You have to give it to them. Despite upcoming triple digit temperatures, the Phoenix Bike Community never stops peddling.” ~ Me, in 2012.

I wrote that in a post just over a year ago (“Can we measure distance in miles per doughnut?“) and the (then) upcoming Celebration of the city’s growing bike scene, as an event we know as Pedal Craft was just kicking into its second volume.

Here we are: June 2013. My, how quickly things pick up when people get excited about the possibilities of something… This past April, just five months after Phoenix Spokes People (PSP) formed–a group of urban cyclists dedicated to making Phoenix a friendlier, more welcoming place to ride a bike–they were represented at nearly all of the 19 community budget hearings for the City of Phoenix.

It’s not sexy, standing up and asking politicians for a much-needed increase in funding for bicycle infrastructure, but it gets the job done. Prior to PSP’s activation in the budget hearings, the city of Phoenix was spending a paltry $50,000 per year on bike safety and improved infrastructure.

Word spread quickly and we are fast becoming a popular group to join in the Phoenix bicycling community. We believe that bicycling should be an easily accessible form of transportation for people of all ages, incomes and abilities. We imagine a Phoenix with people dressed up or down – going to work or heading out for a night on the town – and getting there safely by riding their bike in a proper bike lane.” ~ Lisa Parks, PSP advocate

To put that $50,000 city of Phoenix bicycle budget in context: The country average for a bike infrastructure spending is $1 per person. In Atlanta, it’s $6 per person. Phoenix is a mere 3 cents per person!

 April 2013 Bike to Work Day (photo by Jonce Walker)

Or rather, that WAS our bike budget… That was before the Phoenix Spokes People took to our Phoenix streets and raised their voices with facts, figures, encouragement, and accountability on how the money should be spent. The result is that PSP made a difference!  The approved budget for the City of Phoenix now includes $1,500,000 to make our city more bike-friendly!

We’re sending the message that biking and walking and all multimodal transportation is as important as vehicular traffic in the city of Phoenix,” Mayor Greg Stanton.

Phoenix Spokes People has monthly meetings and monthly rides. If you bike Phoenix, they’d love for you to join them!

PSP members (Lisa Parks, John Romero, Mayor Stanton, Sean Sweat, and Joey Robert Parks) with Mayor Stanton at the first budget hearing of 2013 (photo by John Romero)

Providing neighborhood choices and transportation choices, and neighborhood choices that allow you to reduce transportation costs — are really essential for the success of Phoenix,” says Curt Upton from the city’s planning department, who’s part of the Reinvent PHX management team. “From an economic development perspective, the stakes are pretty high for us to make sure that we’re a livable city and we’re an attractive city going forward.” ~ The Atlantic, ‘Phoenix’s Walkability Gamble Might Actually Pay Off‘

(And what about Pedal Craft volume three? Sign up for details at the link.)

If you want to buy or sell, please give me a call at 602-456-9388 or email me at ken@getyourphx.com.

Special thanks to Duc Laio for hosting the May Get Your PHX. This was probably the most heart-warming event we’ve had. Duc and his wife Noelle are doubling down on Downtown and investing so much of their heart, soul and resources in to Scratch French Pastry at 2nd St and Roosevelt.

They shared this with us and the RoRo community has stepped up to help with their plans.

Thanks also to Ben Bethel of the Clarendon Hotel for offering free pool entrance to his hotel for anybody who visits Scratch AND donating a one-night stay to our Get Your PHX free raffle.  Natalie Melchiorre also donated a one-month health reboot with her company, BodyAide. The famous Trini Fragozo of VolR Salon also donated gift certificates for styling. Mural artist Jesse Perry was very gracious to come answer questions about the new mural that he is doing on this corner, as well as his upcoming events at the Renaissance Hotel downtown Thank you all for supporting a new business downtown!

June’s Get Your PHX is all about new beginnings. As you know the old Phoenix Public Market closed last year, although the twice-weekly open air Phoenix Public Market remains in business.

Aaron Chamberlin of the famous St. Francis Restaurant on Camelback and 3rd took the initiative to create a new community spot for us downtown. He has been a true neighborhood supporter, as he has worked collaboratively with the Phoenix Public Market to open the Public Market Cafe. He could have done anything with this building, but his goal is to create a fun, affordable restaurant that is accessible to the community, and which complements the open air market.

The Cafe has open seating, a full bar, a wood fired rotisserie and excellent food. This is just the kind of walkable, light rail friendly cooperation that downtown deserves. Aaron is focusing on farm-to-table, affordable meals. 

Folks, there is a real locavore philosophy here that we will hear about from Aaron. They ground their almond butter and burgers only when you order them. 

The New Times reported that “Cafe will also have retail shelves stocked with 90 percent local products, including Black Mesa goat cheese fudge, Chris Bianco’s canned tomatoes, Bob McClendon’s honey, Hayden Flour Mill flour, olive oils, vinegars, aprons and cookbooks.” 

As you know, this is not easy to pull off. Locally-sourced, organic products are often more expensive and it is a true talent to find a way to offer meals under $10 in that environment. So, we look forward to hearing Aaron tell us first hand how he does it and what he is planning next.

So, please join us on June 20th. We will meet Aaron personally to hear about his vision and what it took to open the market. Of course, there will be specials and samples from the Public Market Cafe as well as our monthly Get Your PHX Free Raffle.

So, do I have your attention?

Did you know the largest reading room in North America is at Phoenix Burton Barr Central Library?

Get yourself over to the 43,000 square reading room on the fifth floor of the library and witness the precise moment of the summer solstice.

Folks, this is one of those “hidden secrets” of Phoenix that everybody should see at least once.

In fact, you can only see it once per year, on the summer solstice. And on that day, “The ceiling will seem to float and the columns glow like candles.”

The summer solstice is the day when the sun reaches its highest point in the sky, marking the longest day of the year.

The top floor roof structure of the library has the most to offer viewers of the indirect light. Blue skylights above each column illuminate the tips of the columns at noon on the summer solstice.

“Summer solstice reminds us that we are not just Arizonans, not just Americans, but we are children of the universe,” said Will Bruder, architect/designer of the library.

On Friday, June 21, Bruder will describe the unique features he designed to create a visual effect at solar noon on the summer solstice.

EVENT DETAILS

Event: Summer Solstice Celebration
Registration: Not Required
Date: Fri, Jun. 21, 2013
Age Level: All
Time: 11:30 AM to 1:30 PM
Location: Burton Barr Central Library

Enjoy live music by Canyon Records recording artist Anthony Wakeman. Music begins at 11:30. (After the event, join the Hance Park Conservancy in the Fourth Floor Lecture Room for a preview of the Hance Park redesign.)

If you want to buy or sell, in fall, spring, winter, summer, or summer solstice, please give me a call at 602-456-9388 or email me at ken@getyourphx.com.

“Whipeeeeeeee!”

              or

“Whoaaaaaaaa!”

Every square in this rainbow slide (not the one on the left, though that does look like fun. I mean every square in the image below) represents a month—January, February, March—all going up.

This covers central phoenix and downtown zip codes, historic and older neighborhoods. One vertical stack of those boxes adds up to one year. See how we’ve dropped quite precipitously:  from 7,500 (in 2010) to 5,800 (March, 2013). In 2008 to 2010 a lot of those were short sales and foreclosures. You can shrink inventory, but the demand is still there and what happens? The price goes up.

Same three-month moving average

In this next slide is the average of all three months going back in time. In this way you keep from getting a bunch of blips that aren’t really accurate. See in those downtown zip codes how we’ve gone from $117 in September 2012 to now at $144 per square foot. Let’s look at year to year. March 2012: $105 to $144. That’s a big jump. Now the three month moving average is going to be more extreme than 12-months, because we’re averaging prices today and 12 months ago. The line is smoother and more conservative.

See from March 2012 it went from $96 to $149 per square foot. This $123 represents the average price for this day and the three months before. So you’re seeing that upward trend. Now, in downtown Scottsdale, we’re starting at higher prices.

Follow me on this:

In March 2004—in the recent comparisons slide, below—the monthly average price per square foot was $115. By the end of 2004 it was $131, a 16% increase. In March 2013, it was at $114, with very similar conditions. We started in January 2013 at $108.

Do we think the price can get to a similar 16% increase point by the end of 2013? This increase from $108 to $114/$116 is a very similar line. So for 2013, yes, I think we’re anywhere in a 16% – 20% price increase, just like 2004. I think we could very easily see average prices by the end of this year, somewhere between $125 and $130.

Now let’s take that same 15% – 20% increase—seen here in this next slide of this more-conservative 12-month moving average price per square foot—and apply it county wide to only Phoenix and Scottsdale, keeping in mind the trend-line I talked about in this post.

Phoenix was on a 12-month moving average in March of this year, sitting at $129 price per square foot (for those same zip codes). If you apply that same 15% – 20% increase, you’re looking at $140 – $146 by the end of this year. Apply that same 15% – 20% increase to the Scottsdale area, starting at $156 for the 12-month moving average, you’re looking at $170 to $175 by year’s end.

I think it’s very reasonable to say that we’re going to be there by the end of 2013.

Let’s compare visually

This here, in this next slide/image is for the whole county and is just by way of an illustration. 2004 (the blue line) and 2012 (the purple line) looked a lot the same in terms of path upward. At the end of March, we were about to surpass the same place we were in 2004.

Attention. Attention. Here ye the Town Criers.

Every few weeks, it seems, we hear a lot in the news about how they’re breaking new ground and there is all these new developments. Each one of those dots in the chart represents a month. In the month of Jan, Feb 2007 we built 4,000 houses. Over the course of over 2006, we built something like 60,000 homes. It was insane. They were crappy, throw-‘em-up houses. And now the news loves to proclaim:

Look! We’re building again!

But the number is tiny. It’s about 250 – 300 homes.

This is important to Central Phoenix for a couple reasons: These new builds are out in the fringes of Phoenix, so you’re not adding to central Phoenix inventory. Also, they’d have to build a lot more of these homes on the fringes for it to have any impact on prices in central Phoenix.

I don’t want to list ‘cause it’s going to be worth so much more a year from now.

But what happens if everyone holds off from selling? People will stop looking and prices go up.

Urban Density: Take away

• Investors –If you want to invest in something, get your mind around the fact that you’re more likely to hold it than flip it and get a better price for it; because the margin’s not there or you’re not going to get cash flow because you paid so much for that thing to begin with and nobody’s going to pay that much rent.

• Sellers –Watch for possible price plateau during the summer. With these price increases, don’t just think I’m gonna hold a year to sell and get this higher price, that’s not necessarily so. Also, with these price increases, people who are thinking this, don’t be so certain, because either people stop buying, or people are prices out of the market, or a lot more people say, “Look the prices are there, go, go, go!” I don’t think you can be that confident for a year or even 9 months from now.

• Urban Cores – are in need of urban infill. Detached residential and condos are coming in the burbs, but we need more rooftops centrally.

• Prices – They’re not necessarily a result of heavy demand, because there’s no inventory coming up the way we thought it would.

Be ye Investor, Seller, Buyer, or Town Crier, give me a call at 602-456-9388 or email me at ken@getyourphx.com. I’ll get it done.

[slide image: Trish_Gee88]

For the last month or so, I walked you through a 5-part series on the current state of the market. Today, we’re going to take a giant leap up. Welcome to…

The Macro-Macro View

This slide is from the Brooking’s Institute. It’s a very new thing. Very new information.  It’s about migration of people into Phoenix.

In about 2006 we had 400,000/year moving here, but then it dropped. People have been coming from the big red circles to the blue circles because they’re tired of the cold, the overpopulated areas, the promise of something better, lots of reasons. The circles are sized based on the number of people migrating.

The Macro-Micro View

This next graph gives us a good look at the migration percentage rates between 2001 and 2012. The gray line at 0.0 indicates a normal inflow of people migrating in and out of each city. The red lines are people migrating out. Because red lines are a negative number it’s below the 0.0 line. The blue lines are people migrating to each city. These are positive numbers.

In 2011 and 2012 you see people are moving into Phoenix. We’re going back to our normal above average inflow of people. Follow the line back to 2003, you’ll see we had a positive migration rate which peaked in 2004/05. The numbers took a huge nose dive in 2004/2005 because of bad economy and people were leaving Arizona. Now they’re starting to come back. We never went negative, though Orlando did (the dark blue, almost black line).

The macro-macro and macro-micro takeaway is that people are still leaving the east and coming into Phoenix.

Thinking Ahead: Infrastructure

Let’s think about the coming infrastructure. Where is the light rail going? Will the light rail still drive investments? There’s very limited infill planed, so if you’re an investor, you need to follow the transit.

The thick blue lines below are planned extensions of the light rail. The little circles are current light rail stops.

We’ve learned that you can hardly find a house between the 7’s now because of where the light rail is. Those people who really didn’t like the idea of the light rail coming in may still be out there, but look how much it’s helped the economy. Look at what the economic development has done.

The light rail line heading farther west on the I-10, starting at the I-17 should be done by 2023. Does this mean you need to jump on a house right now? No. Will the homes near that coming light rail line be as extremely unavailable as the last time that reduced the homes between the 7’s so significantly? I doubt it.

Look at this where the future light rail line going up 19^th Ave to Dunlap (the line past the red bit), headed to Metrocenter.

You’ll want to keep watch on Metrocenter over the next 10 years. We don’t know exactly which way it’s going to go up the 51, but we do know it will go to the ballpark. We also know that it’s going to follow the 51, though how close right up next to it is uncertain. It’s a great drive. I’d love to see the line go right up the middle of the 51 freeway. We’ll see.

The line might go into into paradise valley mall, right at Cactus rd. There are some really nice houses there. I think we’re going to see some good value go into those houses because of that.

Look back up at the big light rail map, above. Notice that the light rail does not go into Scottsdale.

 

You won’t know about it for 30 years, but Scottsdale is making the same mistake right now that Georgetown made in Washington DC in the early 1970’s.

When the Metro line opened there, Georgetown wanted nothing to do with it. They didn’t want “those people” (whatever that means) around. For that reason, all the development around the Metroline went east. There’s a new convention center, new stadium, tons of other new developments on the opposite of Washington DC, today, the exact opposite direction of Georgetown. Georgetown is dead.

Scottsdale is asking for the same thing. I’m calling it right now. You can quote me on this.

Thinking Ahead: The Phoenix We Want

Ready to make a difference in our future light rail infrastructure and other important urban choices?

Last night (5/15) the Urban Choices Community Conversation: Making Phoenix a World Class City took place with the Phoenix City Council district 4 candidates. If you missed it, tonight, (5/16) the same opportunity for downtown Phoenix will take place with the District 8 candidates at 6pm – 8pm, at Levine Machine (605 E Grant St, Phoenix, AZ 85004)

• Creating Connected Communities (Facilitating Walking, Biking, Rail, and Bus Connectivity)
• City Staff 2.1 (Silo Busting and Moving from Planning to 21st Century Implementation)
• Economic Competitiveness (Economic Resources Stewardship – Development Connected to Existing Infrastructure)
• Economic Diversity (Moving Beyond Boom and Bust)
• Transit Oriented Development (Redefining Urban Vibrancy –New Thinking in a New Economy)

Buy or sell, give me a call at 602-456-9388 or email me at ken@getyourphx.com.
I’ll make it happen.

Are they just uninformed people? Those who declare “The Bubble is coming! The Bubble is coming!”? We know we’re not in a bubble, based on the first four parts of this series, but where do the voices of doom come from?

I’ll tell you something: earlier this year, before I sat down and took a good hard look at the facts and figures, before I started laying the foundation for my market analysis briefing (upon which this series is based), before I did all, I’ve got a tell you I was worried that we were getting into minor-bubble land.

But Get Your PHX/Cromford Report team mate Tina Tamboer talked me off that ledge.

People are seeing agents listing properties at irrationally high prices. This doesn’t necessarily mean we are in a bubble. What it means is: agents are listing properties at irrationally high prices just because their clients want them to go fishing for a higher price.

Their buyers are telling them, “I want you to list it here, at this amount.”
Their agents may tell them, “Uh, that’s a little high for the comps.”
And the seller says, “No. I want to list it here.”

Agents advise, but can ultimately only do what they’re told. If a client wants to list it high, you list it high. Other people see that pricing, then they try to list it high, etc.

Remember I said in the summer things slowdown in terms of sales?

I’ve indicated in green lines, below, the first and second quarters between 2001 and 2013. Right now, we’re just hanging out close to our long-term average.

Which means what, exactly?

This year, watch for prices to go up for the first two quarters [like they always do]. People will be listing furiously. You still are not going to see the number of listings you saw during the bubble. When you get into the summer, at the beginning of that third-quarter, and all the way through the third quarter, you’re not going to see a slump, but a plateau.  ~ Tina Tamboer, Get Your Phx/Cromford Report

People go on vacation and fewer people list. Glance back to all those sections with the green lines. Note that regardless of the severity or abundance of sales, Q1 and Q2 sales always increase, followed by a plateau. So here’s the take away: if you are thinking of listing, it is better to list it and sell in the first two quarters.

Right now, we’re just at the beginning of the second quarter. You still have just shy of three full months. If you put a property on right now, chances are – unless you’re priced way above market – you’re going to get your house sold in a matter of weeks. If it’s a nice, clean property in central Phoenix and most parts of town, you’re going to sell pretty quickly.

Once you get to the summer, you might see activity slowdown, and prices fall back a little bit.

Do you really want to risk that?

When you get into the end of the year, what happens? Look back up to the chart again at Q4 over the years. You’ll see that end of the year home selling is not as good as beginning of the year. Why? Because in October, November and December, people are beginning to think about holidays, which is why sales slowdown at the end of the year. The conclusion is the same: the best time of the year to sell your home is in the first two quarters.

The first quarter of 2013 ended a week ago. You’ve got less than one quarter left.
If you’re thinking of getting your home out there, talk to me.
We’ll get it out there.

Please give me a call at 602-456-9388 or email me at ken@getyourphx.com

[megaphone man: Shrieking Tree ]

After the bubble comes the recovery. In part 3 of my series on why we’re not in a bubble, you saw how non-distressed homes are taking on a greater role in the market. The final bit of proof that we’re not in a bubble goes like this…

The chart below is from part 1 of our analysis. Recall that the little spike in 2009 (green box in Market Index below) where we saw people taking advantage of the First Time Home-buyer Tax Credit.

And then the banks brought a few more things like foreclosures and short sales on the market, as we were struggling to get out of that. There was a little dip their between 2009 and 2010 in prices and a shot back up. We had a lot of inventory on the market. These are normal home sales people who were up against distressed inventory so they had to bring their prices down.

Distressed only

When we look at distressed-only prices in this next chart, we still have this jump.

 

On the far right of this chart, on top of the horizontal blue line, is where normal (non-distressed) sales prices are at $202, 382.

If you draw back into the past, you run into this green box on the left. Look at where the price lands and to see that it’s not the same. Actually, before that, that price landed in late 2004. It’s a different measure, because the last time we saw the price going up, it was the last quarter of 2006 (the right side of the green box on the left).

The last time we saw prices like our non-distressed number of $202,382 going up was at the end of 2005. The conditions were much different –buyers paid very little down payment, they had little skin in the game, sellers could choose their appraisers and lenders were going mad.

The last time we saw them going down was at the end of 2008. In terms of price increase, distressed home sales still have 45% to go in order to get up to $202,382. But that’s probably not going to happen. Back at the worst of it, distressed homes sales had 102% to go to reach normal.

We’ve come a long way in terms of prices coming up on those distressed homes, so yes, if you can into a distressed home, that’s great, but there are very few of them around.

And this, dear friends, is why were not in a bubble:

• Distressed homes are still pulling prices down.
• Inventory might be tight, but it’s not as tight as you thought it was (we talked about this in part one).
• Distressed property inventory is really tight, but the normal property inventory is growing at a regular pace.
• Normal property prices are still relatively low compared to what we saw before the bubble.
• If those $202,382 prices for normal homes were in the same landscape where we saw the same conditions that were happening pre-bubble (like in the last chart we reviewed in part 2 “Return of the Equity Seller”, with things like 100% financing and the like, I’d say yeah, we’re in a bubble, and we might be really worried.
• We’d be way, way above our long term trend line (part 2) if that was happening.

Where do the voices decrying “We’re in a bubble!” come from?

What does the answer have to do with the coming summer?

That’s next week!

If you want to sell or buy, please give me a call at (602) 456-9388 or email ken@getyourphx.com. I can get it done!

Thanks again to our friend Laura Dragon of {9}TheGallery  the folks at Bragg’s Pie Factory Diner , Chris Klein and Chris Duran of Glass Lab/Metal Lab, Beatrice Moore, the Grande Dame of Grand Ave and Jen Urso of Frontal Lobe Community Art Space. We had a wonderful time and learned so much!

This may be a red letter day in Phoenix. Well, technically about a month ago was a red letter day in downtown. It was the day that Scratch French Pastry and Pallet opened in the long-vacant Canvas building at 2nd St and Roosevelt.

For how long were we forced to look at that empty building, once full of hope, defaced by neglect and empty promises?

But no more, my friends, no more! Today, we rise again!

Sorry. Pastries and beer get me all melodramatic.

First, a little back-story. I spoke with co-owner Noelle Liao last November about their plans to open a downtown version of their successful Scottsdale French pastry shop, called Scratch, in Canvas. Back then she estimated that they would be ready to open by about April.

Now, for of you downtowners who may be thinking that something from Scottsdale can’t be all that good, listen to this story. Noelle, who has family in Arizona, was a model working internationally when she met her husband, Duc, a Vietnamese-Chinese fashion photographer, raised in France.

Bada-bing, bada-boom, they get married, have a couple children and decide to settle in Scottsdale. Well, “settle” is relative. Duc still jets off to Europe regularly for photo shoots. Plus, they both spent years researching and preparing for their excursion in to the world of pastries. Duc was classically trained at Le Cordon Bleu and together they spent a year preparing and researching where to open in Scottsdale.

After over four years of rave reviews, they are taking the opportunity to join us here where all the action is. And, here’s the other reason they are worth a visit: they made a name for themselves serving very reasonably priced fair. They have sandwiches around $8, pastries around $5 and 19-ounce beers for $4 at their daily happy hour. This happy hour is getting some positive reviews already, too.

Noelle said that they were inspired to begin this business because of the time that they spend in France. Their weekends, highlighted by causal times spent at the local pastry shops.

Now this, my friends, is why we want to celebrate Scratch. Not only is the back-story über charming and trés internationale, but they are truly trying to share with us an incredible memory and giving us a chance to experience that same feeling.

UPDATE: Chef Duc Liao is making a special French cheese pastry called a Gougère for the first 30 people in the door.

May  2013 Get Your PHX
May 23rd, 5:30 to 7:30
1011 N 3rd St, Phoenix Map It

Last week, I promised to show you the real kicker. Here it is: Non distressed homes are taking on a greater role in the market. The distressed houses are going away.

What did the line look like for non-distressed homes? These are people who didn’t necessarily lose their home but their values went down. Watch what happens here, ‘cause this is the real kicker that reveals why it is we’re not in a bubble.

This chart is for Maricopa County, Median Home Sale Prices: NON-DISTRESSED SALES ONLY

The red arrow indicates the 18% pricing increase in the bubble. This was bubble-pricing at the beginning of the bubble. The large red circle that follows is what a real bubble looks like.

Now look at where we are now in this next chart. Look at the matching 16% increase at the far right of the chart, marked in blue.

We’re just matching the increase of Q4 2003-2004! Ask yourself:

What did it take to get us to where we were at the outset of the bubble? Recall those three big components from my part 2 analysis, last week. Are those at play here in the market again?

No.

We don’t have 100% financing.
We don’t have mortgage cash backs.
We don’t have schemes.

People have to have money. You have to 3.5% down, minimum for FHA. The conditions before are not the same now:

Mortgage lenders have to go to class and get licensed, just like agents now. Lenders didn’t have to do that before. You have to have some skin in the game nowadays, but you didn’t really have to have that back then. We’re not seeing those kinds of things. So for normal home prices, that dashed light blue line  in the chart above,  we’re right on the normal.

The normal home sellers and buyers are just kind of hanging out. When you look at what the prices are today

(~ $200,000 – per the number of the far right side of the above chart) and then look back into the past at the last time we were at that point, in the fourth quarter of 2004 (~ $193,950), you start to see what your equity is.

In the graph above, if you bought your home in the green box on the left, 2001 to late 2004, you had equity. If you bought it in the box on the right, late 2009 to now, you have equity. Now’s the time to sell.

Next week: Welcome to Recovery Mode (part 4)

To sell (or buy) please give me a call at (602) 456-9388 or email ken@getyourphx.com.