Market Update: Pandemic Invert Real Estate Market Norms, Resurgence in Luxury Homes, Future Projections 2021
Peak Sales activity in North Scottsdale was evident in the 1st and 2nd quarters of 2020.
More precisely, in our traditional high season we see Listings Under Contract accelerate in Q1, with Q2 being our historic high bar in Closed Sales, as the Contracts written in Q1 close in Q2.
2020 was no exception, as the number of listings going under contract in January and February was out pacing all prior seasons.
And then it happened…
The Pandemic lockdown dramatically put the brakes on Contracts being written for 6 weeks – from the beginning of March until the market began to recover in late April.
We then witnessed the most amazing ‘V’ curve – the market recovered as dramatically as it fell. This is very evident in the Year-over-Year Percent Change in Listings Under Contract:
Notice how at the time of this update on December 22nd, listings are continuing to go under contract at a whopping pace, 62% over this time last year!
The parallel story of 2020 has been the supply squeeze relative to the demand. Listings in North Scottsdale have literally dropped in half.
At the same time sales are on track to double year-over-year:
The consequence of demand outpacing supply is, of course, rapid price increases, as illustrated in the annual appreciation by zip code charts shown below.
Luxury Sector Resurgence
Yet another newsworthy phenomenon has been the incredible resurgence of the luxury sector. Looking at MLS Valley statistics, in October of this year, Arizona Regional Multiple Listing Services reported 374 million+ dollar sales compared to 134 in October 2019, an astounding 279% increase!
As an example, looking at the luxury buyers this October, 34% reported their addresses as out-of-state.
Since air conditioning came to the Valley in about 1947 – the year Russ Lyon Realty Company first opened its doors; Maricopa County has been among the fastest growing counties in the U.S.
There is the obvious reason — people want their place in the sun! And now, reportedly with about 10,000 people 65-plus retiring every day the demographics have accelerated the migration to the Valley.
Now add the Pandemic Factor: The desire for more open space; the ability and preference to work from home; issues of safety; and the list goes on.
However, particularly noteworthy is how the well-heeled are coming to us from both coasts. A comparison of truck rentals inbound from California and outbound from Phoenix tells you all you need to know!
While we can’t predict the future, it’s fair to say these trends will likely continue. There’s evidence the ‘smart guys’ agree upon – as shown in the ‘bank grade’ 5-year Forecast from Collateral Analytics below.
CBSA is a government acronym that stands for Core Based Statistical Area.
The lower line is the general Metro; the 3 colored lines above represent North Scottsdale zip codes, with the vertical line representing today, followed by their 5-year Forecast.
While we won’t pretend to understand the algorithm used in Collateral Analytics top-of-class, bank-grade Forecast, they do tell us that relative affordability and employment prospects are key factors.
While there’s so much sobering news related to the consequences of the Pandemic, it is ironic that a home’s safe harbor, together with the trends cited above, have made this a banner year for residential real estate in Scottsdale, Arizona.