The luxury real estate market in Greater Phoenix has been booming this year thanks to its attractive combination of economic growth, scenic landscapes, and affordable living.
But what are the prospects for the last quarter of 2023? In this article, we will talk about the forecast, current trends, challenges, and opportunities for high-end buyers in Greater Phoenix in the next couple of months.
Greater Phoenix Luxury Real Estate Forecast for Q4
So far, the luxury real estate market has been strong for 2023, due largely to the demand from high-income buyers both nationally and internationally looking for luxury housing in the best locations.
While the Valley’s luxury home sales dipped slightly in summer, as they often do when high-ticket buyers seek cooler places, high-end home sales are already starting to creep back up as fall ushers in cooler weather. In fact, nearly 99% of Valley homes for sale in August met their list prices, up from 98% in August 2022.
For the fourth quarter, we expect luxury real estate in Greater Phoenix to continue to be in high demand due to the sunny weather, low taxes, relatively low cost of living, and favorable economic conditions.
Key areas where affluent buyers are looking this quarter include North Central Phoenix (Arcadia and Biltmore) and North Scottsdale, along with the ever-popular Paradise Valley.
Statistically, the market looks like it will continue to be favorable to sellers simply because of the lack of inventory. That said, cash buyers will find more opportunities and more ability to negotiate than at this time last year.
Q4: Current Trends in Luxury Residential Homes
One key trend in Greater Phoenix is the increasing demand for historic, custom, and estate living in various neighborhoods that offer distinct character and amenities. You can read more about some of the hot spots for luxury homes (such as Encanto-Palmcroft, Paradise Valley, and North Central Phoenix) here. These areas offer a mix of architectural styles, greenery, accessibility, and proximity to the city’s attractions.
Another trend is the rising prices and competition for luxury homes. Zillow reports that as of October 9th, 2023, there are 2,999 luxury homes for sale in Phoenix. The median listing price is $1.8 million. Buyers who are looking for luxury homes in Phoenix should be prepared to act fast and negotiate well, as the market is expected to remain hot and dynamic.
A third trend is the growing interest in new construction and modern design for luxury homes, as Sotheby’s International Realty showcases some of the stunning properties that feature contemporary aesthetics, spacious layouts, high-end finishes, and smart technology. These homes appeal to buyers who are looking for innovation, comfort, and style in their luxury living. Point2 also lists some of the luxury home builders and communities that offer new and customized options for buyers who want to create their dream homes.
Of course, just as the luxury communities in Greater Phoenix are unique from one another, so are their current market trends. Here is a deeper dive into some of Greater Phoenix’s top luxury markets:
The most current data from Redfin shows that the median price of homes in Paradise Valley increased by 3.2% year-over-year, reaching $3.2M in August 2023. The average time on market for homes in Paradise Valley was 53 days in August 2023, down from 73 days the previous August. The number of homes sold in Paradise Valley slipped from 22 in August 2022 to 21 in August 2023. Going into quarter four of this year, the Paradise Valley market is considered not very competitive. Experts say that low inventory and high prices are creating a “clogged market” in Paradise Valley, which is causing a market slowdown.
According to Redfin, the median price of homes in North Scottsdale increased by 4.0% in August 2023 compared to the same month last year, reaching $1.0M. The average time that homes in North Scottsdale stayed on the market before selling was 57 days, which is 18 days longer than last year. In August of this year, 399 homes were sold. That is 19 less than last year. Because of these trends, North Scottsdale is considered somewhat competitive going into the fourth quarter of 2023.
According to the latest data, the median price of Arcadia homes in August 2023 was $1.4M. This is a 14.9% increase from August of last year. The average time that homes in Arcadia stayed on the market before selling was 75 days, compared to 43 days in August 2022. The number of homes sold in August 2023 was slightly lower than last year, with 71 sales versus 72. Arcadia is considered not very competitive at this time.
A recent report on the Biltmore housing market shows that the median home price in August 2023 was $850K, a 37.1% increase from August 2022. Biltmore homes sold in an average of 46 days, which is a week more than the same period last year. There were 25 home sales in Biltmore in August this year, down by one from last year. The Biltmore market is considered somewhat competitive going into quarter four.
Data shows that the median price of homes in North Central Corridor rose by 24.4% year-over-year, reaching $1.2M in August 2023. Homes in North Central Phoenix stayed on the market for an average of 42 days. This is six days longer than August of last year. The number of homes sold increased slightly from 32 in August 2022 to 33 in August 2023. The North Central Phoenix market is considered somewhat competitive going into quarter four.
Factors Driving Luxury Home Demand in Greater Phoenix
The luxury housing market in Arizona has seen a surge in demand and a shortage in supply due to various reasons.
Cost of Living
Compared to California and other expensive states, Arizona offers lower taxes, cheaper living expenses, and more affordable housing costs. This means that people with high incomes can get more value for their money in Arizona, which fuels their interest in luxury homes. This results in rising home prices as supply fails to meet demand. This is a challenge that affects the entire Phoenix housing market.
Proximity to California
Arizona is a popular destination for high-income earners from California, which has the most affluent population in the US. The COVID-19 pandemic has enabled more professionals to work remotely or flexibly, and many of them have left the big cities in search of better housing options.
Arizona’s population is growing rapidly, but its housing supply is not keeping up. Some areas have zoning rules and development restrictions that limit the availability of land and properties. This creates a tight market that drives up the value of luxury homes.
Arizona has a strong economy and a stable real estate market that appeals to wealthy investors who want to buy luxury properties. They see Arizona as a safe and profitable place to invest their money.
The average home buyer faces many obstacles, including higher mortgage rates, soaring home prices, a nationwide housing shortage, and fierce competition. These factors don’t seem to have as much of an impact on buyers in the $1 Million and up range.
The 2023 luxury outlook report from Sotheby’s International Realty reveals that the steady sales of high-end properties are driven by two main factors:
- Personal wealth has increased significantly, creating a higher demand for luxury homes.
- The COVID-19 pandemic has made homebuyers more conscious of their living spaces and their quality.
Because many pay cash, luxury buyers are not affected by the changes in interest rates on the luxury residential market.
With these factors in mind, we expect the luxury housing market in Greater Phoenix to remain strong through the rest of 2023.
Challenges for the Luxury Housing Market in Q4
One major challenge affecting the real estate market is the fact that would-be Gen Z and Millennial buyers don’t feel that home ownership is attainable. This is due to several factors, including:
- Rising debt
- Increased borrowing costs
- Lack of savings for downpayment
- Student loan debt payments restarted
- Higher mortgage payment to total income ratios
These issues plague potential buyers not only in Greater Phoenix but across the country.
Another challenge is that investor activity has slowed due to challenges in the housing market, including less inventory and climbing mortgage rates.
Low inventory continues to stifle the market as luxury buyers have relatively few options when it comes to luxury homes in greater Phoenix.
Prices for luxury homes also continue to rise in places like Paradise Valley, Metro Phoenix, and Scottsdale, deterring some would-be buyers.
Q4: What Luxury Buyers Are Looking for in a Luxury Home
If you are selling your luxury home, it’s good to know what is attractive to high-end buyers. According to AZ Big Media, here are some things that luxury homebuyers in greater Phoenix are looking for in a home:
Outdoor Kitchen / Living Space
These features offer many benefits for enjoying the outdoors and hosting guests. An outdoor kitchen with a grill, fridge, stove, and sink makes for easy and convenient cooking and clean-up. An outdoor living area with cozy furniture and a fire pit or fireplace creates a warm and inviting space to entertain or relax.
A fitness room is a luxury feature that many homebuyers want. A fitness room can have equipment such as bikes, treadmills, weights, and machines for strength training. It can also have hand-held devices and accessories to enhance a workout. Having a fitness room in the home gives the homeowner the privacy and convenience that they won’t get from a gym membership.
A spa-like bathroom is another luxury feature that buyers want in their homes. This includes features such as a big tub with jets, a shower with multiple heads and body sprays, and a floor heating system. Some buyers may also want a bidet or a steam shower for extra comfort. Luxury buyers also prefer high-quality fixtures from brands like Grohe, Kohler, and TOTO for the best spa-like experience. The bathroom should also have elegant lighting to create the right mood. Lastly, large mirrors and smart storage systems make the bathroom feel like a hotel suite.
Smart appliances are often near the top of the list for luxury buyers. These devices offer the functionality and convenience that buyers are looking for. Smart refrigerators can check the status of your food from anywhere using temperature and humidity sensors.
Smart ovens can be controlled remotely and can be set to cook your food at the right temperature. Smart microwaves allow residents to reheat or prepare a meal with the touch of a button. Smart washing machines and dryers have sensors that can adjust the amount of detergent and water based on the size and weight of the load.
New Luxury Communities to Check Out in 2023
With the limited inventory for luxury housing, affluent buyers are searching for new construction opportunities in coveted communities. Here are a few examples of new communities you might explore. If you see a home or lot you like, get in touch with an experienced luxury real estate agent in Phoenix immediately, as these move quickly.
Situated in Scottsdale’s vibrant Shea corridor, Aura offers a prime living experience. This exclusive gated community comprises just 12 single-story homes, showcasing innovative designs by renowned architectural firm The Woodley Group. Spanning 3,000 to 3,500 square feet, these residences boast 3-4 bedrooms, a den, 3-car garages, open great rooms leading to indoor/outdoor spaces, and contemporary architectural elegance. While you’ll be tempted to stay in, Aura’s location provides easy access to Arizona’s natural beauty, including mountain vistas and hiking trails, as well as proximity to lakes, top-tier healthcare, and acclaimed educational institutions like Basis School. (Pre-selling now)
- 12 Lots
- 10,000 sq. ft. Lots
- Gated Community
- Prices Starting from the High $1.7 Millions
- 3,034 – 3,228 Sq. Ft.
Nestled amidst breathtaking mountain views and pristine desert landscapes, Shadow Ridge offers an idyllic Scottsdale haven. With expansive lots, some up to an acre in size, this sequel to the acclaimed White Horse and Bronco communities seamlessly blends contemporary design with timeless indoor-outdoor living. Positioned just a stone’s throw from the Tom’s Thumb trailhead, it provides a highly coveted location. You can explore their model homes at the Bronco community on N. Pima and Happy Valley Rd., featuring Skye View and Shadow Ridge. (Selling now)
- 31 Lots
- 1/2 Acre Lots
- Gated Community
- Prices Starting from the High $2 Millions
- 4,190 – 6,444 Sq. Ft.
Nestled within the sought-after North Phoenix corridor, Emblem at Talinn is a splendid gated community within the Talinn at Desert Ridge master plan, developed by home builder Shea. This community offers roomy single-family homes on the largest homesites in the master plan. There are five distinct floorplans with 3 to 6 bedrooms, 2.5 to 4.5 bathrooms, and 2- to 3-car garages. Residents enjoy access to expansive community parks, a planned recreation center with a pool, and a future elementary school to be constructed within the master plan. Emblem at Talinn boasts an ideal location in the Desert Ridge neighborhood of North Phoenix, providing convenient access to major freeways like I-17, Loop 101, and AZ-51 for quick commutes throughout Greater Phoenix. You’ll find shopping, dining, and entertainment nearby at Desert Ridge Marketplace, High Street, Kierland Commons, and Scottsdale Quarter. In addition, numerous golf courses are just a few miles away. (Two ready-to-build plans available)
- Gated community
- Prices starting just above $1 million
- 2,553-3,744 Sq. Ft.
- Part of the master plan will include parks, a community pool, and integrated bike/pedestrian paths
In April, the Paradise Valley Town Council unanimously approved a proposal for a 17-acre luxury residential community crafted by Scottsdale developer Silver Sky. Nestled on the picturesque slopes of Mummy Mountain, this exceptional property will host 12 distinctive homesites, with eight earmarked for custom-built residences and the remaining four for stunning showcase homes. These custom home plans, ranging in size from 7,500 to 15,000 square feet in size, are already in progress. Future amenities will include tennis courts, spacious multi-car garages, and state-of-the-art fitness facilities complete with spas and cold plunge pools.
- 1 to 1 ½ acre lots
- 7,500 – 15,000 Sq. Ft.
- Beautiful mountain views
Phoenix, Arizona, is one of the hottest markets for luxury homes in the country. The demand for high-end properties is expected to stay high through the end of this year. Whether you want to buy or sell a luxury home in Phoenix, Paradise Valley, Scottsdale, or nearby areas, you need an expert agent who can guide you through the process. Thomas Osterman is a trusted and experienced luxury real estate professional who can help you achieve your goals. Contact Thomas now at (602) 405-4052 to get started.