We’ve known it intuitively and anecdotally for a long time, but here is some great news that proves it: home values next to light rail are stronger.

In a recent blog by Michael Melaniphy (President and CEO, American Public Transportation Association (APTA)) he said:  “Average sales prices for residences in close proximity to high-frequency public transit were more stable during the recession”. This is not a guestimate, but backed up by strong data drawn from a nationwide report commissioned by APTA and the American Association of Realtors®.

The five cities upon which the study was based are a representative sample of the types of high-frequency public transit systems throughout the U.S. The five cities were Minneapolis-St. Paul, San Francisco, Chicago, Phoenix and Boston.

“During the last recession, residential property values performed 42 percent better on average if they were located near public transportation with high-frequency service.” ~ APTA and the American Association of Realtors®

Enter Phoenix’s $2.9 million Sustainable Communities grant (2011, from the Department of Housing and Urban Development) for Reinvent PHX —  a way to produce sustainability action plans for the five districts along the existing light rail line and establish a new transit-oriented model for urban development along the city’s light rail corridors.

As the nation continues to assign us with the unofficial title “World’s Least Sustainable City”, we’re still a “Bird on Fire” worth writing books about and paying attention to.  You may recall that in November last year, I wrote about Phoenix leading the Nation in Innovation and Efficiency.

A year ago, January, Native American Connections built a community for our growing, city-dwelling Native American populations in the mixed-use, mixed-income apartments of  the Divine Legacy, just across from the Campbell & Central light rail station.

In my post last September, I mentioned a great story on KJZZ’s Changing America series where the reporter talked about how retirees are moving into downtown areas and urban cores along the Valley Metro light-rail line.

And as The Atlantic noted in a post a couple days ago, it looks like Phoenix’s walkability gamble just might pay off.  Light rail homes gives people quicker access to alternate ways to get around town, access to jobs, and lower transportation costs in walkable areas.

All of this is particularly important if you are thinking to list your home. If you bought before about 2004 or between about 2009-2011, you are probably in a really good position to sell.

In the immortal words of one Hannibal Smith, “I love it when a plan comes together.”

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

[metro image: King Chung Huang]

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.

Last week, I shared details of the actual percentage of the increasing value of homes in the downtown Phoenix historic districts between January 2011 and October 2012. This week, I’ll open it up to CenPho, still focusing on the historic neighborhoods. You’ll find this very interesting and informative…

The bold numbers are the percecentage of change in those areas that follow:

No Change

I believe that we have not seen much change in these historic neighborhoods because they are so small and unique. We just have not seen much turnover in homes here.

Ashland Place Historic District
Hoover, Vernon and Ashland Avenues between Central Avenue and Third Street

Alvarado Historic District
Central Avenue, Oak Street, 3rd Street and Palm Lane in Phoenix
Note: I have a great listing at 140 E Coronado, directly behind the Phoenix art museum. This is a great, stable neighborhood.

East Alvarado Historic District
Central Ave., 3rd St., Oak St. and Roanoke Ave.,

East Evergreen Historic District
McDowell and Fillmore Sts., Central and 7th St.,

Up to 15% increase
This is generally the same as those areas noted above. This is a relatively small area and there is not a lot of turn-over.

La Hacienda Historic District
Thomas Rd. and Earll Dr. between 3rd St. and 7th St.

15% – 24.9% increase
The change in these areas is a result of some really nice renovations of historic homes. You are not seeing the huge increase in prices, as with those areas further down in this post because these areas remained surprisingly stable throughout the recession –at least by comparison. These areas prove my premise: that historic neighborhoods survive shocks better than other neighborhoods.

Campus Vista Historic District
Osborn to Thomas, 7th Avenue to 15th Avenue.

Cheery Lynn Historic District
Flower St, Earll Drive, Randolph Road, and 16th Street.

Country Club Manor
7th St. Osborn Rd and Thomas Rd

Del Norte Historic District
Virginia Avenue to Encanto Blvd, 17th Avenue to 15th Avenue

Encanto-Palmcroft Historic District
Encanto Bvd, McDowell Rd., 7th Ave. and 15th Ave.,

Encanto Vista Historic District
Encanto Bvd, Thomas Rd., 7th Ave. and 15th Ave.,

Fairview Place Historic District
15th Ave., McDowell Rd., 18th Ave., and Encanto Blvd

F.Q. Story Historic District
McDowell Rd., 7th Ave., Roosevelt St. and 17th Ave.,

Idylwilde Park Historic District
11th St and 12th St. Weldon Ave. and Fairmount Ave.

Margarita Place Historic District
15th Ave and 16th Ave along Edgemont Ave.

Medlock Place Historic District
Missouri and Camelback Rds. Central and 7th Aves.

Melrose-Woodlea Historic Neighborhood
15th ave to 7th ave and Indian School to the canal

Oakland Historic District
Van Buren and Jefferson Sts. 7th and 15th Aves.

Pierson Place Historic District
Camelback and the Grand Canal Central and 7th Aves.

Woodland Historic District
Grand and 19th Aves. and Van Buren and Fillmore St

Yaple Park Historic District
The Canal and Indian School Rd., 7th and 15th Aves.

25% – 34.9%
Willo saw some terrible price drops, but really started coming back in 2011. I believe a lot of this prices increases in Willo became apparent earlier than those shown far below.

Los Olivos Historic District
Located along Monte Vista Road between Third and Seventh streets

Roosevelt Historic District
McDowell Rd and Fillmore St. Central Ave. and 7th Ave.

Willo Historic District
Central and 7th Aves. McDowell and Thomas Rds.

35% or more increase
These areas really saw a huge dump in prices during the recession. The Coronado neighborhood, for example, was priced incredibly high on a per foot basis before the drop and they saw a huge downturn. Garfield neighborhood is increasing for other reasons –can you say “ASU expansion?” Garfield is going to be an important downtown neighborhood in the coming years and everybody is jumping in on it. I just hope that those who are jumping in are actually renovating the homes and not just acting as absentee landlords.

Brentwood Historic District
McDowell to the I-10, 16th Street to the 51

Coronado Historic District
Virginia Avenue to Coronado Road, 8th Street to 14th Street

Country Club Park Historic District
Thomas Road to Virginia Avenue, 8th Street to Dayton Street.

Earll Place Historic District
Earll Drive and the north side of Pinchot Ave between 16th and 18th st.

Garfield Historic District
7th St. 16th St. VanBuren St. and I-10

North Encanto Historic District
Osborn and Thomas Rds. 15th and 19th Aves.

Windsor Square Historic District
Missouri and Camelback Rds. Central Ave. and 7th St.

We were not certain that The Mortgage Forgiveness Debt Relief Act of 2007 was going to survive into 2013, regardless of the much ballyhooed fiscal cliff. The Debt Relief Act simply says that you will not pay taxes on the amount of debt you are forgiven if you short sell or foreclose on a home. 

The 11th hour congressional extension means homeowners will not have to pay taxes on forgiven mortgage debt from short sales or loan modifications until 2014. The Relief Act was set to expire December 31, 2012.

Without the tax break, a homeowners forgiven debt could be considered taxable income.

“Housing advocates and lawmakers [were] worried that the exemption [would] disappear just as thousands of homeowners [were] receiving large amounts of mortgage debt relief from the nation’s five largest banks as part of a national settlement of foreclosure abuse investigations.” ~ Jim Puzzanghera, Chicago Tribune

The five big banks the reporter for the Tribune is referring to are Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. As of September 20 last year, the article goes on to say, “Nearly 140,000 homeowners received some type of relief under the settlement, averaging about $76,615 each.”

As we are all well aware, homes today are worth much less than what they were purchased for in the housing bubble. By reducing the value of a troubled mortgage to the current value of a house, banks are frequently able to save themselves money. If the tax break had not been extended, any mortgage debts a bank forgave would then be counted as taxable income. In other words, if a $350,000 mortgage were reduced by the bank to a then current value of $250,000, the happy homeowner would suddenly become the proud owner of a $100,000 income tax bill.

“As a result, a homeowner struggling to pay the bills would be faced with tens of thousands of dollars in taxes. That would destroy any hope of establishing future mortgage debt relief for troubled homeowners, as any bank leniency would result in heavy tax trauma for borrowers.” ~ Zach Carter, The Huggington Post

According to CNN/Money, over 50,000 families lose their homes to foreclosure every month.

A sigh of relief is in order. Whew.

Here is the important take-away: Take advantage of this fiscal-cliff debt relief tax extension…now…while the next 12 months are still in play. Give me a call or drop me an email. I will absolutely sell your home, even if it is short sale.

Choosing an agent is a very personal decision. 

Let’s grab a cup-o-coffee, I’ll explain the Get Your PHX Method and you can see if I’m the right agent for you. Try before you buy!

While some of you will understand instantly what this post’s subject title means, others will get lost along the way if we don’t clarify some road signs.

That ‘FHA Anti-Flipping Rule Waiver’ stop sign is good through ‘Dec 31, 2012’. No California-stops, please. Thank you.

Before moving forward, let’s make sure we all understand the legal definition of “Property Flipping”:

A practice whereby a property recently acquired is resold for a considerable profit with an artificially inflated value.” ~ Housing and Urban Development / Fair Housing Administration (HUD/FSA)

(And for those who think flipping requires anything less than deep pockets and lots of hard work, the creator and star of A&E’s reality show, “Flip This House” has some great insight into the inevitable question: Is house-flipping as easy as it looks on TV?)

The stop sign was put in on February 1, 2010 by HUD/FHA. Before that, there was one of these:

What that meant was that prior to the February 1, 2010, HUD/FHA didn’t allow a home buyer to use an FHA loan when purchasing a home from an investor who bought the home, did repairs and renovations, then listed it for sale within ninety days of the original acquisition date. If you were a buyer with an FHA loan, you had to wait until the 91st day to make an offer on a flipped home sold by an investor.

This prompted investors to stay away from HUD owned homes, which had the kind of negative effects we’ve all seen with REO’s (bank owned homes) being abandoned for long periods of time, leading to vandalism, squatters, and reflecting poorly on the surrounding community. The rule was originally supposed to expire in Feb 2010, but with so many houses distressed and foreclosed the FHA waived the rule (video) to encourage home buying until Dec 31, 2012.

Because of the FHA 90-day flip waiver extension (full PDF guidelines), investors can now accept offers from FHA buyers within the first 90 days.

This has been an important extension because the goal of ‘house flipping’ is (of course) to sell the home as fast as possible and for as much as possible. This helps to stabilize home prices by allowing home investors to purchase HUD or bank-owned houses and sell them quicker, raise housing prices faster, removing all the negative effects of abandoned homes, and therefore turn the housing market around sooner.

Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.” ~ HUD.gov

Come Jan 1, 2013…

What lies ahead for the U.S. Housing Market…?

What about closer to home, say Central Phoenix? I’ve been writing about that very thing over the last couple months in my series ‘Get Your PHX Market Briefing’ based on my expertise in this area and with invaluable input from Mike Orr at The Cromford Report.

If you would like to be part of a future ‘Get Your PHX Market Briefing’, please contact me at 602-456-9388 or feel free to email me.

As the summer begins to tease us with signs of fading out–the sky is overcast and the rain is supposed to continue for the next week or so, I find myself thinking about the end of the year. Specifically, I think about how the older realtors always talk about the “slow months” –November through January.

Now, I’m no old hand, but I’m not that new and I can tell you that last Halloween through New Year’s was all work for me in the real estate business.

As the story goes, people stop buying or selling houses because the holidays just creep up on them and they get distracted. The common wisdom says that the market slows down after the summer and then maybe you may be able to negotiate a better deal during the holidays and Christmas. But that has not been the case the last two years.

If you look at previous years (see below), you will see that this is generally true; especially around Thanksgiving. In the first chart below you will see the last nine years. Some of them drop off drastically, but come back around February. In the second chart you will see 2004 and 2005 compared to 2010 and 2011. In ’10 and ’11 there was a little drop around November, but then we just picked right up again.

In other words, don’t assume that the end of the year is going to be slow!

The take away?

First: Don’t assume the end of the year is going to be slow. Whether you are selling or buying, take advantage of the active market.

Second, it’s been hectic the last two years. We have every reason to believe it’s going to be hectic this year, too.

And by the way, if you’re thinking to short sale, you’re running out of time if you want to avoid the tax repercussions of selling your home short. Please see this article and learn how the Mortgage Forgiveness Debt Relief Act allows you to avoid paying taxes on mortgage debt forgiven by your lender. This act runs out at the end of this year.

For those looking to relieve some pressure from the uncertainty of when to swing their buy-it-now bat and make contact with the house-ball, the number of listings  are creeping up again, wouldn’t you know it. (See the brown line in the “Monthly Average Sales Price” chart below).

Why is that, you ask?

Which is better:

The freedom of a condo? Or the land value of a house? You’ve found the area where you want to live. You have your financing arranged. But, you are stuck.

[Image:davecito]

This week and next I’ll be sharing some ideas to help you sort it all out by comparing the pro’s and con’s of each option. Today, I’m going to focus on the bonus features of a detached, residential house. (If you’re leaving toward a condo, you’ll want to read this, though, as you’ll get advice, too, since I’ll be comparing the two options.)

1.   The land Will Never Go Away

90% of all millionaires become so through owning real estate.”
~ Andrew Carnegie

Let’s face it. Buildings fall down.

But unless you live on an island in the Mississippi, your land will probably not go away.

This is a drawback for condominiums. Although many are built to last, some have been thrown up so quickly in recent years, they may not last 30 years.

Ask yourself this question:

Which is more important to me at this time in my life: being free from yard and home maintenance or buying something that I will have 20 years from now?”

[image: PrimeImageMedia.com]

2.   No Shared Walls

In a condo development, you may hear your neighbors. If you are the kind of person who does not like to see the same neighbors almost every day in close proximity, you may consider a house.

You can build a privacy wall or grow bushes around your home. Your back yard can be a fantastic get-away.

Ask yourself this question:

Do I enjoy the sense of community that I can have by sharing a common living area. Or, do I prefer more space that I can call just my own?”

How much more are you willing to pay for that luxury?

3.  Greater Flexibility to Improve and Remodel

Most condominiums, if built with block construction, give you some flexibility to re-arrange inside. You may be able to remove some walls and expand rooms.

However, once you start talking about windows, balconies, and patios, the restrictions begin to pile on.

If you have a house, you can go crazy repainting, adding features, and personalizing your home.

However, you must still adhere to city code for things like wall height and that massive Trojan Horse water slide you are planning to build in the back yard.

Get to know and love these two links:

City of Phoenix Historic Preservation

City of Phoenix Residential Building Permits

4.  Your Property Value is Tied to the Success of Neighbors

In a condominium, all owners pay into a fund that maintains the common property, including landscaping and insurance for things that owners share, such as walls and a roof.

In a house, you don’t have to pay these monthly assessments. But, then again, you have very little power over your neighbor, who has decided to park a massive pink RV between your two homes.

Or, if your neighbors don’t take crime prevention seriously, will your neighborhood likely improve or decline?

Ask yourself this question:

Am I willing to spend the time volunteering with the neighborhood association in order to protect my property value?”

Hint: You will want to ask a similar question for condos.

5.  Keeping Up Appearances

People often talk about keeping up appearances in the negative, as if it is all about superficiality.

But in a neighborhood, keeping the street looking good has a very direct impact on your property value.

If you are inclined toward a condominium because you don’t have to mow the lawn, consider this:

• The Average HOA Assessment = $200/month
• Average gardener = $100/month

6.  Other Things to Consider with Houses

Growth potential tends to be higher.

Condo boards politics can be tricky.

Houses are more adaptable for growing a family.

Always meet the neighbors before you buy, as part of your inspection period.

Kenneth “Ken” Clark
REALTOR(r)
At Your Service!
HomeSmart
(602) 561-5881
Ken@GetYourPHX.com

 

Nobody has any idea. But I predict that, while it won’t be as dramatic as our last, it may go on for a while.

Here’s the analysis:

After the presidential elections in November, regardless of the winner,  prices will continue to move upward. How do I know this? And why does this sound like a weather report prediction?

It’s because the coming change in home-buying patterns is showing evidence of a refreshing rain moving our way. After a six-year long summer of dry, cloudless skies, we’re beginning to smell the change in the air. A break from the scorching heat is a ‘comin.

To say it without the weather analogy, the increase in buying will continue, in part because a lot of companies are holding off on major projects and hiring until after the elections’ fallout. However, that upswing won’t be dramatic because our national debt and energy prices will continue to be a drag on our economy.

In regards to prices, we don’t see where new inventory in our Phoenix market will come from, especially in CenPho. Tight inventory means higher prices.

Mark Zandy, one of the nation’s preeminent housing analysts was on the Diane Rems Show yesterday morning talking about prices and how they are continuing to move upward as distressed properties are going away.

In Phoenix house prices have gone up 30% from last year. Yes 30%.

Take a look at the graph below, showing the Monthly Average Sales Price Per Square Foot. You can’t see the wind, but you can tell how and where it’s moving by watching the things it affects.

This chart shows a snapshot of four years worth of housing prices on the move. The brown line on top, the one with the greatest upward spiking is 2012.

My expert conclusion?

The heat is unbearable and so many people are walking around with sunburned proof of the long, hot summer. If you’re thinking of buying, make your move and buy now.

I want to say this very clearly: while prices will be going up for the foreseeable future, they won’t return to 2007 levels for years. So, if you are thinking to BUY, do it now before you lose another 30% of your buying power. If you think you want to hold off SELLING until you hit 2008 prices again, don’t expect to see that again until 2020.

If you want more information, please contact me at 602-456-9388.