Friday, April 30, 2010
Phoenix Business Journal - by Jan Buchholz
Paradise Valley luxury homes are trading at a rapid clip, and one agent who specializes in the affluent neighborhood says she has more buyers than properties.
"I need more inventory," said Lauren Ellington, agent for Realty Executives Premier Marketing Group.
Since the first of the year, high-end homes have been selling "like hotcakes," she said.
Chris Karas, an agent with Russ Lyon Sotheby's International Realty, has been involved in a number of high-end Paradise Valley sales since the beginning of the year - including the most expensive one to date.
The property, located near the northeast slopes of Camelback Mountain, was a 12,000-square-foot spec house constructed on 2 acres and completed in 2009. It sold for $6.6 million in February.
"It was to be priced about $12 million when the builder broke ground," Karas said.
In this case, the buyers were local residents looking to upgrade. But the vast majority of recent sales in Paradise Valley have involved out-of-state and out-of-country buyers, according to Ellington, Karas and veteran broker Walt Danley, founder of the Walt Danley Group.
"The PV buyers are from the Midwest, in their late 40s and early 50s, and they're planning for retirement," Danley said. "They can afford to buy these homes for the (enjoyment of their) grandchildren."
Although Midwest buyers predominate with Danley, Karas has worked with buyers from all over the world: London, Germany, South Africa, Dubai, Abu Dhabi and Qatar. They are a combination of old and new money, he said. Many are retirement age, but several have been in their late 20s and early 30s.
They aren't shopping remotely, either.
"They are very savvy buyers. They do their research. They come into town. They are looking for quality," Karas said.
Ellington concurs. "These aren't bottom-feeders or lowballers," she said.
Even though the Leads section of the Phoenix Business Journal has recorded nearly 50 notices of trustee sale on Paradise Valley homes since the beginning of the year, Danley said foreclosures are not driving the market as much as they were a year ago.
"Most of the foreclosures have come and gone," Danley said. "They were mostly builders' spec homes."
Short sales - deals that a seller works out with a buyer for less than what is owed on the mortgage - are the dominant model, Danley said. However, Ellington said short sales and lender-owned properties are not necessarily the best deals.
"With those properties, there's a bidding war," she said.
Prices can escalate quickly and may ultimately exceed the cost of a comparable traditional sale. In fact, they can quickly become lousy deals.
Short sales come with additional challenges, including timing.
"Buyers are afraid of them. They can take two, three, four months," Danley said. "I had one that was in escrow for six months."
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