Y’all know that I dig The Cromford Report.

And not just because I respect Michael Orr, who founded The Cromford Report and who has been chief analyst and editor since its inception in 2006. The fact that Mike holds a master’s degree in Mathematics from the University of Oxford, has been investing in real estate since 1976, and is director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business at Arizona State University, should say something about his credentials.

I’ve mentioned to you in the past that the data in The Cromford Report™ comes from public records and under license from the Arizona Regional Multiple Listing Service (ARMLS) is another source of confidence. Reputable organizations like The New York Times and Get Your PHX regularly refer to The Cromford Report for daily real estate market insight in the Greater Phoenix residential market should come as no surprise. What the magic soup, secret spices, and mathematical wizardry is that makes the data into the graphs, charts, index, etc. at The Cromford Report™ is a mystery, but the results are certifiable.

I first wrote about The Cromford Report in March 2011. I’ve been citing it more frequently, lately, and I’ll be doing more so in the months to come.  If you are a real estate investor in Phoenix, you need to subscribe to The Cromford Report.

The Market Index

If there’s one thing you really need to pay attention to on The Cromford Report, it’s The Market Index. If the market gauge is over 100, it’s a seller’s market. Below 100 is a buyer’s market.

Look at the Market Index for today.

This Index is really handy. Based on this number, well over 100, are we in a seller’s or a buyer’s market?

If you follow The Cromford Index (or you’ve been reading my posts), you’ll know that number has been on the rise for the last year.

Historically, you can see what things looked like before and compare it with today.

Back in September, 2010…

Let’s back up to April 2005 and take a look at the Market Index was in context of the years leading up to 2010.

This is Central Phoenix, all areas and types of residential homes, between 2002 and 2009…

At the peak, in April 2005, the Market Index was way, way over 100, making it whose market? (I know. You don’t even have to look; some of you may not want to). Right now, today, the index is 160-ish. We’ve been seeing this coming for a long time.

Here’s the skinny.

This is a VERY HOT seller’s market.

It will not always be that way. If you’re thinking of selling, you have to get in there now. It’s been going up since late last year, but do not assume prices will go up forever. We know they don’t. We know they won’t. It’s so easy to lull yourself into a false sense, especially when you don’t track invaluable resources like The Cromford Report.

“If I just wait 6 months, the prices will be really high” they say.

Yeah, and maybe, if everyone waits six month, there will be no inventory, and the bubble will burst. Or, maybe, interest rates will go up, and then the bubble bursts.

Move on it now. Contact me when you’re ready. I’ve got your back.

I can be reached on my cell at 602-456-9388 or via email Ken@GetYourPHX.com

With ASU’s 2^nd annual Phoenix Urban Design Week just three weeks away (April 4^th and 5^th), the Feast on the Street Saturday, April 13^th, bringing together people around a half-mile long dining table in downtown Phoenix, historic preservation a constant need (last year’s coffee-table book showcases the importance of preserving Midcentury modern buildings), and the need for more sustainable green practices, I got to thinking:

What are some of the most important steps a person should take if they’re thinking of buying a home in the urban revitalization we’re witnessing in downtown Phoenix?

Step 1:   Get involved with groups like Local First AZ, Roosevelt Row, Get Your PHX, and Phoenix Spokes People (urban bicycle action group with 450+ members, intent on making our streets safer for bicyclists).

Step 2:  Condo or House? I wrote about this in August last year and it’s just as relevant today.

Step 3:  Take a walk, ride, or bike through our Historic Districts.

Step 4:  Familiarize yourself with the schools. This handy link lets you search by closest intersection.

Step 5:  Where are the best coffee houses? Which ones have wi-fi? Arizona Coffee has a great city-wide list with links, reviews, interviews, etc. My office is conveniently located in monOrchid, right next to Songbird café, which I highly recommend.

When you stop by, poke your head into my office not 10 feet away and say hello! I’d love to share some more urban tips with you about finding a home in downtown or central Phoenix.

Ken Clark, Realtor
602-456-9388

The 2013 McDowell Mountain Music Festival (MMMF) is coming up Friday, 22 March – Sunday, 24 March and this year, not 10 days away, it’s goin’ down in downtown Phoenix! If past events serve as an indicator, crowds are expected to be in the thousands! The festival grounds are at Margaret T. Hance park (at the east side of the park, off 3rd Street, just north of Moreland) at 200 E Moreland St, Phoenix.

This is a super-duper, like, really big deal my friends. If you’ve been in downtown for more than about 5 years, you should know automatically why. If you have not, read on. Well, even if you do know why, please read on. No use just stopping here.

Prior headliners include The Flaming Lips, The Black Crowes, Ratdog, Gov’t Mule and The John Butler Trio. By 2011, MMMF had raised over $500,000 for local charities. Fully 100% of proceeds this year will benefit Phoenix Children’s Hospital, Ear Candy Charity, and uMom New Day Centers. The event started at West World in 2004, moved to The Compound in 2011 and in 2013 digs its roots into downtown Phoenix.

The MMMF is a big deal. There will be thousands of people, camping, eating, and drinking. This is a huge influx of cash to downtown businesses. But I don’t think people get it.” Downtown advocate and Arizona Preservation Foundation president, Jim McPherson.

Well, we get it, Jim. And I’m here to tell all my friends about it, too. They’ll get it. And they have friends who’ll get it, too, you see, so they’ll share it and… so on, and so on! You’ll all want tickets, of course, and a peak at this year’s band line-up. (You will notice the link in the last sentence is for the new local venue called Last Exit Live. See below. Buying your tickets through there will help a new local venue establish itself.)

The 2013 McDowell Mountain Music Festival line-up:

Balkan Beat Box        JGB Band        Deer Tick             Les Claypool’s Duo de Twang             Dr. Dog              The Roots             Edward Sharpe & The Magnetic Zeros
The Shins            Heartless Bastards                 Umphrey’s McGee                  Iration              Yonder Mountain String Band  

And while you’re thinking about downtown Phoenix, here’s an excerpt from our next Get Your PHX event invite.

For our March 21 Get Your PHX, I’m very excited to announce that we are going to get an honest to goodness preview of a new downtown venue, Last Exit Live—the local stage which will feature the  McDowell Mountain Music Festival—before they open!

Last Exit Live is the Official Sponsor and organizer for the Local Stage at McDowell Mountain Music Festival this year. They’re coordinating with the Get Your PHX Team to bring you a Local Stage Pre-party and the soft opening of Last Exit Live.

So I’d love to hear what you think about the Festival: Is there any real value to downtown Phoenix to having the music festival here this year? Do you think it will make any lasting impact for our rising city?

Thanks again to our Get Your PHX February host,  Tertio Wine Bar and the folks from Empty Glass Wine Company, for an incredible presentation. I expected a much lower turn-out because we were asking folks to pay ahead for the four-course meal. Yet we had a very strong showing and we all walked out of there with a new appreciation of what Virginia Senior and her crew are capable of.

For March, I’m very excited to announce that we are going to get an honest to goodness preview of a new downtown venue before they open (its been a while, huh?). When you come to the next Get Your PHX on March 21st, you will not only get a glimpse of the new Last Exit Live before its official opening, but you’ll also help kick off the local stage feature of the McDowell Mountain Music Festival.

Here’s the skinny: The McDowell Mountain Music Festival (MMMF), in a belated recognition that downtown is the place to be these days, will move its line-up of shows to Margaret T. Hance Park, starting March 22nd and ending March 24th. Last Exit Live, as the newest official Local Stage for the event is coordinating with the Get Your PHX Team to bring you a Local Stage Pre-party and the soft opening of Last Exit Live.

Here is what we have lined up for you already:

1) Our friends at Blue Sky Airport Parking are hosting this event. They are a locally-owned, Local First Arizona member company. They are generously helping arrange specials from one of our local food truck friends, to be announced. Their active participation in improving their neighborhood downtown has brought them much acclaim and a number one rating on Yelp.
2) Last Exit Live’s owner Brannon Kleinlein is offering an incredible special on drinks: $2 domestic beers and $3 imports from 5:30 to 7:30, just for Get Your PHX attendees. After 7:30 the drinks will still be only $3 for domestics and $4 for imports.
3) Brannon is booking two local Phoenix bands, to start at 8:30, to help kick off this MMMF Local Stage for a weekend of incredible new music. Please stay tuned, as we will announce this over the course of the next couple weeks.
4) We already have raffle items for you from AccountingPros and Local First Arizona for our monthly FREE raffle. You know how this goes. I expect to find more goodies for the raffle before the big event.

I also really want you to meet Brannon in person. Our goal with the Get Your PHX events is to celebrate the people who make downtown better every day. You will hear more from Brannon. For now, here’s the basics: Last Exit Live used to be in Tempe from 2003 to 2009. Brannon sold it in 2009, it closed under the new owners and he has re-started the venue in downtown. As Brannon reported to the Downtown Devil, he wanted to be part of the growing scene downtown and felt certain that this size venue (prevalent in Tempe) would fill a niche downtown. 

As I think we all do, Brannon believes that we need to be re-building inward rather than sprawling outward. He is putting his money where his mouth is. We want to support that. So, please come by. Also, if you want to get tickets to the McDowell Mountain Music Festival, please order them through the Last Exit Live website. This will help Brannon’s business and ensure he can give us a great bands and experiences downtown.

More on Last Exit Live:
New Times
College Times 
Java Magazine 
More New Times
 
March Get Your PHX:
The Local Stage Kickoff at Last Exit Live, Sponsored by Blue Sky Parking
Thursday, March 21st, 5:30 to close
717 South Central Ave  Map It
Phoenix, AZ 85004

Quick announcement: I earned the HomeSmart Diamond Club award for 2012. In the eyes of HomeSmart, I bought or sold an impressive amount of property for my clients in 2012. I’m particularly proud of this because I started as an agent just about the time the recession started. I did that on purpose. I knew that if I was tough enough to make it through the rough times, I would be that much better an agent for my clients (and myself) when times got better. I know that I made the right decision.

Foreclosed properties are almost down to long-term, “normal” levels. There is no shadow inventory. But you’ve heard me tell you why a hundred times by now. In February, there were fewer than 1,000 recorded residential trustee deeds in Maricopa County for the first time since September 2007.

But if you want to understand the most important driver of cost, you need to look at inventory, which we do regularly here. See the chart, above. See how the average days on market for all homes has dropped from over 160 in early 2011 to about 60 today. This number is lower for cheaper properties and lower for homes in CenPho, in many cases. 

So, what happens when inventory goes down? Price goes up! 

Expect more of that, as home builders are still not building as quickly as they once did. Most importantly, they are not building in the CenPho area. Further, people who might have been thinking of selling are hearing about price increases and they may be holding off, hoping for even higher prices before they sell. We really need those houses on the market to keep prices from rising too quickly. (Price increases are good, but not when they create the conditions for another bubble!)

Further, further, sellers are listing their houses at inflated prices just to see who will bite –people are biting and appraisers are supporting those prices.

Further, further, further, interest rates continue to stay low. So there are a ton buyers for very few houses. What do you do? If you are a buyer, don’t hesitate. Get out there. If you are a seller, I would not wait too long either. I think we have the makings of a mini-bubble. There is an equal chance that you could wait to list your home only to find that mini-bubble burst and prices are lower than they are today.

If you are thinking about listing you home (even for short sale), please give me a call and let’s meet. If you are thinking of buying, let’s grab a cup of coffee and talk about your plans. We can build a strategy that gets you the home that you are looking for.

Call me at 602-456-9388.

Last week, we saw how understanding relevant data is vital to how I inform my gut instincts as an agent.

This week, let’s look at how data on historic neighborhoods informs my gut and how what I’m seeing in several “overflow areas” plays into it. Homes in historic neighborhoods are getting more and more expensive, and they will continue to do so as people who value those homes will continue to buy just outside the historic areas. Why? Simply because there is a finite number of them and more people want homes with that character.

So, over-time more people have renovated historic neighborhoods that neighbor the original historic neighborhoods. The supply increases.

This “spillover” dynamic has given us our 35 historic neighborhoods. Specifically, neighborhoods that were seen as “not ready for prime time” are improving right next to the current neighborhoods.

The first historic neighborhood in Phoenix was Roosevelt. Garfield, FQ Story, Willow, Encanto, Palmcroft, and others followed. People around them started saying:

Wait, we have older homes. We either don’t want to or we can’t afford to buy in the historic districts. Or, we believe our neighborhood is unique historically. Let’s apply for historic designation here.

The number of neighborhoods with historic designation has been increasing over the last 30 years, and very dramatically over the last 10 years. Because of my expertise, immersion in the data, and instincts, I know where the spillover is going to happen next. I’m seeing a lot of renovation in areas which you should not pass over for consideration when looking for a home.

Another thing to look for are the “historic-adjacent” neighborhoods. These may never get historic designation, but they benefit from their proximity to historic neighborhoods.

Example: the Woodlea and Melrose districts at 7^th avenue.

The northern of Woodlea is Glenrosa Ave. Technically, north of Glenrosa is not historic because not enough people maintained the original condition of their homes there and not enough people wanted it to be historic.  Homes in the non-historic neighborhood, are much more expensive and enjoy greater stability than they woiuld if they weren’t right next to the historic neighborhood of Woodlea.

What about the east side of 7^th AVe where the houses are very similar to the ones on 7^th Avenue? Unfortunately, they don’t have that historic designation to benefit from.

I’m seeing neighborhoods that were formerly avoided to some degree by agents, but we’re starting to see some good renovations.

Specifically, I’m seeing a lot of renovations in the listings west of 19^th avenue, south of Indian School, and as far south as Encanto. These have a lot of navy brick homes, which are hard to find and very sturdy. New home construction is too expensive and almost never brick. Brick is more stable, better for deterring termites. These were homes built in the 1940’s and 1950’s for the most parts.

I’m also seeing some nice renovations in the area of 24^th street and Thomas; also brick homes. In some areas it’s street by street, where one street is great—with a lot of renovations—and the next street isn’t so good. Another area where I’m seeing a lot of renovation is east of 16^th street, west of the 51 freeway, and south of Indian School. Even compared to a year ago, it’s improved noticeably. It’s happening in that area because it’s spilling over from the Coronado historic neighborhood (which is getting oversold: too many buyers, not enough houses), so people that aren’t finding things under $200,000 are pushing over to the 16^th street areas.

That area has been a little rough in past years, but you’re going to start seeing more and more renovations just outside of the traditional historic neighborhoods, because the historic neighborhoods are pricing higher. Classic supply and demand. You might consider looking into these 16^th street areas because of the action that’s going on there.

There are other neighborhoods further to the east that are going up in price as well, on the other side of the 51, going all the way over to Scottsdale. Give me a call if you’re curious about that.

Shoot, give me a call if you’re curious about other historic spillover areas you’ve got on your mind as well.

I look forward to talking with you. I can be reached at 602-456-9388

This week I want to talk about how data informs my gut sense. What does it mean when I talk about different types of ‘data’ in my posts? A hugely reliable source of my data comes from The Cromford Report.  The Cromford Report takes data directly from the Multi-Listing Service, which is the most accurate report of sales in Arizona. In this next graphic, you’ll see what the Cromford Index does. Two things you need to know about this chart on Phoenix for the last 30 days:  Above 100 and below 100.

Look at the two gauges on the left and right sides. Anything over 100 is a seller’s market. If the arrow is in the green, it’s good for sellers; red, it’s good for buyers. As you can see from the 30-day chart at the bottom of the graphic, the supply is really flat right now. That’s because we’re not getting a new supply of homes into the available inventory, which means it’s a seller market. Between buyers (the Supply Index gauge on the left) and sellers (Demand Index gauge on the right) you’ll see demand is pretty flat (in the yellow zone). In an ideal world, buyers and sellers are equal in getting what they want.

 Macro

This chart below is for Phoenix, for the last couple years.

You can see here, in the pink, that it became better for sellers in 2011. It’s at over 100, so it’s better for sellers. Since 2011, it’s been increasingly better for sellers, there was a little drop off at Christmas 2012, but then it’s popping up again. The long-term Crawford Index tells us that things have been getting better for sellers for a while –for much longer than the media was reporting.

Can I get any worthwhile information on just a month worth of data, or must I have a year’s worth of data to be able to offer any real value?

With the Crawford stuff, you have to look at the micro and the macro, balance them out, and end up with the gut feeling (many authors on decision making whom I’ve read say that the gut reaction is the more accurate than we might think). You have to be in the business and see lots of data to get that gut sense.

Micro micro

Check this out, we can look at zip codes also in The Cromford Index.  Isn’t that cool? This is a micro-micro example of using data. This data shown in the chart below is for $100,000 to $250,000 on Phoenix zip codes for 85003, 85004, 85005, 85012, 85013, 85015. This is SFR in Maricopa county. It’s a 6-months moving sales, and it’s really janky because there aren’t that many homes in that price range.  It’s a pretty small area for home prices.

I have used this kind of data in the past (3/26/10 – “Data is right. Media is wrong” and 8/25/09 – “Can I Say I Told You So?” to make my cases about I saw (based on the data) and felt (based on my gut instincts) was going to occur.

Was I right just because of the data?

Not at all. I took the data and used it to get the gut instinct. You’ve seen me put up images of supply, inventory, and demand, on this posts and in the past, and you’ll see them in posts to come, but what I’ve found is you use the macro and the micro data, but in the end you have to go with your gut.

Next week, we’re going to talk about data as it relates to up and coming areas. I can tell you now what my gut instincts tells me:

The micro data shows price increases, but I also know that people are getting priced out of historic neighborhoods, so they’re going next door. I know those neighborhoods. And not just from an aesthetic perspective, but from gut instinct.

Give me a call, buy or sell.  Go with your gut.

In part four, we discussed the different local credit unions and how their Health Savings Accounts work. Now, we’ll discuss how to select the best credit union based on brokerage account services.

A brokerage account is like a money market account, but from it you can buy stocks, sell stocks or buy mutual funds.So it’s like a health savings account except the money is for investment or portfolio items. Like an HSA, there’s a firewall. The reason – credit and the bank should remain separate.

For example, if you are on your  JPWellsComeriBank account online and want to look at your brokerage account, the website will open a new window and take you to that separate brokerage website. With Desert Schools Credit Union, they will personally connect you with a financial services company who will set up your account services, etc. You can set up your account on Desert Schools to make automatic bill pays to your brokerage account, as well. Though you still must login to the brokerage accounts from a different website than your Desert Schools website. The two businesses are separate, but they are more integrated on a personal level.

When I called Desert Schools Credit Union, I was directed to financial services, and spoke with a representative immediately. He told me about what they had, that he’d look at my portfolio, and help me get the changes set up from my national bank. Now, when I did this over at Arizona Federal Credit Union, they directed me to a woman named Stephanie. I left my number for her, but she never called.

From the perspective of a small business owner, credit unions are all  basically the same. They have the same fee structure and basically the same offerings. The thing that really differentiates one credit union from another one is customer service. If I own a business, I want my banker to be on the phone and someone who knows me. Why am I leaving JPWellsComeriBank? Because they’re a big anonymous bank. While the fee structure among different credit unions are nice, as well as the integration of health savings account, they’re not critical. The bottom line for me: What was their customer service like?

In wrapping up this series on credit unions, we’ve taken a close look at the difference, we’ve examinatined them in person, we’ve compared the pros and cons. I can sum up the most satisfying part of this process in one example which really captures the essesnce of why I left a big national bank for a local credit union.

The story goes like this:

I went into Wells Fargo to take out my money for the last time and the woman assisting me asked, “Why are you leaving us?”

“Two reasons:” I told her. “I’ve waited too long to put my money where my mouth is and I’m finally going to support a locally owned bank. When I use my money at locally owned businesses, 30% of my money stays in the local economy.”

“But Desert Schools doesn’t have very many ATMs …”

“Are you really playing the ATM card card?”, I asked her, “You know that doesn’t matter. I can just take money out from a cash advance at the grocery store.”

Her response?

“Oh, yeah, I guess so.”

So, there we have it. I thought this process would be longer and more difficult. In some ways it was, but in most ways it is really easy to mover your money to a locally-owned credit union and keep your money where your state is, so to speak.

Good hunting!