Why does Phoenix still have such a shortage of properties?

As we learned from my previous posts on this series (part 1 and part 2) this inward migration from the east coast and midwest into Phoenix is one of the key reasons home prices will continue to rise for the foreseeable future. There’s a logical explanation for the shortage of properties.

Look first at the motivation for out-of-state companies to come here in the first place:

It started when California changed their tax code and started to tax the Internet retailers. So when those Internet retailers started coming into Phoenix, they began by taking up our warehouse spaces. At the same time the Arizona legislature restructured our tax codes so that we were more competitive with states like California, Texas, and New Mexico. ~ Tina Timboer, Cromford Report

Notice our standard of living here compared to other major cities. Those companies coming here don’t have to pay their employees as much money. Why pay them a six figure salary, when they can get the same middle class life out here, but for much less? You can get a 2,400 sq ft, four-bedroom, two bath home out here for very affordable prices. Compare us against New York, San Francisco, even Texas. Plus, GPEC (Greater Phoenix Economic Council) has just done a great job to attract those out of state businesses, too.

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.

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]

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

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

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

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

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

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

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

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

Ken Clark, Realtor
602-456-9388

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.

Houses are being scooped up really quickly right now.  This is no exaggeration: good homes are selling within 24-48 hours now. I’ve seen how frustrating it’s been for some of my clients when they don’t get the properties they offered on.

So… Here are five things that I am asking my clients to do to increase there chances of getting the property that they want. (There are other things, but I can’t give away all my trade secrets!)

1.  Check MLS in the evening, rather than the morning.

Most agents don’t get up early and post new listings. They do it at night. I try to check for new listings in the evening for this reason. If you see something you like, shoot your Realtor an email.

2.   Look closely at the neighborhood on the Internet before visiting the property.

If you are looking at one property in a neighborhood you don’t like, you might miss another property that you do like. So, let’s use the Internet to our advantage. Type the address of the property in to Google Street View and have a look around. We agents already have an opinion of the neighborhoods that we know. But we can’t always predict what you like.

3.  View the property within hours of identifying it, not days.

My “Get Your PHX Team” is adapting to the market conditions. When a property comes on that one of my clients wants to see, the member of our team who is available immediately will try to get them in to see the property, quickly.

4. Have your prequalifcation letter or proof of funds ready.

Realtors cannot show properties unless the buyer has all their financing sorted out. In this market, we need to make decisions in hours. Further, sellers want to verify the buyer’s purchase method. So, everything has to be ready to go.

5. Print/Scan/Fax

These days, we are allowed to sign contracts, then scan or fax them. For this reason, I have my team carry blank contracts to a property in case a buyer wants to make the offer immediately. However, if we don’t write a contract on the spot, we may need the buyer to print/sign/return documents quickly. If a buyer doesn’t have this capability at their office or home, it’s important for them to let us know before we view properties.

The rush that we Realtors feel in this market is frustrating. We understand that nobody likes to feel pressured. Yet, we want the buyer to get what they need and we sincerely appreciate their patience and accommodations. By doing these five things, we are more competitive in getting buyers the property they want.

[image: woodleywonderworks]

I was recently introduced to the 2012 Centennial Edition of the Bicycle Map and Phoenix Historic Neighborhoods  (PDF).

It was created under the guidance of Joseph Perez, the city of Phoenix Traffic Safety & Bicycle Coordinator (May 31, 2012 video), so I had high hopes for what Joe might bring to the mix.

I’m hoping people using the map will see the close proximity of the historic districts, bike trails, canal paths, and light rail stops, and think, ‘I should move here. It’s so close to everything,’  Perez told me when I asked him about it.

As it turns out, I live in the Campus Vista historic district and own a bike, so I felt endowed with certain unalienable rights to… put this map to the test.  Campus Vista is one of the 35 historic districts profiled, colored, numbered for easy recognition in this unique little fold up map. My neighborhood (light blue, #4):

Campus Vista. The opening of a new campus for Phoenix College in 1939, just outside city limits, created a demand for nearby housing. Bordering on the eastern and northern campus, the homes in this district represent a heterogeneous collection of mid-20th century domestic architectural styles.

Eager to start my journey, I head east on Thomas until I reached the yellow dots at 5^th ave and head south. This dedicated bike lane takes me through a dark orange neighborhood, one of my favorite places to buy and sell homes, and one of the most popular historic areas to walk, drive, or bike through: the Willo District.

Showcasing a wide variety of home styles including Tudor, Spanish Revival, Bungalow and Ranch, Willo is one of the largest historic neighborhoods, with majority of construction having taken place during the 1920’s-1930’s. Significant architectural changes in Willo can be marked  in the neighborhood starting with the earliest development near McDowell, and progressing north toward Thomas.

As I leave Willo, I cross south at McDowell and enter the Roosevelt District,

The first Phoenix neighborhood to be designated a historic district… A typical “Streetcar” neighborhood, its narrow and deep lots often showcase both California and Craftsman Bunaglow.

It’s a wonderful ride and I slow my pace even though it’s over 105 degrees out. (One has to have priorities, you know.)  A bit later, I follow the dedicated bike path over the I-10 freeway, then stop as I’m struck by the proximity of the majestic Kenilworth Public School building (and not just because I see my name is in it).

View Phoenix Historic Districts in a larger map

I’ve reached Fillmore. The map shows my path as orange dots, a “Bike Boulevard” that leads east through central Phoenix to 7^th street and the Garfield Historic District–- “modest bungalows, Period Revival homes, turn-of-the-century structures and a concentration of Pyramid cottages.”

A bike boulevard is designated visually on the road by ‘sharrows’, two white parallel arrows over a large white bicycle that make it obvious the road is to be shared with bicyclists. This summer, the Bike Boulevard (begun in a public meeting in 2010) will be completed when it reaches the Grand Canal Trail at 33^rd street, leading bicyclists from there into Tempe. (Read the full story here.)

SRP has plans to install a pedestrian bridge this year,” said Perez.  “To help connect the boulevard to the Grand Canal Path immediately east of Indian Trail but seperate because of an irrigation ditch.” [update: the bridge is now complete at Garfield & indian Trail!]

If you’re a bit skittish about sharing the road with cars, like I am, you might reconsider when you read Taz Looman’s Blooming Rock post, “Why I Converted from a Sidewalk Cyclist to a Street Cyclist”.

Well…Bike Boulevard and the land of Garfield awaits…I’m off!

You may have seen my previous stories about the effort to put historic trollies on Grand Avenue as an economic development project. This low-cost project would help encourage new businesses along Grand Ave between Van Buren and Roosevelt –a trend that is already under way, but which could quicken and bring new income to Phoenix.

Since writing these stories, I joined the Grand Avenue Rail Project (GARP) board and we are working to get recognition of the great return on investment this represents.

It came to my attention this last week that the folks at the Trolley Museum, where they house the historic trollies which we hope to use on Grand Ave., have received a proposal from a neighboring city to take our trollies and add them to their local museum.

From what I am hearing, the Phoenix Trolley Museum folks, not getting a particularly warm feeling from City of Phoenix, are seriously considering taking this other museum up on their offer. From what I hear, some in the City really want to take back the trolley museum building at Margaret T. Hance Park so they can use it for other things. They have gone so far as to encourage the Trolly Museum to move, but they have not provided a viable place for them to go.

The sad part is that there is a very viable option, which the Museum folks and GARP founder Robert Graham have been advocating for: put the trolly museum on Grand Ave., along with an accompanying trolly line that will encourage new business on Grand.

Thus their frustration.

Here is my concern: if the Trolley Museum moves to some other city, it will be even more difficult to see the GARP idea through and it will represent yet another Phoenix stab at historic preservation. Even sadder is the fact that the city does not need to lay out much money to make this happen. They just need to partner on proposals to the federal government for transportation dollars, which can be used for this purpose.

The estimated cost to build the infrastructure, outfit a new museum on grand and operate the system: $10 million. I believe that the resulting new home sales, infill development and business starts along grand will be worth ten times that.

Please contact your city councilmen and let them know that you support the Grand Avenue Rail Project.

I’m very proud to announce a new listing that I have at the widely-coveted Villa del Coronado.

Please see this link for the listing information.

These condos, built in 1958 are one of the few quintessential examples of Mid-Century Modern design left in Phoenix. Did you know that one of our previous governors used to own a property here?

I use the word “coveted”, above because this community is absolutely pristine and sought-after by Mid-Century Modern buffs.

The owner of this property has renovated the bathrooms with beautiful modern features, opened up the great room. The Villa de Coronado community has two salt water pools, with one heated. It is also one of the few properties downtown with individual garage parking.

The community takes care of everything, even some maintenance for each unit. That way you can get out and explore, wether you are going across the street to the Phoenix Art Museum or to the light rail stop about 300 feet away.

These properties are co-operative condos, a rare breed in Phoenix. As such, the properties are kept in immaculate condition by people who are very particular about the type of property they own. It means that if you own one, you actually own a portion of a corporation. As such, all of your taxes, electricity, gas and other usual HOA fees are paid out of one monthly fee. It also means that these properties can only change hands by paying cash, with one exception –“seller carrybacks”. Financing is not an option.

To put it another way, because you are buying in to a corporation a lender is not likely to give you a loan.

What is a “seller carryback,” you ask? Check out this post from way back in 2010 about seller carrybacks and how they work. Basically, you can buy it directly from the owner through installments.

If you want more information about this unique opportunity, please give me a call at 602-456-9388.

(Yeah, go ahead. Say it. “Phoenix and Historic Preservation are oxymorons.” Did you get it out of your system? Ok. Thanks. Proceed.)

In keeping with the National Preservation Month’s May theme—“Discover America’s Hidden Gems”—past and present Phoenix Historic Preservation Commission members will share their favorite Phoenix memories and “hidden gems”.

Nine Phoenix resident commission members, from at least one of the following categories—registered architect, real estate professional, archeologist, and historian—serve on the commission for a three-year term. The newest member is Tazmine Khatri Loomans (“but you can call me, Taz”), architect, writer and advocate for sustainable building practices. Her first committee meeting was May 21, but I know she’ll have plenty to contribute to the celebration! (For more info on Taz, check out her excellent ‘city. sustained.’ Phoenix-based blog, Blooming Rock.)

Maybe we’ll hear something along the lines of discoveries in 2010’s excellent coffee-table book, “Midcentury Marvels: Commercial Architecture of Phoenix, 1945 -1975” co-written by The Phoenix Historic Preservation Office and Ryden Architecture, Inc.

The Phoenix Historic Preservation Office writes books!? And they do a lot more, working to protect and enhance historic neighborhoods, buildings, and sites. They work closely with the Phoenix Historic Preservation Commission, to identify designate districts and properties that are eligible for a listing on the Phoenix Historic Property Register.

To qualify as a Historic Property in Phoenix, a property has to be at least 50 years old or have achieved an exceptional level of significance in the past 50 years.

“Significance” can mean one or more of these things: that the property is connected to events have contributed to wide patterns in the Phoenix history; that it is associated with significant people from Phoenix history; that it has, or is likely to in the future, provide information that will be helpful to increasing our understanding of Phoenix history or pre-history; and/or that the construction of the property clearly represents a specific type, period, or method; or it represents the work of an artistic master.

National Historic Preservation Month Celebration
6:30 p.m.
Tuesday, May 29
Encanto Clubhouse
2605 N. 15th Ave.