Affordable luxury housing in Phoenix metropolitan area remains strong draw
By Terrance Thornton | Digital Free Press
Perched atop a mountain. Nestled at the base of a mountain. Planted on the side of mountain. A swath of acreage amongst a major metropolitan city. The most stunning views, surroundings and one-of-a-kind amenities the world can offer.
These are all characteristics of the luxury home — a price point $800,000 or better — found in certain pockets of the Valley of the Sun.
Places like central and north Scottsdale, the Town of Paradise Valley, central Phoenix and Fountain Hills are typical destinations for the luxury home enthusiast seeking a place to recharge, revitalize and provide respite.
Frank Aazami, principal at The Private Client Group at Russ Lyon Sotheby’s International Realty, knows luxury real estate.
“For eight weeks running, showings and under contract numbers have been on an upswing for sellers. New supply typically tapers off when the weather begins to heat up, which makes it a good time to list while most sellers will not, however. I am pleased to report demand remains strong despite interest rate increases,” Mr. Aazami told the Digital Free Press earlier this week.
“A high percentage of luxury homes remain cash buys. The demand and popularity of ‘turnkey’ homes continue to be the rage with clientele. I would like to offer kudos to our talented interior designers who are tastefully furnishing these homes. Of course, the best assessment falls under your street, style and finishing level experience.”
All things are local, Mr. Aazami says, pointing out luxury homes in Arizona are value options for those coming to the Phoenix metropolitan area from other densely populated areas of the country.
“For the past three years, homes have been sold at a premium, which is creating record sales in many parts of the country and across the globe,” he said. “Cash buyers skipped appraising their investments — historically, folks have been moving to Arizona and will continue to do so helping to maintain strong demand. Well designed, built and maintained homes will always have a buyer for them.”
On May 3, Howard Schneider and Ann Saphir at the Reuters news service reported the Federal Reserve raised its interest rate by a quarter of a percentage point to the 5% to 5.25% range, which had been anticipated by financial experts and American Realtors alike.
Mr. Aazami says as a threat of a ‘shallow’ recession continues to peek general news wires across the country there are emerging options at The Private Client Group for those looking for the best-in-class product.
“Our most significant growth has been in the auction side of the business where we are procuring multiple offers from the global markets not just from local markets,” he explained of ingenious business opportunities at Russ Lyon Sotheby’s International Realty. “In fact, later this month, we’re launching another estate home in Paradise Valley to be publicly auctioned.”
When it comes to luxury housing — and most things of significant value — the devil is in the details, Mr. Aazami reminds.
“Look closer to who designed and built your home, how well was it maintained and by whom,” he said. “I would inspect the home, but then have a reputable builder look closer to the quality of construction material used and the workmanship. First-time home buyers are finding better values where all the growth has been on the west side and southeast Valley. Many are upgrading into Scottsdale, Town of Paradise Valley and Arcadia due to the quality of schools and activities part of those communities.”
According to the Cromford Report, price points between $250K and $800K in Maricopa County are showing 40-57% of sales involving seller-paid concessions, and the median concession is $9,000.
Context of inventory and luxury housing
For Bret Ceren, Realtor and associate broker at Platinum Living Realty, inventory shapes all economic indicators of metropolitan housing.
“Historically, a market is balanced between buyers and sellers when we have enough inventory to sustain six months of sales at the current average daily sales rate,” he said. “For example, if we are selling, on average, 250 homes per day, then the market would be balanced at 45,000 homes available for sale. Since we are at approximately six weeks of inventory, it is a strong sellers’ market as a whole, though there are areas that have more inventory and some with less.”
Mr. Ceren says a balanced market puts both parties — buyers and sellers — on equal footing.
“The benefit of an actually balanced market is that both buyers and sellers are equally positioned in their sides when negotiating an agreement to sell,” he said. “There are plenty of homes to purchase, so buyers have options and aren’t feeling as compelled to settle for terms that would otherwise be unattractive to them; simultaneously, there are enough buyers for the homes on market that prices and conditions for sellers are stable and generally improving over time with timelines for the sale of their home that are generally predictable, allowing them stability in planning a move.”
A common definition of a balanced real estate market could be when supply and demand are about the same, with home prices rising in line with long-term average rate of inflation.
But as Maricopa County continues to enjoy strong rates of people moving to the Phoenix metropolitan area — some numbers suggest more than 250 a day — and those factors are impacting the ebbs and flows of housing availability.
“New construction is always an option across the entirety of the market and the thought of a brand new home is alluring — most buyers tend to start with this idea,” he said of a common vestige of the American dream.
“The downside is the time to wait for it to be built and the costs of construction; typically, a new home is more expensive than the comparative existing one. In luxury, all these factors are heightened, as well. So, the buyer may choose to purchase what is available and ready to be moved into. This can be especially true if the home fits the buyer or is truly one of a kind and could not be reproduced, which is a consideration in luxury.”