Phoenix Finds Its Way Out of the Downturn: A Model for Recovery

The Arizona capital of Phoenix was one of the hardest hit markets by the housing crisis, with home values plunging nearly 60 percent from 2006 through mid-2011 and foreclosure filings soaring.

As recently as June 2011 Phoenix held the second highest metro foreclosure rate in the country, behind only Las Vegas, according to RealtyTrac. By the end of 2011, it had dropped to No. 6, and by March 2012, slipped to No. 9.

Adam Artunian, senior research analyst with John Burns Real Estate Consulting (JBREC), says it wasn’t too long ago that Phoenix was considered ground zero of the housing market’s collapse. “Phoenix has orchestrated a dramatic turnaround in recent months and has considerably outpaced other distressed markets such as Las Vegas, Riverside-San Bernardino, and Sacramento,” according to Artunian.

So what’s going on in the Valley of the Sun that’s so different from the rest of the country? What market forces are strong enough to lift the nation’s sixth most populous city from the depths of the downturn?
Analysts and local real estate professionals alike attribute the market’s turnaround to investors who are snapping up properties to fix and flip or fix and rent.

While Phoenix has always been an attractive investment market, Artunian says investors have literally flooded the area since the downturn and now make up close to 45 percent of all buyers.

Investor demand is so strong in fact that Artunian says first-time buyers are having difficulty competing with investors who are paying with all cash. Local agents are reporting bidding wars among prospective buyers, with homes going for more than the asking prices.

Artunian notes that single-family rental rates are now averaging $12,500 a year. With the selling price of a distressed home usually well below the median home price of $127,000, he says investors can expect to achieve between a 5 percent and 10 percent annual return, after operating expenses and before any home price or rental appreciation.

Investor demand has served to drive up home prices in the area. According to Michael Orr, director of the Real Estate Center at the W.P. Carey School of Business at Arizona State University, the median price of single-family homes in the Phoenix area rose to $134,900 in March of this year, up more than 20 percent from a year earlier.

He says the increase signals a shift in the mix of properties being sold, with fewer low-price foreclosures moving through the market. Median and per square foot pricing is moving up as traditional sales account for a greater percentage of activity, Orr explained.

The average price per square foot for homes in Phoenix during the first quarter of this year was $956, according to the online real estate marketplace Trulia. That’s an increase of 999.9 percent compared to the same period last year.

Local investors say homes priced at the lower end of the market – under $100,000 – are becoming increasingly harder to find, and once you do find a bargain-priced gem, it’s snapped up and off the market before you know it.

Artur Ciesielski, a Realtor and partner with inPhoenix Realty Group, noted in a recent blog post that the nose-dive in Phoenix home prices since the bubble burst is now fueling investor appetite, especially in a market with such high rental demand.

“Expect investor demand to continue and to be part of the demand that is driving prices up,” Ciesielski writes, “and forget about shadow inventory, it’s not coming.”

The housing inventory in Phoenix has fallen to a mere 2.4 months, down from nearly 5 months just one year ago and over 12 months in early 2008. According to JBREC, months-of-supply has not been this low in Phoenix since late 2005 when sales activity was at feverish levels.

Listings of existing homes for sale have fallen 43 percent since March 2011, and local practitioners are now calling “shadow inventory” nothing more than a myth. They say if banks were holding properties off the Phoenix market, now would be the time to release them and it’s just not happening.

Where are all the real estate investors descending from? Artunian points to Canada. While there are a growing number of local investors taking advantage of current conditions, he says Canadians are increasingly flush with cash, many because of their own real estate boom in recent years.

That combined with a favorable currency exchange rate has given them “unusual buying power,” according to Artunian. He cites data from the Cromford Report, a local real-estate publication, which shows one in every 25 sales registered in February went to a buyer that listed a Canadian address.

by Carrie Bay dsnews.com May 2, 2012



Phoenix Finds Its Way Out of the Downturn: A Model for Recovery

Phoenix tops Zillow list

Phoenix topped real-estate portal and online valuation service Zillow's list of metro areas expected to achieve growth in home values in 2013 in a report issued Tuesday.

According to Zillow, the Phoenix area is expected to experience a 6.5 percent increase in median home price in 2013 compared with the current year.

The first runner-up was Miami-Fort Lauderdale with an expected median-price increase of 5.6 percent, followed by Tampa with an expected 2.5 percent increase.

According to Zillow, the predictions are based on data from past home-value trends and current market conditions, including leading indicators such as home sales, monthly housing-inventory supply and jobless rate.

An Arizona State University report issued Thursday said the Phoenix area's median single-family-home price was up more than 20 percent in March compared with a year earlier.

The number of foreclosures completed in March was down a whopping 60 percent from March 2011, according to ASU real-estate analyst Mike Orr, who wrote the report.

Orr said new-home sales were up 35 percent in the Phoenix area for the same time period.

Of the 30 major metropolitan areas included in the Zillow forecast, 16 markets were expected to see median home-price increases, while 14 markets were expected to see price declines in 2013.

At the bottom of the list was Atlanta with an expected decrease of 4.1 percent, followed by Chicago with an expected 3.8 percent decrease.

by J. Craig Anderson azcentral.com Apr 27, 2012




Phoenix tops Zillow list

Hotel Palomar in downtown Phoenix almost complete

Tom Tingle/The Republic This is the Hotel Palomar under construction in downtown Phoenix. View is from Central and Jefferson.




Years of construction at First and Jefferson streets in downtown Phoenix are about to end at the CityScape office-and-retail project as construction crews complete the Hotel Palomar Phoenix.

The $90 million, 242-room boutique hotel in the RED Development project officially opens June 5. It joins the Hotel San Carlos, Hyatt Regency Phoenix, Renaissance Phoenix Hotel, Sheraton Phoenix Downtown Hotel and the Westin Phoenix Downtown in the lineup of downtown hotels.

Jim Hollister, general manager of the new hotel, said other hoteliers in the area have been welcoming to the Palomar, even though it will bring them new competition.

"We are fighting for the same business in summer," Hollister said.

CityScape general manager Jeff Moloznik said the Hotel Palomar will give Phoenix more leverage when courting large national conferences and events, such as the Super Bowl, which will be held at the University of Phoenix Stadium in 2015, with fan events at CityScape.

"But we're also competing together as a group nationally for conventions," Moloznik said.

Phoenix officials have said the city needs more hotels downtown to support the large-scale conventions they have been drawing to the Phoenix Convention Center, a few blocks from CityScape.

An estimated 195,750 people are expected to attend the center's conferences this year -- which amounts to nearly 276,000 room nights in local hotels, according to the Greater Phoenix Convention and Visitors Bureau and convention-center officials.

Those convention attendees are expected to spend more than $283 million during the year on food, drinks, rooms, souvenirs and entertainment.

The Palomar in Phoenix, a Kimpton hotel, would be an attractive option for conventioneers, and it could be a selling point for associations and other national groups that are deciding where to hold their next annual conventions, said Jennifer Franklin, a spokeswoman for the hotel.

Franklin also said Kimpton hotels have a loyal customer following, especially among women, which makes it an attractive brand for cities to acquire.

The Hotel Palomar Phoenix is the second hotel that Kimpton Hotels and Restaurants has built from scratch, Hollister said. The other is the Hotel Palomar in Chicago. The company usually adds hotels through "adaptive reuse" -- renovating existing buildings.

Moloznik said the Hotel Palomar Phoenix boasts energy efficiency and recycled materials that may enable it -- and all of CityScape's two blocks of stores, restaurants and offices -- to qualify for the prestigious LEED certification, the international hallmark of green design and construction.

In addition, it already meets Kimpton's standards for green building under its 7-year-old green building program, EarthCare -- another selling point for the environmentally conscientious customer.

The hotel's 242 rooms are decked in chic neutral tones -- espresso brown; gray beaded wallpaper; beige-colored, croc-textured doors on the wardrobes; and stainless-steel fixtures. The furniture has crisp, straight edges, but pillows and other accessories soften the sharpness. Nightly room rates start at $149.

"It's like that show 'Mad Men,' " Hollister said, referring to the popular AMC television show set in the early 1960s, when interior design was markedly minimalist with stark, contrasting colors.

A one-bedroom unit features a separate sitting room. Each bathroom has a Fuji soak tub.

A 3,200-square-foot ballroom will play host to conferences, banquets and celebrations. Boardrooms also can be set up in the meeting spaces. Altogether, the hotel offers more than 15,000 square feet of meeting space.

Construction crews are putting the finishing touches on two bars. One, on the second floor of the hotel, is the Blue Hound Kitchen & Cocktails bar, where Palomar guests will be invited to a "Wines of the World" hour at 5 p.m. daily. Room service also is available 24 hours a day.

The outdoor pool is on the third floor, where guests can watch the crowds walking to and leaving concerts, Phoenix Suns, Mercury and Arizona Diamondbacks games. Another bar, Lustre, next to the pool will be open to the public.

Guests hoping to squeeze in a workout will get complimentary passes to Gold's Gym Elite at CityScape.

Hollister said the hotel has been hosting job fairs at the CityScape office tower to hire 250 workers, from cleaning crews to managers.

by Emily Gersema - Apr. 28, 2012 04:35 PM The Republic | azcentral.com



Hotel Palomar in downtown Phoenix almost complete

Home prices in Phoenix area up 20 percent in past 12 months

Home prices are surging in metro Phoenix, climbing 8 percent in March alone and 20 percent in the past 12 months.

The median price of a house in the region climbed to $134,900, according to a new report from the W. P. Carey School of Business at Arizona State University.

The trend is projected to continue throughout the year, although at a slower pace.

Mike Orr, director of the Center for Real Estate Theory at ASU, doesn't expect home prices to continue to climb as fast as they did in March over the next few months. But he projects metro Phoenix's housing appreciation for 2012 to reach 25 percent by September.

Orr credits the turnaround to steep drops in foreclosures and in the number of homes for sale, coupled with an increase in sales.

Fewer foreclosures means fewer inexpensive homes for buyers. The number of homes taken back by lenders in metro Phoenix is down 60 percent from March 2011.

Housing inventory has dropped steadily during the past year because of a record number of investors snapping up properties out of foreclosure.

Home sales are up 35 percent from a year ago as more regular buyers have joined investors in the mix.

"Prices have begun to rise at a fast pace, and bargains are no longer plentiful," Orr said. "Most homes that are priced well are attracting multiple offers within a couple of days, and many are exceeding the asking price."

March's price increase was the sixth in a row for Phoenix's housing market. Most real-estate analysts say the streak of rising home prices, along with slower foreclosures, is proof a housing recovery is under way.

A growing number of national real-estate analysts say metro Phoenix is leading the U.S.' housing market's recovery.

Metro Phoenix's median home price is still at least $130,000 lower than it was during the boom but almost $30,000 higher than it was in August 2011.

Foreclosures are down, and so are the sales of lender-owned homes. Since March 2012, the number of foreclosures resold by lenders has plummeted 61 percent. At the same time, regular sales, new-home sales, investor purchases and short sales have climbed. All those types of transactions have higher median prices.

The number of houses on the market across the Phoenix area is down 64 percent from March 2011.

Frustrated real-estate agents have buyers ready to sign contracts but can't find houses for them.

Don Paulsen of Peoria-based West USA Realty said the number of homes on the market is even lower when the number of homes that already have contracts written on them is subtracted.

An example would be a short sale in which the owner accepted an offer and the agent is showing the status as AWC -- active with contingencies -- until they get lender approval, he said.

"The reality is most agents will not show those homes because they know there is already an accepted contract on them," Paulsen said.

Orr also expects foreclosures to continue to fall, which means even fewer inexpensive homes will be for sale.

"The very low number of inexpensive homes available for resale means more buyers are considering purchasing new homes as an option," Orr said. "This signals the start of a distinct upward trend in new-home sales."

Pinal County home prices are up 21.3 percent in price per square foot from March 2011 to March 2012, with Maricopa County prices per square foot up 12.9 percent.

The areas showing the greatest increases are those that suffered the most price damage from the foreclosure wave from 2007 to 2011, Orr said. Examples include El Mirage, up 20 percent in average price per square foot; Maricopa, up 20 percent; San Tan Valley, up 31 percent; Tolleson, up 20 percent; Glendale, up 16 percent; Phoenix, up 17 percent; and Anthem, up 17 percent.

In contrast, some areas least affected by foreclosures are still showing price decreases. Examples are Paradise Valley, down 2 percent; Tempe and Fountain Hills, down 3 percent; Sun City West, down 12 percent; and Wickenburg, down 18 percent.

Owner-occupied home sales, which have been eclipsed by foreclosures and short sales in recent years, also increased 47 percent from March 2011 to March 2012.

Prices are still below March 2011, but Orr said the trend has reversed recently, with the price per square foot rising 8.1 percent from February to March. The median normal resale price is now $166,650, still 4.8 percent below the $175,000 in March 2011.

New-home sales are concentrated in the southeast Valley, with Gilbert and Chandler recording the most sales in March, Orr reported.

by Catherine Reagor - Apr. 26, 2012 11:36 PM The Republic | azcentral.com




Home prices in Phoenix area up 20 percent in past 12 months

Phoenix Housing Market Rising

http://video.cnbc.com/gallery/?video=3000085201&startTime=0&endTime=6

Homebuilders busy again in corners of metro Phoenix

Homebuilding, metro Phoenix's biggest industry before the housing crash, is on the rise again.

Unlike in the past, this burst in the region's homebuilding isn't being driven by buyers going farther and farther out to find a house they can afford or investors looking for bargains.

In some areas of metro Phoenix, including Chandler and Gilbert in the southeast and Peoria and Surprise in the northwest, short-sale home prices are climbing so high due to multiple offers that resale home prices are rivaling new-home costs.

At the same time, builders are able to put up new houses for costs that let them compete with foreclosure-home prices. Many picked up empty lots in prime locations for bargain prices during the crash and can keep construction costs low.

The results: Among buyers, a growing number who have been outbid multiple times on short sales and foreclosures are opting to purchase new houses instead. And among builders, who have seen several dismal years of slow sales and deep losses, some are now reporting profits or at least their highest monthly sales in years.

Amy Baum had been outbid on seven short sales on homes in Chandler and Gilbert when her real-estate agent persuaded her to look at new homes in Gilbert.

Baum, an occupational nurse who treats employees at Intel, wanted to be near her job and her parents, who live in the southeast Valley.

"The prices on short sales were being bid up so high, I would have ended up paying $215,000 for a home that would take another $15,000 to fix up," said Baum. "I could get a new house for $215,000 and not have to worry about fighting some other buyer for it or renovating it."

New-home recovery

New-home sales and permits to build homes are up significantly in metro Phoenix from last year, due mostly to buyers like Baum.

"There's no question the new home market is finally on its way back," said RL Brown, publisher of the "Phoenix Housing Market Letter," a monthly newsletter tracking homebuilding. "But no one knows whether it will come back rip-roaring like the boom of 2006 or a more normal market like 2003."

For the first two months of this year, new home permits are up 84 percent compared with the same period in 2011, but the overall numbers are still low by metro Phoenix standards.

In January and February, there were 1,460 single-family permits issued in the region. In 2003, there were about 2,500 permits issued a month. In 2006, new homes went up at an average rate of 5,300 a month.

New-home sales are up 34 percent, but again, there were only 1,099 during the first two months of the year.

Several builders are reporting March was their best month for sales in years, and the uptick in the new-home market is likely to continue for at least a few more months.

Homebuilder Taylor Morrison sold more than 100 metro Phoenix houses in three weeks, making March its best year for sales in four years, said Pierrette Tierney, the company's vice president of sales and marketing.

She said buyers who have lost bidding wars on short-sale and foreclosure homes are Taylor Morrison's biggest group of buyers now.

"People call after looking at one of our houses and say, "If I write you a deposit check right now, can I get that lot?' " Tierney said.

"They are so happy when we tell them yes because they have been turned down so many times trying to buy existing houses. Of course, we are thrilled, too."

Location, location

Not all areas of metro Phoenix's new-home market are drawing buyers. The areas with the most homes being built are also the areas with the fewest existing homes for sale. The fringe parts of the Valley, the communities farthest out, continue to struggle.

"Real-estate agents are beginning to steer clients to new homes again because, in certain areas, it's the only option for their buyers," said Marcie Jarnagin-Beckham, a sales associate with Meritage's Villages at Val Vista in Gilbert, where Baum purchased her home.

The majority of new homes sold in metro Phoenix during the past year have been in Gilbert and Chandler. Buyers are drawn to those areas for the schools, jobs and shopping.

Other popular areas are Peoria and Surprise in the northwest. Several large employers have moved into the areas, and the expansion of Loop 303 has made commutes easier.

"It's all about location for homebuyers now," said Brown. "People will no longer drive until they qualify to buy a house."

Perry Dion has been trying to buy a house in Peoria for the past year. He has bid on dozens of short sales and even gone to the foreclosure auctions in front of the Maricopa County Courthouse.

"I have been going month-to-month on my apartment paying more because I kept thinking one of my offers would be accepted," he said. "But recently, I realized I have saved enough money that I can buy a new home in the area."

He's been checking out new subdivisions in Peoria and north Phoenix for the past few weekends and hopes to sign a contract this month.

Dion wants to sign a deal soon because he is already seeing some slight increases in the prices of the new homes he's checked out.

Market conditions

There's a shortage of home lots in the areas of the Valley where most new houses are being built. That, along with demand for more buyers, could push up overall new home prices this year, say real-estate analysts.

"I don't think any homebuilders are jumping up and down yet, but it feels good to be selling homes again," said Carl Mulac, president of AV Homes and chairman of the Home Builders Association of Central Arizona. "I am just concerned about how long this window of opportunity will last."

Some builders are expected to try to draw buyers in other parts of the Valley where they still have inexpensive lots. But there's no guarantee that strategy will work.

Building costs could rise if new-home demand continues to increase.

Subcontractors had to cut what they charged builders to survive the downturn, and most are ready to raise their fees as soon as they can, said Brown. Those higher fees will push up new-home prices.

And bargains on empty lots in foreclosure are mostly gone, so builders' land costs will continue to rise.

"My biggest concern for the market," Mulac said, "is whether the price appreciation of new homes can outpace the cost appreciation builders will soon be facing."


MORE ON THIS TOPIC

Single-family permits issued in metro Phoenix

1,460In January and February

2,500Per month in 2003

5,300Per month in 2006





by Catherine Reagor - Apr. 13, 2012 11:07 PM The Republic | azcentral.com



Homebuilders busy again in corners of metro Phoenix

Housing takes a few baby steps forward

Naysayers of metro Phoenix's housing-market recovery might be swayed by this:

The median price of an existing home in the region climbed 7 percent during March.

Last month, the median price of a Phoenix-area used home reached $131,000, according the real-estate firm AZBidder.

That's the highest the median for the area has been since June 2010.

A little more positive data. In March, 9,587 houses were sold across the region. That's the highest level since June 2009.

The number of homes for sale continues to shrink.

There are 21,750 houses on the market Valley-wide, according to the Cromford Report.

But that figure includes 7,700 homes that are already under contract for a sale.

Minority bias alleged

The National Fair Housing Alliance investigated nine metro areas, including metro Phoenix, to determine if foreclosure properties in Black and Latino neighborhoods were being maintained and marketed by lenders as well as foreclosures in predominately White neighborhoods. Its report was released earlier this week.

In the Valley, the housing group compared fewer than 200 foreclosure homes in Glendale and Maryvale. The investigation found 40 percent of the bank-owned homes in Maryvale, which it considered predominately Latino, had broken doors.

Only 6 percent of the bank-owned houses that the group checked out in the neighborhood in Glendale, which it considered predominately a White community, had broken doors.

About 73 percent of the foreclosure homes in the west Phoenix community didn't have "for sale" signs.

And 11 percent of those Glendale foreclosure home were missing those signs.

The investigation was a random sampling, and the Housing Alliance would not disclose what ZIP codes the homes it tracked were in or which lenders were the worst offenders.

But the report does address a problem for most major cities with higher foreclosure rates.

The Housing Alliance plans to file complaints with the U.S. Department of Housing and Urban Development in the next week accusing the lenders of violating the nation's Fair Housing Act.

by Catherine Reagor - Apr. 6, 2012 03:31 PM The Republic | azcentral.com



Housing takes a few baby steps forward

Phoenix bankruptcy filings still declining

Metro Phoenix bankruptcies continued their downward trend in March, with the number of filings dropping 26 percent from the same month in 2011. The decline corresponds with an easing of consumer debt pressures nationally, according to a new report.

The 2,074 filings were the highest total so far this year, but March tends to be a busy month, as people use their income-tax refunds to pay attorney fees. The latest tally was well below the 2,813 filings in March 2011 and the 3,063 in March 2010.

Valley bankruptcies have declined, on a year-over-year basis, for 14 consecutive months.

For all of Arizona, filings were down 28 percent from a year earlier and also have decreased for 14 straight months on a year-over-year basis.

Nationally, the 122,118 filings in March were down 17 percent from a year earlier, reported the American Bankruptcy Institute and Eqip Systems.

"With the economic recovery weighed down by the distressed housing market and high unemployment, consumers and business are continuing to cut their debt burdens," ABI executive director Samuel Gerdano said in a statement.

Consumer-debt problems eased across the board in last year's fourth quarter, according to a report released Thursday by the American Bankers Association. Past-due loans fell in all 11 categories tracked by the association, highlighted by a decrease in credit-card delinquencies. Some 3.17 percent of card accounts were 30 days or more overdue, down from 3.25 percent in the third quarter of 2011.

The overall delinquency total for the 11 categories dropped to its lowest level since 2008.

"You can't get a better consumer-credit report card than this," said James Chessen, the ABA's chief economist, in a statement. The last time delinquencies dropped in all 11 categories was the fourth quarter of 2004, Chessen said, though he cautioned that housing-related problems are keeping overall past-due rates elevated. For example, home-equity-loan delinquencies eased just slightly, to 4.08 percent from 4.12 percent.

Mark Winsor, an attorney at the Winsor Law Group in Mesa, said he thinks local bankruptcy filings will remain elevated due to lingering housing pressures. In particular, a lot of borrowers continue to owe money on second mortgages on homes they short sold, yet lenders still have six years to collect on those deficiencies, from the time a loan first went delinquent, he said.

"Some of those lenders might be waiting on the sideline for borrowers to get back onto their feet" before demanding payments, Winsor said.

Also, he said the decrease in local housing inventory means real-estate agents are having a tougher time generating sales, and for that reason more people in that profession might seek bankruptcy protection.

by Russ Wiles - Apr. 5, 2012 06:24 PM The Republic | azcentral.com



Phoenix bankruptcy filings still declining

Phoenix-area office market shows life with new projects

Although the metro Phoenix office market continues to struggle, it performed well enough during the first quarter to prompt a handful of office developers to announce plans for new projects, commercial real-estate analysts said.

Overall, the office-leasing market fared better in the first quarter than it had during the same period since 2007, said Chris Jantz, vice president of research at Cassidy Turley BRE Commercial in Phoenix.

It was also the first quarter in years in which a handful of office developers announced new projects, including Hayden Ferry Lakeside III in Tempe and SkySong III in Scottsdale.

Jantz said the Phoenix area's overall office-vacancy rate is still uncomfortably high at 28.2 percent for privately owned, multi-tenant office properties of at least 20,000 square feet.

That's down just a hair from the 28.3 percent vacancy rate reported for the same properties in the first quarter of 2011, he said.

The biggest difference was that overall net absorption -- the total amount of previously vacant space that became occupied by tenants -- was a positive number in the first quarter for the first time in five years, Jantz said.

Still, the total net absorption was only about 91,000 square feet, a relatively small amount compared with the local office market's total vacant space of about 19.2 million square feet.

"Things are certainly improving, but we'll need to see a lot more activity for the vacancy rate to go down significantly," Jantz said.

Commercial-real-estate brokers and analysts generally break down office properties into three categories based on location, age and quality. The categories are, from best to worst, Class A, Class B and Class C.

A Cassidy Turley report issued this week showed that Class A properties had positive absorption of about 132,000 square feet in the first quarter, while Class B properties had negative absorption of nearly 37,000 square feet.

That means Class B properties actually lost tenants overall in the first quarter. Class C office properties also lost overall, about 4,300 square feet.

Jantz said those numbers are further evidence of a trend that has been occurring for the past few years, in which office tenants move from lower-quality properties to nicer and newer ones because prices are so low.

Brokers call it the "flight to quality," he said.

The average asking rent for office properties of all classes was down in the first quarter compared with a year earlier, according to the report.

In the first quarter, the average asking rent was $20.84 per square foot annually, compared with $21.62 per square foot annually in the first quarter of 2011.

Jantz said asking rents are expected to remain flat throughout 2012.

by J. Craig Anderson - Apr. 4, 2012 06:35 PM The Republic | azcentral.com



Phoenix-area office market shows life with new projects

Phoenix-area home prices headed upward

Home prices are climbing in metro Phoenix faster than they have since the housing boom.

Some parts of the region experienced home-value increases of 5 to 10 percent a month this year because of a shortage of homes for sale that is sparking bidding wars between investors and regular buyers armed with pre-approvals for mortgages.

Valley home values database


This emerging recovery of home prices in the Phoenix area started late last year and has been building each month.

Home values still have a long way to go to recover to pre-boom levels. Metro Phoenix's median existing-home price is currently $124,500, about $20,000 below the area's median in 2002 and well below the $267,000 from the height of the boom in summer 2006.

But many housing-market analysts see this as the beginning of a long-awaited recovery for the area's battered housing market. The uptick in prices is enticing more buyers who have been waiting for the market's bottom to purchase a home and now have likely missed it.

"Phoenix-area home prices are climbing so quickly in some areas now, due to such low inventory, it's hard to keep up," said Tom Ruff, real-estate analyst with online foreclosure service AZ Bidder and a founder of the Information Market, which supplies data for The Republic's Valley Home Values report.

He said the prices on sales closing now, which were started 90 days ago, are outdated. So to find comparable sales, buyers and real-estate agents need to look at sales negotiated last week.

Investors have driven the market, usually paying cash for low-priced homes and beating out other bidders. About 60 percent of homes sold in metro Phoenix this year have gone to cash buyers.

Now, both investors and regular buyers trying to purchase before prices climb higher are giving Phoenix's housing recovery momentum.

However, not all parts of the region are showing the same positive signs. Areas with lower-priced homes are drawing the most buyers, while the Valley's high-end housing market is still in a slump.

Communities in metro Phoenix with better schools, shopping and freeway access are also beating out other neighborhoods -- not far away -- for home-price increases.

"Metro Phoenix has always been a pocket market for home sales," said Jim Sexton of Realty One Group. "Chandler home prices may be steadily rising now, while a neighborhood in Mesa right next to its border are seeing declines."

Micro-markets

Many of the metro Phoenix neighborhoods and communities seeing the most rapid increases in prices now experienced the biggest drop in values.

Some communities on the edge of the region, including Goodyear in the west and Queen Creek in the southeast, drew more speculators and homebuilding during the boom. Many of the buyers had subprime loans that resulted in the Valley's first wave of foreclosures.

Home prices in these new communities plummeted much lower than the region's median but are now rising the fastest.

For example, in Goodyear, the median home price has climbed 14 percent in the past year.

But while the increases are large, the prices are low: The growth translates to a median home price of $92,000 in the area, compared with $81,000 in 2010.

Some neighborhoods with bigger homes in the southeast Valley cities of Chandler and Gilbert are posting significant price increases, even though the areas didn't see huge previous declines. Chandler's median home price has climbed to $186,000 from $170,000 last year.

Bidding wars

Martin Dace has been shopping for a house in the southeast Valley for nine months. He has been outbid by both investors and regular buyers on foreclosures and short sales.

Now he's considering buying a new home in Gilbert, near his job. Though the new home will cost $25,000 more than a short-sale house of the same size, he won't have to worry about being outbid.

"I am ready to buy and move in," he said. "I am tired of losing out on bidding wars. And new homes' prices are bound to go up, too, at some point."

Housing analysts say higher-paying jobs and better schools in the East Valley draw buyers willing to pay more to live there.

Homes priced below $400,000 in established neighborhoods are selling the fastest, real-estate agents say.

Real-estate agent Bobby Lieb of HomeSmart said a home listed for $165,000 in the upscale Encanto neighborhood in central Phoenix drew 26 offers and sold for almost $225,000.

There are similar bidding-war stories across the Valley in neighborhoods where homes are priced below $400,000, even in high-end communities.

Diane Watson of Russ Lyon Realty said a Carefree home priced at $300,000 through a short sale received three offers on the first day.

"The lender actually accepted the offer right away, but I had agents calling me for weeks with clients who wanted to put in backup offers," she said. "So many buyers are losing out on bidding wars, they are getting desperate."

Struggles remain

The high-end housing market was the last to crash and is now the slowest to recover. Homes priced above $1 million in Paradise Valley and parts of north Scottsdale are generally slow to sell.

Mike Orr, a real-estate analyst with Arizona State University's W.P. Carey School of Business, said supply is a problem for the million-dollar-plus market.

He said so many homes are for sale with price tags and mortgages above $1 million, that this portion of the market could take a few years to post increases.

The median price of a home in exclusive Paradise Valley has fallen to $870,000 from $1 million a year ago.

Though, last week, a Paradise Valley home did sell for $10.5 million in cash, the highest price paid for a metro Phoenix home since the boom.

Joan Levinson of Realty One Group said that there are buyers looking for great deals in the Valley's high-end housing market but that some sellers are still reluctant to accept offers in the hope prices will climb.

Looking ahead

If the current trends continue, with fewer foreclosure homes for sale, home prices will also continue to rise, real-estate analysts say.

Foreclosures did climb slightly in February, but not enough to alarm housing-market watchers.

The number of metro Phoenix homes taken back by lenders during February is still less than half the number of foreclosures recorded during almost every month in 2009.

Also, the number of homeowners behind on their mortgages in Arizona continues to fall. So, many market watchers don't expect another big jump in foreclosures.

Post-foreclosure sales are another matter -- banks decide when to put those homes back on the market. If they were to flood the market with a large supply of vacant homes, they could drive prices down again, as a similar move did in 2008-09.

Longer term, experts are gauging a housing recovery not by bank-owned homes but by homes for sale by owner-occupants.

Orr said the recovery will feel much more real when homeowners who bought before the boom feel optimistic enough to put their homes on the market.

"Many homeowners and buyers are still several months behind the reality of what's going on in metro Phoenix's housing market," said Orr, who also publishes the Cromford Report, an online daily real-estate analysis. "The housing market started recovering last year and hasn't stopped."

by Catherine Reagor - Mar. 31, 2012 11:32 PM The Republic | azcentral.com






Phoenix-area home prices headed upward

Fewer Phoenix-area homes for sale; prices up

A surge in buyers and a drop in foreclosures have left a shortage of houses for sale in metro Phoenix, according to a newly released report on the state of the housing market.

The shrinking inventory has prompted bidding wars and pushed up home prices in many communities.

At the end of February, the supply of homes for sale was just under 24,000, down 42 percent from a year earlier, mostly because of a 52 percent drop in foreclosures during the past year, according to the latest monthly real-estate report from Arizona State University's W.P. Carey School of Business.

As banks take back fewer homes through foreclosure, fewer homes go to auction or back on the market.

Tuesday's report, which said that home prices could keep climbing if the inventory of homes for sale remains low, was the most optimistic from ASU since the beginning of the region's housing crash in 2007.

"Supply is tight, in a pretty extreme way, and it looks like it will stay that way for months," said Mike Orr, director of the Center for Real Estate Theory and Practice at ASU.

Orr said that as long as supply is tight and there are more buyers than sellers, Phoenix-area home prices will continue to climb.

Metro Phoenix's median home price has steadily been increasing since last August, when it fell to a 12-year low of $113,000. The region's median for February was $124,500, up 8 percent from a year earlier.

Climbing home prices could entice more homeowners who bought before the boom to try to sell their homes.

More sellers would increase supply, balancing the market and aiding many frustrated buyers who are currently being outbid on foreclosures and short-sale homes.

"Now, I have a ton of buyers and no properties to sell them," said Diane Brennan of Scottsdale-based Keller Williams Integrity First Realty.

"I warned buyers for months they should act quickly. Many didn't pull the trigger before because they were waiting for the bottom," she said.

There is a potential problem lurking in the recent trend: Some appraisals aren't keeping pace with the increases in home prices.

Orr said appraisers are still looking at prices from three months ago.

In some parts of metro Phoenix, though, home prices have climbed 5 percent or more since the beginning of the year.

by Catherine Reagor - Mar. 27, 2012 10:48 PM The Republic | azcentral.com



Fewer Phoenix-area homes for sale; prices up

Phoenix-area homebuyers squeezed out by investors

Many potential homebuyers who sat on the sidelines watching metro Phoenix's house prices fall during the past five years are back in the market, ready to take out a mortgage and move in.

But many are finding they cannot buy.

Armed with a preapproved mortgage and even enough cash for a hefty down payment, they bid on foreclosed homes and houses up for short sale -- but are outbid by investors buying houses for cash on the spot.

Traditional homebuyers, who typically make an offer contingent on other steps such as an appraisal and securing the loan, find they can't compete with someone who is willing to pay up front the entire asking price or more.

Tight supply makes the competition even stiffer.

Home resales, averaging 7,500 a month, are at their highest level since the peak of 2005-06. But the number of homes for sale is at the lowest level in more than a decade. There currently are about 23,000 homes for sale in metro Phoenix, one-third of the area's housing inventory in 2009.

With demand for houses high and supply so low, many are drawing multiple bids.

That is not to say the bidding wars are driving up prices in the overall housing market nearly as much as they did in boom times. Median resale prices remain near the bottom of the lows to which they fell after the housing crash and wave of foreclosures that began in 2007.

But those low resale values have kept many traditional sellers out of the market, too, experts say. Many homeowners don't have enough equity to sell, or just don't see enough profit to make selling and moving worth it.

The result is that much of today's bidding is on foreclosure homes or short sales, where banks approve a sale for less than the current borrower owes.

And in these cut-rate homes, cash is king.

Foreclosures have declined in recent months, as banks increasingly approve short sales to help residents avoid foreclosure. The drop in foreclosure inventory is working to push up home prices a little each month.

Most metro Phoenix homes for sale are still considered great deals. Market watchers agree that long-term investors paying cash will lead to fewer empty homes and a better market overall.

But for the housing market to truly recover, they say, it must see a return of the regular participants: homeowners confident enough to put their houses on the market, and perhaps more importantly, regular buyers with mortgages and jobs who can afford to buy homes of their own.

"Phoenix's housing market is in a state of fast changes," said Mike Orr, real-estate analyst for Arizona State University's W.P. Carey School of Business.

"Prices are ticking up, and buyers are getting more and more frustrated they can't find homes," said Orr, who also publishes daily real-estate analysis called the Cromford Report.

Traditional buyers

Nakisha and Lenny Williams heard about the great deals for Phoenix foreclosure and short-sale homes more than a year ago. The couple began searching online. The low prices for homes built just a few years ago helped them decide it was time for a move.

The young couple quit their jobs, sold their Chicago-area home for a modest profit and relocated to Phoenix, where they found new jobs fairly quickly and rented an apartment while they shopped for a home. But the Williamses have been outbid on at least five homes so far and have been waiting for more than a month to hear back on their latest bid on a Litchfield Park house.

Nakisha Williams works for a water company. Though Lenny Williams recently lost his construction job, the couple have been saving for a down payment and are preapproved for a mortgage they can afford, if their offer of $120,000 for the home is approved.

"It's crazy for buyers now," said the couple's real-estate agent, Yvette McDonald of Monopoly Realty. "The Williamses are still looking for other homes while they wait to hear back from the lender on the Litchfield Park home, but we can't find anything that is still available by the time we make an offer."

She has several other potential buyers in the same position, making multiple offers that aren't accepted or are topped by other bidders, especially investors.

Investors

Andy Rysdam has $10,000 for a down payment and is preapproved for a mortgage to buy a home for as much as $175,000. Recently, his real-estate agent found a potential house listed late in the afternoon. They went to see it first thing the next morning, and already there were seven other offers on it.

"It's the investors getting the best homes. They have cash," said Rysdam, who is renting and not giving up on buying a home despite already being beaten out by investors several times.

Cash buyers, who are typically investors looking to resell the properties or use them as rentals, account for nearly 60 percent of all Phoenix-area homebuyers now, according to data compiled by AZBidder.com, an online foreclosure-auction service.

"We are seeing multiple offers on any decent home," said Rysdam's agent, Brett Barry of Phoenix's HomeSmart. "These are different than the bidding wars from the boom, but buyers are getting more and more aggressive as the inventory of homes for sale continues to shrink."

Scottsdale real-estate agent Diane Watson is working with a Canadian investor who wants to spend $10 million on metro Phoenix homes that can be turned into rentals.

Wealthy investors can make more money buying foreclosure or short-sale homes in growing areas like Phoenix and renting them for seven to 10 years until prices rebound than they can on most other investments now.

Watson can't find enough homes for her Canadian investor and is considering approaching homeowners underwater on their mortgages and late on their payments to sell through a short sale even before their lender suggests it.

"I am about to go door to door," she said. "People don't realize they have the short-sale option because the deals have been so hard to do in the past, but not now."

Laura Gonzales thought she had found the home of her dreams in Phoenix. The elementary-school teacher has been renting a house in north Phoenix's Desert Ridge area since she moved from California in 2007.

As foreclosures have climbed in her neighborhood and home prices have fallen, she has slowly saved for a down payment. In January, she found "the perfect home" listed for short sale just a block from where she's renting. The house was bigger, and her monthly mortgage payment would be less than her rent.

She made an offer the day it was listed for sale. But already a dozen other offers had been made. She upped her offer by $10,000, but at least two investors upped their offer by twice as much.

The home ended up selling for almost $200,000 -- more than $50,000 over the asking price.

"It was heartbreaking," Gonzales said. "And last month, the same thing happened to me on a house I didn't want nearly as much, but I felt like I had to keep bidding because the homes I like are going so fast in this area."

Diane Brennan of Scottsdale's Keller Williams Integrity First Realty said the housing market is crazy now. "It's nearly impossible to buy a home in the $100,000 range," she said. "I've got tons of buyers and no properties to sell them. One home in south Scottsdale got 43 offers."

A rush to avoid higher prices

Metro Phoenix's median existing-home price has been steadily ticking up since last August when it fell to a 12-year low of $113,000. In February, the median price for the region was up to almost $123,000, according to a monthly analysis from AZBidder. All types of homebuyers see metro Phoenix's prices finally rising and want to close a deal before they go higher.

Some first-time buyers with Federal Housing Administration financing have a bit of an advantage now, said real-estate agent Barry.

Those buyers are required to put down only 3.5 percent, so they can often keep bidding with investors, knowing that if they win and the appraisal doesn't come in that high, the lender will have to lower the price to meet the housing agency's requirements.

Banks might boost supply of homes

Banks still hold many of the homes they took back through foreclosure in recent years; the rush to buy could push them to put more on the market.

"If lenders are holding back on foreclosures and waiting for a sign the homes will sell, well, the time is now," said Jim Sexton of Phoenix's Realty ONE Group.

"Real-estate agents and buyers are all frustrated. The demand for homes is real."

Lenders did slightly increase the number of new notices of foreclosure they sent last month, which could mean more short sales or foreclosures for buyers to choose from in the next few months.

Housing analysts say the current buying frenzy may run its course in six months and not create a lasting recovery. Experts say the region's housing market won't really recover until regular homeowners, who can afford their mortgages, feel like they can sell and make a decent profit -- not the profit of 2006, but enough to pay off their mortgage and net a slight profit if they bought before 2000.

Regular buyers, who have to put down 10 to 20 percent for a mortgage, might have to wait for those regular sellers to put their homes on the market, creating enough supply to ease the bidding frenzy. When demand is strong enough that multiple bids are made on houses owned by homeowners, not lenders, that will be a strong sign of a return to a normal market.

"Once sellers begin to realize the market is recovering, and they can actually make some money on their home, then the market will truly start to stabilize," said ASU housing analyst Orr.

by Catherine Reagor - Mar. 10, 2012 11:25 PM The Republic | azcentral.com

Phoenix-area homebuyers squeezed out by investors

Downtown Phoenix to get more apartments

 
Crews are prepping a downtown Phoenix property to lay the foundation for 325 apartments that a Scottsdale-based developer anticipates will house a number of college students after it is finished in 2013.

Executives of Concord Eastridge said they see opportunity in the increasing number of students moving into the downtown area to take classes at three major campuses: Arizona State University's downtown Phoenix campus, with nearly 16,000 students; the University of Arizona's College of Medicine and Pharmacy College campuses, with 560 students combined; and the Phoenix School of Law, with an estimated 1,000 students.

Adding to the potential economic boost is a future Arizona Cancer Center that will focus on clinical research, and Northern Arizona University, which this fall will open physical-therapy and physician's-assistant programs to draw 49 students to the downtown biomedical campus.

Community leaders welcome the $52 million apartment project south of Roosevelt Street, between Third and Fourth streets, as a sign of revitalization. The historical area has had a smattering of dusty and empty lots since the 1970s and 1980s, when land speculators and property owners thought they could make it big by razing and selling properties near downtown Phoenix and what eventually became Interstate 10.

The two-block, eight-story apartment and retail buildings will change the Roosevelt neighborhood significantly, said Cindy Dach, a neighborhood resident who also leads the non-profit Roosevelt Row Community Development Corp.

"It's going to increase our population probably around 30 percent," Dach said. "And even from the simple thing when I walk around at night ... the fact that there's going to be lights on is just going to change the neighborhood and bring more people walking around."

Dach said it also will diversify an area that is home to several artists and their studios, including the nearby Artisan Village at Roosevelt and Sixth streets.

Phoenix officials estimate the two buildings -- a mix of studios and two-, three- and four-bedroom apartments -- will house an estimated 600 people. The apartments will include several amenities for students and young professionals.

"There will be a pool and spa and other amenities on both blocks," said Steven Schnoor, a Concord Eastridge vice president. "Each building has its own pool, its own fitness facility, its own entertainment area -- including a barbecue eating area and lounge -- and interior entertaining spaces."

The list goes on: tanning beds, fitness rooms, community kitchens where tenants can entertain large groups of friends, high-speed Internet and other stuff college kids look for in a near-campus home.

"Really, they're all the amenities that you would expect in state-of-the-art student housing in higher education today," Schnoor said, noting that Concord Eastridge's portfolio includes several college projects.

Schnoor said the company doesn't have an exact dollar figure yet on rent for the downtown Phoenix apartments, but "they will be comparable to what a student would pay to live at (ASU's) Taylor Place."

A single bedroom at ASU's Taylor Place in downtown Phoenix costs $7,670, while a double-bedroom costs $8,560, according to Arizona Board of Regents records. That cost does not include a meal plan.
Concord Eastridge also is making its project a home for small businesses, renting the ground floor of both buildings to retailers.

The developer has been preparing for the apartment project since June, when it paid $3.08 million for the two vacant blocks, 2.89 acres in all, which had been owned by Mortgages Ltd. until it went bankrupt.
Concord Eastridge has gotten some help from Phoenix officials. It will pay no property tax on the site for 25 years -- a burden eased by a special designation granted by the City Council last year.

In Arizona, a city or county can ease property taxes for a project that is meant to spur economic
development by taking ownership of the property under the state's Government Property Lease Excise Tax program. Several properties in downtown Phoenix, from the Arizona Center to the mixed retail-and-office project CityScape are among the hundreds of properties that pay no property taxes in Phoenix because the city owns them.

Instead, the developers pay rent to the city every year of the agreement. Its annual rent to the city starts with $10,000 in the second year and increases 5 percent each year for the contract's 25-year term. After eight years of the contract, it will begin paying excise (sales) tax of up to $350,000 a year.

by Emily Gersema - Mar. 3, 2012 04:28 PM The Republic | azcentral.com

Downtown Phoenix to get more apartments

Phoenix-area bankruptcies rise in February

Valley bankruptcies rose modestly in February, snapping a three-month downward streak, as income-tax refund money allowed more people to pay attorney fees and court costs.

The 1,623 filings were up from 1,321 in January but down 11 percent from February 2011.

The general trend over the past two years has been toward fewer filings as the economy has recovered slowly and the unemployment rate has eased.

February's total was the third lowest of the past two years. Before February's numbers were released, bankruptcies had declined in eight of the 10 prior months.

For all of Arizona, the 2,160 filings in February were up from 1,795 in January but down nearly 12 percent from February 2011.

Bankruptcies typically rise in February compared with January as many cash-strapped individuals start receiving tax refunds that they can use for filing expenses.

Another reason it pays for debtors to delay filing until after they receive their tax refunds is that they can spend the money or use it to pay off student loans or other debts that won't be discharged through the bankruptcy process, said Scott Cohen, an attorney at Engelman Berger PC in Phoenix.

By contrast, when taxpayers file for bankruptcy before receiving their tax refunds, the money typically goes to pay debtor claims. This is why January generally is one of the less-active bankruptcy-filing months of the year.

Chapter 7 filings, which give debtors a fresh financial start after non-exempt assets are used to pay creditors, accounted for more than 80 percent of the February bankruptcies , inline with a long-term trend showing those filings to be the most common . Most of the rest were Chapter 13 debt reorganizations.

by Russ Wiles - Mar. 5, 2012 05:04 PM The Republic | azcentral.com





Phoenix-area bankruptcies rise in February

Building-permit complaints in Phoenix increased in 2011

Building-permit complaints in Phoenix increased by several hundred between 2010 and 2011, but far more cases were resolved before the city took them to court.

According to the Phoenix Planning and Development Department, the number of complaints rose to 1,446 from 1,135 between 2010 and 2011. The number of court cases dropped from 54 to six.

About half the increase in complaints can be attributed to a home appraiser who noted differences between homes he inspected and public records, said Mo Glancy, the department's deputy director.

Many of the rest are the result of "house flippers," investors who buy and remodel foreclosed homes without the necessary permits, he said.

About two-thirds of the violations were resolved in both years, simply by notifying the project owner who followed through with the required permits, Glancy said. Most of the others could not be verified, did not involve an active project or were the result of neighbor or family disputes, he said.

Glancy said responsibility for permit enforcement switched from the Neighborhood Services Department to the Planning and Development Department in August 2010, accounting for the drop in court cases.

"It is hard to get a resolution through the court," Glancy said. "We have tried to make resolution easy" by working with homeowners and contractors.

Phoenix issued about 20,000 building permits last year, about two-thirds of them for residential projects.

Most violations are the result of confusion about the requirements, which are in place to protect public health and safety, Glancy said. The city does not have enough personnel to check all projects but will follow up on complaints.

The cases that go to court are the most serious violations, Glancy said. In one case, a wedding facility went into operation without the needed permits, even though the owner had been alerted. That case is still in the works.

by Michael Clancy - Feb. 23, 2012 10:00 PM The Republic | azcentral.com




Building-permit complaints in Phoenix increased in 2011

Report: Upbeat findings for Arizona housing market

David Wallace/The Republic A sign last month advertises another Valley home sold, this one in Gilbert. A new ASU report suggests that home prices overall in the Phoenix area have been on the rise since September.



Metro Phoenix home prices are up. Fewer inexpensive homes are for sale, and the number of pending foreclosures is down.

The positive housing-market update comes from Arizona State University's newest real-estate report.

It's the first monthly housing analysis from Mike Orr, who was recently named director of the Center for Real Estate Theory and Practice for ASU's W.P. Carey School of Business.

"Single-family home prices overall in the Phoenix area have been moving up since they reached a low point in September," Orr said in his debut monthly housing report.

"Also, looking forward, I expect a declining trend in foreclosures."

Orr also publishes a daily online analysis of Phoenix-area housing indicators called the "Cromford Report."

The median price of all home sales, including new homes, reached $120,500 in January of this year, Orr reports. That compares with $113,166 a year earlier.

The average price per square foot of Valley houses has climbed 3 percent since last year.

There were approximately 8,000 new and used homes sold in January, up from 7,500 in January 2011.

Orr said investors have snatched up the oversupply of homes for sale under $300,000.

"Many people think there's a glut of homes the banks are hiding somewhere, and that may be the case in other markets, but not here in the Phoenix area," he said.

"We've gone through so many foreclosures that the system has been working itself out for about five years."

In January, there were 2,450 single-family foreclosures in both Maricopa and Pinal counties, compared with 4,200 during January 2011, according to the ASU report.

The supply of homes listed for sale in metro Phoenix is down 42 percent from a year earlier.

by Catherine Reagor - Feb. 23, 2012 06:35 PM The Arizona Republic | azcentral.com





Report: Upbeat findings for Arizona housing market

Foreclosures hit 4-year low in metro area

New data indicate that the number of Phoenix-area homes taken back by lenders in January fell to its lowest level since early 2008.

Last month, there were 2,263 foreclosures, or trustee sales, in the region, according to real-estate research firm Information Market. Pre-foreclosures, also known as notice of trustee sales, fell to 2,932, the lowest level since the summer of 2007.

A year ago, both foreclosures and pre-foreclosures were double what they are now. The number of pending foreclosures is one-third of what it was a year ago. Only 15,000 active foreclosures are making their way through the process now.

Some housing analysts continue to talk about shadow inventory, characterized as essentially unexpected foreclosures that will hit the market just as it begins to recover. But that phenomenon can't be tracked now.

Tom Ruff, analyst with Information Market, tracks notice of trustee sales, trustee sales and homes sold at the foreclosure auction daily. He said he sees no sign of a shadow-inventory problem in metro Phoenix.

The region's mortgage-delinquency rate has also fallen during the past year, meaning fewer homeowners are falling behind on their payments. Some market watchers say banks just aren't moving on many foreclosures and are not reporting all the loans borrowers are missing payments on, but lenders deny this.

So going by the numbers and word of lenders, it looks like the worst of metro Phoenix's foreclosure crisis is behind it.

Economic barometer

The southeastern corner of 25th Street and Camelback became a Christmas-tree lot in the mid-1980s during an office-construction boom in metro Phoenix, and the first Esplanade tower went up west of it. Then came the real-estate crash of 1990. The lot at 25th Street remained empty except around the holidays.

As the Phoenix office market rebounded in the mid-1990s, the lot was developed into a shopping center with an athletics store and two popular eateries, the Hard Rock Cafe and Marco Polo Supper Club.

But then came the slight downturn from the dot.com bubble, and by 2003, the center's stores and both restaurants had closed. Developer Donald Trump proposed a high-rise resort for the corner during the boom in 2005 but walked away from the project in 2006.

Last year, Alliance Residential bought the lot out of foreclosure.

The firm is building a 270-unit upscale-apartment complex there.

by Catherine Reagor - Feb. 3, 2012 02:39 PM The Arizona Republic





Foreclosures hit 4-year low in metro area

Valley rises in economic rankings - USATODAY.com

The Phoenix region, which had one of the worst-performing economies among the nation's 100 largest metro areas, finally is moving rapidly in a positive direction.



Metro Phoenix rankings

This is how the Phoenix region ranked among the nation's 100 largest metro areas for improvements from the second quarter ending in June to the third quarter ending in September.

Real-estate owned properties:* Second.

Housing prices: Seventh.

Unemployment rate**: 19th.

Employment: 26th.

Gross metropolitan product: 94th.

*This refers to the properties owned by banks or other lending institutions per 1,000 properties that have mortgages.

**This ranking is based on a one-year percentage-point change in the rate. The Phoenix-area rate in the third quarter was 8 percent.

Source: Brookings Institution's Mountain Monitor report

A Brookings Institution Mountain Monitor report being released today puts metro Phoenix among the top 20 of the metro areas for its overall economic performance and improvement between the second and third quarters.

That's a dramatic turnaround from its placement among the 20 or 40 worst, where it has been for the past year.

The finding is based on four indicators: changes in the number of jobs, unemployment rates, economic output (gross metropolitan product) and housing prices. The time periods for the changes varies with each indicator and ranges from several months to several years.

Mark Muro, a Washington, D.C.-based senior fellow at Brookings' Metropolitan Policy Program, credits the turnaround to the national growth of two segments of the Phoenix area's economy, high-tech and manufacturing, which help offset Phoenix's real-estate crash, as well as subtle improvements in housing and employment.

"The Phoenix area has a lot of wreckage from the real-estate mess, but you do participate in those important technology and manufacturing segments," he said.

In contrast, the Tucson area, with fewer of those industries, remained in the bottom fifth for its overall economic performance. It is also more dependent on now-stagnant federal dollars.

"They (Tucson) have just as significant real-estate shrapnel, but they have a thinner economy. They have fewer drivers to offset the real-estate crash," Muro said of Tucson.

The Brookings report ranks the Phoenix area 26th among the metro areas for job gains between the second and third quarters, with a gain of 0.6 percent, compared with a national metro average of 0.1 percent.

"It (job growth) may not feel great, but it's something and it's better than what is going on in a lot of places," Muro said.

Arizona State University economist Lee McPheters said Wednesday that job growth in the second half of the year has come faster than in the first half and that the region will probably end the year in 10th place for the most job gains among metro areas.

Although the Phoenix area's housing market remains in pain, Muro said a drop in lender-owned properties and rise in housing prices over the quarter helped boost Phoenix's overall ratings.

Brookings research shows that the Phoenix area's housing prices have fallen 56 percent from when they peaked in the fourth quarter of 2006 to the third quarter of 2011.

But since hitting their low point in the second quarter of 2011, prices have risen almost 2 percent.

The number of lender-owned properties per 1,000 properties that have mortgages has fallen to 9.3 in the third quarter from 11.4 in the previous quarter.

The third quarter not only brought progress for the Phoenix area but for the entire intermountain West, which consists of Arizona, Colorado, Utah, New Mexico, Nevada and Idaho.

All the states began to see signs of recovery after idling for most of the year, Brookings said. And even struggling Las Vegas landed in the middle.

By Betty Beard, The Arizona Republic Dec 15, 2011


Valley rises in economic rankings - USATODAY.com

After drop, home prices on the rise in Valley

In August, as metro Phoenix home prices dipped to another new low, some real-estate analysts predicted the area's home values would keep falling. Other analysts disagreed, saying all the indicators, besides home prices, were heading in the right direction for values to climb before year's end.

The median price for an existing Phoenix-area home climbed to $119,900 in November, according to a new report from the Information Market. It's the region's highest median home price since November 2010.

In October, Phoenix's median home price was $115,000, which is where it had hovered most of the first half of this year. But when it fell to $112,000 in August, some market watchers thought it would drop all the way down to $100,000 by the end of this year. Of course, some panic ensued.

But the housing analysts who were watching foreclosures fall, sales climb ahead of last year's pace and listings plummet, stood firm in their opinion that home prices would begin to rise again.

During the past few months, not only short-sale prices but the prices for foreclosure resales known as REOs, or real-estate owned, have been steadily climbing. In some areas of metro Phoenix, REOs are now selling for more than houses sold through lender-approved short-sale deals. In 2008 and 2009, REOs were dragging down the area's home values as lenders took back houses through foreclosure and then resold them quickly for bargain prices to get the properties off their books.

Home prices are also climbing at foreclosure auctions, also known as trustee sales, held daily in front of the Maricopa County Courthouse. The auctions are Arizona's method for lenders to foreclose.

In 2008, when foreclosures started to climb, few properties sold at these trustee auctions. Back then, lenders weren't lowering prices beyond what was owed on a house, so investors weren't interested in purchasing a house for at least twice what it was actually worth. But once lenders started lowering prices to much less than what they were owed, bidding picked up quickly.

Competition is also driving up prices at the trustee auctions. Each month this year, more than 1,000 foreclosure homes have been bought at Maricopa County trustee auctions. That compares with 100 per month at the beginning of the crash.

by Catherine Reagor The Arizona Republic Dec. 9, 2011 04:04 PM




After drop, home prices on the rise in Valley

Apartment investment firm to target Phoenix in 2012

One of the most prolific investors in Phoenix-area apartment properties this year said it plans to spend $100 million on real-estate acquisitions in five Western states with a likely focus on the Phoenix area in 2012.

BH Properties LLC, a Los Angeles-based real-estate investment firm, has spent about $40 million this year to acquire six commercial properties and two promissory notes on commercial properties in the Phoenix and Tucson areas.

The company also named Andrew Van Tuyle its director of acquisitions, to spearhead the company's aggressive portfolio-expansion plan in the Western U.S. Van Tuyle, of Los Angeles, is a 15-year veteran of the real-estate investment market who has handled the closing of more than $2 billion in transactions in over 20 states.

"Our 2011 acquisitions position us well for continued portfolio expansion and growth in 2012," said Steven Jaffe, executive vice president and general counsel of BH Properties. "Andrew Van Tuyle will be integral to us sourcing and closing $100 million in new acquisitions in the Western states during the next calendar year."

In January, BH Properties acquired the 320-unit Fiesta Park apartment complex, 1033 S. Longmore, in Mesa, for $5.5 million. It was the company's first purchase in the Phoenix area in nearly three years, Jaffe said at the time.

"Our last acquisition was in April 2008 -- that's when we put the brakes on," he said.

A sense of confidence that the market for multifamily-housing had become relatively stable prompted the company to resume its investment activities in Arizona, Jaffe said.

The company is interested primarily in Phoenix-area apartment properties but also has purchased a shopping center in Phoenix and a fast-food restaurant in Douglas, about an hour southeast of Tucson.

Jaffe said BH Properties also would consider investing in industrial properties for the right price.

The company targets underperforming, commercial properties can be repositioned to make them more profitable by investing in various capital improvements.

BH Properties is focused on $2 million to $15 million acquisitions in Arizona, Nevada, Colorado, Washington and Southern California, including both properties and promissory notes on loans backed by commercial real estate.

The company's Arizona purchases in 2011 include:

Sunpointe, a 152-unit multifamily property in Phoenix.

Thunderbird Plaza, a 79,380 square foot retail center in Phoenix.

Church's Chicken, a fast-food restaurant in Douglas.

Biltmore on the Lake, a 420-unit apartment complex in Phoenix.

Casa Bella, a 410-unit multifamily apartment complex in Tucson.

2020 Bell, a multifamily development in Phoenix.

by J. Craig Anderson The Arizona Republic Dec. 3, 2011 05:24 PM




Apartment investment firm to target Phoenix in 2012