Phoenix High-End Condo Market on Rebound

Phoenix Business Journal
Date: Friday, February 17, 2012, 4:00am MST

The market for million-dollar condos has picked up in the past few months, leaving very little inventory for buyers looking to downsize or buy urban-style second homes. Just 27 condominiums priced at more than $1 million are listed for sale on the Arizona Regional Multiple Listing Service .

“Inventory is at a record low,” said David Newcombe, an agent with Russ Lyon Sotheby’s International Realty specializing in high-rise properties. “The situation is the opposite of the luxury, single-family home market, which has so many more properties for sale.”

Ironically, three to four years ago, there were so many empty new condo projects that numerous properties went into foreclosure. Many of those have changed hands and have been either sold at deep discounts or converted to high-end rental properties.

The market is extremely competitive now. The second-home market is in its high season, with the number of out-of-state visitors peaking during the winter months, and only a few luxury developments have units to sell. Some of the larger ones are the Plaza Lofts at Kierland Commons, the Landmark at Kierland, the Scottsdale Waterfront Residences and Optima Camelview, all in Scottsdale, and Esplanade Place in Phoenix.

The highest-priced condo sold in the past 12 months went for $2.2 million last May at the Scottsdale Waterfront Residences.

Emily Devlin with Coldwell Banker Success Realty in Phoenix represented the buyers, a couple from Paradise Valley. Both are retired physicians who have lived in the Valley for many years.

“They were moving to Chicago to be with their grandkids, so the family purchased one of the penthouses so they had a place to come when the weather was bad in Chicago,” Devlin said.

They purchased the unit furnished.

Several high-end sales have been recorded just since November.

One of those, a 4,100-square-foot condo at the Landmark at Kierland, was sold for $2.15 million to Oleg Saprykin, a former Phoenix Coyotes hockey player who now plays in a Russian league. It was the second-most expensive condo to sell in the past year.

“He spends his winters playing hockey and his summers here in Phoenix,” said Ed Lewis, president and CEO of Butte Cos., which developed the Landmark just north of Kierland Commons.

Saprykin had been one of the Landmark’s early buyers, and he wanted to trade up to a larger unit, Lewis said. Like most of the buyers there, he paid cash.

“It’s almost impossible to get a jumbo mortgage,” Lewis said.

Lewis also sold the third-most expensive condo in the past year: a 3,600-square-foot penthouse, for $1.66 million.

“It was an empty-nester couple who sold a big house in North Scottsdale. We’re seeing a lot of downsizing,” he said. “Most of our buyers are coming from the northeast part of the Valley.”

Lewis noted that the price per square foot has been increasing steadily. For the past six months as of Feb. 8, the average was $532. For the six months ended Aug. 12, 2011, the average was $452.

“We’re seeing price recovery in the million-dollar range,” he said.

Still there has been a gap between list prices and actual sale prices.

For instance, the $2.2 million condo that sold last year originally was listed at nearly $2.7 million. The condo that Saprykin purchased for $2.15 million originally had been listed for about $2.5 million.

Scottsdale Classic Real Estate’s Margo Young was the listing agent for the $2.2 million sale in the Scottsdale Waterfront. She has represented numerous sellers at the property and is feeling confident that the condo market is coming back, at least in A-plus locations.

“We’ve had a lot of activity in downtown Scottsdale right off the bat this season,” she said. “So hopefully we’ll see another good year.”