Market Update August 19th, 2024

The high-end real estate market often experiences a significant slowdown during the summer months, which can cause noticeable distortions in market averages, particularly those related to pricing. This seasonal dip is a common occurrence, affecting the overall market dynamics and skewing data that reflects the true state of the market. To better understand how this happens, it’s essential to examine specific regions within the Greater Phoenix area and compare their performance during the months of April and July.

Focusing on the Northeast Valley, where most luxury homes are located, we define this region as including Carefree, Cave Creek, Fort McDowell, Fountain Hills, Paradise Valley, Rio Verde, and Scottsdale, with the addition of Phoenix 85016 and 85018, while excluding Scottsdale 85257. In this area, the number of single-family detached home sales dropped from 662 in April to 440 in July, reflecting a substantial 34% decline in unit volume. Correspondingly, the average price per square foot also decreased from $558.56 to $505.70, marking a 9.5% decline.

In contrast, the rest of the Greater Phoenix area, excluding the defined Northeast Valley, showed a much smaller decrease in market activity. The sales count for single-family detached homes fell from 4,631 in April to 4,267 in July, representing only an 8% drop. Additionally, the average price per square foot in this broader area decreased slightly from $262.36 to $254.26, a modest 3% decline. These figures indicate that the high-end market in the Northeast Valley has a more pronounced impact on the overall market averages.

When examining Greater Phoenix as a whole, the weakening contribution from luxury sales is evident. The average price per square foot for the entire region fell from $313.17 in April to $289.28 in July, a 7.6% decline, which is more than double the decrease seen in areas outside the Northeast Valley. However, it is expected that high-end sales will rebound as temperatures cool, leading to a recovery in their contribution to the market, and subsequently, the stabilization of average pricing.

Now is the time to prepare especially if interest rates start cooling even more! 

“When you arise in the morning, think of what a privilege it is to be alive, to think, to enjoy, to love.”
—Marcus Aurelius

Have a great week everyone!