The Scottsdale housing market has long been a dynamic one, and 2024 is no exception. While the red-hot seller's market of recent years has tempered somewhat, the question remains: is it still a good time to sell a house in Scottsdale? Let's delve into the key market indicators to understand where Scottsdale stands and what it means for sellers in 2024.
Signs of a Balanced Market in Scottsdale
- Inventory on the Rise: Data suggests an increase in active listings compared to last year. This indicates more options for buyers, which can nudge the market towards a more balanced playing field.
- Sale-to-List Price Ratio: Currently, homes in Scottsdale are selling close to their asking price, with a ratio hovering around 97-98%. This suggests that sellers are achieving fair value without bidding wars typically seen in a strong seller's market.
- Days on Market: The median days on market have decreased compared to previous years, indicating a brisk sales pace. However, they haven't dipped as dramatically as in a seller's market, suggesting a more balanced dynamic between buyers who can take their time and sellers who can expect interest without properties lingering.
Advantages for Sellers in 2024
- Appreciation on the Horizon: Market forecasts predict continued growth in home prices, albeit at a more moderate pace than recent years. This means sellers can still expect to fetch a good price for their property.
- Favorable Conditions in Specific Segments: The entry-level market (homes between $500,000 and $700,000) remains competitive, favoring sellers in this segment.
While the overall market presents a balanced picture, it's crucial to remember that the Scottsdale real estate landscape can vary by neighborhood and price range. While the breakneck seller's market pace has slowed, sellers can still capitalize on a market with rising home values and continued buyer interest. By strategically pricing their property, leveraging the expertise of a local realtor, and making their home shine, sellers can navigate this balanced market successfully.
Scottsdale Housing Market Forecast 2024-2025
The average home value in Scottsdale, AZ, currently sits at around $824,119, a figure that's been steadily climbing, though at a slower pace recently. But, that's just the average—there's much more to the story than a single number.
The Scottsdale housing market is, as you'd expect in a desirable location like this, a dynamic place. The current average home price reflects this, but it doesn't tell the whole story. Things are moving a bit slower compared to the frenzied buying periods we saw a couple of years ago. Homes are still selling, but the days on market are lengthening slightly.
What used to be a matter of hours or days is now often measured in weeks. Zillow reports that homes in Scottsdale go pending in around 35 days. This doesn't mean it's a buyer's market, but it does signify a shift away from the extreme seller's market we experienced earlier.
Factors Influencing the Scottsdale Housing Market Forecast:
Several factors play a significant role in shaping the future of the Scottsdale housing market. These are not isolated events but interact in complex ways. Let’s examine them carefully:
1. Interest Rates: One of the biggest drivers of the housing market is interest rates. When interest rates are low, borrowing money becomes more affordable, leading to increased demand and higher prices. Conversely, rising interest rates make mortgages more expensive, cooling down the market. The Federal Reserve's actions regarding interest rates will heavily influence the Scottsdale market. Personally, I believe that the current fluctuations are causing some uncertainty, impacting buyer behavior. It's harder for buyers to predict with complete confidence where prices will be in the future.
2. Inflation and Economic Conditions: The overall economy significantly impacts the housing market. High inflation reduces purchasing power, potentially slowing down buyer activity. Recessions or periods of economic uncertainty can make people hesitant to make significant investments, such as buying a home. Conversely, a strong economy can boost confidence and increase demand. Currently, we are seeing moderate inflation, which is impacting buyers' affordability in Scottsdale's higher price range.
3. Population Growth and Migration: Scottsdale's appeal as a desirable place to live continues to draw people from all over the country, and even internationally. This population influx can put upward pressure on housing prices. If this migration continues, the demand for housing in Scottsdale will remain robust. I've seen many people relocate from California and other states, attracted by Scottsdale's climate and lifestyle.
4. Inventory Levels: The number of homes available for sale is a critical factor. Low inventory usually leads to higher prices because of increased competition among buyers. High inventory, conversely, can lead to price drops or slower price appreciation. While inventory isn't excessively high, it's not as low as it was, leading to the slightly longer days on market I mentioned earlier.
5. New Construction: The pace of new home construction can directly influence the market. Increased new builds can help alleviate low inventory and stabilize prices. However, construction costs are high, which means new homes are generally priced at the premium end of the market. This has implications for the supply of affordable housing in Scottsdale.
6. Local Regulations and Zoning: Government policies and regulations related to land use, zoning, and building permits can affect the supply of available housing. Stricter regulations can slow down development and contribute to lower inventory. Scottsdale's policies regarding density and development play a significant role in shaping the long-term supply of housing.
Short-Term Predictions:
Predicting the future is never an exact science, but based on the factors above, here's my take on the Scottsdale housing market forecast for the short term (the next 6-12 months):
- I anticipate a continuation of the current trend: steady, but not explosive, price growth. We're unlikely to see a dramatic spike in prices, but neither are we likely to experience a major correction.
- The days on market will likely remain relatively stable. While there might be slight fluctuations, I don’t foresee a significant increase or decrease.
- The high-end market might see some price adjustments depending on interest rate changes and buyer behavior. The more affordable segments of the market may remain steadier.
Long-Term Predictions:
Looking further out, the long-term Scottsdale housing market forecast (3-5 years) requires considering even more variables, such as broader national and global economic conditions, long-term shifts in population dynamics, and unexpected events. This is harder to predict precisely! However, I'd suggest these possibilities:
- Continued, albeit moderate, price appreciation remains the most likely scenario. Scottsdale's inherent desirability will likely maintain a certain level of demand.
- Competition for desirable properties will likely remain strong, although perhaps less intense than in recent years.
- The interplay between interest rates, inflation, and economic growth will significantly impact future market activity.
The Scottsdale housing market forecast is positive in the long term, but the short-term outlook requires careful observation of economic indicators. There is, and will likely continue to be, opportunity for both buyers and sellers in this sophisticated and highly desirable market. Remember, every situation is unique. It's always best to consult with a seasoned real estate professional to receive personalized advice based on your circumstances.
Should You Invest in the Scottsdale Real Estate Market?
Scottsdale, Arizona is a highly desirable location for real estate investment. With its warm climate, stunning natural scenery, vibrant nightlife, and high-quality educational institutions, Scottsdale has something to offer for everyone. The city has been ranked as one of the best places to live in the United States, and it is not hard to see why.
The Scottsdale real estate market has been thriving in recent years. The average home value in Scottsdale is $807,104, up 4.8% over the past year. The median days to pending is around 35 days, indicating that homes are still selling quckly.
There are many investment opportunities in Scottsdale, ranging from single-family homes to multifamily properties. The city has a diverse range of properties available, from luxury homes to more affordable options. One of the most promising investment opportunities in Scottsdale is in rental properties. The rental market is strong. The city has a high demand for rental properties, making it a great location to invest in rental real estate.
Another promising area for real estate investment in Scottsdale is commercial real estate. The city has a thriving economy, with a range of businesses and industries that are in need of commercial space. With a growing population and a strong economy, the demand for commercial real estate is likely to continue to grow in the coming years.
The Excellent Quality of Life
A city in a large metropolitan area is competing with every other city for residents. If the city is poorly managed or simply deteriorates, it’ll lose residents who only have to move a few miles to get away from it. In this regard, Scottsdale real estate investment is a wise choice because the city stands out in terms of quality of life. We’ll ignore the golf courses and focus instead on A-rated public schools and family-friendly amenities. They could do a little better on crime, but there are areas in Phoenix real estate market that are far worse.
Scottsdale's Job Market
Scottsdale is also an emerging tech market, with companies GoDaddy, Yelp, Paypal, Indeed.com, and Paradigm Tech all opening offices downtown. This is a great town for businesses, including small businesses and entrepreneurs. The Scottsdale job market has consistently averaged an unemployment rate a full point lower than the state average and roughly half a point lower than the Phoenix metro area average.
That alone would bolster the Scottsdale housing market. However, the relatively high property values mean much work here but live in other cities. Yet it contributes to a higher-than-expected rental rate in the Scottsdale housing market. Ironically, the high per capita income of 54K per person, twice the state average, drives up rents and housing prices.
Scottsdale's Tourist Market
Scottsdale is famous among locals for its Fashion Square Mall. However, you see more people coming here on vacation to enjoy the 200 local golf courses, many of which are world-class.
Others come to see the Major League Baseball teams in spring training in Scottsdale. Others stay in Scottsdale while watching teams practice in nearby Mesa. All of this explains why the city has the fourth-largest number of AAA four-diamond hotels in the United States. The nature of the tourist market, though, gives you the ability to rent out properties both nightly and for weeks at a time.
The Diverse Scottsdale Rental Market
The Scottsdale housing market has a more diverse rental market than just catering to those who can’t afford to buy a single-family home. For example, the area is famous for its snowbirds, retirees who come for the winter before returning home. Some of them buy a one or two-bedroom home to live in for half the year.
Others rent such properties. While many live in Sun City and other age-restricted communities, others choose to rent elsewhere in the Scottsdale real estate market.
They’ll prioritize amenities, proximity to healthcare providers, and low maintenance over cost in many cases. This population also increases the demand for RV-friendly homes and trailer parks. That provides an unusual play for those who want to profit off affordable housing in the Scottsdale housing market but don’t want to deal with Section 8 rentals.
Latest Rental Trends
As of May 2024, the median rent for all bedroom counts and property types in Scottsdale, AZ is $3,100. This is +55% higher than the national average. Rent prices for all bedroom counts and property types in Scottsdale, AZ have increased by 29% in the last month and have remained the same in the last year.
The monthly rent for an apartment in Scottsdale, AZ is $3,082. A 1-bedroom apartment in Scottsdale, AZ costs about $2,036 on average, while a 2-bedroom apartment is $3,032. Houses for rent in Scottsdale, AZ are more expensive, with an average monthly cost of $3,495.
Arizona is landlord-friendly compared to neighboring states like Nevada and California. What makes it notable is that it is becoming more landlord-friendly. For example, the city is passing laws that make it easier for landlords to enter units to make repairs. The state is making it easier to discard abandoned personal property and limiting appeals by those going through eviction. And it was already relatively fast and easy to evict people in Arizona.
The Scottsdale real estate investment options include the short-term rental market. The city requires short-term and vacation rentals to be registered with the county. Landlords must pay the transaction privilege sales tax and transient tax. A sales tax license is required. However, that’s simply the city saying you can rent out these units if you pay the same taxes that hotels do. The rest of the city’s regulations make the Scottsdale real estate market-friendly for renting out via sites like Airbnb.
They don’t limit short-term rentals to a tourist district. You can rent out both the main house and accessory dwelling unit on the same property. And state law doesn’t give cities the ability to apply new regulations that essentially ban short-term rentals. However, homeowners associations can regulate these types of properties, so do your research before you buy a Scottsdale real estate investment property assuming you can generate short-term rental income.
The Geographic Constraints
The Scottsdale real estate market is certain to experience appreciation for the same reason the local quality of life is so good – it is nearly surrounded by parks. The northern end of the city touches Tonto National Forest. The western edge borders McDowell Mountain Regional Park.
Homes with views and access to the national parks command a premium. Fort McDowell is a Native American reservation likewise off-limits. Tempe, Phoenix, and Mesa are all heavily developed. The city simply doesn’t have much room to expand to meet demand. This means the newest development will require redevelopment, increasing the cost of such properties and the value of existing housing stock.
At first glance, Scottsdale seems like a home buyer’s dream. It is full of suburban neighborhoods. The median household income is more than 70,000 dollars a year, and that’s pulled down by a retiree population so large that the average age is 46. However, affordability in the Scottsdale real estate market is relative.
The median wage is 73,000 but the median home price is approaching 400,000 dollars a year. This means many cannot afford to own a home though they may want to. This drives demand for rentals in the Scottsdale housing market.
It is surprisingly only a third of the residents rent, though this is somewhat higher than the 20 percent average for the area. Conversely, the high-paying jobs in the area are one reason many people move here, generating demand for rental properties by new residents.
The Relatively Low Tax Burden
Arizona has a surprisingly low property tax rate. It averages 0.85 percent of the property’s assessed value, while the national average hovers around 1.1 percent. Another benefit of Arizona real estate law is that the state limits the increases in the assessed value of property to 5 percent (or less) per year. This means your property taxes probably won’t rise at the same rate as the property value. That’s good since the Scottsdale housing market saw an appreciation of roughly five percent last year and is predicted to see at least 2 percent growth in 2019. Income taxes are competitive with the rest of the country and a bargain compared to tax-and-spend states like California, too.
