For the August 2017 Market Update, we are turning to look at the role of rentals on the sales market, with the help of Tina at the Cromford Report.

For those of you who own rental property, or who are deciding what to do with your rental property, this month’s analysis is particularly relevant.

Here’s the Cromford take on the August 2017 Market Update.

For Buyers:
Good news for buyers, listings for sale between $150K and $300K stopped declining over the past 4 weeks.  This is good news because as the summer progresses, there are fewer buyers to compete with in the marketplace which offers a seasonal relief for those still willing to brave high temperatures and scalding door knobs to view homes.  Supply is still extremely low, but this slight improvement gives as much relief as a hot breeze on a July afternoon.  It’s not much, but it’s something.  Meanwhile, luxury buyers may notice fewer properties to look at this summer as demand was higher during the Spring season and overall inventory has been dropping due to a higher number of closings and seasonal cancellations/expirations.  Expect inventory in price ranges above $500K to continue declining seasonally until settling into a stagnant level in August and early-September.

For Sellers:
There has been a lot of talk about the increased production of luxury apartments and what impact they will have on the residential real estate market.  One segment that is starting to see their influence is apartment-style condominium rentals leased through the Arizona Regional MLS.  While rents on single family homes and townhouses continue to rise, successful leases of apartment-style condominiums have dropped 11% in average rates from a high of $1.26/sf in January 2017 to $1.12/sf by June. The drop is consistent across all lease price ranges for this type of rental and is not seasonal.  Areas that have been particularly affected are Tempe, Old Town Scottsdale and the Central Corridor including Downtown Phoenix.  Considering the lack of supply for sale in affordable price ranges and the added competition from brand new apartment complexes, this may be a good time for landlords of apartment-style rentals to consider selling if they’re unwilling or unable to reduce their rental rate.

Commentary written by Tina Tamboer, Senior Real Estate Analyst with The Cromford Report
©2017 Cromford Associates LLC and Tamboer Consulting LLC 

What we’ve seen for the August 2017 Market Update anecdotally may seem to contradict this analysis.

We had clients who purchased an affordable condo at about $90,000 in CenPho. We closed very quickly (three weeks) and, since the property was vacant, prepared them with resources to get ready to rent the property as soon as they closed. They advertised the condo for rent and had about 8 possible renters within days. They interviewed, chose and the new tenant moved in this week.

In other words, they were clamoring for an affordable rental.

The reason this does not contradict Tina’s analysis may have to do with price point. The new build apartment complexes that she is referring to are often renting much higher than a 40-year old condo. We have often felt that the new rentals are priced too high for the market, and I think that is why the rental rates for the new properties have dropped. As we’ve said before, the apartments are over-built.

That will probably continue to depress rental rates. If you own an older property, however, you are probably right where the rental rates need to be.

So, if you are thinking of purchasing a rental property, now may be the time. Give us a call at 602-456-9388 and we’ll help.

I saw this article in AZCentral which asked what renters need to earn in Phoenix in order to live here.

Y’all know that I’ve been critical of the number of apartment units that have been going up in Central Phoenix, as well as the fact that they are priced way above what is affordable here.

But, here’s the next question: What do these same renters need to earn in order to purchase?

Of course you would expect a realtor to ask that. We all just want to get everybody to buy a home, right?

Wrong.

I don’t actually believe that everybody need to purchase a home. However, the last I checked (about two years ago) there was a 6-to-1 ratio of apartments being planned downtown to owner occupied homes being considered. Those apartments have since been built.

While home ownership is not for everyone, I do think those numbers are way off.

But, I digress.

This article addressed what millennials need to save in order to purchase a home. The article is terribly misleading because it assumes that they need to save 20% of the median home price (about $27,000) to buy. So, it predicts that it will take them 13 years to save that.

Near the end of the article, they admitted that people can still get FHA and Conventional loans for 5% down, and under. But, very, very few people actually purchase with 20% down. So, why start the article on such a misleading point?

Oops. I digressed again.

The reason I asked what that same apartment renter needs to purchase a home is because I know that apartment companies are charging much more than what these folks would pay to own a home, if only they had good credit and down payment.

In other words, renters pay a premium for living space (more than owners) when they don’t have good credit and funds to purchase a home.

So, the question to be answered is what is the real minimum income that a person would need to make in order to purchase a home in Phoenix?

The answer, of course, depends on where in Phoenix they purchase and how much they have to put down.

Let’s assume they are making just enough to afford the county-wide median home, at $245,000. Let’s assume they bring the minimum down payment for FHA at 3.5% and that they have just enough to cover closing costs. Let’s also assume about $8,600 for down payment an another $4,500 for closing costs.

That $245,000 home (assuming no HOA fees) will cost you about $1,500 per month, depending on property taxes. I think that many, if not all of the apartments downtown cost more than per month that AND are probably smaller.

Just a disclaimer: I’m not a lender. So, this is just an illustration. If you are thinking of buying a home, I can share some leads for you of great lenders.

So, what is a minimum of that renter needs to earn in order to purchase? According to my calculations, about $40,000. Again, I could be off, so talk to a lender. But, my point is that home ownership is much more attainable than many think –and that’s where the apartment builders get you!

If you are thinking about purchasing a home, please call us first at 602-456-9388.

We were inspired this month to tell you about Teen Lifeline, an organization with a confidential crisis hotline where teens can call or text and talk to someone just like them about their problems. These Peer Counselors receive rigorous and clinician-lead training so that they are able to answer any call from a teen, and help them find hope. Sadly, 1 in 3 of the calls that come over the hotline are from a teen contemplating suicide. However, they find a connection of hope talking to someone their age who can connect with them and understand what they are going through.

Teens in the community learn about Teen Lifeline as a service through prevention education in the form of class room presentations. Students also learn about what warning signs to look for in their friends, and how to develop healthy coping skills and help seeking behaviors. By spreading awareness of Teen Lifeline’s resources, we are able to better reach more teens, and let them know they are not alone.

The Peer Counselors who answer the calls and texts that come through the hotline are volunteers, and undergo 70+ hours of life-skills training on various topics so that they can effectively provide help and hope to the callers, no matter what the reason.

One child is lost to suicide in Arizona every five days. The aftermath of suicide is devastating. It forever changes the family, the neighborhood, school, and the entire community. Without Teen Lifeline’s hotline, prevention education, and life-skills training, troubled teens would suffer in silence when they feel like giving up. Fortunately the community can help make sure there is always a place for teens to turn to, by investing in Teen Lifeline’s life-saving work.

Connections of Hope: an Evening to Celebrate Arizona’s Youth is an impactful and youth-centric event happening on Friday, October 6^th at the Montelucia Resort & Spa. It is unique in that the event is centered around teens and the incredible things they are capable of. With an incredible silent and live auction complemented by entertainment by a teen band, and experiences shared from Teen Lifeline Peer Counselors, it is an evening that will have an enormous impact on saving the lives of our precious youth.

Some teens will call or text to talk, others reach out as a last resort. Whatever the reason, teens helping teens is what happens at Teen Lifeline every day.

For more information on how to Save a Life, visit https://teenlifeline.ejoinme.org/savealife2017

For information on Connections of Hope, visit: http://www.teenlifeline.org/hope

Usually, you see images of our listings in this section. However, we sold all of our listings!

Its a nice problem to have, but it sure does leave this section of the newsletter a little barren.

So, I would like to ask you to do one thing for us to bring back those nice photos.

Please support our Charity Referral Network.

You may have seen the following phrase on my email signature or in the Clark Report: “You refer, we donate. Call me today to find out how we can support your favorite charity. We appreciate your referrals!”

This is our attempt to focus positive attention on those charities that you care about, and which do so much good work here in Phoenix.

Here is how it works. If you send us a referral for a home sale or purchase, and that transaction closes, we will make a donation to the charity of your choice. We will post on our blog and on Facebook that your referral was instrumental in making that donation happen.

It is as simple as that. Thank you!

Please give us a call today at 602-456-9388 for more.

Well, we’ve hosted Get Your PHX every month since January, 2009.

Thats 102 straight months of supporting the city we love. Some events had 10 attendees. Some had 200.

We spun off the Phoestivus Market and raised money for the Phoenix Public Market, while supporting hundreds of new businesses. Its been an incredible run.

So, July will the the first month since January of 2009 that I did not have somewhere specific to be on the second-to-last Thursday of the month.

Why? We will no longer host the monthly Get Your PHX events in their current form.

Its not that we are getting out of the community building business.

Rather, we have something else in mind. I hesitate to say exactly what. But, its gonna be good.

It will reach back to the reason I started Get Your PHX to begin with –to build community and empower people.

So, stay tuned. This story is yet to be told.

I would like to ask you to do one thing for us while you wait for that news.

Please support our Charity Referral Network.

You may have seen the following phrase on my email signature or in the Clark Report: “You refer, we donate. Call me today to find out how we can support your favorite charity. We appreciate your referrals!”

This is our attempt to focus positive attention on those charities that you care about, and which do so much good work here in Phoenix.

Here is how it works. If you send us a referral for a home sale or purchase, and that transaction closes, we will make a donation to the charity of your choice. We will post on our blog and on Facebook that your referral was instrumental in making that donation happen.

It is as simple as that. Thank you!

Please give us a call today at 602-456-9388 for more.

As we do each month, we check in with the Cromford Report for their monthly update. Here’s your July 2017 Market Update.

For the monthly period ending June 15, we are currently recording a sales $/SF of $151.10 averaged for all areas and types across the ARMLS database. This is up 0.4% from the $150.45 we now measure for May 15. Our forecast range midpoint was $151.94, with a 90% confidence range of $148.90 to $154.98. We were correct in forecasting a rise, but the actual rise was only about half as big as forecast.

On June 15 the pending listings for all areas & types shows an average list $/SF of $154.91, up 0.6% from the reading for May 15.

Supply has been falling quite sharply in the last few weeks while demand is little changed. However, we will shortly be entering the third quarter, a period famous for weaker pricing. This is because the luxury market loses a lot of sales volume during the hottest months, whereas the rest of the market slows to a lesser extent. This is a seasonal effect and does not indicate underlying weakness. We would expect the upward price trend to resume once we get to the end of September.

Now back to you, Ken.

Thanks, Tina.

So, here’s our more anecdotal view of the July 2017 Market Update for Central Phoenix and the historic neighborhoods. We are seeing property prices continue to move up in CenPho at a faster clip than the county-wide numbers. The chart here is for all prices. When I looked at different price brackets, the move remained.

In short, people want to live in CenPho. But you knew that, didn’t you?

We don’t believe that this means sellers can price absurdly high and expect to get what they want. Two of our recent listings downtown did have small price drops off of the original list price. That’s normal.

The Cromford Index continues to indicate a strong seller’s market, stronger than the last two years. This is, in large part, due to the shortage of available homes. You’ve heard me recently complain about the over-built rental market. Some of those projects could have been condos. This is the result.

As we often say, your decision to buy or sell should be about need rather than a desire to play the market. We can help you make the best decision with market-based data and experience.

Call me (Ken) at 602-456-9388 and let’s chat.

The green cleaning tip for July 2017 from our friends at GoingGreenHouse Cleaning is all about air quality. After all, it’s summer time and with kids home from school we have a lot going on inside our homes.

Did you know that indoor air quality can be two to five times more polluted than the air outside? There are a wide variety of toxic chemicals lurking in your home and we often don’t think about all of the carcinogens that are swarming around in our air —from the cleaning products we use, candles, toiletries, clothing, and even the furniture inside our home, we are constantly polluting the air inside our home.

The Environmental Protection Agency estimates that we spend approximately 90% of our time indoors. Arizona summers are HOT and can be quite brutal. As summer creeps up on us we tend to spend more and more time indoors. Why not protect that air the best that we can?

Poor air quality can threaten your family’s health, so it’s important to keep things out of your home that cause pollution and ensure that your home is well-ventilated.  Here are a few ways that you can ensure you are being proactive this summer when it comes to the air inside your home:

1. Indoor plants

So, how do houseplants clean the air? Plants absorb some of the particulates from the air at the same time that they take in carbon dioxide, which is then processed into oxygen through photosynthesis. But that’s not all, microorganisms associated with the plants are present in the potting soil, and these microbes are also responsible for much of the cleaning effect . Here are a few examples of good air purifying plants:

Garden Mum: In NASA research, garden mums were found to be a air-purifying champion. They remove ammonia, benzene, formaldehyde, and xylene from your homes air. Plus they are cheap and readily available at any garden store.

Aloe Vera: Aloe Vera leaves are full of a jelly-like liquid that is chocked full of vitamins, enzymes, amino acids, and other compounds that have wound-healing, antibacterial, and anti-inflammatory properties. So as well as being a great resource for your medicine cabinet (think burns, scrapes, bites, etc) Aloe Vera also removes formaldehyde from the air.

Spider Plants: Shown to remove formaldehyde and xylene from air. They are super easy to grow indoors but need bright sunlight. 

2. Beeswaxcandles

Regular paraffin candles are petroleum derived and can release chemicals like benzene, toluene, soot and other chemicals into the air. These types of candles do more harm than good for indoor air quality and should be avoided. Pure Beeswax Candles, on the other hand, burn with almost no smoke or scent and clean the air by releasing negative ions into the air. These negative ions can bind with toxins and help remove them from the air.

3. Salt lamps

Salt lamps are another natural way to clean indoor air. Have you ever seen a salt rock lamp or do you own one without knowing exactly what it does? Salt crystal lamps, similar to beeswax candles, emit negative ions into the atmosphere which restore and neutralize air quality. Our homes and offices are filled with electrical appliances and electronics (televisions, computers, fluorescent lighting, microwaves, heaters, air-conditioners, etc.) all of which emit positive ions. Positive ions are known to reduce our energy levels. Balancing positive and negative ions also help reduce airborne infections.

4. Bamboocharcoal

Another natural air cleaning option for your cleaning tip for July 2017 is bamboo charcoal. Charcoal can have a toxin-removing effect on the air. Use bamboo charcoal in burlap bags in you house. They work wonders for odor removal and removing toxins from the air.

5. Essential oils

Multiple studies have shown that diffusing essential oils actually kills mold and mildew. Lavender, eucalyptus and tea tree oil all have powerful disinfecting properties that will combat air-borne bacteria and also dust mites, as well. Simply put a few drops into an essential oil diffuser and diffuse away.

Keep your air pure this summer and rest assured that your family is safe at home!

cleaning tip for July 2017

I’m starting a new monthly feature, thanks so the incomparable Greg Peterson our famous local urban farm brainiac. This is your urban gardening tip for July 2017.

I’m a fan of urban gardening for many reasons:

1. I want to grow more tasty food!
2. We are using billions of gallons of water on trees and plants in our urban areas that don’t produce food. By changing our approach just a little, we can feed more folks healthy food and improve the world.
3. I like learning things –although my success as an urban gardener thus far is debatable

So, having said that, here’s your Gardening Tip for July 2017:

Urban Fruit Trees:
Bounty for the Lazy Gardener

by Greg Peterson

My favorite plant to nurture at the Urban Farm is the fruit tree, it appeals to the lazy gardener in me, as I can plant a tree once and reap the bounty for many years to come. The selection of fruit trees that you can grow is vast — peaches, apples, apricots, plums, pears, citrus not to mention all the tropical fruits you might enjoy.

Discovering just what works for you and how to pick the perfect fruit trees for your yard can be perplexing and growing fruit trees in an urban area is significantly different than rural orchard growing. In rural areas a commercial orchardist would have the tools, trucks, tractors and space to grow fruit and grow a commercial harvest. As urban dwellers we often lack these tools and time it takes to manage large trees, which often take up 400 to 600 square feet and literally fill up yards.

Most urban farmers do not need or expect commercial results from their urban orchard. A commercial grower would never consider using his methods on a small lot, so why not develop urban methods?

A few years ago my friends over at Dave Wilson Nursery created a concept they call ‘backyard orchard culture’ or urban orcharding (for this article we will call it ‘the technology’) a process designed to help keep our trees small. Small trees are: easier to pick, prune and manage; allow for high density planting with more different varieties in the same space of a large tree; and offer what is called successive ripening.

The benefits of keeping a fruit tree small start with ease of management. Most logically this makes the trees easier to pick without having to get a ladder or some other height-stretching tool we might have. Additionally, this also makes the tree easier to protect from birds and other predators. Netting the trees is an option, however never use bird netting as it tangles in the trees and will actually catch and kill birds. My suggestion is to use tulle, a fabric found inexpensively in fabric stores. This protects your fruit harvest without doing damage to the tree and wildlife. My friend Jenny actually completely covers her apricot tree and brings it up, under the canopy and attaches it a little bit up the trunk. This creates a dip in the tulle where falling fruit is caught; she then puts a small slit in the tulle that she closes with a clothespin. This gives her easy acess to open and harvest her bounty. Ingenious I say.

Additionally small trees offer us the ability to put more trees in the same space as one larger tree. At one point at the Urban Farm I had 12 trees planted in a small orchard that previously housed one large tree. Multiple trees planted in a small area is accomplished by planting trees closer together. I have found that the perfect size tree is 6 to 8 feet tall and 6 feet wide. Using this logic planting trees 6 feet apart will give you a nice hedge if you put them all in a row. I often use this method to create front yard fences along the sides and sometimes the front of the property. You would be amazed at how much privacy a front yard fruit hedge provides. In the Dave Wilson Nursery document linked at the bottom of this article they cover more ways to increase your planting density.

Successive ripening is by far the best reason however to keep your trees small. With successive ripening you are selecting different varieties of a type of fruit that will ripen at different times. By using this method in conjunction with keeping your trees smaller you harvest a smaller amount of fruit off of each tree but have more trees to harvest fruit from at different times. You are effectively extending your harvesting season for the same kind of fruit.

Here is what it looks like. In Phoenix I choose a Desert Gold Peach, which ripens mid May, a Tropic Snow Peach that ripens early June and a Mid Pride Peach that ripens in late June. This means that instead of being able to harvest one crop for two to three weeks I can harvest three crops over 9 to 12 weeks.

Now that you have a basic understanding of urban orcharding you need to be aware of one major factor in growing fruit. I call it the Fruit Tree Secret that most nurseries don’t want you to know, primarily because corporate sends them trees that will never produce fruit in your climate. AND they have to sell these trees.

The secret is called chill hours. Fruit trees in the stone fruit (peach, apricot and plum) and pome fruit (apple and pear) families require a minimum number of chill hours to set fruit. Chill hours are considered temperatures between 32 and 46 degrees and occur between October and February. Your first step in fruit tree ownership is to determine the amount of chill hours that you get in your area. To do this, contact your local nursery or cooperative extension office.
Here in the Valley of the Sun we receive on average 350 hours of chill, so we need to make sure that any fruit trees planted, require less than 350 hours of chill. Planting a fruit tree that requires more than 350 hours may or may not produce fruit.

The simplest way to determine chill hours of a tree is to look at the tag on the tree – it will say how many chill hours are required – if it doesn’t and you don’t know – DON”T BUY THE TREE. I know because I did this two decades ago. The peach tree was offered at a screaming $6.99, we couldn’t pass it up so we adopted the tree and planted it. Fifteen years and zero peaches later I had to pay someone to remove the tree. That is a hard lesson that you don’t have to repeat.

In 1975 when I was 14 years old I planted my first 3 fruit trees at my childhood home. 13 years later I planted my first urban orchard and by 1999 other people were curious how to plant their own fruit trees. I was frustrated by the lack of information that was available to assist me in doing this. So I started offering classes in my living room at the Urban Farm to teach people how to grow their own.

That same year I contacted a local nursery wanting to purchase 50 fruit trees and they were unreceptive to giving me a discount. So I reached out to Dave Wilson Nursery in California, they were perfectly happy to sell me trees at wholesale. I had to purchase 100 fruit trees, which I did and the Urban Farm Fruit Tree Program was launched. The program has been offering community classes, education and fruit trees every year since and has distributed more than 10,000 fruit trees in the Phoenix Metropolitan Area.

If you live in Arizona you can participate in classes and purchasing fruit trees. If you live worldwide you can participate in our online classes. Either way please visit our fruit tree program page at https://www.urbanfarm.org/fruit-tree-program/ for more details on the program. If you are inspired and would like to create a Fruit Tree Program for your area email me at Greg@UrbanFarm.org

Above all enjoy planting your own urban orchard and reaping the fruits of your labor.

Happy Fruit Tree Planting

Gardening Tip for July 2017

Most of you know that I’m an unabashed fan-boy of the work that the Phoenix Public Works Department does to create a Circular Economy through its Reimagine Phoenix Program.

A circular economy is one in which products are specifically designed to more easily be re-purposed or recycled so that they can be re-used, rather than just being thrown in to a landfill. The old model, a linear economy, is wasteful, expensive and unsustainable –especially in the desert southwest.

Have a look at this video for more. It’s pretty exciting that Phoenix is taking a lead on this.

Here are a few of the things that Public Works has done:

• They created the Resource Innovation Campus, that is designed as a kind of business incubator for companies that will specialize in turning more of your garbage and recycled items in to profitable products. This will create jobs, innovation and will save taxpayers money.
• They partnered with Goodwill of Arizona to re-direct mattresses away from the landfill by breaking the component parts of the mattresses (metal, fabric and wood) in to re-usable products.
• They have partnered with a private company to re-direct the roughly 34,000 tons of un-compostable and bulky palm fronds to feed for animals. This saves us all money and creates a more sustainable feed source for animals.
• They have issued RFPs in search of companies that can convert waste gases to fuels for trash trucks, that can divert textiles for better use and that can divert paint products for better uses, among others.

So, why is this realtor so gooey-eyed about this stuff? Simple. My business partner and I help our clients purchase homes that may take 30 years to pay off. How much will that home be worth if we here in Phoenix do not pay more attention to sustainability?

We feel a responsibility to our clients that far out-lasts the purchase of the home.

I love living in Phoenix and I don’t want to wake up one day to find that we have lost the battle to balance our desire to live in the desert with the desert’s ability to sustain life here.

Oh, and I really love the idea of supporting locally-owned innovation here.

So, watch for more articles like this in future issues of the Clark Report and consider signing up for the Reimagine Recycling Program, so you can divert more waste to support a sustainable economy.

Image courtesy of Phoenix New Times

Y’all know that I’ve been commenting a bit in recent months about the future of downtown. (Have a look here.)

I’ll admit. Like many folks, I’m worried.

So many of us worked for years to build a vision for the future of downtown that includes the arts. Yet, we seem to be over-whelmed by glass buildings who’s street-level windows are reserved for rows of dead treadmills, rather than locally-owned businesses and galleries.

Somehow along the way, we have pushed the arts out and turned the arts community one again in to a kind of diaspora in Phoenix. Is that the future of downtown that we wanted?

This article by Antonia Noori Farzan of the Phoenix New Times does a pretty good job of placing our current predicament in to historical context.

Personally, I attribute the problem to the failure of the Arizona Legislature to create economic incentives for smart urban growth, which supports locally-owned businesses and the arts. Instead, the only tool that the city has favors massive projects that favor out-of-state companies over locally-owned company.

Of course, these are the same people who are happy to give away billions of dollars to out-of-state companies in tax give-aways, while saying that they don’t want to “interfere with the market” or “choose winners and losers.”

My pontificating aside, I have seen so many of my friends downtown with a kind of shell-shocked look on their faces as they have seen their arts district disappear. It may be high time for us to re-group and re-think what our future should hold and how to get there.

So, stand by. I think you will see some movement in this direction in the near future. Let’s start talking about hosting some community town halls, shall we? Hit me up if you have some ideas or would like to help.

I’m feeling the itch to organize. How about you?