South East Valley - Killing it!! - Market Update

Cromford Daily Observation - When we look at the market for single family homes over $500,000 we see the following changes in the quarterly average price per sq. ft.

Area	Average $/SF Dec 2015 - Feb 2017	Average $/SF Dec 2016 - Feb 2017	% Change
West Valley	$172.13	$165.02	-4.1%
Phoenix	$231.84	$230.62	-0.5%
Northeast Valley	$355.87	$352.71	-0.9%
Southeast Valley	$163.90	$173.57	+5.9%

The Southeast Valley sticks out like a sore thumb and has done for several months now. This is the only large area where homes over $500,000 have been selling for much higher average prices per sq. ft. than last year. There are certainly a few spots in the Northeast Valley and Phoenix that have done the same, such as Arcadia and Old Town Scottsdale, but when we consider the larger areas, these favorable trends are dragged down by the weak price trends in North Scottsdale, Paradise Valley, Fountain Hills, Carefree and the Biltmore District. The $/SF ratio between the northeast and the southeast has closed from 2.17:1 to 2.03 :1 over the past 12 months.

Again restricting our analysis to homes over $500,000 we can find some pretty steep rises in the quarterly average price per sq. ft. in the following southeastern ZIP codes:

• Mesa 85213 - up 26% from $131.68 to $165.85
• Gilbert 85298 - up 19% from $150.29 to $178.37
• Mesa 85207 - up 11% from $168.59 to $187.86
• Tempe 85284 - up 6% from $182.27 to $193.26
• Gilbert 85234 - up 6% from $161.58 to $171.78

All of these areas offer the buyer a good choice of large luxury style homes at relatively cheap prices, luxury homes for the budget conscious, if you like. Since this has become a visible phenomenon over the past 6 months, I wonder if there is a correlation between this favorable price trend and the creation of high-tech jobs in the Southeast Valley particularly along Rural Road. The jobs pay above-average salaries and for lower-end luxury home buyers who care about getting the maximum house for their money (and living close to a freeway so they can get to work easily), the Southeast Valley has been looking pretty inexpensive for the last several years. Of course that advantage could erode if prices continue to rise faster than the Phoenix area as a whole. As you can see in the table above, there is still a big price gap between the southeast and the northeast (and Phoenix), so the southeast still has a lot of room to run before its price advantage is gone.