It’s interesting to me that for the last week or so, the Cromford Report has been putting out statistics analyzing everything from where the most expensive homes are being sold, to where most homes between $200-400K are selling. The common denominator of all of these charts, data and analysis seems to be location. Yes- the first rule of real estate.
Even with low gas prices, Phoenicians resoundingly head into the “Core” of the Metro area which is heavily weighted to homes inside the loop 101 and north of the 101 Loop. I’d also include areas that are north of the 60FWY from east to west within the 101 Loop, which would include Tempe, parts of Chandler & Ahwatukee. When you consider that most of the areas business centers, including Downtown & Midtown Phoenix, The Biltmore/Camelback Corridor Area, Downtown/Old Town Scottsdale, Scottsdale Airpark among other areas are inside this area, it becomes a little easier to envision. After years of commutes to far out-reaching areas like Avondale, Buckeye & Queen Creek, it appears that many people have simply decided they don’t want to spend their money or their time commuting and this is starting to manifest itself in our real estate market stats.
Here are a few stats I saw and the ones most worth noting. I’ve shaded all of the zip codes with a large portion of their area inside the “Core” of our metro area. This chart shows single family homes between $200-400K with the least inventory: (5/11/15)
With the exception of Chandler, 85224 & Mesa, 85202, which are both just outside the boundaries I mentioned, the 10 of the 20 zip codes with the least inventory all lie within this “Core” area. As you head further down the list, for the next 10 zips, another 4 homes would fall into the this area also.
Conversely, all but 2 of the zip codes with the most inventory, fall outside of the “Core”- Phoenix, 85007, & Phoenix 85022. The 85007 zip code starts at the top of some of the most established historic districts and includes the Encanto-Palmcroft, Fairview & FQ Story Districts. The gorgeous historic homes there are now in the new FAA flight path. If I hadn’t seen 5 homes listed on one block across the street from the southern end of Encanto Park, heard the noise overhead and felt the rumble in the ground for myself while out with clients, I’d not have a better perspective for why people might want to leave… Phoenix 85022 is the Moon Valley area. It also has a healthy supply of luxury homes around the Moon Valley Country club and the inventory is probably a little skewed because of it.
The next chart shows, single-family homes under $500K with the least inventory: (5/10/15)
Even in the “Move Up” category, the trend is similar. This is what this chart looks like for the homes from $400-800K in zip codes with the least inventory: (5/12/15)
The interesting part is that even for luxury homes, or those priced over $1M, the same holds true- the further into the core that the home is, the more likely it is to sell and have a lower “Days of Inventory”, this is with 1 exception, the Town of Paradise Valley, or 85253. (5/9/15)
The 1st 7 homes on this list fall into the “Core”. After that, the days on market rises sharply above 1 year of inventory. All of the remaining zip codes, except 85253 are outside of the “Core”. Paradise Valley is also one of the most expensive in the US and likely has the highest concentration of homes over $1M in the state. In 2014, Paradise Valley was the 127th priciest zip code in the US with an median home price of over $1.7M. Scottsdale, 85262 ranked at #391 at just over $1M for the median home price.
For a slightly different perspective on this chart, consider this map below of these 16 zip codes shaded in green to demonstrate just where they are:
All of the homes at or under a 1-year supply, with the exception of Paradise Valley which has the most inventory on this chart, are all inside of this area too. Given that our median sales price for the ARMLS area is $210,000 and rising, there has to be a reason that these zip codes are performing so much better than their luxury cousins on the outside.
Many of these homes in the areas on the outside are secondary homes- vacation, corporate or otherwise. They are further away from various area amenities. When you’re spending $1M or more on a 2nd (or 3rd and so on) home, you may not be as concerned with having to drive an extra 10 min to go get some groceries, if your sole purpose is to be on vacation and/or you’re seeking solitude or beautiful views.
On the flip side, if you’re buying a luxury primary home particularly one in the center of town, it’s probably because it will put you MUCH closer to the things you spend most of your time doing. People are still choosing to live closer to the place where they work and spend their time out of work for lots of reasons- shorter commute, less money spent on gas, closer proximity to dining, shopping, recreation, etc., the things that matter to them. All of these factors contribute to a better quality of life. And when you have the money to buy a luxury home, maximizing your quality of life is probably at the top of the list of priorities.
The trend I’ve seen over the last several years from the start of the recovery is that buyers at all price points want to live closer to the things that matter to them. Unless it’s a vacation home, my clients are all going in droves to centrally located areas with lots of amenities that are close to where they work and to family. I think this is a trend that will continue and homes in the “Core” will continue to see stable values and healthy appreciation. After all, how far do YOU want to live from the things that matter to YOU most??