We are now only a few months following the historic rise in interest rates – which has led to a rapid decline in home refinancing, rapidly growing levels of inventory for sale, and declining median sales prices across Arizona. A lot of this current market activity is driven by investors, iBuyers, and builders who want to off-load their inventory before the market declines further. But if you live in Paradise Valley or Arcadia this might not yet seem as apparent as with other areas of the valley.
Because July and August are traditionally the dead of summer in the valley and this year it seems even more luxury homeowners than ever have fled the heat for more moderate weather, past-due travel, and family visits. All of this is great when trying to get a reservation at the most popular Scottsdale restaurants, but it also means the real estate market “seasonally” slows down as well – especially in areas like Paradise Valley.
So even though prices still remain high and inventories low, this could all change in a few months when many of the snowbirds return and the Luxury real estate market becomes more active again heading into high season and our upcoming valley events led this coming season by Super Bowl LVI on February 12, 2023.
During a few recent open houses we hosted in Paradise Valley this summer, we are getting more questions than ever from buyers about the state of the market and where it might be heading from here. As we tell them, there is no crystal ball to a market but there are a few things to keep in mind when buying and selling in today’s real estate market:
- Unique value homes tend to hold their value better than most – so buying the best quality and builds can help support your investment. Not all communities, streets, and homes are alike, and some are truly unique gems. As a result, highly sought-after and not easily replaceable homes almost always command a higher price which is why it is so important to work with an experienced luxury agent who has an intimate knowledge of the best luxury builders, designers, and architects in your area, so you know which homes are truly the highest quality in each neighborhood and community.
- Arizona is rapidly growing for a reason; our low taxes, warm/sunny climate, and relatively clean and safe communities are a welcome change from many of the out-of-state buyers we continue to meet who cannot seem to wait to leave their current states.
- Supply will always be an issue for many years to come and in all markets. No matter where the market is at, the US housing supply is still short by over 6 million units and with the housing market now in a “housing recession,” the supply issue will only continue to grow. For luxury buyers, there are also only a few communities with limited inventory in Arizona that most people want to live. This is why communities like Paradise Valley and Arcadia continue to do so well – they are always in high demand.
- There are still a number of homes for sale in 2022 based on 2021 prices. Each day we see a growing number of “price reduced” emails from other agents indicating that the homes they had listed now must be reduced in order to sell – the more inventory that pops up, the more this pressure is felt. But when you are in places like Paradise Valley in the summer with only around 108 active listings above $2M in price, which is only 1.6% of the total homes in PV (6,442), then some owners may still think that the previous strategy of “I’ll be the next comp” in 2021 will still work in 2022. For the highest demand, new top-of-the-line homes, this may still hold true but for the resell market, especially for those homes previously over-priced, the market is changing and not in the direction they would like. This is one of the many reasons, especially during the time of changing markets, that listings must be priced correctly for the market.
- If you are a home seller, it is VERY important in markets like these that you price your home correctly before the 30-day clock starts on your listing. In short, time is NOT on your side. If you do not receive serious offers within the first 30 days, the market has spoken, and you need to reset your pricing. Worse, if you have received NO OFFERS within the first two weeks after listing your home for sale, then you likely need to seriously consider pricing reductions even sooner. The longer this takes, the longer your home can remain on the market and people start wondering “what is wrong with your home?” inviting low-ball offers instead. You want to avoid all of this by pricing correctly when you hit the market, adjust if needed quickly based on market reactions, and market heavily and effectively within the first 30 days of listing your home.
- If you are a buyer, this is also why it is important that you work with an agent that has detailed knowledge of the local luxury real estate market so you can help avoid problems and not waste your time. If you are looking for a unique, high-quality luxury home that can hold its value the best, make sure your agent has intimate knowledge of the communities and home details in your desired locations so they can help you find the best option to meet your needs. Many times, we have done this by successfully reaching out to the homeowners and their agents of these homes and arranged for sales when their home was not even listed on the market.
HOW WE CAN HELP YOU…
The Goldman Ruge Luxury Group provides luxury property owners, buyers, and sellers in Arizona with the highest level of service and support when dealing with one of the largest personal financial decisions our clients will make in Arizona. Our clients depend on us as their trusted advisors for all aspects associated with their luxury properties both including and beyond the home buying and selling processes by helping them protect and maximizing the asset value of their luxury properties. We primarily focus on luxury property sales in the Paradise Valley, Arcadia, Scottsdale, and Phoenix areas.
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