The Coronado Historic Neighborhood is almost exclusively bungalow style homes with great big porches and lots of cool architectural features.

In the 1960s through the 1990s, neighborhoods like these fell in to disrepair and disfavor, as people looked for massive homes and modern features.

Thankfully, recently, people have started to re-appreciate the front porch. You know, actually talking to your neighbors!

This house is perfect for that, as is the Coronado neighborhood. You can easily imagine cool mornings with a cup of joe (or whatever your poison) and some light reading. That is just the way of the world in Coronado!

Click on the picture for a virtual tour!

The nice part is that you don’t have to live like the 1930s to enjoy this house. Check out the modern kitchen, washer and dryer and bathrooms.

Let me know if you’d like to have a look.

This, from fellow CenPho and Historic Preservation advocate, Jim McPherson:

On Wednesday, State Senator Linda Gray (Republican) introduced SB 1166 that would eliminate the State Property Tax Reclassification program.  This is the “tax break” for residential historic properties in Arizona: approximately 6,000 total statewide of which approximately 2,900 are in Phoenix and 2,000 in Tucson.  It will be heard in the Senate Finance Committee on Wednesday, January 27, 2010.

Arizona’s preservation-focused tax incentive has successfully countered private and public land-use policies favoring demolition and new construction, while providing financial benefits to building owners who might otherwise feel burdened by preservation projects.

The proposed bill is linked here: http://www.azleg.gov/FormatDocument.asp?inDoc=/legtext/49leg/2r/bills/sb1166p.htm

To express your opinion about this proposal, contact your state legislator — http://www.azleg.gov/alisStaticPages/HowToContactMember.asp — and/or members of the Senate Finance Committee:

The Honorable Jim Waring, Chair ~ <jwaring@azleg.gov>
The Honorable Barbara Leff, Vice Chair ~ <bleff@azleg.gov>
The Honorable Ken Cheuvront ~ <kcheuvront@azleg.gov>
The Honorable Pamela Gorman ~ <pgorman@azleg.gov>
The Honorable Ron Gould ~ <rgould@azleg.gov>
The Honorable Debbie McCune Davis ~ <dmccunedavis@azleg.gov>
The Honorable Richard Miranda ~ <rmiranda@azleg.gov>
The Honorable Russell Pearce ~ <rpearce@azleg.gov>

BACKGROUND

Does historic preservation make economic sense?  Does it result in economic benefits as well as esthetic and cultural benefits for communities?  The answer is yes, based on a growing number of studies that quantify the economic impacts of historic preservation.

The following statistics from recent studies are typical of the positive findings of preservation’s economic benefits:
Historic preservation activities generate more than $1.4 billion of economic activity in Texas each year.
Rehabilitation of historic properties in Georgia during a five-year period created 7,550 jobs and $201 million in earnings.
Each dollar of Maryland’s historic preservation tax credit leverages $6.70 of economic activity within that State.
In one year, direct and indirect expenditures by heritage tourists in Colorado reached $3.1 billion.

The ACHP has compiled links to online studies on the economic impacts of historic preservation.  The links to the studies — available at http://www.achp.gov/economicstudies.html — fall into six categories:
General Studies
Statewide Studies
General Community and Resource Studies
Impacts of Historic Designation
Impacts on Property Values
Impacts of Preservation Tax Credits

If you have local statistics and success stories about how historic preservation has benefitted your community and neighborhood, please share.

Jim McPherson
Vice President, Arizona Preservation Foundation

According to more information from the FHA today, loans with case numbers assigned on or after April 5, 2010 will have increased premiums for home loans and refinance transactions.

So, this means you need to have an accepted offer by that date, which means you need to start looking no later than the beginning of March.

The premium is the charge that you pay when you close on your house in order to insure against default. (See yesterday’s post.)

The changes are as follows below:

Upfront premiums

1. Purchase money and full credit qualifying refinances will be 2.25% (It now stands at 1.75%)
2. Streamline refiancing (all types) will. be 2.25%
3. HOPE for Homeowners (delinquent mortgagors) will be 2.00%
4. Home equity conversion will be 2.00%

Annual premiums (what you pay on your monthly bill, also known as PMI) will remain unchanged and are as follows for loans over 15 years:

1. Loan to Value of less than or = to 95% is one half of a percentage point (or 50 BPS).
2. Loan to Value of less than 95% is 55 BPS.

To put in common English: We have some time before the higher premiums kick in so you need to start looking seriously soon. Rates and mortgage insurance premiums are at an almost all time low, but will almost certainly be higher by March.

Source: Dan Hlavac

If you are a first-time home buyer, you may be affected by an increase of fees to secure an FHA-backed loan.

The FHA does not make the loan. It just insures that you, the buyer, won’t default on the loan. With so many defaults recently, they have had to pay out a lot. Like any insurer, if they have to pay out more, you, the customer, have to pay more to get insured.

This is how it works: typically, when you get an FHA-backed loan you only have to pay 3.5% down. But you have to pay up to 1.75% of the loan amount in the form of an insurance premium against default. That amount is about to go up to 2.25% for reasons outlined in this Wall Street Journal article.

But there is more. You may also be limited in the future to how much of the closing costs the seller can pay for you. Currently, the seller can pay up to 6% of the buyer’s closing costs. The FHA may reduce that to 3%, as they believe that the 6% rule encouraged people to pad prices of homes too much.

Also, if you have a credit score of under 580, you are likely going to have to front 10% of the loan, rather than the typical 3.5%.

Finally, there is also talk of increasing the 3.5% down payment to 5% sometime this year.

All of this is because the FHA is backing many loans across the country and is fearful that it needs to do more to prevent

I asked one of my mortgage broker friends, Dan Hlava of Met Life, if this is effective immediately. He tells me that, yes, all of this is true, but that it is not something to be alarmed about for the average buyer. It really depends on your score. “Met Life does not lend under a credit score of 620, so that 10% down part of it does not apply to us.”

As for the premium, the average person with a reasonable credit score is not going to see a higher insurance premium. However, in those instances where your credit score is lower than 600, that is when you are going to see higher costs.

According to Nova Home Loans broker Jeannie Bolger, “This is not going to happen tomorrow. But if the FHA does change the guidelines, it will likely happen sometime over the summer.”

The moral: if you are thinking of buying a home this year, this is another reason to do it sooner rather than later.

Other reasons:

1) Interest rates will probably start going up in March.

2) People will be flooding the market again looking for the $8,000 tax credit.

3) There will not be a flood of new foreclosures entering the market.

Call me if I can help!

ACTION ALERT: HB 2161 Hearing on Monday!

It’s official.

On Monday (January 25th) the House Banking and Insurance Committee will hear HB 2161, Rep. Tobin’s bill that would overturn the will of the voters and authorize 400% interest payday loans forever!

We need you to act now!

The payday lenders are making the rounds, trying to woo your elected representatives into believing the deceptive “reforms” they promise in this bill will eliminate the Payday Loan Debt Trap.  They will NOT!

Now, the committee members need to hear from YOU.

Come to the hearing on Monday AND contact all committee members today!

Your message can be short and to the point:

The voters have spoken!  We said “NO” to 400% payday loans loud and clear.
~
HB 2161, just like Prop. 200, hides payday loans’ 400% interest rates amidst a myriad of meaningless “reforms.”
~
HB 2161 will result in thousands of Arizonans trapped in debt, year in and year out.  It will continue to allow out-of-state companies to drain $150 million dollars from the state each year in fees stripped from trapped borrowers.
~
Vote NO on HB 2161 and do as the voters demanded:  LET THE SUN SET ON 400%!
~
JOIN US MONDAY

AT THE STATE CAPITOL:

Arrive by 1:15 p.m. to ensure you get a seat

Here are the details you need:

State Capitol
House of Representatives
1700 W Washington Street
Phoenix AZ 85007

House Committee on Banking and Insurance
House Hearing Room #5

The hearing starts at 2:00 pm, but COME EARLY to ensure you get a seat. (The payday lenders will try to pack the house with their “satisfied customers” and employees, who will be paid to attend.  We need to out-number them.)

Coming?  Let Kelly know – kelly@economicintegrity.org

~~

Call and Email the Committee Members TODAY:

Nancy McLain (Chairman), Republican — District 3
(602) 926-5051 nmclain@azleg.gov

Doug Quelland (Vice-Chairman), Republican — District 10
(602) 926-3024 dquelland@azleg.gov
Thank him for standing with Consumers and voting “NO.”

Carl Seel, Republican — District 6
(602) 926-3018 cseel@azleg.gov

Cecil P. Ash, Republican — District 18
(602) 926-3160 cash@azleg.gov

Andrew M. Tobin (bill’s primary sponsor), Republican — District 1
(602) 926-5172 atobin@azleg.gov

Cloves C. Campbell, Jr., Democrat — District 16
(602) 926-3042 clcampbell@azleg.gov
**URGE HIM TO VOTE NO!   HE IS ON THE FENCE.**

Robert Meza, Democrat –  District 14
(602) 926-3425 rmeza@azleg.gov
Thank him for standing with Consumers and voting “NO.”

David Bradley, Democrat — District 28
(602) 926-3300 dbradley@azleg.gov
Thank him for standing with Consumers and voting “NO.”

See you Monday!

Thank you,

KELLY

Kelly Griffith
Arizonans for Responsible Lending

PS:

To read the proposed legislative language, monitor co-sponsors and track the bill, bookmark the following link: HB2161

For Committee updates between now and Monday, keep your eye on their website:
House Committee on Banking and Insurance

~~~

Paid for by Arizonans for Responsible Lending

Major Funding by AARP Arizona
Center for Responsible Lending, N.C., SEIU, Washington, and SIMG, Tucson.
Additional Support from Arizona State Credit Union, UFCW Local 99
The Arizona Credit Union League, and Mi Familia Vota.

www.NoMoreLoanSharks.com

Last month I wrote about the possibilities of commuter and passenger rail in Phoenix and Arizona. While deciding which tracks to use for these trains would be complicated, it was really the up-front costs that keep Arizona from moving toward the future in this regard.

But one man is trying his best to move the train down the track on a smaller scale –one which could still help encourage the growth of more expansive rail use in Phoenix.

Robert Graham wants a trolley on Lower Grand Avenue and he isn’t waiting for a government agency to get around to it. He has been quietly making the rounds and building alliances around a proposal for a short-run trolley car line that would cost in the low millions –cheaper than most new roads with greater economic impact.

He calls it “GARP”, the Grand Avenue Rail Project.

His local focus and realistic vision makes me think that we just might be able to pull it off in the near future.

Here is the skinny:

Graham (not the guy in the picture, above) is the the Principal Architect at the Motley Design Group, a design firm that has done a number of historic preservation projects around Arizona and Phoenix.

Graham, knowing that there used to be rail on Grand Avenue decades ago, looked out on the old road from his desk at his firm and asked “why not now?”

He saw the potential for a short-run trolley that serves as transportation, a local attraction and a way to support all of the businesses along “Lower” Grand Ave., from Van Buren to Roosevelt.

If you’ve ever been on Grand, you know that most of the old buildings there are perfect for a future business and shopping district –no master planning necessary. The buildings are close to the street, with street parking and lots of broad, traditional facades.

Graham was inspired by the Old Pueblo Trolley that runs on 4th Avenue in Tucson, and which helped revitalize that street. And in his position as an architect working in Phoenix for decades, he could see how all of the pieces could fit together.

Piece #1: The Phoenix Street Railway Museum. A small group of rebels against the growing freeway culture bought one of the last remaining bodies of an original Phoenix streetcar in 1975. Since that time, working out of a streetcar “barn” at the Ellis-Shackelford house in downtown Phoenix, they have restored one car to working order and are working on a second. In other words, we have the vehicle.

Piece #2: Storage and right-of way. Graham points to acres of unused space under the I-10 freeway at 15th Avenue and Grand that could be used as storage, maintenance and a kind of small switch yard for one or two cars. See the map, below.

Piece #3: Business Support. The fledgling Grand Avenue Merchant’s Association (GAMA) fully supports the idea of a street car line along Grand Ave., and one property owner has suggested lending space for a streetcar museum. The problem: “fledgling” means they have no money to do it themselves.

Piece #4: Institutional Support. Graham is looking for support from the city to consider plans to lay track along the middle lane of Grand Ave. This track, unlike the new light rail track, is relatively cheap to install. There are no expensive curbs and extra signals. While Graham suspects that the streets and transportation planners at the City might worry about reducing the car carrying capacity of Grand Ave., he looks forward to conversations about how to make it work.

He sees the work in four potential phases, starting with moving the train cars to a new storage yard under I-10, along with a small trolley museum (about $500,000).  Phase 2 and 3 lays tracks from the I-10 south to Van Buren (another million dollars). A potential Phase 4 could then connect Grand Ave. to the light rail station at 1st Ave and Van Buren –the most complicated and costly phase.

However, this last phase would mean that you could ride the modern light rail in from the burbs, jump on the old Trolley and visit all the galleries and sites that will inevitably populate Grand Ave. Now, that’s economic development.

Photos Courtesy of Motley Design Group

While Graham admits that his cost estimate are very preliminary and “pulled out of the air,” he is hopeful about getting start-up funds from what are called T-21 Transportation Grants, through ADOT.

According to Graham, the grants are extremely generous, needing only a 5% match to get funding. That’s $25,000 to get a $500,000 grant.

Grant is looking for help with his idea. While he is still making the rounds to get critical political and bureaucratic support, he also needs volunteer grant writers, fund raisers and advocates. If you are interested in joining in the cause, contact Grant at trolley@motleydesigngroup.com.

I’ve lived in several cities with this kind of trolley system in place and I think Graham’s vision is perfect for the times. While it will be tough to get the kind of money to get started, this is the kind of “low dollar” project, that if started soon, could be in place in time for the next big boom in downtown redevelopment.

It could secure Grand Avenue’s identity as a historically significant, locally-owned alternative to the mega-mall.

Regular contributor of topic ideas of my blog, John Bennett, sent me this Newsweek article that explores how the generation raised in this recession might live differently.

Unlike in previous recessions, a more frugal life outlook might hold this time because the economics of the world, in general, will force Americans to save more, spend less and make different decisions about consumption.

According to the article, “the personal savings rate has more than quadrupled from its 2008 low to the current rate of 4.5 percent.”

This is amazing to me. Back when I worked at the Concord Coalition, a federal deficit reduction advocacy organization lead by Senators Paul Tsongas (D) and Warren Rudman (R), we watched in horror as the American average savings rate went in to negative territory. Meanwhile, the Japanese and Germans had a strong, consistent personal savings rate.

This had an impact on our federal budget deficit, as the amount people saved impacted the price of bonds and (in a complicated way that I’m not very good at explaining) the deficit that we funded with those bonds.

The article also predicts that we are entering “a new age in which young graduates can’t expect to do better than their parents—and one in which Wall Street is perceived as being able to continue business as usual while Main Street struggles.” Heck, I’m already there. I doubt that I will do as well as my parents. Although that might come from my personal choices to try to save the world, rather than anything else. Yet, over-all, the number of kids who do better than their parents is dwindling.

It creates an interesting set of ideas to think about as the Baby Boomers pass on. First, the Generation X-ers will be living off what their parents leave them, which, in the aggregate, will be more than any other time in history. Yet, there may not be much left after the Baby Boomers live longer, spend more on health care and then, finally, when we have to find a way to pay off all of the debt accumulated in our massive federal debt.

What does this mean for the housing market? I think in the 15-20 year time horizon, you can expect that many large homes will be left to the next generation by Boomers. Unless there is a continued influx of immigrants who improve America’s productivity level (not just service jobs), those homes might just sell for less and be worth less.

On the positive side, however, the Recession Generation is learning something that the eco-friendlies in the Boomer generation have been saying for decades with little response: live smaller. Dry your laundry on a line, compost, reuse things that break, live in a smaller, more energy efficient home.

When I lived in Bosnia, many folks did these things without thinking about it –even in 2007 when I went back to visit. An economist would say that it was because they had a lower standard of living and had to do these things because they had no other choice. This is true. Yet, the frugal part of life there never left me feeling that my standard of living was all that bad. In fact, it made me feel better about my lifestyle and my impact on the environment in many ways.

I hope we get a little of that New Frugality in America and it sticks.

My number-crunching Realtor-mentor, Leif Swanson did his annual good/bad analysis of the year.

This is really interesting, especially in light of dire predictions for 2010.

REAL ESTATE UPDATES: GOODBYE 2009 – HELLO 2010!

2009 was hot & cold depending upon price and if you were a seller or buyer.

The Bad News:
* Property prices dropped 31 percent in 2009, bottoming out in early April. Some cities fared
better than others. See the attached “Comparison of 2008 & 2009 Data” sheet to see how your
city performed.
* The average sales price in 2009 was $170,000, down from 2008’s $248,000.
* Foreclosures dominated the real estate market, accounting for 55% of 2009’s sales. Short
sales accounted for 25% of all active listings, but only 14% of all sales.
* Homes priced above $350,000 remained hard to sell.
* Vacant properties accounted for 82% of all sales in 2009.
* Loan modification programs failed to materialize. It was too late for many homeowners.

Good News? How about these facts:
* Although the average sales price in 2009 was lower than 2008, by the 4th quarter, the average
sales price went up to $174,100, a 2.4% increase.
* Phoenix was the best in the nation on home price change in the 4th quarter at plus 1.3%.
* Home & condo sales in 2009 were much higher than last year. Almost 55 percent better! In
fact, 2009 was the 3rd best sales year ever (over 92,400 sales). December 2009 was the 2nd
highest sales December ever.
* Affordability was the name of the game in 2009. How can anyone complain about prices
below $100/square foot?
* Interest rates dropped significantly in December 2008 and hovered around 5% all year.
* Pending sales are still strong going into January 2010 despite national news to the contrary.
* Over 9,900 pending sales right now! And over 670 sold properties so far in 2010.

But they are still historically low. So, don’t panic.

I am constantly reminded by old-timers that rates in 1981 were as high as 14%. Back then people would do seller carry-backs, which meant that the seller of the house would actually act as the lender. If you were the buyer, you would pay the seller every month for some number of years and then you were expected to pay off the loan. That usually meant that you would find financing in that time or get your rich uncle to pay it off for you.

It makes me wonder why we don’t do more seller carry-backs. Probably because people don’t know how to make them work. With all of the people who have foreclosed on homes, you would think there would be a market for that kind of thing. If your credit is a mess because you lost your home, you could still get a house by making a deal with the seller.

My friend Dan at Met Life regularly sends me updated interest rates that they offer.

You can see that rates are moving up a little. As I’ve said in previous posts, watch for these to climb higher in March. For now, you can still do really well with a new loan. Give Dan a call or shoot me an email for more information.

Kimber Lanning is one of the most interesting people in the state right now, and her organization Local First AZ is one of the most promising groups for our future.

Kimber advocates for making a simple choice: try to spend your dollars on locally-owned businesses before you spend elsewhere.

Now, I am a free trade kinda guy, but I think we have let it go too far in some ways (especially when it comes to environmental degradation and worker’s rights). Yet I don’t think it is harmful to make a choice to support local businesses. As Kimber likes to say, For every $100 spent in a chain store, $13 remains in the state. For every $100 spent in a locally owned business, $45 remains in the state.

I find this topic particularly interesting because of the time I spent as the director of the State Energy Office, which (unfortunately) is housed in the Arizona Department of Commerce. What I saw and we’ve seen over years is that we bend over backwards to attract businesses to Arizona and give away the farm rather than support local businesses, which, if fostered, could be the next Intel or Microsoft and could end up bringing more business here.

I am inspired by Kimber’s leadership and the rate at which Local First has exploded over the last couple years. Maybe something about the Great Recession has made people realize that they need to keep it local. She has done more for AZ than any sitting politician I can think of, except maybe Terry Goddard.