High demand for luxury homes continues
Players in
metropolitan Phoenix's luxury home
market say demand for expensive houses is running
high despite rising prices and scarce land in
desirable neighborhoods.
Traditional luxury
enclave
Paradise
Valley leads the pack when it comes to
highest median price but values are rising faster in
other expensive spots. Among them: North Scottsdale,
Carefree and the Biltmore and Arcadia areas of
Phoenix.
Investors, retired
executives, athletes or successful business types
looking for the ultimate in move-up housing are
helping drive sales of new and existing luxury
homes. Their willingness to pay up for a big house
loaded with things such as a home theater, gourmet
kitchen and wine room on a sizable lot is ratcheting
up prices and changing the boundaries of the luxury
market.
"It's nuts out
there," said Tori Levitt, senior mortgage consultant
with Optimum Financial. "I think it is a great
market for both buyer and seller."
Buyers benefit with
low interest rates and interest-only loans that keep
payments down, she said. Sellers, she said, are
enjoying multiple offers and noted that full-price
offers are becoming pass?as most serious buyers are
bidding above the list price to lock up the deal.
"Values are jumping
by the thousands in the span of just a few months,"
Levitt said. "Sellers are negating appraisals out of
the contracts and requesting non-refundable earnest
deposits following inspection periods."
Home values in
pricey neighborhoods have been on a tear in recent
years. The median price in the combined new and
resale markets in the Paradise Valley ZIP
code 85253 has risen from $687,500 in 1999 to
$938,750 in the first half of this year, a gain of
more than 36 percent, according to The Arizona
Republic's analysis of data from Marketon.
That market has
cooled somewhat since last year but nearby luxury
ZIPs are hotter than ever.
North
Scottsdale's 85255 ZIP, home to trendy
communities such as DC Ranch and Troon, was a strong
performer last year but moved into the elite class
of price gainers, up more than 17 percent in the
first half of this year.
The median overall
price in the ZIP is $499,250, beaten only by
Paradise Valley, Carefree and neighboring
ZIP 85259 that covers the Shea Boulevard corridor on
Scottsdale's eastern boundary.
Some Valley housing
pros still define a luxury home as one that costs at
least $1 million. But others say that $1 million
doesn't get you in the door in the best
neighborhoods and insist that luxury really starts
at around $3 million.
The top house deals
in metropolitan Phoenix routinely run in the
$2 million range and $3 million sales aren't
unusual. In a recent week this month, all of the top
10 house sales were $2 million or more, with two
exceeding $6 million and one other of more than $3
million.
"The days of
building a $2 million custom home in north
Scottsdale or Paradise Valley are rapidly coming
to a close," said Tony Calvis, a principal of Calvis
Wyant Luxury Homes, a custom builder in Scottsdale.
Commercial real
estate developer Russ Scaramella and his wife, Lori,
looked at houses all over the Valley before settling
on a DC Ranch home that was under construction. The
couple figures they saved time and money by buying a
speculative, or "spec," house that Calvis Wyant was
working on. They still were able to pick out the
features that would give the house its final look
while bypassing a big chunk of the building process.
The house cost
between $4 million and $5 million and covers 8,200
square feet. The couple evaluated the house for its
investment potential and knew they were moving to a
neighborhood that is appreciating. But they also
sized it up for its proximity to schools, its views
and as a place to raise their four children.
"We didn't buy it
to sell it," Russ Scaramella said. "We bought it to
live in it."
Rising land prices
are helping drive up the price of
luxury homes. The wave of teardowns, the
practice of buying and destroying an old house to
clear the lot for a new mansion, is moving beyond
Paradise Valley and Arcadia. Calvis said it's
happening more often between 64th Street and
Scottsdale Road, mainly between Shea Boulevard and
Cactus Road where buyers are attracted to houses
sitting on acre-sized, or larger, lots. Phoenix's
Central Avenue Corridor also is picking up more
teardown action as buyers who work downtown try to
shorten their commutes.
"The big thing is
this just continues to be a great place to live,"
Calvis said. "Because of that, I'm very bullish on
the future. . . . We don't have an ocean but it is
pretty close and people in California who have an
ocean don't have a problem coming here."
Glen Creno
The Arizona Republic
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