SCOTTSDALE LAGS VALLEY AS HOME SALES CLIMB

Yes, we are at 2 year highs when looking at the weekly sales here in the valley. Yet homes in Scottsdale are not moving. Most of that is about pricing. We see homes selling, and some at what I would consider over value prices, but we don't see the type of activity we would expect in Scottsdale. Why is there so much activity in the West valley? Two reasons: Prices and mortgage availability. Prices have come down dramatically and buyers are swooping in to pick up the good values. Plus with FHA raising their limits to $357,000 purchase price, that brings plenty of liquidity to that market.
FHA does not help most of Scottsdale. Two things are hurting the Scottsdale market: Prices and mortgages. Prices have come down, but not as low as they will go. I was out previewing for a client in McCormick Ranch last week. I looked at 12 competing properties ranging from $489,000 to $675,000. I capped it at $675,000, because there were plenty of other homes at higher prices that would have fit in this group. That was the point, this group of homes were very similar. Yeah, there were some variances and they were not all the same value. But none had a $200,000 variance in values. So, what I am saying is pricing does not represent value properly. The other issue is mortgages, this price range and higher price ranges put the mortgage in a JUMBO status. Interest rates on JUMBO are still very high and this is hurting demand. Maybe as prices come down we will see rates drop. The risk will be lessened as prices drop. Let's hope the banks respond with those lower rates.