A 15,000-square-foot home on 17 acres within the Silverleaf community in North Scottsdale sold for a record-breaking $24.1 million in 2020. (Provided photo)
Here’s why the luxury housing market is exploding in Metro Phoenix
In the past five years, the Metro Phoenix market median home price has nearly doubled. In Phoenix, the median home price is $405,000 compared with $215,000 five years ago, according to Redfin market data. From April to June, houses across town hit their lowest number of days on the market, in Phoenix that number was 22 days.
According to Redfin market reports, the median sale price of single family homes in Scottsdale is $900,000, up 20% year-over-year. In Paradise Valley. The median single family home median sold for $2.8 million, up 34% year-over-year and more than doubled since the end of 2016.
Since October 2020 32.7% of homes in Scottsdale sold over list price.
The luxury housing market has been subject to the same trends as the rest of the market. Low inventory, supply chain issues for new builds and demand and rising prices all affect both markets.
At the same time, people are migrating to the county for the luxury market for the same reason as the rest of the market. Maricopa County is one of the fastest growing areas in the country, and it is much less expensive than other areas.
“The same house someone might be able to purchase here for $6 million might have been $12 million in the Bay Area,” Babbi Gabel, a founding partner at RETSY, explains.
About half of the houses Gabel’s clients are looking for are second homes.
But what makes a luxury home luxury? Gabel describes them as homes that are custom, have custom finishes or have a unique aspect starting at a price point of about $1.5 million.
Five to 10 years ago, Scottsdale and Paradise Valley were not a $5 million market, nowadays the average price ranges from $4 to $6 million. Heightened materials cost has led to more expensive remodels and new builds in the luxury housing market.
“We’re starting to see new builds in the price range of $7 to $20 million. This was completely unheard of even five years ago,” she explains.
Buildable land is also adding to rising prices. In places like Paradise Valley, which is landlocked with no room to expand, builders are paying nearly $2 million an acre. For the new building to be profitable they have to build at a much higher price per square foot.
Gabel says that like the non-luxury market, inventory is at an all time low, but demand is still high. She notes that in 2020 she had 571 active listings in Scottsdale and in 2021 it was down to 333 listings. And like the rest of the market, homes have multiple offers and get sold quickly.
“At certain times the luxury market does its own thing, but what we’ve seen over the last three years is just a crazy market all across the board,” Gabel says. “My partner and I right now have 20 buyers who are above $2 million that are looking here in the Valley. We can’t find anything.”
She predicts these trends continuing in the future.
She concludes, “for the next four to five years, growth and demand is going to continue to drive the housing market. Provided there’s nothing unforeseeable and interest rates or inflation don’t go through the roof.”