(480) 433-6036 raycutler@ubgre.com

Timing Matters

Hello fellow Scottsdale Real Estate investors,
Today I’d like to offer you a slightly different view of the Scottsdale Real Estate Market.
For this view, I have selected all Scottsdale homes sold from 2014-2017 for a price of $200K-$500K (our investment range).
As in the last investor post, I have split this group into categories of who sold the home:

  • An agent
  • A “flipper”
  • A FSBO (For Sale By Owner)
  • A builder (a new build)

There are several things we see when cutting the data this way:
There is very steady, upward, year on year on year growth in sales volume from 2014-2017

Each year has a predictable up and down undulation, peaking in ~Q1-Q2 and falling in ~Q3-Q4 (this pattern is generally true for all of greater Phoenix)

The percentages of each category tend to remain roughly the same over this period.

New builds have made a small comeback, but are not a significant part of the Scottsdale market.

Let me add a couple of my own thoughts to the picture, and try to draw a couple of conclusions:
New home builders have (so far) focused on building mid-priced homes on the edges of the metro area.
North Surprise, Gilbert, Chandler, Wickenburg, Goodyear just to name a few. Generally new builds today fit this profile: ~1500-4000 sq. feet that have are priced from ~200K-~450K.

New-build activity in Scottsdale (and other more central Geos) is very low (as the Cromford data shows). Perhaps builders are targeting 2nd time, move up home buyers. Survey data shows this demographic wants a bigger, fully equipped new home, for as reasonable price as they can get and they are willing to commute further to achieve that goal.

Additionally, thus far builders are not building starter homes. The price ranges fall between ~$250K-$600K, with the majority of homes built in the ~$300K-`$450K range.

This means that the starter market for existing homes is hot, hot and hot!

Inventory is and has been shrinking.
This seems counter-intuitive when looking at the ongoing sales growth, however, inventory has been shrinking for quite a while. I will post an inventory view next time, and we can look the data and discuss.
The good news for investors is that this shortage drives almost immediate equity through appreciation in both rents and home value after purchase. The bad news is the longer you wait to make your next purchase, the higher the price. It might be smart to “time” your buy to Q3-Q4

As discussed earlier, sales activity (competition) drops considerably in Q3 and Q4 and then picks up again in Q1 and Q2. Many smart investors use this trend to their advantage and focus their buys on the Q3, Q4 timeframe, getting the lowest purchase price.

All of this means it is a great time to be investing in Scottsdale real estate. Inventory is shrinking, rates remain historically low with very little competition from home builders, driving a very strong buyer demand.
If I can be of further assistance, please contact me and we can set up a call or meeting.