Author Archives: Jared Diamond

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The Housing Market in Phoenix: Room for Growth

With a nickname like “valley of the sun,” what’s not enticing about Phoenix? Sprawling, sun-drenched landscapes; a thriving epicenter of culture and entertainment; and a rich tapestry of Native American history all comprise the experience of visiting the U.S.’s fifth-largest metropolitan area. There is more to Phoenix’s charm than that, however. Shortly after Arizona received its statehood in 1912, the city became a bustling center destined for rapid growth. Originally purchased for $550, the 320-acre town site blossomed exponentially throughout the decades into the 500-square-mile metropolis that it is today.

With 20 unique communities, there is always something for everyone to do in Phoenix. Sports, recreation, dining – they all make the city an attractive habitat for a variety of house hunters and job seekers. Mild winters and a low cost of living further fuel migration into Phoenix, making it one of the fastest-growing job and housing markets in the nation. But it wasn’t always this way.

During the early 2000s, the height of Arizona’s economic salad days, low real estate costs and higher-than-average income levels created the perfect environment for investors and residents to maximize their ROI. A surge in Phoenix’s job creation prodded the city’s financial growth, instilling confidence in everyone who had money to spend that spending it was the way to go. Property values skyrocketed as the city became more attractive and “flipping houses” was a profitable endeavor for investors. Life was good.

But there was trouble on the horizon brewing quietly as households across the state sunk into debt in the mid-2000s. As the housing market became a hotbed of activity, homeowners borrowed heavily in order to get a piece of the action. And then, the floor fell out. After the sub-prime crisis and the collapse of Lehman Brothers, the economy tanked, dragging Phoenix home prices with it. Properties throughout the city were worth far less than the debt homeowners accrued for them. The year was 2007.

Anecdotal evidence points to much of the occurrences transpiring at the recession’s outset. “The home buying markets, as one could imagine, became insinuated with sellers. What was interesting to note was the simultaneous demand increase for home rentals, most especially in Arizona,’ notes Marc Holland, Operations Coordinator with Home Star Search, (an online resource of rent-to-own housing availabilities). “Much of the rental demand came from individuals underwater on their mortgages. After they decided to walk away, many of them became renters. Slowly, we’ve began to see that trend reverse.”

As Phoenix’s boom busted, jobs disappeared. Unemployment rates rose as home prices fell, and those who maintained employment saw a decrease in yearly income. Commercial development ceased, homes went into foreclosure, and the city – like an exaggerated microcosm of the nation – slipped into recession.

But like its namesake, Phoenix has experienced a rebirth in the last couple of years. Rising from its failed housing market is a renewed economy that promises a return to its former glory. The cost of housing is increasing gradually and investors are helping bolster the market’s economy by purchasing approximately 30% of the homes available. Plus, the elimination of easy credit has resulted in tougher financing restrictions that should limit home purchases to those capable of maintaining their mortgage obligations.

What does all this mean for the future of Phoenix? In light of the housing market’s collapse, the resilient city seems determined to define itself beyond its traditional roles of rapid growth and tourism. It’s an ideal location for new business; there’s plenty of inexpensive real estate and – true to its history – its ability to rapidly swallow the desert to create more space for development makes it highly accommodating for an influx of new workers. Boasting four consecutive months of job growth at the end of 2011, Phoenix’s economy ranked as one of the best in the West as well as in the Top 20 of all U.S. metro areas (according to a report released by the Brookings Institution earlier this year). The primary reason: an increase in manufacturing.

Phoenix’s growth engine will always be its remarkable quality, but its economy shouldn’t depend on it so heavily. The ability to quickly garner a workforce through increased population levels means nothing if there are no jobs for said workforce once it arrives. By continuing to attract new companies and focusing on new enterprises, Phoenix’s economy will grow, restoring the housing market to health through accelerated job growth and increased employment levels.

Jared Diamond is a guest contributor who writes on a variety of real estate and personal finance topics. diamond holds a B.S. in economics and has written extensively on housing markets in relation the the Great Recession.

Cut Energy Cost With Energy Star Program, Other Upgrades

Cut Energy Costs With Energy Star Program, Other Upgrades

In an economy where every dollar counts, mortgage payments are not the only major bills on the minds of homeowners. Utility expenses also take a painful bite out of the household budget. For now, the solution to cutting energy cost is right inside the home.

The Energy Star program, created in 1992 by the Environmental Protection Agency (EPA) and the U.S. Department of Energy, suggests some tips that should be adopted by the homeowner looking to cut excessive energy usage. In addition to these tips, homeowners can also make use of some common sense upgrades that have proven to work well.

Change your air filter

The Energy Star program recommends changing your air filter regularly — at least once every three months. Air filters block dust, mold and other airborne particles from entering the home through the duct. When the air filters are clogged and filthy, your HVAC system will be forced to work a lot harder than it’s suppose to, which would then increase your energy cost.

While you are at it, you might want to tune up parts of your HVAC system to enhance performance. Doing this once or twice a year is good enough. An expert should be called to help unless you know everything about your system. To ensure your system is up to par, look for and fix loose electrical connections, apply lubricants to squeaky moving parts, and remove trapped dirt in the blower compartment. Fine-tuning your HVAC system makes a significant difference, but that’s not all.

Properly seal your ducts

The Energy Star program also recommends seeing to it that your ducts are always properly sealed. Ducts act as tunnels through which the warm or cold air travels to reach your rooms. They are known to be energy wasters when in bad shape. You can improve energy efficiency by as much as 20 percent if you fix your defective ducts. One simple way to test them is to find out if there are rooms in your home with vents in them that just don’t get warm or cold enough compared to other rooms. If that’s your situation, it’s likely you have defective ducts that need repair.

Replace incandescent light bulbs

You can top up Energy Star’s recommendations by simply adding some common sense energy-saver tips that have also proven to be very effective. One of them is simply replacing incandescent light bulbs in your home with energy-saver bulbs. This effort not only saves you money, but it also helps the environment. The Union of Concerned Scientists, a not-for-profit science organization, reported that if every U.S. household replaced just one incandescent light bulb with an energy saver bulb, it would help prevent 90 billions pounds of harmful gas emissions from power plants (coal and the like).

Energy-saver bulbs are often priced slightly higher than regular bulbs in stores, but the difference can quickly be recouped within one- to two-months’ use. If you happen to go shopping for a couple of them, look out for bulbs with the Energy Star logo.

Upgrade old home appliances

Upgrading your old home appliances to newer versions can also seriously help cut costs. If you’ve been to retail stores that carry appliances, you may have noticed most of them are decorated with energy-saving stickers. The most popular one is that of Energy Star. Some appliances like the wall-mountable AC’s are also equipped with programmable features that can be set to conserve energy while in use. The prices of appliances continue to fall most likely due to competition from various brands. This might be the right time to start replacing your old, energy-guzzling home appliances.

Insulate your walls

Lastly, unless you have already done so, insulating the walls of your home is one smart way of reducing energy cost. For those who are building new homes from the scratch, it’s highly recommended that you add wall insulation from the outset. One other factor that forces your HVAC system to work a bit harder is when hot or cold air leaks in and out of your walls. Besides, if you are thinking of placing your home on the market, full-home insulation is one of several positives for pitching your home value. Maybe your current budget is not good enough for a full home insulation. You can still do a little bit by looking for areas in the house that are not usually covered with dry wall, such as the attic, basement and garage. By simply applying spray foam or rolled fiberglass to relevant areas, you will notice some difference in heating behavior at home. If you are not the handy type in remodeling, utilize the services of an expert.

Try implementing these energy saving tips mentioned, then sit back and watch your energy bill go down. Moreover, you would also be contributing to the reduction of harmful gas emissions into the atmosphere.

For more information about the Energy Star program, visit energystar.gov.