Tag Archives: foreclosed home

Valley Commercial, Real Estate Sales Dip

Valley Residential, Commercial Real Estate Markets Still Struggling, ASU Report Shows

Residential and commercial real estate prices in Metro Phoenix  are still suffering in the rough economy, a report from the W. P. Carey School of Business at Arizona State University show.

Valley home prices are going negative for the first time in months, and commercial real estate prices are about 30-percent lower than at the same time last year, according to the report.

On the residential side, the ASU-Repeat Sales Index (ASU-RSI) measures annual changes in average Phoenix-area home prices. The latest index shows a 0.2 percent drop from August 2009 to August 2010. Previous reports revealed no change from July 2009 to July 2010 and small annual increases in June, May and April. The index hasn’t been in negative territory since March.

“This is the first overall decline since March, but it is consistent with the small ups and downs associated with relatively stable housing prices,” assures the report’s author, Professor Karl Guntermann, the Fred E. Taylor Professor of Real Estate, who is assisted by Research Associate Adam Nowak. “The ASU-RSI has been relatively stable for more than a year, which suggests that changes in house prices will be moderate going forward unless there are dramatic changes in the Phoenix economy or housing market.”

Foreclosed homes have been one of the stronger segments of the market in recent months, according to Guntermann. However, the price index in that segment declined 4 percent in August after five straight months of increases.

“The weakness in prices may mean there finally is insufficient demand to absorb the steady stream of foreclosures that enter the market each month. However, it is too early to tell if the decline is the start of a new trend or reflects just a temporary slowdown,”  Guntermann says. “The data also doesn’t provide a basis for optimism when it comes to non-foreclosure homes, which showed a 9 percent annual drop in August. That’s the segment of the market of interest to most homeowners either waiting to sell or just wanting to know when their equity will stop shrinking.”

Median home prices in the Valley have also fallen out of the $125,000-$135,000 range where they had been for almost a year. The preliminary median figure for August is just $122,000.

The preliminary median price of a townhouse/condominium in the Phoenix area for August was just $65,000, down from $77,100 in July.

“This is a continuation of a downward trend that began in June,”  Guntermann explains. “Townhouse/condo prices seem to periodically take a step down in price and then stabilize for several months before starting the next decline.”

On the commercial side of Phoenix-area real estate, the first two quarters of 2010 show somewhat of a leveling off. Guntermann says commercial prices peaked at an annual rate of 28 percent in the third quarter of 2006. The commercial index began to decline dramatically by the end of 2008, and the decline sped up throughout 2009.

“By the end of 2009, the annual decline reached 40 percent,”  Guntermann says. “Commercial prices in 2010 remain about 30 percent lower than the corresponding quarters in 2009, reflecting a market with significant problems. The good news is that the commercial market appears to be showing signs of stability rather than worsening declines.”

Both the commercial and residential indices are based on repeat sales, the most reliable way to estimate price changes in the real estate market. Repeat sales compare the prices of a single property against itself at different points in time, instead of comparing different homes and commercial properties with different quality factors.

The new ASU-RSI reports can be found at http://wpcarey.asu.edu/realestate/housing-market-reports.cfm and http://wpcarey.asu.edu/realestate/commercial-market-reports.cfm.

Doug Fulton CEO, Fulton Homes - AZ Business Magazine June 2010

CEO Series: Doug Fulton

Doug Fulton
CEO, Fulton Homes

How would you assess the current state of the home building industry?
Today, I would say it’s in recovery. I would definitely say we have hit the bottom and we are experiencing the trough here. … From this point, things can only get better … This is our fourth year (dealing with the downturn). It’s a very, very tough cycle. This is a cyclical business, it always has been. I was here in the ’80s and ’90s when it cycled then, with the Keating, Lincoln Savings (& Loan) RTC days. It cycles. This one has been a vicious, tough, tough cycle where we’re paying for the run-up and the escalation — and the runaway inflation in the homebuilding industry is really what we had. Now, we’re paying for it.

Foreclosures are expected to be higher in 2010 than they were in 2009. How will that affect the home building industry?
Luckily, the banks aren’t fire-selling these properties, which is a good thing in two ways. One, is that it’s keeping the values somewhat stable, not letting them fall through the floor. And second, it’s very frustrating for people to buy a foreclosed home or a home that is in the short-sale mode. It takes a lot of time, it takes a lot of energy, so I have an entire group out there that is very frustrated about the whole process. And guess what? I can give you an answer (on buying a new home) in 24 hours.

What strategies has Fulton developed to cope with the collapse of the housing market?
We have targeted foreclosures — that’s what we’ve done. We’ve gone after them, talked about them, we do the little tongue-in-cheek “lipstick on a pig equals foreclosure.” We have the foreclosure-cost calculator. … You can actually go onto our website … and you can punch in cabinets, countertops, flooring, paint … and it shows what you are really going to pay for this (foreclosed) house when it is all said and done and you have it all fixed up to the level where you want to live in this thing. And then there is a button off to the side of that … that goes out to our quick delivery inventory homes and finds homes $5,000 up or down of what you’re going to pay for a home that you are basically (going to have to renovate). … That’s how we’re combating the current market status.

What lessons can the home building industry take away from the economic downturn?
First and foremost, it’s a cyclical business. It always has been and it always will be. Some are going to be tougher than others. This has been the toughest one in over 30 years that I’ve experienced. Going back to quality construction, treating your people with respect. … When times get tough, people want a safe harbor. … Consumer confidence is at all time, historical lows, so if they are going to make that decision (to buy a home), they are going to go to somebody they feel comfortable with, someone they know, that their neighbors brag about — word of mouth. Obviously, word of mouth is an important way to advertise. We earn that by delivering a quality product and treating our customers (well).

What is the role of a C-level executive working in the home building industry today?

I have lots of hats. We don’t have anyone here with executive-itis. … We don’t have anyone here with their mahogany playpen at the end of the hall barking out orders to secretaries. There’s never been a secretary at Fulton Homes and there never will be. Never happen. If your garbage is full — empty it. If you want a cup of coffee — the break room is over there. We are very hands-on. So when you say “the role,” I don’t even know where to begin. I don’t do it all, not even close. I don’t want to give that impression. I hire people that I don’t have to go around wiping their nose. … I make it very clear to everyone that this is where we’re going, get them to buy into it, to understand it, and treat them with respect.

    Vital Stats





  • Joined Fulton Homes in 1981
  • Served as vice president of marketing and president at the company
  • Attended Pierce College, Utah State University and Arizona State University
  • Is a special deputy with the Maricopa County Sheriff’s Office, a member of the Central Arizona Mountain Rescue Association and an honorary commander at Luke Air Force Base
  • www.fultonhomes.com

Arizona Business Magazine June 2010