An analysis of home sales in metro Phoenix found some striking price disparities, including properties located just a few miles from each other but thousands of miles apart in terms of price.
The study of homes sold in the metro in 2020, conducted by international real estate search portal Point2, found a few huge price disparities in the city of Phoenix.
For example, two homes less than two miles from each other on East Arcadia Lane in Phoenix both sold in August 2020. But the similarities stop there, because one went for $2.2 million and the other sold for $5.95 million — three times as much.
The analysis also looked at properties that were bought and sold again a few months later for a significant profit.
The most profitable resale was for a home at 5426 E. Pinchot Ave. in Phoenix, fetching its former owner $600,000 in profits, according to Pointe2, a division of Santa Barbara, California-baed Yardi Systems Inc.
Oana Solomon, data analyst at Pointe2, said her team analyzes home price changes and trends on a regular basis, but this is the first time the team put together reports about same-street transactions.
“Actually, the whole study started out of sheer curiosity,” she said. “One might assume that homes located on the same street would have comparable price tags, but I was curious if this assumption stands up to scrutiny. So, I looked at same-street transactions in 2020 in three American cities and found that sometimes this is definitely not the case.”
The reports on Phoenix, San Diego and Los Angeles focus only on the biggest sale price gaps between properties located on the same street and does not reflect the overall state of the market, she said.
“It’s just a glimpse into one of its particularities at a given moment in time,” Solomon said.
While price disparities in metro Phoenix were similar to those of San Diego, Solomon said she found much bigger price disparities in Los Angeles, which boasts some of the most expensive homes in the country.
The biggest price gap between two properties located on the same street in the Los Angeles area was $119.7 million between two homes in Beverly Hills, she said.
“In all three cases, we are talking about properties with significantly different square footage,” she said. “While square footage is very important when deciding on a home, for many homebuyers, location is the No 1 factor. So that’s what we wanted to see — if buyers could find a lower-priced home on a very expensive, desirable street, or close to other more pricey properties.”
Julie Rohr, luxury residential specialist with Walt Danley Christie’s International Real Estate in Paradise Valley, said the devil is in the details.
In the case of the two Arcadia Lane properties, one was built in 2020 and the other was built in 1966, Rohr points out.
“If one is going to focus their understanding of value solely based on price per square foot, one will never, ever understand our market,” she said. “There are so many variables that come into play: age of property is a big one. If the property has not had recent updates, that will greatly affect sales prices.”
Condition of the property also is important, she said.
“Buyers hate to see deferred maintenance,” Rohr said. “If they see neglect, their mind goes immediately to ‘what has been neglected that I cannot see?”
Maximilian de Melo, managing partner at America One Luxury Real Estate, said he’s seeing huge price disparities for two reasons.
“The market has gone up substantially over the last year and some homeowners were able to rake in a huge profit if they bought in the first weeks of Covid where everything was on hold for a couple of weeks,” he said. “Since then we’ve seen prices skyrocketing. The other factor is the premium buyers are paying for new construction or full remodels versus regular resale homes or properties that require updating by the new homeowners.”