August 17th, 2015
IF you want to start a fight in Scottsdale, try this– just ask a group of homeowners which one of their neighborhoods is the best. Then step back and watch the fur fly. Tip- this little exercise is tremendously fun at parties.
There’s no doubt that Scottsdale residents are passionate about where they live, specifically their neighborhoods. We understand why. In terms of pure dollars, choosing the “right” neighborhood can mean a difference of tens or even hundreds of thousands of dollars over time.
While “best” is a measurement that’s a little tricky to define, here at The Matheson Team we decided to measure the next best thing: home value appreciation. Specifically, which luxury Scottsdale neighborhood is creating the most equity for its homeowners? After a lot of digging we found some surprising answers.
Let’s dig in.
THE NEIGHBORHOODS & THE DATA
First, a little about how we chose the neighborhoods and our methodology (Note: if the word methodology just made you cringe, feel free to skip directly to the results below. If, however, you’re an obsessive numbers geek like we are, please continue reading).
Choosing which neighborhoods to compare wasn’t easy. As soon as we began to analyze potential communities, it became apparent that it just wasn’t feasible to include every Scottsdale luxury neighborhood. Simply put, creating reliable data for appreciation comparisons requires neighborhoods with a lot of transactions. Brand new communities, smaller neighborhoods, or neighborhoods with a low transaction frequency just didn’t have enough data points for comparison.
After considering dozens of potential candidates, here are the neighborhoods that made the most sense to compare:
Ancala, DC Ranch, Desert Highlands, Desert Mountain, Grayhawk, Silverleaf*, Troon, and Troon North.
*Silverleaf could technically be considered part of DC Ranch, but for data purposes it tracked differently, thus our decision to separate it.
The next question we had to consider was how to measure appreciation. Luckily we had help from Mike Orr, Director of Real Estate Studies at ASU and founder of the Cromford Report. With Orr’s direction we settled on this measurement for our “battle of the neighborhoods”: percentage change in annual average sales price per square foot. Data from May 2011 to May 2015 was collected. We chose 2011 as the starting point for our data set as market statistics support the fact that the North Scottsdale real estate market “bottomed out” in the second half of 2011.
All data was obtained from public records, not the Multiple Listing Service (MLS), which would have excluded FSBO’s (for sale by owner) and other non-MLS sales.
We also applied the following criteria:
- We excluded trustee sales. Why? Too many pricing anomalies.
- We included distressed properties (i.e. short sales and bank-owned properties). Why? Luckily in North Scottsdale, there are very few distressed properties today, but they were certainly a part of the value equations of these neighborhoods in the earlier part of this study’s time period.
- We excluded condos and townhomes. Why? Condos and townhomes appreciate and depreciate differently than detached homes and also make up a different percentage of the market in each of the neighborhoods studied. We elected to leave them out of this report and focus specifically on detached properties, so that we would be comparing “apples to apples.”
Before comparing neighborhood vs. neighborhood, this is what the overall appreciation picture looked like for ALL 8 NEIGHBORHOODS COMBINED, from May 2011 to May 2015: