PRESCOTT, Ariz.,  – Marcus & Millichap (NYSE: MMI), a leading commercial real estate brokerage firm specializing in investment sales, financing, research and advisory services, announced today the sale of 1141 East Gurley Street, a 30-unit multifamily property located in Prescott, Arizona. According to Ryan Sarbinoff, regional manager of the firm’s Phoenix office, the asset sold for $3,400,000.

Richard Butler, senior vice president investments in Marcus & Millichap’s Phoenix office, represented the seller, a partnership out of Los Angeles as well as the buyer, a partnership out of San Diego. The seller purchased the property in 2018.

“The seller decided to sell because they identified a higher yielding, alternative product investment opportunity in California. After receiving multiple offers, we found a first-time buyer who was interested in entering the Prescott market and after touring the property, aggressively went into escrow at an above list price. Tyler Waller, director with the Phoenix Marcus & Millichap Capital Corporation, was instrumental in securing financing,” says Butler.

Waller was able to negotiate the interest down to a 3.70% rate with one (1) year of interest-only term, a 30-year amortization and no prepayment penalty.

“This very stable asset was completely reconstructed in 2017 and has consistently achieved 100% occupancy since its renovation, much like the rest of the Arizona multifamily market,” added Butler. “In 2021 Prescott ranked third in the country for job growth and economic vitality and continues to be a desirable area for investors and tenants alike.”

By Litic Murali Eye on Housing Report on May 11, 2022

Per the Mortgage Bankers Association’s (MBA) latest month’s surveys (the week ending May 6), the 30-year fixed-rate mortgage (FRM) rate rapidly grew to 5.53%, marking the steepest interest rate increase on record. The Market Composite Index, a measure of mortgage loan application volume, increased by 2% on a seasonally adjusted basis from one week earlier, despite a general downward trend.  Prospective buyers are showing some resiliency to higher rates, partly due to utilization of adjustable-rate mortgages (ARMs), per the MBA.

ARMs typically have lower rates than their fixed-rate counterparts but more volatility following a predetermined period (usually 5 years) after which the rate becomes variable. ARMs’ lower rates also reduce a mortgage’s monthly payment. In the latest week, the percentage of ARM originations, in terms of loan volume, was 10.8%. This figure is nearly double what it was one month ago. On dollar terms, ARM originations made up 19.4% of new mortgage debt.

Total mortgage activity has been trending downward, but the last two weeks have shown an uptick in Purchasing, which increased by 0.5% on a seasonally adjusted basis. It still has been exhibiting monthly declines. Refinancing, on the other hand, has continued trending downward through the latest week.  The latest week’s FRM rate was 17 basis points higher than the previous week.

The ARM interest rate used above represents that of a “5/1 ARM”, i.e., a 5-year period of a predetermined interest rate followed by a variable rate that changes every year, subject to market conditions. Its weekly changes also trail behind those of the FRM’s interest rate. All figures above are not seasonally adjusted. In the latest week, the average contract interest rate for 5/1 ARMs increased to 4.47 percent from 4.25 percent.

On an unadjusted basis, the Purchasing Index showed an 8% year-over-year decline and the Refinancing Index showed a 72% year-over-year decline.