It’s no secret that the real estate market is in a difficult position right now. Rampant inflation and rising interest rates have slowed market activity and caused prices in many areas to come down. Current and future investors are wondering what all of this means for their property values, both now and in the future. The long-term prognosis for the value of North Scottsdale luxury real estate remains positive for reasons that you’ll read about below.
What’s the market currently doing?
Right now, the housing market in Scottsdale is competitive. Homes tend to go under contract within four to six weeks of becoming available. Some properties may sell more quickly, but it’s uncommon for a home to spend less than three to four weeks on the market. Most sellers will eventually accept an offer lower than their original asking price. The good news is that home prices remain higher than they were one year ago, but it remains to be seen how long this will last, given the likelihood of an upcoming recession.
What factors are impacting the market?
There are a number of reasons why the market seems likely to encounter a short-term recession in the near future. The two most significant factors are higher interest rates and heavy inflation. After multiple years of strong buyer activity due to interest rates that were significantly lower than average, things began to slow down in 2022.
Interest rates came up again, and buyers no longer showed up in large groups to shop for available properties. The decrease in demand correlated with a slight drop in sales prices, and there’s no way to know how long the market will be stuck in this type of position. The Federal Reserve has expressed optimism that interest rates could come down sometime within the next year or two, but this is unlikely to happen until inflation gets under control.
Interest rates came up again, and buyers no longer showed up in large groups to shop for available properties. The decrease in demand correlated with a slight drop in sales prices, and there’s no way to know how long the market will be stuck in this type of position. The Federal Reserve has expressed optimism that interest rates could come down sometime within the next year or two, but this is unlikely to happen until inflation gets under control.
How does the current state of the market affect the value of luxury properties?
The present state of the market has little to no effect on the long-term value of luxury real estate. Because buyers of luxury properties tend to be very well-off and highly qualified, they don’t have to worry as much about changes in the housing market or the national economy. Luxury property exists in a separate market in many ways, especially in an area like Scottsdale, which will always be a place where people want to live.
Another reason long-term home values aren’t greatly affected by the current state of the market has to do with the fact that homes are hard assets. A hard asset is something with real and tangible value. Unlike a stock price that can change multiple times throughout the day, it can sometimes take months (or even years) to notice a significant change in the value of a home.
Another reason long-term home values aren’t greatly affected by the current state of the market has to do with the fact that homes are hard assets. A hard asset is something with real and tangible value. Unlike a stock price that can change multiple times throughout the day, it can sometimes take months (or even years) to notice a significant change in the value of a home.
How does inflation impact the value of luxury homes?
Over the past 100 years, home prices have outpaced inflation by nearly 3%. This means that home values are not only remaining consistent with inflation, but homes are actually becoming worth more over time. This is true even though the last 100 years featured multiple significant financial trials, including the Great Depression of the 1930s and the housing market crash of 2008. The real estate market has shown an ability on multiple occasions to respond to challenges in the local market and come back stronger than it was before.
Shouldn’t I be worried about what the market is doing right now?
It’s worth noting what is happening right now, but it’s truly not something you need to be overly concerned about. Many experts continue to believe that the market is still in a position of overall health and stability. One number you’ll sometimes hear about from industry leaders is the mortgage delinquency rate. Many people believe that the mortgage delinquency rate tells a greater story about how the market currently stands. A higher mortgage delinquency rate would suggest more significant concern about the short-term future of the market. Mortgage delinquency rates are as low as they have been in over 25 years. This is good news for anyone with a stake in the real estate industry.
What can I do if I want to raise my home’s value?
The good thing about the long-term value of your property is that you can control more than you think. There are several ways that you can boost your home’s value and increase the ROI that you would expect to receive when you sell your home. Start by performing minor upgrades in your kitchen or bathroom.
Look for ways that you can make your home more energy-efficient. Not only will this increase the value of your property, but it will also save you money on your utility bills. If you choose to install new windows or replace your garage door, you will improve your home’s insulation while also boosting your curb appeal. Buyers also love to see homes with upgraded outdoor living spaces, especially luxury properties. Consider adding a fully stocked outdoor kitchen to your patio area or wiring your outdoor living space for surround sound.
Look for ways that you can make your home more energy-efficient. Not only will this increase the value of your property, but it will also save you money on your utility bills. If you choose to install new windows or replace your garage door, you will improve your home’s insulation while also boosting your curb appeal. Buyers also love to see homes with upgraded outdoor living spaces, especially luxury properties. Consider adding a fully stocked outdoor kitchen to your patio area or wiring your outdoor living space for surround sound.
Anxious to join the North Scottsdale real estate market?
If you decide that now is the time for you to invest in North Scottsdale luxury real estate, reach out to POWER+, and they will help you get the process started. They have spent many years helping buyers and sellers find the best possible deals when shopping for homes in the area. They boast a tremendous knowledge of the market for Desert Mountain luxury real estate, and they take pride in educating their clients and answering any questions that may come up. Contact their team when you’re ready to move forward.
