This report is part of PERSPECTIVES, a comprehensive look into the world of prime residential real estate. Access the full report here to discover the latest trends and dynamics shaping the market.
Lavish homes on large lots, picturesque desert scenery and year-round warm weather continued to draw top-tier buyers to the Phoenix, Arizona area in 2023.
The price per square foot for homes selling for $2 million or more in Maricopa County (where Phoenix is located) jumped from $672 in March 2023 to $705 less than a year later.
“The market that one might anticipate would experience the greatest downturn due to the tightening of the real estate sector as a result of rising interest rates has, in fact, witnessed appreciation,” says Chris Morrison, founding partner of Scottsdale-based real estate firm RETSY.
Sales of seven-figure homes didn’t slow either, keeping pace with 2022, the Arizona Republic newspaper reported. In affluent Paradise Valley, a suburb of Phoenix, home sales were up 34% in the third quarter year over year, and home prices climbed 19% in the third quarter, compared with the second quarter.
Camelback Mountain architectural estate, Phoenix. Presented by RETSY
A $23.5-million sale in Paradise Valley set a record for the town, besting the previous high of $21 million recorded in 2022. The 18,500-square-foot home, built for a car collector, underscores the relative value of the area’s ultra-luxury market. Set on 5 acres next to picturesque Mummy Mountain, it has two swimming pools, two libraries, a theater, a gym and a 900-bottle wine room.
Still, 2023 had its ups and downs. It started with sluggish sales in the second and third quarters, then recovered in Q4.
“I’ve had more high-net-worth individuals reach out in the last quarter of 2023 than I’ve ever seen in our industry,” Morrison says.
People shopping for a second or third high-end home in the Phoenix area primarily move from California, followed by Texas, Washington State and Colorado.
And although sale prices didn’t dip, the number of luxury homes for sale did. Morrison recalls 2021 and early 2022 when sales increased during the Covid pandemic and “people on the sidelines jumped in and all bought at once, causing one of the greatest increases in home values in Arizona’s history.”
Camelback Mountain architectural estate, Phoenix. Presented by RETSY
The ups and downs of selling have evened out since the Covid crush, but a lack of newly built homes may affect transactions into 2024.
Some developers pulled out of projects when interest rates rose last year. Morrison worries that may result in a temporary shortage of new homes. This could particularly affect buyers looking for smaller homes in high-end communities. “They want to downsize in house size, and maybe in land size,” Morrison says, “but not in lifestyle.”
Morrison believes 2024 will be strong, based on the increase in sales at the end of last year. As interest rates decline, he thinks inventory will increase. “All those people on the sidelines could flood the market,” he says.
