2015, $/SF

  • 85310 (Farthest North) -6%
  • 85301 (Historic Downtown) +20%

Luxury Stagnation

The multi-year run of huge increases in luxury home prices is long over.

The luxury home market is sensitive to the stock market. Luxury home buyers tend to own a lot of stocks so when the stock market goes up, they feel good and buy luxury homes.

The stock market has been moving sideways, however, for a year and a half now and most of the recent stock market news has been blah, so it looks like luxury home prices will continue to mark time for awhile.

Lower Price Boom Continues?

This market is harder to forecast but since it’s been moving up so strongly, I’m expecting it to continue up unless the economy softens.

If interest rates ever increased significantly it could really change the real estate market for years.

Current homeowners with low-rate mortgages – which is pretty much everyone now – would be less enthusiastic about trading up (or down), if that would mean they would lose the great mortgage rates they have on their current homes.

But right now it looks like interest rates may not increase significantly for several years.

A recession is far more likely than significantly higher mortgage rates.

Recessions, however, tend to hurt the lower end of the market the most. So a recession would take the wind out of lower price home sales and price increases.

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Comments on this entry are closed.

  • mike bennison July 11, 2016, 1:07 PM

    John,
    What comment do u have on real estate for the Surprise area 85379 (Copper canyon ranch) : values,future price increases,supply and demand,?
    best regards
    Mike Bennison
    14598 West Hope Dr.
    Surprise az.

    • John Wake July 27, 2016, 3:31 PM

      Mike, Thanks for the question. It took me a while to figure out a good way to answer your question so I decided to go with video.

      In this “unlisted” YouTube video I discuss the real estate market for single family homes – https://youtu.be/-hiCQXIB3mM

      Let me know what you think.

      Thanks again for the question and sorry again for the late response.