By Mike Bodeen · 20 November 2017
The Phoenix Metro $1,000,000 Plus Market
So, what’s happening with the high side of the Phoenix Metro residential real estate market, which we’re calling the Million Dollar plus market? Has this market done as well as the other price ranges since 2011 when local values bottomed out?
The short answer is no. The luxury home market in the Phoenix metro area has struggled. Correction, it’s still struggling. And with the possibility of negative real estate tax rules for higher end homes being implemented, it may get worse before it gets better.
Let’s start with the overall listing supply inventory. We’re comparing 2017 year to date (YTD) versus 2016 YTD for the same period of time. Overall, the supply of homes for sale has increased 8% versus 2016. There are currently 1817 homes in the over 1M range. October new listings that have come on the market are up 31% compared to October of last year.
Sellers and their agents have been aggressive in getting get price reductions. Weekly price reductions have risen 65% since last year. There is some good news. The number of listings in escrow (going through the sold process) increased 21% against last year.
On the appreciation side, there is none. (see interesting Cromford $/SF chart) The price per square foot has been flat for over 2.5 years after almost 4 years of steady price increases before that. If there’s a silver lining here, it’s that the $/SF is not decreasing. Supply and demand are both increasing. This has at least kept prices stable.
What will it take to benefit this upper end market? For starters, a stronger local economy! The quality and quantity of higher paying jobs would need to increase. But with the possibility of a luxury home tax hit with tax reform, that would be a challenge.
I think the most important takeaway from this otherwise not great news is that for now, buyers are getting great value for their money in the luxury home market.
– Mike
Market data referenced in this article comes from The Cromford Report.