Walt Danley

Christie ’ s international Real Estate

Northeast Valley – Luxury Market Summary – January 2023

This summary analyzes single family homes over $500,000 in all areas of the Northeast Valley, including Scottsdale, Paradise Valley, Arcadia, Biltmore, Carefree, Cave Creek, Fountain Hills and Rio Verde.

Supply

Supply dropped during December. As of January 1st, 2023, the active listing count was 15% lower than it was on December 1st, moving from 1,990 to 1,700. High interest rates are discouraging sellers as much as buyers and new listings are arriving very slowly. We measured 924 at the same time last year, so supply has risen 84% since then. There is therefore better choice for the buyers left in the market compared to a year ago. All price ranges decreased though the smallest monthly drop was for those priced over $3 million. These fell from 365 to 338. Distress remains very low. There are five pre-foreclosures and two lender-owned homes among the active listings, which is a slight decrease compared to last month.

DEMAND - SALES

Once again closings were low during December after dropping dramatically between June and October. We counted only 368 closed listings during the month, down 50% from December 2021. Sales between $500,000 and $600,000 dropped the most – down 59% compared to a year ago, but closings were down in all price ranges. It is important to note that we were in the hottest market on record twelve months ago, so year-over-year comparisons need to be taken with a grain of salt.

DEMAND – UNDER CONTRACT

We can anticipate future sales by looking at homes under contract. We started 2023 with only 438 listings under contract, which is down 39% from 719 in January 2022. Demand was already very weak during the last three months and although it has deteriorated still further since then, it is starting to stabilize, as the annual decline is less than last month. We are likely to see closing numbers during January that are far lower than January 2022. The drop in demand has affected all price ranges. Mortgages interest rates have dropped back from the peak reached in November, so if they can find stability, sentiment could start to improve.

Paradise

Sales Pricing

Due to relatively low volumes and a wide range of price points, the Northeast Valley luxury market can display a lot of volatility if measured monthly. We therefore prefer to measure price per sq. ft. over a longer period to identify trends more accurately. The twelve-month average currently stands at $488, up 20% from $407 in December 2021. The six-month average stands at $477, up 13% from $422 in December 2021, but down from $504 in August. The three-month average stands at $473, down from the peak of $512 in June because pricing has weakened sharply over the past seven months due to the steep drop in demand and improved supply. The strong upward pricing trend that has persisted for many years has reversed course and we expect the twelvemonth average will change direction in 2023 like the three-month average did in July and the six-month average did in September.

Under Contract Pricing

The average under contract price per square foot stands at $560, up from $545 last month and much higher than the $528 we measured a year ago. This suggests that the recent weakness in sale prices may ease during January and February.