A lot of us are wondering what the heck is going on in the Scottsdale real estate market.
Housing prices are through the roof, more than 20% in some places, and the availability is painfully low. The Phoenix area is one of the prime destinations for businesses and residents leaving overpriced and over regulated states like California. Housing prices here are more and more looking like what has been going on in the Golden State over the past few decades: Up up and up.
It's not all Californians’ fault, of course. Many factors play into that high-cost, low-availability market that were experiencing in housing right now in Scottsdale.
Let's address a few of them:
Arizona is one of the top growing states according to the 2020 Census Forbes also reports that Arizona is one of the top places for economic growth and Wallet Hub noted that Scottsdale was th sixth-best city in the nation to find a job. It's also a low-tax state and middle-of-the-pack in cost of living. No wonder people are moving from high-cost states to Arizona.
While we have seen slightly lower interest rates for housing over the past year or so, the cost of borrowing money for a place to live is as low as it's been during most of our lives. That may (will) change, but the threat of that rising pushes some buyers to pull the trigger now instead of waiting. They also can afford more home, or more expensive homes like those in Scottsdale.
The fact that prices are going up so fast also may spur some buyers to jump into the market now when normally they would have waited to create a greater down payment or pass some other financial threshold.
Covid risk aversion:
People are not putting their houses up for sale, and much of that is because they are risk-averse to making big changes in her life right in the middle of a pandemic. They don't know if they could buy a new house with the gains the current house they would be selling in Scottsdale. Many people are not secure in employment. So fewer people putting their house up for sale. That means more buyers are chasing fewer sellers, and buyers almost always pay more in that scenario.
Arizona is right next door to California, the once-Golden State where residents and businesses are now fleeing because of high taxes, high housing costs, high regulation, traffic, natural disasters, and more. If you look at the cost of a house in L.A. compared to one in Phoenix, it's more than twice the price. And while Scottsdale is roughly half again the average housing cost of Phoenix, you can still get a very nice place here with a dollars you would make selling a mediocre house in California. And you would pay less on taxes and almost everything else. Scottsdale is a beneficiary of California's woes, if you consider more people moving from there beneficial.
The New Economy:
One thing businesses learned during the pandemic is that there are more opportunities for remote working than previously recognized. That encourages suburban growth and offers more motivation for fleeing areas with high crime or costs for a more passively and pleasant environs, like Scottsdale. More people can keep their job, or at least their work, and live remotely.
This may affect Scottsdale less than lower-priced housing market, but millennials are becoming more and more the dominant force in today's housing market. And because of nearly back-to-back recessions, that demand has been delayed and is coming to bear fruit with a passion these days. That may also push move up buyers and surrounding communities to consider a move to Scottsdale.
So what happens now?
As the economic and social devastation of the pandemic recession fades, more and more people will be moving, changing jobs, putting their house up for sale, getting on with life as we knew it before all this happened. And as the old saying goes, "Trees don't grow to the sky." My guess is that prices will plateau, perhaps even dip a bit, before resuming its traditional upward path of 3- 4% appreciation. So by this time next year, we should have a much more normal, although much higher cost, market.