Steven Skarphol

Associate Broker

MBA, LEED Green Associate

Realtor®, ePro®, SFR®, CDPE, MSSC, CSSN

Superior Court Real Estate Special Commissioner

Zillow Rated 5 star

The

Skarphol

Rapport©

Q4-2016

8388 E Hartford Dr, Suite 100

Scottsdale, AZ  85255-7806

Office:   602-595-7200

Cell:   602-317-5164

Fax:   602-749-6815

[email protected]

www.Skarphol.com

QUARTERLY MARKET UPDATE - FOR BUYERS/SELLERS, INVESTORS & GREEN UPDATE:

First, I would like to start this market update by thanking all my new and existing clients for their loyal business. Your commercial, land, multi?family, and residential property transactions all contributed to making 2016 a record year for me!

Second, for the 4th year in a row, HomeSmart ranked #1 in residential real estate with nearly $6B in sales volume!

Client Testimonials:

“Steven is fabulous and goes the extra mile to make sure all goes smoothly. Steven was always available when he needed to be reached. If I had any questions regarding paperwork he knew the answers. Steve was extremely helpful and friendly and I would recommend him to anyone looking for their future home!”

B.M – First Time Homebuyer

“Steve helped my sister and me sell a vacant lot in Mesa this week. He went above and beyond to make this sale happen. There was a tax lien and encroachment by a neighbor, which had prevented us from selling the land before. Steve worked through each issue until it was resolved in our favor. Can't thank him enough!”

E.W. & J.W – Complex Vacant Land Sale

“Steve is a knowledgeable and reliable realtor. He goes above and beyond to make sure we are satisfied with his services. No matter what time it is. He helped my husband and I with our 1st house 5 years ago. With plenty of trust, we called him when were ready for a second house. The transaction was smooth and fast. But we are not over with Steve, he's in the process of helping us with our rental. I referred him once and it won't be the last time referring him to others.”

A & M, R –  Move-up New Build Home and Investment Property Lease-up.

Market Update: 

• SINGLE FAMILY   - Sellers are advantaged across all price ranges except above $1M, with strongest advantage in the $250k - $350k range. Expect to see market values increase as inventories are low and buyer demand good.  Buyers are seeing pressure as rents, mortgage rates and prices increase.  The combination of market conditions for sellers and buyers, place Metro-Phoenix in the #1 position for real estate markets in the country for 2017.

• LUXURY - Buyers, great year to buy $1M and up!  Luxury sellers, on the other hand, must accept a price that is less than ideal, dictated by an over-supplied market.  Selling does create the opportunity to reinvest the capital now for a higher return as oversupply will continue to soften prices for all homes except the few premium luxury properties in high demand. 

• MULTI-FAMLY   - Strong demand resulted in over 25% increase in number of sales paired with a 43% increase in the number of new loans when comparing 2016 versus 2015.  Cap rates continue to increase, resulting in lower market values, as demand outpaces supply.  Expect an adjustment in this market with softening rents as nearly 10,000 units of primarily luxury rentals begin to enter the Metro-Phoenix market.  This will mean downward pressure on single family rents to hold or gain tenants and fierce competition for tenants requiring rental concessions to rent up the luxury properties.   Some of the luxury properties will likely fail in this overbuilt condition.

• LAND -   Infill land in market-ready locations remain in high-demand and pushing prices up. Population growth is exceeding the production of new homes by a significant margin which is likely responsible for the robust resale market.  For new home builders, the vacant finished lot inventory is about 50,000 lots, representing a 3-year supply; this is down from a 5-year supply in 2014.  Restricted lot inventory and higher finished lot prices are forcing builders to build smaller homes to provide sale pricing to match market demand.

• COMMERCIAL/RETAIL -  Finishing strong in Q4 2016, this segment delivered only a 3% gain in unit sales year-over-year. Money continued to flow to this category as 13% more loans were placed YOY.  Adaptive reuse is the key in this asset class as internet sales, delivery technology, and consumer purchasing behavior evolves.  Properties are being re-developed to add housing, employment and medical facilities as the strip centers, power centers, and regional malls evolve to maintain or restore financial viability.

• OFFICE -  Sales are down about 3% YOY with the number of loans up 5%.  Loan rates remaining low incentivizes owners to restructure or refinance.    Vacancy is improving, but still hovering around 16% in the office segment.

• INDUSTRIAL -   The number of sales are down 12% YOY, but this segment has vacancies around 10% with increased demand generating the development of 2.5M sq. ft. of new speculative space. 

GREEN UPDATE:

• Solar PV and Batteries are the current big stories.  The cost of Solar PV, at least at the utility level, is now cheaper than fossil fuel.  Hopefully this will lead to more responsible development of clean renewable energy sources and accelerated reduction in the production and dependence of energy from all sources of fossil fuel.   China is already making the pivot to correct and clean toxic air in major population centers.   This trend is global and precipitated by the collaboration of nations on climate change negatively impacting our planet.