When we blogged in May about the Greater Phoenix luxury home market, sales were stagnant and properties were sitting on the market for long periods of time. The coronavirus pandemic forced many owners to stay in place, and jumbo loans were difficult to secure. As we head into the final stretch of 2020, the high-end market has been on an absolute tear—even during a traditionally quiet part of the year.
The Arizona Regional MLS recorded its first-ever sale over $20 million in October, with two transactions at this price point. November also saw record-breaking sales within specific neighborhoods, including an Arcadia home that sold for $7.65 million, and a Desert Mountain property that sold for $10.2 million. The effect is not limited to the ultra-luxury segment, however: The first two weeks of November saw 771 closings over $500,000 across Greater Phoenix—an increase of 90% compared to the same period in 2019 and an increase of 183% vs. 2018.
Questions remain about the potential effects of Arizona’s recently passed Proposition 208, which creates a new income tax on individuals who make over $250K or couples who make over $500K annually. While there are concerns about the law’s impact on economic growth and demand for high-end homes in Greater Phoenix, to this point, there has been little evidence of contract cancellations or diminished new contract activity over $1M. Time will tell whether that remains the case.
Perspectives for Sellers and Buyers in the Greater Phoenix Luxury Home Market
If you are a seller, the current market represents an amazing opportunity: high demand, low supply, and very low interest rates. You are in a position where you can call your price and negotiate a favorable deal—as long as you have a strategic plan. Despite the several-month surge, you can’t assume that the market is going to continue to appreciate. There is also an important caveat: Buyers still need to get an appraisal to support the price or to close the gap with cash.
On the buyers’ side, it is obviously a tougher situation, but low interest rates and the availability of jumbo loans (which were scarce during the spring and summer) can take some of the sting out. Although supply is low, the best opportunity is to focus on properties that may require a little bit more renovation work. That’s where the value is at currently because those homes are sitting on the market a bit longer.
Whether you are buying or selling a luxury home or something in a more modest price range, the expert real estate team at R.O.I. Properties can help you create a strategic plan—and find and execute the right deal. Contact us at 602-319-1326, or [email protected].