Steven Skarphol

Associate Broker

MBA, LEED Green Associate

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

Superior Court Real Estate Special Commissioner

Zillow Rated 5 êêêêê

The

Skarphol Rapport©

Q2-2017

8388 E Hartford Dr, Suite 100

Scottsdale, AZ  85255-7806

Cell:  602-595-7200

[email protected]

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

EXECUTIVE SUMMARY – RESIDENTIAL REAL ESTATE MARKET IN 60 SECONDS

BOOM!   The first six months of 2017 are off to a roaring start.  We have seen this level of annual sales before in the 2004-2005 run-up, so most clients start to ask and worry about another housing BUBBLE.  The good news is that the fundamentals are different.  First, the 2004 vs 2005 median sales price increased over 40% in one year.  Current 2016 vs 2017 median price increase is running about 6.5%.    Second, in the BUBBLE, rapid price appreciation was compounded by oversupply, a rush of investors and unfortunately rampant mortgage fraud induced by reckless speculation in the collateralized mortgage bond security market.  Today, the supply is about 90-days, which is generally favorable to sellers in most market segments.   Less than 60-days’ inventory would be a concern because in 2005 as the BUBBLE was bursting, the inventory was only a 37-day supply.  Third, mortgage rates remain low, but tight credit is still moderating the market.  Bottom line:   Healthy residential market in the short run.  Monitoring a hyper-undersupply of product combined with hyper-price appreciation would bring on a yellow caution light.

Client Testimonials:

“Steve, thank you for the enormous effort you put into getting us our retail location.  We appreciate your contributions into making our dream a reality!”

J.Y & T.Y Commercial Retail     Spinetic-Spinners 

"Steve was great!! He worked with us (the sellers) as well as the buyer to facilitate our sale. He went far beyond our expectations in successfully selling a hard-to-sell property. His knowledge of the process, market, environment, and rules and regulations are unsurpassed. I truly have to say that our sale was successful because of Steve. I thoroughly enjoyed working with Steve and highly, highly recommend him."

K.B.  Infill Vacant Land with Residential Subdivision Complexities

Market Update – A Closer Look: 

• SINGLE FAMILY   -  Sellers remain advantaged across most price ranges.  Demand also remains strong as evidenced by 75% of all single-family sales selling in 60-days or less.  Conventional financing is dominant at over 50% market share, with cash and FHA each holding about a 15% market share.

• LUXURY - Buyers, great year to buy $1.5M and up!    A split has occurred in the luxury market at the $1.5M mark according to Michael Orr of the Cromford Report.  The annual sales rate has increased 35% over the same time 2 years ago, indicating improving demand. However, supply increased 13% in the same timeframe, so abundant inventory remains for the Buyer to choose from.  Above $1.5M the story is the opposite, with inventory increasing greater than the annual sales rate, 11% vs 9% respectively, driving the days of inventory supply above $1.5M to stretch beyond 600 days. Quantity vs quality.

• MULTI-FAMLY -  Rents appear to be stabilizing with average rent now $1,553, up 3.2% year-over-year.  Rents may be responding to the nearly 10,000 units of primarily luxury rentals beginning to enter the Metro-Phoenix market.   Also, more renters may be entering the purchase market with ownership being favored over the cost to rent. The number of multi-family investment sales transactions in the commercial market is down 32% year over year due to a reduced supply of available units.

*Take a tour of one of my listings in 3D:  Arcadia Lite 85018 - $4,300,000 – 14 Townhouses NEW 2017 Build!

    (Interactive - Click the blue circle around and walk through the rooms by landing on the white circles.)

• LAND - Residential Infill land in market-ready locations remains in high-demand.  Commercial/Retail/Industrial land are also picking up as the market continues to recover and developers move forward with innovative new offerings.  

• RETAIL -  Store closures in the retail sector continue as retailers adjust to the Internet-Of-Things. On the positive side, Warren Buffet purchased a 10% stake in Store Capital, which provides financing to franchisees.

• OFFICE -  Vacancy is improving, but at 17.7% vacancy, Metro Phoenix remains at the top of the list among major markets in the US.  The primary cause is abundant small blocks of space up to 10,000 sq. ft., but limited demand in this range.

• INDUSTRIAL -   Sales volume and pricing are improving as major players like Amazon consume warehouse space for distribution centers.  Manufacturers are also expanding.  Check out this 21^st Century local company revolutionizing the building industry.    KATERRA

GREEN UPDATE:

• Innovation around Batteries continues to be the disruptive force in the development of new materials that significantly improve energy storage in batteries.    A recent breakthrough allows batteries to be recharged in about the time it takes to fill a tank of gas.  The electrolyte that energizes the battery is pumped-in replacing the depleted electrolyte which is removed and recycled.   Given the existing infrastructure of gas stations with pumps and underground tanks, this is potentially a huge catalyst for the auto industry to focus away from fossil fuels.