Urban Life

RL Brown Predicts Up Swing in Phoenix Housing Market

I just got done listening to long-time Phoenix housing guru R.L. Brown give his predictions for the Greater Phoenix housing market.

On one level he predicted a rise in the new-build market beginning in 2011 and showing good strength by 2013. On another level he said this would only happen if Government got off its partisan rear-end and started leading the country into realistic and sustainable job growth.

Brown's Predictions included:

• Price will be the driver for home sales, not location.
• Consumers are looking for larger lots and space.
• The condo market will suffer with the exception of the central corridor, parts of Scottsdale and Tempe.
• Consumers will be buying more conservative homes that are affordable over the long term verses large expensive homes.
• Homes in the $250,000--$400,000 range should see the greatest demand in the next 3 years.

Brown says the people (you & I) must demand our elected officials start doing their intended job... effectively managing the concerns of the nation, states and cities. He says it is essential we let politicians know we are serious about change and tired of lobbyists, in-fighting and partisanship rule decision making.

Perhaps yesterday's Mass election results are the start of a wake-up call our elected officials are about to get on many levels.

My personal take on his talk was that the real estate market will show significant strength when consumer confidence and job creation see upward change.

Best to you,

Gene Urban
The Urban Team at Realty Executives
602-234-5777

How Are Condos Doing in Downtown Phoenix

Anyone who owns a home or condo in downtown Phoenix knows the condo market has been a bit dreadful this past year. High end developments like 44 Monroe found their buyer pool vanished, Summit at Copper Square has made the news with judgments, liens and foreclosure problems, and Orpheum Lofts saw values plummet like a rock off a high cliff.

The good news is condo prices have fallen to a point of true attractiveness for many buyers. Recent sales, October 2009 to December 15th, demonstrate buyers are willing, perhaps even delighted to buy the now low priced units.

The key to purchasing condos appears to be cash. Of the 61 units sold since October 1st 2009, 38 were cash buyers, 17 conventional loans and only 6 with FHA financing.

Financing of units is a real problem. The Federal Housing Administration put forth lending guidelines that limit a person's ability to obtain FHA and, in many cases, conventional loan financing. Loans for higher end properties, AKA jumbo loans, have had trouble finding investors to buy the paper making luxury units difficult to sell to non-cash buyers.

HOA issues are a concern as well. Many are underfunded and have a fair amount of debt on the books. It's not uncommon for homeowners to put their HOA dues at the bottom of the bills pile.

Based on ARMLS sales data, it appears that Brink Commons, Downtown Phoenix Lofts and Regency House had sales in the past 2.5 months involving FHA financing. Tapestry, Portland 38, Mezzo and Stella all show conventional loan financed sales.

The big sales winners, according to ARMLS,  for the last part of 2009 are:

• Brick Commons -- 6 units
• Landmark on Central -- 5 units
• Cambridge Manor -- 5 units
• Hawthorn Condominiums -- 5 units
• Tapestry on Central -- 4 units
• Windsor Place -- 4 units
• Portland 38 -- 3 units
• Mezzo -- 2 units (they tell me they only have one of these Will Bruder design homes left.)

Conclusions:

We are still a bit worried about the future of condo prices. Some have come so low that even a 10-15 percent drop won't cut too deep into a homeowners pocket. However, in developments that do not qualify for conventional or FHA funding the buyer pool (demand) is limited and low demand usually indicates a fall in values.

We also advise taking a detailed look at the heath of the HOA. Are there issues that may invoke a special assessment? Read the minutes of the HOA meetings to see what has been discussed. Find out how many homeowners are behind on their payments. Take a look at their reserve funds to make sure they have the money to keep the complex in good repair. The bottom line is CYA when it comes to HOA's.

If you buy right in a well managed property, you may find yourself a very happy camper a few years down the line when downtown Phoenix is booming.

Gene Urban
The Urban Team at Realty Executives
602-234-5777

Banks Have Changed The Practice of Real Estate

One of the reasons I found real estate attractive was that no one could take away the product I help people buy or sell. Unlike many sales related jobs, the manufacturer couldn't discontinue the product line because the supply came from all those sweet homeowners who at one time or another need or want to sell their home. This was the perfect business model... until recently.

Today, the supply of homes is largely controlled by banks and asset management companies.The result is a dramatic shift in the supply chain. Since an estimated 80+% of Arizona homeowners are upside down in their homes, the bulk of the supply is either bank owned or short sale requiring bank/investor approval.

I believe the shift from a open supply chain (homeowners) to a rather closed one (banks) has dramatically shifted the way real estate is practiced and not in a good way.

Since banks own the much of the supply, they control who sell homes through limited broker agreements, they regulate commissions and most alarming, they have eliminated many home buyer's rights and protections through special addendum to the residential real estate contract. The last change is perhaps the most egregious and dangerous for home buyers and the practice of real estate in general.

Today is a tough time to be in the practice of real estate. Banks have changed the rules of the game. Home owners, home buyers and real estate agents are all affected by bank policies. Personally, I can't wait until we get back to a more honorable practice where corporate conventions no longer supplant civility.

Gene Urban
The Urban Team at Realty Executives
602-234-5777

Luxury & Mid Price Homes Starting to Sell in Central Phoenix

September home sales in Central Phoenix zip codes 85012 and 85013 indicate home sales in the $500,000+ market are on the rise.

For quite some time the mid to luxury home market has been the pits. ARMLS sales figures from last May and June showed just one sale each month when the price tag was over $500,000 while under $500K properties accounted for 53 sales during the same time period.

July and August saw a slight rise with 3 out of 20 sales (July) and 2 of 15 (August) sales in the higher price range. However, September saw much better numbers.

Of the twenty-one September home sales in 85012 & 85013, four properties went for more than half-a-million clams. At first I didn't think this was all that different until I looked at the percentage of total sales. May and June stats show sales in the above 500K range at 3.77% of total sales while September figures rocked in at 19%... that's a big gain by most standards.

I believe the upswing is due to jumbo loan availability. For most of 2009 it was very difficult, almost impossible, to get a loan for over the conforming standard of $417,000.The hedge funds and investors that traditionally backed the higher loans were off licking their wounds.

However, we are now seeing a slow trickle of investors putting their toes in the Jumbo loan pool. Our friends Lisa Sahughnessy at Desert Heritage Mortgage and Judy Giel of MetLife Home Loans both announced new jumbo loan programs a couple of months ago.

The bottom line is that we are seeing a sales rise in the mid to luxury market and it's not just Central Phoenix; Scottsdale numbers are rising as well. This is good news for the real estate market as it shows a bit of stability moving upwards through the market. If you couldn't get a loan for a more expensive home last winter or spring, you may want to try again... you may be pleasantly surprised with both the rates and what you can buy for your money.

That is all for this Monday in Paradise.

Gene Urban
The Urban Team at Realty Executives
602-234-5777

What is the Phoenix Real Estate Market Doing?

Here is a mid-September 2009 update on the Phoenix real estate market. This post is for Phoenix only.

The news is generally good for the Phoenix market. As our readers know, I am a supply and demand guy with an emphasis on the foreclosure market. Supply and demand tells us a lot about market health and gives good short to mid range market predictions. The foreclosure market tells us a lot about pricing and appreciation.

A number of factors indicate demand is outpacing supply. Both Days on market (DOM) and the months of supply have been falling. According to Micheal Orr of Cromford Report fame, Phoenix has about 3.5 months of inventory. This is a rather low number since normal figures would be in the 4-6 month range.

The lowering of DOM and low number of available homes suggests a sellers market and we are seeing some appreciation of lower priced homes.

The image on the right details the price per square foot sales price info on Phoenix home sales. $/sq.ft. is the dominant factor when valuing homes. You can click on the image to enlarge for easier viewing. As you can see, monthly values appear to be coming back from the dead. 

Lender owned homes are still dominating the sales. Sixty-three percent of home sales in the past month were REO's. We do not expect too much change on this front as bank owned homes generally offer the best value for buyers and are pretty easy to negotiate. In addition, the number of trustee sales (when the bank takes back the property) rose steadily through August and is only showing a small decline this month.

In addition to bank owned homes, short sales are seeing a rise both in numbers for sale and actual closed escrows. This is good news on many fronts. Short sales tend to sell for higher prices than bank owned and can help stabilize neighborhood values. In addition, the rise in closed sales indicates the banks are getting their act together by working with homeowners prior to the home going into foreclosure... a win win for all in most cases.

In general, we see some optimistic numbers going into Fall. Once again, we have to say, most of the good news centers around homes priced under $200,000 with the sub $125,000 market seeing the best results. If tradition means anything is this crazy market, the stability/appreciation we're seeing on lower price homes should work its way up to the mid-price market during the coming year.

Thanks again for your support of Urban Life... our readers are the best!!

Gene Urban
The Urban Team at Realty Executives
602-234-5777

What Are The Most Affordable Cities & Towns In Greater Phoenix?

We, the Urban Team, were recently asked to give some insight into the most affordable areas to buy homes in the Greater Phoenix region. The answer to this question is outlined in the chart below.

The chart ranks 41 cities/towns from most expensive to least based on the current average price per square foot sales prices. The chart also compares last year's numbers with this year's and give us a percent of change.

We found Phoenix's percentage of change a pretty extraordinary at 45.3%. We believe the percentage of change and average $/sq/ft/ figures are tipped low due to the dominance of low-priced bank owned home sales. This figure will adjust upwards as we see more mid-high priced home sales. Of little surprise is the weakness of outline city home values.  

If you have specific questions about an area's performance, we love to share our thoughts and opinions. Just let us know.

Happy Monday Urban Life readers.

Gene Urban
The Urban Team at Realty Executives
602-234-5777

Arizona Republic Today Confirms Urban Team Way Ahead Of Media On Real Estate Trends

Sometimes you have to toot your own horn a bit. The August 20th headlines in the Arizona Republic and AZCentral.com said, Valley Home Prices Holding Steady."  Urban LIfe readers were advised of this trend back in April, 2009... about 4 months ago. Our readers were given information that kept them ahead of the market... something we like doing, big time.

The Urban Team held off until early June to make an official announcement to our clients...just wanted to be safe and confirm the trend was solid. Even with the delay, our peeps were informed 2 months ahead of the general public.

How are we able to provide information so far ahead of the media? We live and breath real estate. Gene spends 4-6 hours each day researching the market, looking at stats, spotting trends and writing for our two blogs, numerous real estate sites and several newspapers. Ron is out in the field negotiating contracts, viewing properties and doing the physical work. The combination of experiences provides real life, real world knowledge that we are able to bring to you.

Another factor in our success is our relationship with Realty Executives. This brokerage goes above and beyond to keep us well informed and knowledgeable. Just yesterday they held an all day educational event. Our speakers included Attorney General Terry Goddard, the Commissioner of the AZ Department of Real Estate, market Guru Mike Orr, fellow blogger and social media expert Jay Thompson and more. In addition, Realty Executives hosts 2-3 agent training events a week. To top things off, our President and designated broker, John Foltz, is regarded as one of the top ten brokers in America. Its no wonder our firm has such a dominate presence in the Arizona market.

We want to thank you for spending time with us each week. It is an honor to have you turn to us for knowledge and insight.

Gene Urban & Ron Urban
The Urban Team at Realty Executives
602-234-5777

Real Estate Market Update for 85003 in Downtown Phoneix

Greetings Urban Life fans. Today we'd like to give a little update on 85003 in downtown Phoenix, AZ. The 85003 zip code is a fun one if you like diversity and urban living. It is bounded by the salt river (s), Thomas (n), 7th Ave. (w) and Central Ave. (e).

The region includes much commercial development as well as a variety of housing. The southern area has seen less updating and improvement with subdivisions like Montgomery much very low priced housing. To the north we have several top historic neighborhoods including Medlock Place, Roosevelt and Willo. Added to the mix are a number of condo developments including the popular Portland Place, Orpheum Lofts, 44 Monroe and Tapestry on Central.

The real estate market data for 85003 is pretty difficult to interpret due to the diversity of housing and the effect a remodel can have on home values. In general we are seeing the price per square foot on the SFH market rising. Supply has fallen from a high of 18 months in April to a low of about 4 months in July. We like to see supply in the 4-6 month range... it indicates a more balanced market.

The condo market is still soft in this region, however, as prices have fallen a buyer market is being found. We still advise caution with the condo market. Recent changes in Fannie Mae lending requirements on condos have made financing and future resale more problematic.

Conclusions: We are big fans of the downtown sector for many reasons and the historic districts of 85003 are a big part. There are some very sweet homes here and many home buyers are taking advantage of the deals REOs and short sales offer.

We also like the growth potential of the city core with ASU's commitment to the area and a fairly diverse employment market. As with all purchases, due diligence is a must... especially with historic properties and condos.

If you would like to see what is currently being offered in 85003, we've included a dedicated search tool for your convenience below. Just so you know, the search show both resale and rentals in 85003. Click on the map to open the search tool, then click on search button to put in your specific criteria. We hope you have fun.

Gene Urban
The Urban Team at Realty Executives
602-234-5777

Real Estate Update Phoenix Arizona 85004. Home & Condo sales, news & info

It's been a while since we've posted information about the real estate happenings in Phoenix zip code 85004. For those who don't know, 85004 is a downtown Phoenix zip code bounded by Thomas (N), the Salt River (S), Central Ave (W) and 7th St. (E).

85004 is home to much of what makes downtown so exciting and fun including the ASU Downtown Campus, Chase Field, US Airways Center, The Phoenix Convention Center, Phoenix Art Museum,  CityScape, The Herburger and more. Some of our favorite "eats" spots are here to including: Matt's Big Breakfast, Pizzaria Bianco, Majerle's, Switch, Hanny's and Sen's. It is the heart of soul of First Friday, home to a bevy of local events and on the light rail line. It is no wonder a lot of people love this area.

Real Estate in the region is a mix of single family homes, condos and lofts. Prices are all over the place with multi-million dollars homes in Los Olivos & Alvarado and sub-100K places in the southern region. Condo/Townhouses dominate the sales and inventory with projects such as Artisan, Tapestry, and Summit at Copper Square. 

The Summit at Copper Square has been in the news lately as a notice of foreclosure was recently filed. According to a July 13,2009 article in the Phoenix Business Journal, only 55% of the 165 units have been sold and a sizable mechanics lien, 3.1 million dollars, has been filed against the property and individual condo owners. Since mechanics liens are generally not forgiven with a foreclosure and follow the property, sales in the development could be both difficult and perilous.

There is both good and bad news on the real estate front; let's start with the good. Bank owned homes do not dominate the single family home inventory. The past few months sales have gobbled up many of the REO homes. Of the current active single family homes, none are bank owned or short sales. In addition, the notices of default are very low for this area of town.

The condo/townhouse/loft market is not in such good shape. We see a number of bank-owned units on the market and a lot of short sales. Prices have fallen considerably making the likelihood of more foreclosures probable in the coming months. However, the lower prices have made the region much more affordable and we are seeing condo sales on the rise, especially in Artisan Village. 

Most of the closed transactions for June & July 2009 were in the sub-$200K range. Higher priced properties still have not found a market and we do not expect much change during Q3 and probably Q4.

The Bottom Line:  We expect sales in the under $250,000 range to dominate all sales. The single family home market looks pretty stable and homes in the bottom end may see some valuation in the next 6-8 months. We believe the condo/townhouse/loft market will continue to be soft with more price reductions, especially in the more expensive units. We strongly advise caution if you are exploring a purchase in the Summit at Copper Square. If I were buying there, I'd hire an attorney to review documents and offer counsel... that comes from a full-time Realtor. 

I believe the region has huge upside potential. ASU is expanding their campus and enrollment; Despite a tough market, CityScape looks to have substantial leases in place; The new convention center is booking larger groups than ever possible, thus bringing out-of-state dollars to the City. In addition, Light Rail provides easy access to the city-core and ridership numbers are far above projection. We like the long term potential of downtown Phoenix!

Thanks for being a loyal reader of Urban Life and we hope this information has been helpful. If you need specific information about the downtown real estate market, please feel free to contact us.

Gene Urban
The Urban Team at Realty Executives
602-234-5777

Click Here to Read Past Commentary on 85004

Information is deemed reliable but not guaranteed. Data was collected from ARMLS. Although we like to think ourselves knowledgable, our opinions are just that, opinions and may or may not be prove correct. 

Phoenix Real Estate & Market Update for 85028

It's time we focus on the Phoenix real estate market. Sometimes I get caught up with social and political happenings. Not today though we will take a look at home sales and the real estate market in Phoenix's 85028 zip code. This update is for July, 2009.

For those of you who read our blog regularly, you know I am a big fan of the 85028 region. The Phoenix Mountain Preserve borders to the south and provides a host of outdoor activities with its mountains and 17 miles of trails. The area is central to most every part of town... Scottsdale is a few miles to the east and the 51 freeway makes short work of getting downtown or to the airport. Shopping in the area is good with Costco, Trader Joes, and PV mall just minutes away as well as a bevy of good restaurants and other retailers.

I like the homes in this area as well. Most are a bit older and have charm... not your row after row of look-a-like stucco shelters. There are horse properties, luxury homes, mid-century moderns, rach style and much  more.

Real estate wise, the 85028 region is doing better than many parts of town. The distress meter, provided by the good folks at the Cromford Report, is moving towards the green. This meter points out the affect of bank-owned homes on the market. As you can imagine, most of the Greater Phoenix market is deeply in the red; not 85028 though.

Lender owned homes currently comprise only 7% of active single family home inventory and these foreclosed properties accounted for only 31% of the sales this past month. As you may know, lender-owned properties have accounted for over 80% of the sales valley-wide this past quarter according to ARMLS figures. This stat is very important since bank owned homes generally drive down market value.

OTHER GOOD NEWS FOR THE 85028 AREA:

• The number of active listings has been falling each month. This is a good thing indeed.
• Pending listing (those in escrow) has risen dramatically. Yeah!!
• The days on market (how long a home has been for sale) is falling.
• Luxury home prices are holding stronger than expected. There were two luxury homes in the mountain preserve area that sold for prices above 2005 values according to ARMLS.
• Overall sales numbers are up from a year ago.
• Trustee sales have not spiked upward. (See graph below)

THE NOT SO GOOD NEWS:

• Home prices are still falling... just not as quickly as last year and Q1 2009.  
• Preforeclosures are on the rise. We've been seeing a steady 5% rise in homes being offered as short sales.
• Foreclosures are on the rise as well.

The graph to the right indicates letters of default (sent when a homeowner is behind on his/her payment) have gone up a bit... the green line.

Conclusions:  85028 appears to be outperforming much of the general Phoenix market. Most of the sales are in the under $300K range; nothing too surprising there. Watch the letter of default notices as they are a strong indicator of future foreclosures and soft home prices.

HOME BUYERS: There are some good deals still available. A number of the properties are short sales, so you may have to be patient. Bank owned homes are much easier to buy, however, many of the normal sellers are pricing competitively these days.

HOME SELLERS: The bank owned homes have really affected home values everywhere. The annual median price is just 66% of the peak value a few years ago. Try to be realistic about market value in today's market. In most cases, the price a home sold for 6 months ago has nothing to do with today's values. Remember, unless you have a cash buyer, you'll be constrained by the appraisal value.

Thanks for reading Urban Life and look for upcoming reports on the downtown and central Phoenix real estate markets. If you would like to search for homes in 85028 or all of Phoenix, simple click on the highlighted text.

Gene Urban
The Urban Team at Realty Executives
602-234-5777