Multifamily housing ain’t what it used to be for Arizona Millennials and Baby Boomers
(Source: ScottsdaleIndependent): Terrance Thornton – Multifamily housing ain’t what it used to be for Arizona Millennials and Baby Boomers. The Valley of the Sun — the City of Scottsdale in particular — has become a hotbed for luxury multifamily housing construction with hundreds of new units expected to come to market over the next 12 to 24 months.
Housing data experts at the Cromford Report, which is the premier data trove for local real estate professionals, say portions of northern Tempe, Downtown Phoenix, and Scottsdale are the heart of the luxury multifamily construction boom.
Sales of condominiums, or townhomes depending on who you ask, are up 77 percent year-to-date in both Maricopa and Pinal counties, numbers show.
But the multifamily trend materializing in Paradise Valley is built within the idea of providing financing for luxury resort redevelopment and new development projects.
Most notably both the Mountain Shadows Resort and forthcoming Paradise Valley Ritz-Carlton have significant interest in developing multifamily housing to provide for long-term financing and to serve an emerging need, developer and home builders there say.
In recent weeks, Macerich, a California-based developer of retail commercial space, has announced plans and gained city approval to add housing stock at the Scottsdale Fashion Square as it tries to bend to the needs of the 21st Century consumer.
In 2017 there were 408 more condo and townhome sales compared to 2016 when 528 total units were sold bringing this year’s total to 936 sales, according to the Cromford Report. Numbers show that multifamily housing stock has sold better each year with the largest skyrocket occurring over the last three years.
The city of Scottsdale has seen a very slight decrease in year-to-date multifamily housing sales going from 125 units sold in 2016 to 123 units sold in 2017, according to the Cromford Report. Meanwhile, the Town of Paradise Valley has seen 48 multifamily units come online over the past year, which are connected to resort redevelopment projects.
One trend identified by the Cromford Report: new home sales including multifamily dwellings are being sold for considerably more money then resale opportunities that came before them.
So far in 2017 the average price per square foot of a multifamily resale was $201 while the average price per square foot for a new multifamily product eclipsed at $329 during the same time period.
What the data holds
Tina Tamboer of The Cromford Report, which is a data-driven real estate report provided to Realtors throughout the Phoenix metropolitan area, says multifamily housing trends are new and emerging.
“I think the type of clientele are Baby Boomers who are downsizing and they are just tired of the keep-up on a larger house,” she said in a Sept. 12 phone interview of the lock-and-leave mentality. “We are seeing that trend in certain types of age groups — the downsizer.”
Ms. Tamboer points out the multifamily housing product coming online is fresh, energy-efficient and luxurious in stature.
“First of all this type of product being built, previous builds — you are not going to have those kinds of heights in that type of product,” she said. “There just wasn’t a whole lot of high-rise stuff around before today.”
But one trend found in the data is one truth long held by real estate professionals: location.
“If you want to live in a certain area and your budget is $250,000 you are not going to find many single-family homes in that budget — naturally condo and townhomes become an option,” she pointed out. “If you have an apartment-style rental those have started to sag a bit, but that is probable because in part more of that product is available so there is more competition.”
Ms. Tamboer explains just a few years ago this level of multifamily housing was not being built.
“We simply didn’t have this type of inventory five years ago, so it makes sense that we are going to see big dramatic increases as far as units sold,” she said. “Once all this inventory is built it will be very interesting to see if their estimations are correct. It is still a little early whether or not it is sustainable or not.”
Rebecca Grossman, Scottsdale Area Association of Realtors CEO, agrees consumer desires are changing.
“Many buyers are looking for simplicity in their lives. For instance, when you have two people living together who both have demanding careers that consume much of their time, you will see them looking for low-maintenance, technology-driven, modern housing. New multifamily dwellings have all the bells and whistles without the upkeep of a single-family home. We are also seeing this with retirees who are looking to downsize so they have more free time to pursue other interests” she said in a Sept. 13 written response to e-mailed questions.
Lisa Westcott-Wadey of the Scottsdale Area Association of Realtors Board of Directors agrees that lifestyle demands are changing for both emerging Millennial clients and established Baby Boomer buyers.
“There is no urgency and they want what they want and they won’t settle. They are savvy and patient as well as cautious of their investment,” she said in a Sept. 13 written response to emailed questions.
“It’s a Realtor’s job to know the inventory and be ready when his or her client asks about this product.
Whether it’s a condo, apartment, townhome, vacant land or single-family home; we as real estate professionals need to treat each transaction with knowledge, professionalism and white glove customer service.”
Data provided by the Scottsdale Area Association of Realtors shows new listings for multifamily options in Maricopa County have dropped from 2016 to 2017, but average sale price during that time has increased 12.7 percent year-over-year.
The closed sales count for multifamily listings is at 9,823, which is up 9.6 percent compared to 2016 numbers meanwhile single-family housing stock has dropped marginally year-to-date at a rate of about 5.1 percent.
Ms. Grossman explains the demand is present for luxury multifamily housing stock in affluent neighborhoods — in particular Scottsdale and the Town of Paradise Valley.
“I have noticed that some single-family homeowners in Scottsdale are very critical of the approval of many of these projects,” she said of predictable municipal melodrama.
“It is understandable that people are concerned about higher density and growth that outpaces infrastructure and public service needs; but, the reality of it is that this demand is not going away any time soon and if Scottsdale doesn’t plan for it, these potential residents will go elsewhere and along with them the tax dollars and economic advantages. If Scottsdale continues to be thoughtful in their planning about how best to incorporate these trends, we should continue to be a great community to live in no matter what type of home you prefer.”
From the ground up
For more than three decades Catclar Investments has been at the forefront of innovative Arizona housing design and Irene Catsibris Clary has been at the helm of that ship.
“We started construction last May and SOHO Scottsdale is compromised of 74 units,” she said in a Sept. 11 phone interview.
Catclar Investments has built or is building 7 multifamily projects in Scottsdale, Tempe, Phoenix and Toronto, Canada. Local developments are:
- Clarendon Estates in Carefree;
- Residences on Main in Scottsdale;
- Main Street Mews in Scottsdale;
- City Townhouses in Toronto;
- SOHO Scottsdale in Scottsdale;
- 4TwentyOne West in Tempe.
Combined, Catclar Investments will ultimately bring hundreds of mid and top-tier multifamily housing stock online to the Valley of the Sun over the next several months.
SOHO Scottsdale has been billed as the next great thing in Scottsdale housing options for the affluent.
“It really comes down to the desire and what age range — most people who are in lofts are people who are now between 40 and 55,” she said of her clientele. “And, what we are finding with folks in the townhomes are young professionals who own architecture firms and are artists.”
The design for SOHO Scottsdale was created by Architect Bing Hu and has an emphasis on enhanced lifestyle with expansive floor plans from 1,553- to 2,270-square-feet.
“This area is so unique as it has so many activities that occur here all throughout the year,” she said of SOHO Scottsdale at 16510 N. 92nd St. “It is all within walking distance from SOHO — the McDowell Mountains are just a stones throw away.”
Ms. Clary said inspiration was drawn from the Barker Block Lofts of downtown Los Angeles of opportunities for the SOHO development.
“We have sold 50 percent of the lofts and we have contracts on about 33 percent of the townhomes so that is 18 townhomes,” she explained of units already sold at SOHO.
“We are getting some very talented buyers — we have two doctors who hold patents for the cures of certain diseases,” she said. “But the biggest challenge we have right now is not selling multifamily, it is the construction of the units. The construction industry is on fire right now and it is hard to find qualified workers.”
Ms. Clary says multifamily housing is an option for potential homebuyers both young and old.
“I am seeing that Millennials as well as Baby Boomers are buying this kind of product. These are younger people who see the value in owning,” she said. “Then there are people who have grown kids in school, university and they live here and they don’t want to maintain another house.”