Tag Archives: housing market

housing.prices

Big Increases Unlikely for Phoenix Housing Market

The Phoenix-area housing market has officially rebounded from artificially low recession levels, and we’re unlikely to see any more big price increases this year. That’s according to a new report from the W. P. Carey School of Business at Arizona State University. Here are the latest details about Maricopa and Pinal counties, as of April:

* The median single-family-home sales price stabilized at just under $205,000.
* Demand and sales activity were low for the normally strong spring selling season.
* Rental homes continue to be extremely popular, since many people are ineligible for home loans and/or uninterested in home ownership.

Phoenix-area home prices rose fast from September 2011 to last summer, before slowing down and then even dropping a little bit earlier this year. This April, for the second month in a row, the median single-family-home price was just under $205,000. That’s up 13 percent – from $181,399 last April to $204,900 this April. Realtors will note the average price per square foot was up 12 percent. The median townhouse/condo price went up 4 percent.

Low demand is largely putting the brakes on more significant upward price movement. The amount of single-family-home sales activity was down 16 percent this April from last April. Sales of homes in the range below $150,000 alone fell 37 percent. New-home sales went down 12 percent. All of this, even though the period from March to May is almost always the strongest part of the year for demand.

“The market has completed its rebound from the artificially low prices that prevailed between 2009 and 2011, and further significant increases are unlikely without some growth in demand,” says the report’s author, Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “It’s also likely that the recent advance in pricing will fade during the summer months, when the luxury, snowbird and active-adult markets go relatively quiet.”

Investors continue to show disinterest in the Phoenix housing market now that better bargains can be found in other areas of the country with more foreclosures. The percentage of residential properties purchased by investors was down to just 16.3 percent in April from the peak of 39.7 percent in July 2012. Completed foreclosures on single-family homes and condos were down 54 percent from April 2013 to April 2014.

In contrast, the supply of homes available for sale is way up, with 73 percent more active listings on May 1 of this year than May 1 of last year. As a result, buyers have far more choices. However, Orr believes that may change, if demand and prices don’t pick up. Potential home sellers may stay out of the market, deciding to wait for better times.

“The underlying key problem for entry-level and mid-range housing demand is a lack of household formation due to many factors, including unemployment, falling birth rates, lower net migration and greater home-sharing, especially among millennials,” explains Orr. “However, if household creation were to return to the normal long-term average, we would quickly have a housing shortage here in Greater Phoenix.”

Meantime, the demand for rental homes is very high, and Orr says the availability of those homes is dropping to unusually low levels. He estimates there’s only a 29-day supply of single-family rentals, and therefore, rent is starting to rise in the most popular locations. As a result of this demand, the Phoenix area is seeing a strong upward trend in multi-family construction permits.

Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed and downloaded at www.wpcarey.asu.edu/realtyreports. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

housing.prices

What Comes Next for housing market?

The Phoenix-area housing market is experiencing a normal seasonal spring bounce in activity and prices, but what will happen next? A new report from the W. P. Carey School of Business at Arizona State University talks about the waves of consumers that will likely start returning to the housing market next year, for the first time since the recession.

Here are the latest details about Maricopa and Pinal counties, as of March:

> The median single-family-home sales price recovered from two months of drops and is back to a level similar to December.
> However, demand and sales activity are still dramatically lower than at this time last year.
> The report’s author examines why certain waves of consumers may start returning to the housing market over the next several years.

Phoenix-area home prices quickly rose from a recession low point in September 2011 until last summer, when the jumps slowed down. Then, this January and February, we saw the first two back-to-back monthly drops in the area’s median single-family-home sales price. This March, we saw that dip erased, but probably not for long.

“The bounce is a normal effect of the busy spring sales season, combined with a lot more high-priced homes in the current sales mix,” says the report’s author, Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “The period from March to May is almost always the strongest part of the year for demand, and it is highly probable we will see pricing fade again during the summer months, when the luxury, snowbird and active-adult markets go relatively quiet. We may still be looking at little to no annual price appreciation by the end of the year.”

The median single-family-home sales price was up about 17 percent from last March to this March – from $175,000 to $204,520. The average price per square foot was up 15.5 percent. The median townhouse/condominium sales price was up 16 percent. We no longer have a tight supply of homes for sale like we did at this time last year. Supply stabilized in March, with 64 percent more listings this April 1 than last April 1.

However, low demand continues to be a problem. Single-family-home sales activity was down 20 percent this March from last March. Some of the drop comes from regular home buyers, but also institutional investors are just not as interested in Phoenix, now that better bargains can be found in other parts of the country with more foreclosures. The percentage of residential properties purchased by investors in the Phoenix area this March was down to 17.4 percent from the peak of 39.7 percent in July 2012.

“The institutional investors are doing very little buying or selling in the Phoenix area at the moment,” says Orr. “Their focus has turned to property management, rather than acquisition or disposal.”

The areas doing especially well right now in Phoenix?

Luxury homes priced at more than $500,000 represented 11 percent more of the market’s sales activity this March than last March. High-end demand above $1.5 million was greater in the first quarter of this year than in any first quarter since 2007.
Rental homes are experiencing very strong demand. Interest is so robust that only a one-month supply is currently available on the market.
Multi-family construction permits are on a strong upward trend. In fact, Orr says the first quarter of 2014 was the second-highest quarter for multi-family permits in 12 years.

Meantime, single-family construction permits were down 18 percent this March from last March. New-home sales were down 15 percent.

Orr says, “A key underlying problem for current housing demand is lack of household formation due to many factors, including unemployment, falling birth rates, lower net migration and greater home-sharing, especially among millennials. However, we could see lenders become the most influential decision-makers in this situation. Many lenders are hurting for business, with applications at their lowest level since 2000, and some may become more forgiving, accepting lower credit scores for loans.”

Orr also predicts we’ll see the first major waves of consumers who lost their homes through foreclosure during the recession coming back into the market, starting next year. He says those who lost their homes at the beginning of the downturn will have spent their required seven years in the “penalty box,” and they’ll reemerge from 2015 to 2019. He adds it’s just a question of how many of them want to try again at home ownership.

Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed and downloaded at www.wpcarey.asu.edu/realtyreports. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

housing.prices

Phoenix Housing Market Quiets Down

The Phoenix-area housing market is quietly ending the year, with a drop in demand and activity. A new report from the W. P. Carey School of Business at Arizona State University provides the latest data for Maricopa and Pinal counties, as of October:

* The median single-family-home price was up 27 percent, to $200,000, since last October, but price increases are slowing down.
* Demand is rapidly dropping, and the supply of homes available for sale is quickly rising.
*First-time home buyers, especially those under 30, are showing little interest in getting into the market.

Phoenix-area home prices have been going up since they hit a low point in September 2011. The median single-family-home price went up an incredible 71 percent from October 2011 to October 2013. It rose 27 percent – from $157,000 to $200,000 – from just last October to this October. Realtors will note the average price per square foot went up about 24 percent year-over-year. The median townhouse/condo price rose 27 percent, to $119,900.

However, the report’s author says the market has been cooling since July and will continue to lose momentum.

“I anticipate sales will be way down in November and through the holidays, when some people even take their homes off the market until late January,” says Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “We also anticipate a much slower rate of price appreciation in 2014 than the furious pace we have witnessed over the last two years.”

Conditions are getting better for buyers and worse for sellers, as the supply of homes available for sale has been rising fast. The Phoenix area had 40 percent more active listings (those not under contract) this Nov. 1 than last Nov. 1. At the same time, demand has been plummeting. The amount of single-family-home sales activity dropped 19 percent from last October to this October.

Orr believes supply will exceed demand before the end of the year, even though supply is still 15 to 20 percent below what would be considered normal. He blames the sudden weakness partly on poor consumer sentiment, including concern over the recent government shutdown. He also notes Census numbers showing fewer households are forming, as some young adults stay with their parents and others show little interest in leaving their rentals to buy a home.

“When you ask people under 30 whether they want to buy a home, they’re not planning on it like past generations,” explains Orr. “Also, demand for starter homes is limited by the difficulty of first-time home buyers in qualifying for loans. Plus, less than 3 percent of the new homes sold in Maricopa County in October were priced below $150,000, so new entry-level homes are getting very scarce.”

Investors and out-of-state buyers are also losing interest in the Phoenix area. The percentage of residential properties purchased by investors has dropped from the peak of 39.7 percent in July 2012 down to 22.6 percent this October. The percentage of Maricopa County homes sold to out-of-state buyers was down from 20.1 last October to 16.4 this October. That’s the lowest percentage since January 2009.

The luxury home market continues to gain ground, with the stock market booming and the growing availability of jumbo loans. Sales of single-family homes priced above $500,000 grew 34 percent from last October to this October. At the same time, sales of lower-end homes priced below $150,000 fell by almost half — 49 percent.

Cheap homes are hard to find as foreclosure levels continue to drop. The number of completed foreclosures fell about 64 percent from October 2012 to this October. The number of foreclosure starts — owners receiving notice their lenders may foreclose in 90 days – dropped 50 percent at the same time.

Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed and downloaded at www.wpcarey.asu.edu/realtyreports. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

Tumbleweed Logo

Tumbleweed Center Relocates Phoenix Headquarters

Tumbleweed Center for Youth Development will expand and relocate its headquarters from Downtown Phoenix to Siete Square II, 3707 N. 7th St. in Midtown, according to Cushman & Wakefield of Arizona, Inc.

Tumbleweed was established in 1972 with a mission to provide a safe space for collaborating with youth and young adults in the community who are vulnerable or experiencing homelessness.  The organization serves more than 3,000 young people each year, ages 12 to 25 years.

“Tumbleweed made a very shrewd decision to expand and relocate its headquarters at this time, locking in to today’s historically low rates.  This allowed us to lower occupancy costs over the long term,” said Paul Andrews of Cushman & Wakefield.  “This strategy cut thousands of dollars in future rent expense that now can be redirected back into the organization’s much needed programs that serve Metro Phoenix’s teenage youth.”

The local non-profit has leased 13,047 square feet at the garden office complex and will locate from 1419 N. 3rd Street in fall of 2013.

Siete Square II is one of four buildings within the larger Siete Square garden office complex.  The Indiana Farm Bureau owns Siete Square II.  Paul Andrews of Cushman & Wakefield of Arizona, Inc. represented Tumbleweed Center for Youth Development in its lease negotiations.

Phil Breidenbach and Lindsey Carlson of Colliers serve as exclusive leasing agents for Siete Square II, representing the Indiana Farm Bureau.

WellsFargoLogo

Wells Fargo Plans 410,000 SF Expansion in Chandler

By Eric Jay Toll, Senior Correspondent for Arizona Builder’s Exchange |

Special to Arizona Commercial Real Estate magazine

 

Wells Fargo unveiled its 410,000-square-foot Chandler campus expansion to a neighborhood meeting in the East Valley September 16. Arizona Builder’s Exchange broke the story Monday night that the bank filed a rezoning application with the city to allow a pair of four-story buildings on the northwest corner of Price and Queen Creek roads in the Price Corridor.

More than 2,500 additional employees will work in the new Wells Fargo buildings, bringing campus employment to more than 5,000 workers.

The bank has selected an architect, but has not named the contractor for the project. A formal announcement with construction schedule is expected shortly. AZBEX reports sources saying the project could cost as much as $90 million.

The building shapes, design and materials are intended to mirror Phase I of the campus. The offices will rise to 64 feet. Three more buildings and parking garages are projected for future phases. The city has not set a hearing date for the zoning. Wells Fargo has not yet announced its construction schedule.

Read the original story here.

 

Eric Jay Toll is the senior correspondent for Arizona Builder’s Exchange. His freelance work appears in a number of regional and national publications, including upcoming stories in AZRE and AZ Business.

98427193

Phoenix-area Foreclosure Saga Ending

The Phoenix-area housing market has finally hit “normal, historical levels” for those going into foreclosure. After years of severe foreclosure trouble, a new report from the W. P. Carey School of Business at Arizona State University reveals that good news and more for Maricopa and Pinal counties, as of May:

* The median single-family home price rose again to $185,000, up about 26 percent from May of last year.
* The final chapter of the foreclosure crisis is wrapping up in Phoenix, as foreclosure starts — homeowners receiving notice their lenders may foreclose in 90 days – finally hit normal, historical levels in May.
* On the negative side, the chronic shortage of area homes available for sale continues to be an issue and could last for years.

Phoenix-area home prices hit a low point in September 2011 and have risen dramatically since then. The median single-family-home price reached $185,000 this May, up from $147,000 last May. That’s a boost of 25.9 percent. Realtors will note the average price per square foot went up 22 percent at the same time. The median townhouse/condo price went up about 27.1 percent.

“Between this January and May alone, the average price per square foot rose about 13 percent for area single-family homes,” says the report’s author, Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “However, the upward pricing pressure should disappear during the summer. I expect the prices to resume their strong upward direction in the fall, once temperatures drop below 100 degrees and snowbirds return.”

Rising prices don’t appear to be dampening the housing recovery in the Phoenix area at this point. In fact, home-and-condo sales activity went up 6.6 percent between April and May. May is the second month in a row where activity increased from the same time during the prior year, reversing a long negative trend. Even the luxury market is gaining, with more sales in May than in any other single month over the past six years.

“There has been much talk of rising interest rates and the negative effect this might have on demand,” says Orr. “The sudden and recent increase in rates has certainly reduced the motivation to refinance existing home loans. However, it is almost certainly increasing buyers’ determination to purchase homes now, rather than later, when rates may go even higher.”

Orr adds he sees early signs some lenders may react to higher interest rates by easing up their rules, allowing more people to buy homes. He also believes prospective buyers may simply settle for purchasing smaller, more affordable houses than they originally wanted, in order to manage the higher interest payments.

At the same time, the wave of foreclosures triggered by the housing crisis appears to be ending in the Phoenix area. Completed foreclosures on single-family homes and townhome/condos in May were down 53 percent from last May. Foreclosure starts – owners receiving notice their lenders may foreclose in 90 days – went down an incredible 67 percent in the same period. Given population growth, this means the area finally hit its normal, historical level of foreclosure starts this May.

“Foreclosure starts dropped 15 percent just between April and May alone,” says Orr. “Foreclosure levels are now far below the peak levels of March 2009, and the number of pending foreclosures is below the level from the first quarter of 2002. We expect these numbers to continue to fall over the next several years due to the very tight underwriting standards in place.”

Without cheap foreclosures coming into the market — and with ordinary homeowners reluctant to sell because they’re either locked in by negative equity or waiting for prices to keep rising — the Phoenix-area housing market continues to struggle with a chronic shortage of homes available for sale that may last for years. The number of active single-family listings without an existing contract was just over 11,000 as of June 1. That’s down 0.4 percent since May 1, and 83 percent of the available homes are priced above $150,000, creating a problem for those looking in the lower price range. At least the shortage has improved somewhat from last year, when supply was dropping at a rate of 6 percent per month.

“The chronic shortage applies to both homes for purchase and homes for lease,” Orr explains. “The average time for a leased home to be on the market is down to about one month. With this fast turnover and relatively low vacancy rates, it’s perhaps surprising that single-family and condo rents have only very modestly increased.”

New-home builders don’t appear too anxious to help meet the demand. They are trying to make sure they don’t overbuild like they did before the housing crisis, and they want to keep prices moving up. Current new-home sales rates are less than a third of what would normally be needed to keep up with local population growth. As a result, Orr says the combined population of Maricopa and Pinal counties grew 2.9 percent from 2010 to 2012, but the number of owned and leased dwelling units only grew by 1 percent.

Lastly, institutional investors continue to lose interest in the Phoenix area. Their buying spree that began in 2011 is in a downward trend. The percentage of the area’s total single-family-home and condo sales carried out by investors is down from 39.7 in July 2012 to 27.3 percent this May. Most investor transactions are actually going to so-called “mom and pop” purchasers. Orr says they own roughly 96 percent of the area’s rental-home inventory.

Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/finance/real-estate/upload/Full_Report_201306.pdf. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

home.prices

Phoenix-area Housing Prices Keep Soaring

Home prices continue their upward climb in the Phoenix area, with more momentum expected until at least June. A new report from the W. P. Carey School of Business at Arizona State University reveals the latest information about the Maricopa and Pinal County housing market, as of March:

The median single-family home price was all the way up to $175,000, about a 30-percent increase from March of last year.
The supply of homes for sale continued to fall, but the problem is not so much the high demand, but more the lack of sellers getting into the market.
Rebounding population growth in the Phoenix area is also blasting past the rate at which builders are constructing new homes.

Phoenix-area home prices reached a low in September 2011 and have largely shot up since then. The median single-family home price went up 29.7 percent – from $134,900 to $175,000 – in the year from March 2012 to March 2013. Realtors will note the average price per square foot went up 23.6 percent during the same time. The median townhouse/condo price increased 43.2 percent – from $81,000 to $116,000. A big reason for all this upward movement is the scarcity of affordable homes for sale.

“The number of active single-family listings has been dropping fast and went down another 4 percent from March 1 to April 1,” says the report’s author, Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “Fewer than 12,000 single-family homes were up for sale (without an existing contract) on April 1, and 80 percent of those were priced above $150,000, making it very tough to find properties in the lower price range.”

Orr adds it’s actually not high demand that’s the major culprit here.

“The low number of sellers is what’s unusual, not the number of buyers, which is only slightly above normal,” he says. “Higher prices would normally encourage more ordinary home sellers into the market, but many are either locked into their homes because of negative equity, or they’re simply waiting for prices to go up more.”

Orr says most homes priced below $600,000 continue to attract multiple offers, and March is the peak of the buying season that lasts from January to June. However, due to the chronic supply shortage, the amount of single-family home sales actually went down 8 percent from March 2012 to March 2013.

Investors are also starting to lose some interest in the Phoenix area, since bigger bargains can be found in other areas of the country that haven’t rebounded as fast. The percentage of residential properties bought by investors dropped from 29.2 percent in February to 27.1 percent in March, the lowest percentage in several years. The market is now seeing increased demand from owner-occupiers and second-home buyers, instead.

Completed foreclosures were down an incredible 60 percent from March 2012 to March 2013. Foreclosure starts – homeowners receiving notice their lenders may foreclose in 90 days – dropped 53 percent. Orr believes we’ll see foreclosure-notice rates “below long-term averages” by the end of next year.

Meantime, new-home sales are also going up, in tandem with resale prices. In Maricopa County alone, new-home sales increased 37 percent from March 2012 to March 2013. However, new-home construction isn’t keeping pace with the Phoenix area’s rebounding post-recession population growth. The U.S. Census reports 1,220 single-family-home construction permits were issued in March, a very small number by historic standards. For example, the total in March 1996 was 3,071, and the total in March 2004 was 5,490.

“The population is growing much faster than the housing supply, with an expected 50,000 to 60,000 people being added to the Phoenix-area population this year, but only around 12,000 new single-family homes being built,” Orr explains. “Builders are scratching their heads, trying to figure out what to do. They don’t want to overbuild like they did during the peak, and they don’t want to build a bunch of new homes for people who can’t secure the mortgages needed to buy them with such tight lending conditions.”

Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/finance/real-estate/upload/Full-Report-201304.pdf. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

Phoenix-Area Housing Market

How to Survive the Phoenix-area Housing Market

The Phoenix-area housing market is especially difficult for home buyers to navigate right now. They face rising prices, competition from investors and other bidders, and a short supply of available homes for sale. That’s why The Arizona Republic and the ASU Real Estate Council at the W. P. Carey School of Business are hosting a free event to help people sort through the complications.

“We keep hearing from potential home buyers how tough it is to deal with current conditions in the Valley housing market,” says Catherine Reagor, who covers the real estate market for The Arizona Republic and azcentral.com. “This is one way to help.”

The event called “Phoenix Housing Market Explained” will be held Saturday, April 6, starting at 9:30 a.m. at Arizona State University’s Tempe campus.

It will feature:

* Catherine Reagor, senior real estate reporter for The Arizona Republic
* Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business
* Mark Stapp, the Fred E. Taylor Professor in Real Estate and director of the Master of Real Estate Development (MRED) program at the W. P. Carey School of Business

The three will participate in a panel discussion and then take questions from the audience. Reagor will offer insight into what she’s seeing as buyers and sellers negotiate ever-changing market conditions…and prospective buyers try to secure a mortgage.

Orr, a prominent real estate expert whose monthly reports on the Phoenix-area housing market are often covered by the national media, will talk about many factors that could affect prospective home buyers right now.

“Everything from investors to rising prices and the short supply of houses are coming into play for people who want to own a new home,” says Orr. “It can be frustrating to bid repeatedly for properties and still come up dry. I’ll go over some of the latest data that could help provide an edge.”

Stapp, an established real estate developer himself, will moderate the discussion and explain current trends in new-home building.

The event will be held in the Business Administration C-Wing Building, or BAC, at 400 E. Lemon St. at ASU in Tempe. Parking is available just across the street at the intersection of Apache Boulevard and Normal Avenue. Signage will direct participants from the garage to room BAC 116 on the first floor of the BAC building.

Because space is limited, registration is encouraged at conversations.azcentral.com. More information about the event can be found at www.money.azcentral.com, www.wpcarey.asu.edu, or by calling (602) 444-4931.

More information about the Valley real estate market is available in the W. P. Carey School’s monthly reports at http://wpcarey.asu.edu/finance/real-estate/market-reports.cfm.

Phoenix-Area Housing Market

Phoenix Housing Report: 2012 Numbers and Look Ahead at 2013

Though home prices continue rising, things are still far from perfect in the Phoenix-area housing market. A new year-end report from the W. P. Carey School of Business at Arizona State University provides a 2012 summary of the numbers for Maricopa and Pinal counties, as well as some insight on what’s ahead:

* The median single-family-home sales price shot up almost 34 percent — $122,500 to $164,000 — from December 2011 to December 2012.
* The supply of homes for sale fell 6 percent from January 2012 to January 2013, with discounted, “distressed” supply down a whopping 42 percent.
* Foreclosures finally plummeted 51 percent from December 2011 to December 2012, signaling we are near the end of a terrible chapter in the Phoenix-area housing market.

Mike Orr, the report’s author, says things have dramatically changed in the Phoenix-area market over the past year or so. Prices have risen significantly since they reached a low point in September 2011.

“2012 was all about low inventory, which has been driving up home prices,” explains Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “Foreclosures and short sales have gone down, eliminating the sources of many cheap homes, so the more expensive types of transactions, like normal resales and new-home sales, went up. As a result, new-home construction, which was at rock bottom in 2011, also really came roaring back in 2012.”

The median single-family-home price in the Valley went up about 33.9 percent from December 2011 to December 2012, rising from $122,500 to $164,000. Realtors will note the average price per square foot went up 27.2 percent. The median townhouse/condominium price went up 42.7 percent, from $70,000 to $99,900.

“However, we expect to see that prices held steady or even fell slightly between December 2012 and January 2013,” says Orr. “Between Christmas and the Super Bowl is always a quiet time for home sales in Greater Phoenix, with ordinary home buyers much less active than average and investors continuing to concentrate on the lower price range.”

On the overall supply of homes for sale last year – Orr says inventory went down 6 percent from the beginning of January 2012 to the start of January 2013. Still, the supply began to bounce back toward the end of the year, increasing 13 percent in the fourth quarter. The supply of cheap, “distressed supply” plunged 42 percent over the year, as foreclosures and short sales fell. Overall sales activity also fell 12 percent for single-family homes and 13 percent for townhomes/condos from December to December.

“With prices moving substantially higher, it’s not surprising that buyer interest eased a little,” says Orr. “We still see multiple bids for many resale listings, but demand isn’t as strong as it was in spring 2012.”

Investor interest has dropped somewhat in recent months, after peaking in late summer. This means ordinary home buyers face less competition from investors’ all-cash offers. Still, all-cash purchases accounted for more than a third (35.5 percent) of the deals in Maricopa County in December. Some investment groups have started buying homes wholesale in bulk from other investors, since the market has become more competitive. Nevertheless, Orr asserts most investors are using their own money and not debt, so he doesn’t expect another housing bubble from this activity.

“Developers are also becoming more active, as bargains become tougher for the average buyer to find and those buyers turn to new-home construction,” says Orr. “Developers are stocking up on vacant lots – having purchased almost 2,300 of them, plus several tracts of undeveloped land, in December alone. However, the number of permits to build on the lots hasn’t shot up, so it looks like developers are trying to remain flexible, deciding whether to build or hold the land for the future.”

Foreclosure starts – homeowners receiving notice their lenders may foreclose in 90 days – are down 40 percent from December 2011 to December 2012. Completed foreclosures are down 51 percent.

Almost all areas of the Valley rebounded significantly in 2012. In fact, Wickenburg is the only city where the average price per square foot went down from December 2011 to December 2012.

Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/finance/real-estate/upload/Full-Report-201301.pdf. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

housing.prices

Phoenix-area Home Prices continue to Rise

More ordinary buyers are finally getting into the Phoenix-area housing market as home prices continue to rise and investors find fewer bargains to snap up. That’s according to a new report from the W. P. Carey School of Business at Arizona State University, which reveals the numbers for Maricopa and Pinal counties, as of November:

> The median single-family home price continued to rise, jumping from $157,000 in October to $162,500 in November.
> The tight housing supply grew 31 percent between September and December, but another drop may be coming in the spring.
> All-cash offers are finally on a downward trend, signaling that investor interest may be waning a bit and more ordinary buyers are able to successfully compete for homes.

Phoenix-area home prices reached a low point in September 2011, followed by a sharp rise that’s expected to continue into 2013. The median single-family home price in November was up to $162,500 from just $120,000 last November — a 35.4-percent increase. Realtors will note the average price per square foot rose 27.4 percent year-over-year. The townhouse/condo median price is up almost 43 percent, from $70,000 to $100,000.

However, according to the report’s author, Mike Orr, the market is unbalanced, with not enough homes available for the many buyers, especially at the lower end. The number of homes for sale, but not under contract, was down 7 percent year-over-year at the start of December. Specifically, the amount of bargains or “distressed supply” was down a whopping 43 percent from last year. Things started to improve this fall, with total supply up 31 percent from September to December, but Orr doesn’t see more good news coming.

“We don’t see a strong flow of new listings coming onto the market,” says Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “For example, short-sale listings are down about 70 percent compared to this same time last year. As the market improves, it seems many people may have decided to hang onto their homes in an effort to let values keep going up. I also anticipate another possible drop in supply this spring. Unless new-home builders can start keeping up with rising demand, we may have a chronic supply problem.”

Ordinary buyers, who usually need financing, still face multiple bids and tough competition from investors offering sellers preferred all-cash deals. In fact, almost half (48.4 percent) of the single-family-home sales under $150,000 in November were all-cash purchases. However, the percentage of homes bought by investors declined from 35.5 percent in August to 27.5 percent in November. Orr says investor activity peaked around August and is on a long-term downward trend. With the possible exception of a brief, normal holiday spike in December/January, he expects a continued drop in investor activity.

“As prices go up each month, price-sensitive buyers, such as investors, get a little less enthusiastic,” explains Orr. “Bargain hunters haven’t got much left to pick over, which is allowing more normal buyers to jump into the market before prices rise past what they can afford.”

Foreclosures are down in the market. Completed foreclosures on single-family and condo homes dropped 34 percent from November 2011 to November 2012. Foreclosure starts – homeowners receiving notice their lenders may foreclose in 90 days – went down 48 percent.

Sales activity stayed relatively level, dipping just 1 percent from November to November. The most expensive types of sales, new-home sales and regular resales, are up 32 percent and 84 percent. All types of discount sales, such as short sales and bank-owned-home sales, are down.

Almost every area of the Valley has seen prices explode over the past year, led by Pinal County, including Eloy, Arizona City and Maricopa.

Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/finance/real-estate/upload/Full-Report-201212.pdf. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

200392710-001

Arizona home prices jump 21.3%

A measure of U.S. home prices rose 6.3 percent in October compared with a year ago, the largest yearly gain since July 2006. The jump adds to signs of a comeback in the once-battered housing market.

Core Logic also said Tuesday that prices declined 0.2 percent in October from September, the second drop after six straight monthly increases. The monthly figures are not seasonally adjusted. The real estate data provider says the decline reflects the end of the summer home-buying season.

Steady price increases are helping fuel a housing recovery. They encourage more homeowners to sell their homes. And they entice would-be buyers to purchase homes before prices rise further.

Home values are rising in more states and cities, according to the report. Prices increased in 45 states in October, up from 43 the previous month. The biggest increases were in Arizona, where prices rose 21.3 percent, and in Hawaii, where they were up 13.2 percent.

The five states where prices declined were: Illinois, Delaware, Rhode Island, New Jersey, and Alabama.

In 100 large metro areas, only 17 reported price declines. That’s an improvement September, when 21 reported declines.

Mortgage rates are near record lows, while rents in many cities are rising. That makes home buying more affordable, pushing up demand.

And more people are looking to buy or rent a home after living with relatives or friends during and immediately after the Great Recession.

At the same time, the number of available homes is at the lowest level in 10 years, according to the National Association of Realtors. The combination of low inventory and rising demand pushes up prices.

Last week, an index measuring the number of Americans who signed contracts to buy homes in October jumped to the highest level in almost six years. That suggests sales of previously occupied homes will rise in the coming months.

Builders, meanwhile, are more optimistic that the recovery will endure. A measure of their confidence rose to the highest level in six and a half years last month. And builders broke ground on new homes and apartments at the fastest pace in more than four years in October.

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Why Different States Are Getting Out of the Housing Crisis Faster

America’s housing market is finally starting to really recover from the Great Recession, but some areas of the country are fighting back faster than others. New research from the W. P. Carey School of Business at Arizona State University indicates one reason: Different states have dramatically different mortgage laws, and some make it easier to push through tough times.

“The laws across states use different legal theories as the basis for mortgages, and they balance the rights of creditors and borrowers very differently,” explains Assistant Professor of Real Estate Andra Ghent of the W. P. Carey School of Business. “The variations started early in America’s history, and they’re not really based on economic reasons, but they’re still having a major influence on what’s happening now with the housing market.”

Ghent runs through a few main issues playing a role in whether a state has already gotten through the worst of the housing crisis or whether it’s still plodding along:

Some states require judicial involvement in foreclosures, while others don’t.
Some states require a massive amount of paperwork, including the original promissory note, in order for a lender to foreclose.
Some states require a longer “redemption period” of time, during which the borrower can be behind on payments, before a foreclosure can happen.

Ghent says, in general, many of the states that don’t require judicial involvement or tons of paperwork have already run through the bulk of their foreclosures and are finally seeing rising property values. That’s because the flood of cheap, foreclosed properties onto the market has stopped.

Arizona is one of the states in which the damage happened relatively quickly, and there’s no longer a big backlog of foreclosures to go through the process. Phoenix-area home prices have been rising dramatically since last fall.

“The key is quick resolution of the situation,” says Ghent. “For example, if a state requires a longer period before foreclosures can happen, then that generally means the homes deteriorate more as the borrowers realize they’re going to have to leave and stop taking care of the property. This is bad for the neighbors and the property values.”

Ghent adds she doesn’t see much renegotiation during the times leading up to the foreclosures. The rules just allow for drawing out the situation.

“New York and Florida, for example, have very slow foreclosure processes,” Ghent says. “Properties can sit around without any maintenance for two to four years while they work their way through the maze, before they finally get a new owner.”

Ghent also doesn’t think that making more foreclosures go through the judicial process will help prevent problems like robo-signing. That’s where some lenders didn’t properly review all the individual details of the cases or follow all of the required procedures.

“In most of those cases, the borrowers were really behind on their payments and would eventually have lost the homes, anyway,” Ghent says. “Fraud is unacceptable, but it was also a case of sheer volume. If those particular states had required less paperwork, that’s what might actually have helped prevent more robo-signing.”

Ghent emphasizes that getting rid of the patchwork of different state laws would ultimately benefit the housing market as a whole.

“Can you imagine how much money, time and resources we could save, if we didn’t have 50 different sets of laws, paperwork and legal-expertise requirements?” she asks. “Again, there appears to be no real economic reason for the differences. Many of these laws date all the way back to the 1800s, and some were changed just after the Great Depression.”

Overall, Ghent has one big message for those who can influence the process in the future.

“Nobody pays attention to mortgage laws for 50 to 60 years at a time,” she says. “They only examine these laws after a major event, so the time to change is now.”

Ghent’s research on the history of America’s mortgage laws can be found online at
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2166656.

200392710-001

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.

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Survey: More People Likely To Enter Housing Market

Americans are feeling less discouraged about the housing market, according to a new national survey by FindLaw.com, the most popular legal information website.

The percentage of Americans who say they are sitting on the sidelines rather than considering buying a house has dropped by more than half. In 2010, 63 percent of Americans said they were less likely to buy a house because of the state of the economy. Today, that number has fallen to 30 percent in the latest FindLaw.com survey.

Meanwhile, because of low housing prices and mortgage rates, the percentage of people who say that the current economic situation now makes more likely to buy a house has risen from 8 percent to 11 percent.

Forty-nine percent of people in the latest survey said the economy is making them neither more likely nor less likely to buy a house.

“Two years ago, the economic situation was driving a lot of potential homebuyers to the sidelines,” said Stephanie Rahlfs, an attorney and editor with FindLaw.com. “But today we’re finding that the state of the economy is becoming less of a factor in keeping people out of the housing market. Many factors influence housing decisions, including income, housing prices, proximity to work, job relocations, mortgage rates, ability to sell an existing home, schools, and so on.  But it’s clear that people’s outlook on the economy is now becoming less of a drag on the housing market.

“In addition,” said Rahlfs, “among middle and upper income levels, we’re seeing a significant rise in people saying the current economy is making them more likely to enter the housing market.  This may be due to some combination of historically low mortgage rates, housing prices that – although rebounding – are still relatively low, and people perhaps feeling more optimistic about the economy in general.”

Free Internet resources such as the FindLaw Real Estate center can provide helpful information on buying, selling and owning a home, including obtaining a loan, borrowers’ rights, finding the best mortgage, homeowners’ rights, avoiding foreclosure and more. It also has useful information for renters, including negotiating a lease, tenants’ rights, and fair housing and discrimination laws.

The FindLaw.com survey was conducted using a demographically balanced survey of 1,000 American adults and has a margin of error of plus-or-minus 3 percent.

home prices

Phoenix-Area Home Prices Continue To Soar

Phoenix-area home prices have been zooming up for months, and the streak continued in May. However, a new report from the W. P. Carey School of Business at Arizona State University takes a closer look at the short supply of available houses, an increase in foreclosures, and a possible leveling off of skyrocketing home prices this summer.

The report on Maricopa and Pinal counties reveals:

  • The median single-family home price went up more than 32 percent from May 2011 to May 2012.
  • The overall housing supply dropped by 50 percent in the same time frame.
  • The number of completed foreclosures of single-family homes and condos combined went up 18 percent from April to May.

The median single-family home price jumped 32.4 percent from May 2011 to May 2012. It went from $111,000 up to $147,000. At the same time, the median townhouse/condo price soared 37.3 percent, from $69,900 to $96,000, and the average price per-square-foot shot up more than 22 percent. Prices have been increasing since they reached a low point in September 2011.

The report’s author, Mike Orr, says high demand and low supply remain the dominant factors in the Phoenix-area housing market. For example, the number of active listings for single-family homes without a contract in the greater Phoenix area was down to 8,550 as of June 1. Fierce competition for available homes has continued to push home prices up.

“Most houses below $250,000 priced realistically are attracting large numbers of offers in a short time, and many exceed the asking price,” says Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “We recently saw a Chandler home get 84 offers and a Glendale home receive 95. The Glendale house closed within four weeks for 17 percent above asking price. Needless to say, this is not something we would see in a normal market.”

The amount of overall sales activity is down, due to the short supply. The number of single-family home sales fell 5.8 percent compared to last May. Orr says things are especially quiet in the luxury and active-adult sectors of the market, where there’s less demand. But new-home sales are up 57 percent over last May, as buyers look for alternatives to the intense competition for existing homes under $250,000.

Orr says, “Contractors are trying to keep up with the new construction demand by supplementing a small skilled labor pool. They’re attempting to lure away competitors’ employees with higher pay and to attract back foremen who’ve gone on to other housing markets or industries.”

Investors are also playing an influential role in the area. In May, almost 28 percent of home purchases were made by investors. Orr says the average area home buyer faces an uphill battle against those offering all cash, instead of a financed offer requiring an appraisal. He does believe, though, that things are about to calm down somewhat.

“Prices gained further strength over the last month, but I suspect they cannot continue to rise at the extremely fast rate we experienced this spring,” says Orr. “This rate can’t be sustained long term, and the most likely time for prices to stabilize is during the hot summer months of June through September.”

At the same time, foreclosures are unfortunately going up in the area. The new report shows completed foreclosures of single-family homes and townhome/condos combined went up 18 percent from April to May this year. However, Orr doesn’t see this as reason to worry yet.

“Completed foreclosures were still down 52 percent year-over-year in May,” he explains. “Since the signing of a legal agreement between the states and five of the nation’s largest lenders, we have seen a slight uptick in the rate of foreclosure notices, but we are still a long way below the peak levels of March 2009.”

The areas of the Valley most affected by the foreclosure crisis are now seeing the biggest surge in home prices. For example, El Mirage, Maricopa, San Tan Valley, Glendale and Apache Junction are doing much better. The areas least affected by foreclosures have seen home prices improving slowest. Still, some are moving into positive territory, such as Cave Creek, Fountain Hills and Sun City. The only areas still showing a decline in average home prices per-square-foot over the past year are Eloy, Paradise Valley, Rio Verde, Sun City West and Sun Lakes.

Orr’s full report, including home prices, statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/finance/real-estate/upload/Full-Report-201206.pdf. More analysis is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com.

homebuyers - Arizona Business Magazine May/June 2012

Homebuyers Bounce Back

The rules have changed a bit, but it’s still a perfect time to purchase a home.

If you have good credit and a good job history and can put money down for a house, it’s a great time to buy, say experts in real estate and finance. In fact, the sooner the better, because it may soon turn into a seller’s market for housing.

And mortgage rates could be climbing as well. Mortgage buyer Freddie Mac recently announced that the average rate on 30-year loans had jumped to the 4 percent level for the first time in three months.

According to attorney Kevin Nelson of Tiffany & Bosco, whose practice focuses on mortgage and real estate, homebuyers can get very attractive packages if they have the solid down payments and credit. “Homeowners can also refinance if they have substantial value in their homes. But lenders are still very cautious about permitting homeowners to have lines of credit,” Nelson says. “And they probably still will be until the financial problems in Europe and unrest in the Middle East calm down.”

Both larger banks and mortgage companies say business is very good. “In the past 10 years, we have never done as many loans per month as we are doing right now,” says Tim Disbrow, regional sales manager for Wells Fargo Bank. “We are the No. 1 lender by a longshot for all mortgages across the state, including Fannie and Freddie and FHA.”

Although some in the lending industry say big banks are moving very slowly in making home loans and can’t keep up with the volume, Disbrow disputed that. “Consumers who go to banks for mortgages are just being asked to document their savings, job history and salaries, something that they weren’t asked to do in the boom years,” he says.

The same rules apply with all lenders now, he says, whether they are banks or mortgage companies. Customers everywhere have to meet the same requirements based on Fannie and Freddie guidelines.

For conventional conforming mortgages of $417,000 or less that are insured by Fannie Mae and Freddie Mac, down payments must be 5 percent or more. Down payments for FHA loans are 3.5 percent. Jumbo loans also seem to be widely available, but lenders generally do not sell them to Fannie Mae and Freddie.

“The big difference between us and mortgage companies is that customers may have to pay other loan originators more in fees,” Disbrow says.

Foreigners are helping fuel the rising demand for homes in the Phoenix area, but plenty of Americans are buying as well. Canada, New Zealand and Australia are well represented. Many foreign buyers pay cash, but some mortgage companies offer loan programs for them. Buyers are often investors attracted to the housing market by low home prices and the potential for high rents.

Eric Bowlby, president of AmeriFirst Financial in Mesa, estimated that about 40 percent of the homebuyers in Maricopa County are cash buyers, while 60 percent get mortgages.

Surprisingly, even those who lost their homes in a foreclosure or short sale can finance homes with mortgages, but they must put down fairly substantial down payments. They can even get an FHA-insured loan from three to five years after losing their previous home.

But to get a Fannie Mae-backed mortgage or one from Freddie Mac, someone who had a foreclosure has to wait from five to seven years. However, if a buyer can verify that some hardship led him or her to walk away from their property – like the loss of a job or an illness – they may get relief from the time requirements.

According to Bowlby, even if someone was upside down in their mortgage and walked away, AmeriFirst has a hard money hedge fund that will finance mortgages almost immediately for those who have the income to qualify and make a 25 percent down payment.

“Even those who are one day out of foreclosure or bankruptcy may be able to qualify,” he says, “but the interest rate is 12 percent.

The rate may be high, he says, but it’s still cheaper to buy than to rent because of the homeowner’s tax deduction and the current increases in rental rates.

ATTRACTING BUYERS

Recently, Wells Fargo announced that it is bringing a new pilot program to Phoenix in an effort to help stabilize housing markets.

The Neighborhood LIFT program, already available in Atlanta and Los Angeles, is designed to help communities attract qualified prospective homebuyers to neighborhoods that are struggling with high inventories of unsold homes.

In Phoenix, the bank has a five-year goal of making $3 billion in such loans. Prospective homebuyers can qualify for down payment assistance grants of up to $15,000, covering home and renovation financing and will also participate in home buyer seminars and tours of properties for sale. There are limits on the amount of income families can have and limits on the size of loans.

Arizona Business Magazine May/June 2012

 

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Phoenix-Area Home Prices Continue To Rise

Phoenix-area home prices continue to rise, but a short supply of available homes is causing the amount of activity in the market to fall. A new report from the W. P. Carey School of Business at Arizona State University gives an update on the hard-hit housing market of Maricopa and Pinal counties, as of April:

  • The median single-family home prices are up 25 percent from a year ago.
  • The overall supply of homes for sale is down 54 percent from last April.
  • The number of single-family homes sold this April was down 11.5 percent from last April, largely due to the lack of supply.

Anxious Phoenix-area homeowners will be relieved to see the median single-family home prices in the area went up 25 percent, from $112,000 to $140,000, between April 2011 and April 2012. Realtors will note the average price per square foot went up 16.5 percent in the same timeframe. However, the new W. P. Carey School report indicates we could be seeing even more activity, if more homes were available for sale.

“April is normally a very busy month for home sales, but this year’s sales are weaker than last year’s due to the unusual lack of supply,” says Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “We’re looking at only about 8,800 single-family homes for sale in the Greater Phoenix area, and more than 25 percent are priced at more than $500,000. The inventory of single-family homes for sale under $250,000 with no existing contract is equal to only 21 days of supply.”

Orr says we have a very unbalanced market with many more buyers than sellers. Home prices have been going up since they reached a low point in September 2011. Condominiums and townhomes are included in the boost. Their median sales price rose about 23 percent from April 2011 to April 2012, going from $72,500 to $89,050.

“Demand remains strong in the market, as evidenced by multiple-bid situations for the majority of resale home listings,” says Orr. “Most homes priced well are attracting multiple offers within a couple of days. Up to 20 or 30 offers for a home are becoming common, and often, many offers exceed the asking price. As a result, in the single month from March to April, the overall median sales price increased by 3.8 percent.”

The areas that suffered the most price damage during the recession, such as El Mirage, Maricopa, Tolleson and Glendale, are now seeing the most positive price movement. A few areas that were least affected by foreclosures, such as Cave Creek, Fountain Hills and Wickenburg, are still showing negative price movement.

Overall, foreclosures are down 62 percent in the Phoenix area from last April. However, one note of concern comes from the number of foreclosure starts – homeowners receiving notice their lenders may foreclose in 90 days. That number went up 4.7 percent from last April. Orr says he has seen a slight uptick in the rate of foreclosure notices since the signing of a recent legal settlement between the states and five of the nation’s largest housing lenders.

New-home sales, normal resales and short sales are up year-over-year, and most lenders have recently encouraged troubled homeowners to use short sales as a preferred alternative to foreclosure. Meantime, sales of homes owned by banks, Fannie Mae, Freddie Mac and the government are going down. In fact, so-called “distressed supply” dropped 81 percent from April to April.

“In order for us to see a more stable housing recovery, the basic rules of economics require prices to change enough to bring a new wave of sellers onto the market,” explains Orr. “That hasn’t happened yet, and so far, supply remains insufficient to meet demand.”

Orr’s full report on Phoenix-area home prices, including statistics, charts and a breakdown by different areas of the Valley, can be downloaded. More analysis is also available from knowWPCarey, the business school’s online resource and newsletter.

home prices

Phoenix Home Prices Up, New-Home Sales Coming Back

Foreclosures are dramatically down in the Phoenix-area housing market. This means fewer cheap homes coming onto the market, home prices rising for the sixth month in a row as a result, and many buyers finally starting to turn their attention from bargain resale homes to new-home sales. A new report from the W. P. Carey School of Business at Arizona State University reveals some trends for Maricopa and Pinal counties, as of March:

> The number of foreclosures completed this March was down a huge 60 percent from March 2011.

> The median single-family-home price went up more than 20 percent from last March.

> New-home sales rose 35 percent in the same time period.

Mike Orr, the report’s author, says the home-buying season is in full swing and peak activity will last until June. The median single-family-home price in the Phoenix-area was $134,900 in March. That’s up 20.4 percent from a year ago when it was $112,000. Realtors will note the average price per square-foot went up 14.4 percent.

“Prices have begun to rise at a fast pace, and bargains are no longer plentiful,” says Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “Most homes that are priced well are attracting multiple offers within a couple of days, and many are exceeding the asking price.”

Orr emphasizes there’s been a dramatic change in the types of transactions happening in the market. Normal resales, new-home sales, investor flips and short sales are on the rise, while lender-owned home sales are down 61 percent from the year before.

Overall, the supply of single-family homes on the market (without an existing contract) went down 64 percent from March 2011 to March 2012. Orr estimates there is only a 23-day supply of homes priced under $250,000 available and that the market is very unbalanced, with far more buyers than sellers. The existing supply is heavily weighted toward the higher-priced end of the market.

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

When it comes to resales, Orr says all-cash buyers are still receiving preference over those with offers that require some form of financing. That’s because lenders need an appraisal, and appraisers are typically looking at months-old home sales for comparison. Those are priced well below the current market value.

“This puts ordinary home buyers at a severe disadvantage,” explains Orr. “More than 26 percent of Phoenix-area transactions are investor purchases.”

Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at wpcarey.asu.edu. More analysis is also available from knowWPCarey, the business school’s online resource and newsletter, at knowwpcarey.com.

Phoenix-Area Housing Market

Short Supply, Rising Prices In The Phoenix Area Housing Market

Are we actually seeing the start of a housing shortage in the Phoenix area? A new report from the W. P. Carey School of Business at Arizona State University reveals some surprising information for Maricopa and Pinal counties, as of February:

  • Housing supply was down a huge 42 percent from the year before.
  • Foreclosures were down 52 percent from last February.
  • Single-family-home prices have been on the rise since September.

Perhaps most notably, the report’s author, Mike Orr, says some realtors are actually starting to call around to ask people whether they would consider selling homes in desirable neighborhoods.

“Supply is tight, in a pretty extreme way, and it looks likely to stay that way for months,” says Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “The inventory of single-family homes for sale under $250,000 (without a contract already) is less than 25 days of supply. This is highly unusual and signals a market heavily out of balance, with far more buyers than sellers. It’s now becoming a matter of how much of a price increase will get people to start putting their homes back on the market.”

The median price for a single-family home sold in the Phoenix area in February was up 8.3 percent from last year. This includes new-home sales, and it’s an increase from $115,000 to $124,500. Realtors will note the average price per-square-foot went up 4.1 percent.

February is the start of the selling season that normally runs through June. Orr expects to see lots of activity and even “frantic attempts” to buy over the next three months. This is likely to push prices even higher.

“One thing that could slow this down is appraisals,” explains Orr. “That’s because appraisers are still looking at prices from up to three months ago, and they may be reluctant to write appraisals that match the now-higher market value. This will continue to give all-cash buyers a big advantage over those who need to secure a loan.”

Orr adds that foreclosures and short sales continue to exert a strong influence on the market. They represent about 20 percent of total sales. New home sales make up only 6 percent of the total market.

Buyers from outside Arizona account for 26 percent of the transactions. Also, despite the positive momentum, Orr emphasizes there are still many Phoenix area homeowners with loans exceeding the market value of their houses.

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Falling Prices, More Foreclosures Plague The Valley’s Housing Market

The housing market in the Phoenix metro area continues to tread through troubled waters.

According to a new report from the W. P. Carey School of Business at Arizona State University, the median price for an existing home in the Valley fell for the third straight month. Making matters worse, foreclosures continue to weigh down activity in the existing-home market.

The median home-resale price for last month was $135,000 — $3,000 less than August 2009. In fact, existing-home prices have been falling steadily since May, when the median price was $144,000. The median price was at $143,000 in June, and $137,500 in July.

“Although current interest rates and home prices are very attractive, homeowners don’t seem to be motivated to buy,” says Jay Butler, an associate professor of real estate at ASU. “This lack of motivation can be attributed to anemic economic and job recovery, low consumer confidence and stricter underwriting guidelines, among other factors.”

Home sales last month were particularly sluggish, with 4,800 homes re-sold. That’s down from almost 5,100 in July. In August 2009, almost 6,000 homes were re-sold. The numbers aren’t expected to improve anytime soon as home sales traditionally slow down after the summer season.

“As the year comes to an end, median prices often decline in response to holiday and school activities that allow little time or desire to buy a home,” Butler says. “Beyond the impact of foreclosure activity, the absence of a strong move-up market, will also limit any growth in home prices.”

The other barometer of the Valley’s existing home market — foreclosures — fared just as badly in August. Foreclosures accounted for 45 percent of the existing-home market last month, the highest percentage since January.

“When you add in re-sales of previously foreclosed-on homes, all of this foreclosure-related activity represents a full two-thirds of the market’s transactions in August,” Butler says.

About 4,000 foreclosures were recorded in Maricopa County in August, up slightly from about 3,900 in July. In August 2009, 3,100 foreclosures were reported.

Housing Development

Shea Homes Again Ranks Highest In Customer Satisfaction Among New-Home Builders In Valley, Report Indicates

For the third straight year, Shea Homes ranks highest in customer satisfaction with new-home builders in the Phoenix market, according to the J.D. Power and Associates 2010 New-Home Builder Customer Satisfaction Study released today.

“The downturn of the housing market — along with intensified competition for a very limited pool of home buyers — has reinforced the importance of customer focus for new-home builders,” says Dale Haines, senior director of the real estate and construction industries practice at J.D. Power and Associates. “In this buyers’ market, builders that are attentive to customer needs and focus on relationship building stand the best chance of enduring through the market recovery.”

The study, now in its 14th year, includes satisfaction rankings for builders in 17 markets. Nine factors drive overall customer satisfaction with new-home builders: builder’s sales staff; builder’s warranty/customer service staff; workmanship/materials; price/value; home readiness; construction manager; recreational facilities provided by the builder; builder’s design center; and location.

Shea Homes achieved a score of 922 on a 1,000-point scale in 2010 — which represents an increase of 19 points from 903 in 2009 — and performs particularly well in the Phoenix market in six of the nine factors: builder’s sales staff; builder’s design center; construction manager; workmanship/materials; home readiness; and builder’s warranty/customer service staff.

The average customer satisfaction index score in the Phoenix market is 872 — 46 points above the 17-market average of 826. Satisfaction has improved substantially in the Phoenix market in 2010 — up 29 points from 2009.

Overall customer satisfaction across all 17 markets has improved for a third consecutive year, averaging 826 — the highest level since the inception of the study in 1997. Markets with the highest levels of overall satisfaction in 2010 include Phoenix, Las Vegas, southern California, Orlando, Fla., and Sacramento, Calif. Overall satisfaction has increased in 15 of the 17 individual markets that were also surveyed in 2009.

Centex Homes ranks highest in new-home quality in the Phoenix market. Home quality in the Phoenix market has improved considerably from 2009, averaging 856 in 2010 — up by 26 points from the previous year.

The problems reported most often in this market include: landscaping issues, exterior paint, and kitchen cabinet quality/finish.

Overall new-home quality across all 17 markets has increased notably to an average of 844 in 2010, reaching a record high. Home quality has improved from 2009 in 15 of the 17 markets. Overall, the most commonly reported quality problems include issues with landscaping; kitchen cabinet quality and finish; and heating and air conditioning.

New-home builders have improved from 2009 in raising awareness of the “green” features of their homes. Approximately 61 percent of new-home owners in the Phoenix market in 2010 perceive that their home is environmentally friendly, compared with just 31 percent in 2009. In addition, the proportion of new-home owners in the Phoenix market who indicate that their builder did not identify the home as green has declined to 51 percent in 2010 from 63 percent in 2009.

“In this hypercompetitive market, green features have become a crucial selling point, since new-home buyers are seeking to save on energy costs, as well as to increase the value of their home,” Haines says.

To be included in the studies, Phoenix-area builders must have closed 150 or more homes in the market in 2009. The new homes are located in Maricopa and Pinal counties.

The studies are based on responses from more than 16,400 buyers of newly built single-family homes that provided feedback after living in their home from 4 to 18 months, on average. There were 1,641 respondents in the Phoenix market.

For rankings for all 17 U.S. markets, visit www.jdpower.com/homes.

E012850

Greater Phoenix Economic Forecast 2011: “Painfully Slow”

The economy may be better in 2011 than it was in 2010, but the road to full recovery will remain long and full of potholes. But hey, it could be worse. It could be 2009.

That’s according to economist Elliott D. Pollack, CEO of Elliot D. Pollack & Company. Pollack was speaking at the Greater Phoenix Chamber of Commerce’s Economic Outlook 2011 breakfast today at the Arizona Biltmore Resort & Spa.

Pollack said population growth in the Valley should settle at 1 percent this year and rise to 2 percent in 2011. Net job growth will contract by 1 percent in 2010 and climb by 2 percent in 2011. Retail sales will increase 1 percent this year and rise by 8 percent next year. Building permits will increase by 20 percent in 2010 before jumping 50 percent in 2011.

In summarizing his 2011 forecast for the Valley, Pollack read a laundry list of good news and bad news:

  • The housing market is at or past bottom, but there are many negatives still trumping a full recovery, most notably slower migration flows.
  • The commercial real estate market is at or past bottom, but recovery will be slow and “take a long time.”
  • Sales tax revenues are no longer falling, but they aren’t growing quickly enough to fix the state’s battered budget.
  • Retail sales have past bottom and there is pent-up demand among consumers, however, those same consumers are still so worried about personal debt that they will continue to curb spending, thus thwarting a big recovery.

While Pollack said the Valley’s economic recovery will be “painfully slow,” he points out that a recovery is indeed underway. For example, the state’s standing in employment growth compared to the rest of the nation is gradually improving — but only after a precipitous decline. In 2006, Arizona ranked second in the nation in job growth; that dropped to 22nd in 2007; 47th in 2008; and 49th in 2009. Up to July of this year, the state had moved up to 42nd in job growth.

Another indication that the Valley’s economy is showing improvement is in the number of economic sectors that have shown net job gains. Of the state’s 12 major economic sectors, five have shown net job gains so far this year (education and health services; trade; leisure and hospitality; professional and business services; other services). That compares to the same time last year, when no economic sectors reported net job gains.

But, Pollack pointed out again, the Valley and state can’t expect the robust and recoveries that have accompanied past recessions.

He says the Valley’s housing market continues to be weighed down by:

  • Weak job growth
  • Tough underwriting standards
  • Negative home equity
  • Loan modification failures
  • High foreclosures
  • Option ARMs (adjustable rate mortgages) peaking in 2011

In terms of equity, 51 percent of houses in the state have negative equity. The national average is 23 percent. Such negative equity severely curtails people’s ability to buy and sell homes. In addition, supply still outstrips demand in the single-family home market, with an excess inventory of houses somewhere between 40,000 to 50,000 units, Pollack said. A balance between supply and demand will not be fully achieved until about 2014, he added.

The picture is bleaker for the commercial real estate market, with delinquencies on loans still very high. In the office market, Pollack cited forecasts from CB Richard Ellis that said vacancy rates would peak at 25.6 percent in 2010 before dropping to 23.9 percent in 2011. As Pollack pointed out, there currently is no multi-tenant office space under construction in the Valley. In fact, he expects “no significant office building in Greater Phoenix for the next five years.”

Industrial space vacancy rates are faring only slightly better, with CB Richard Ellis predicting year-end vacancy rates of 16.4 percent for 2010 before falling to 15.2 percent in 2011. As for the retail market, the vacancy rate will rise to 12.3 percent in 2010 and hit 12.9 percent in 2011.

For office, industrial and retail commercial real estate, Pollack said he did not expect vacancy rates to reach normal levels until 2014-2015.

Still, Pollack maintained that the economic outlook for the Valley “remains favorable,” thanks to the recovering national economy, increased affordable housing in the Valley, a rise in single-family home building permits, unemployment bottoming out, consumer spending improving and continued problems in California.

The State’s Economic Forecast For The Rest Of The Year - AZ Business Magazine Jul/Aug 2010

The State’s Economic Forecast For The Rest Of The Year Calls For An Agonizingly Slow Recovery

Ready to heave a sigh of relief over Arizona’s economy? Go ahead — but don’t get carried away. Some observers expect the second half of this year will bring positive signs that the economy is recovering, turning the dial toward even stronger growth in 2011 and 2012. Others aren’t so sure the state’s recession is in the rear-view mirror yet, and that a quick rebound is in the cards. Two of Arizona’s leading economists, Marshall Vest and Lee McPheters, disagree on how this year will shake out and how quickly a full recovery will be reached.

Half full

Vest, an economist at the University of Arizona’s Eller College of Management, believes Arizona’s economy hit bottom at the end of 2009. He forecasts retail sales will increase 5 percent this year and 10 percent in 2011. Home builders are buying back land they sold a few years ago and preparing for new construction. The housing market is improving “fairly rapidly,” with sales of existing homes up and housing prices stabilizing.

“Housing prices will continue to move up because they are well-below trend,” Vest says. “New-home permits are off the bottom, but I don’t see a whole lot of upward potential until we have absorbed all the vacant houses.”

He estimates inventory at 120,000 homes statewide.

As for that other troublesome spot in the economy, jobs, unemployment dropped to 9.5 percent in April, and may already have peaked.

“I think we’ll see slow improvement in the number of unemployed,” Vest says. “But it probably will be two or three years before we get the (unemployment) rate below 6 percent.”

He expects the hospitality industry, wholesale trade, and the professional and business services sector to show employment gains the second half of this year. New jobs will attract more people to Arizona and Vest predicts the state’s population will grow by 2.5 percent in 2012.

“I don’t expect to see the 4 and 4.5 percent growth from the last expansion because the population base is so large now,” Vest says. “But a 2.5 percent increase is a lot of people.”

Although he says it will take years to repair the damage, Vest sees better days ahead, with the economy in full recovery by 2013.

“This year simply sets the stage for much stronger and broad-based growth in 2011,” he notes. “We should see some significant growth in most sectors of the economy in 2011 and 2012. The areas growing fastest likely will be professional and business services, trade, hospitality, health care and residential construction.”

However, commercial real estate and the public sector will continue to be a drag on the economy, according to Vest.

“Tax revenues lag at least a year behind an economy that is recovering,” he says. “It will be at least a year, maybe two or three, before state and local government regains its footing.”

Half empty

McPheters, research professor of economics at the W.P. Carey School of Business at Arizona State University, thinks Arizona’s recession is still in play as measured by employment. Reaching 2.7 million jobs, the peak of employment in 2007, indicates a full recovery, McPheters says. More jobs may be lost this year — perhaps 24,000 — and 2010 could close out with 2.4 million people employed.

“So 2010 is another recession year,” he notes.

McPheters sees recovery in three to four years. Full recovery could come in 2013 if Arizona averages 3.7 percent job growth between now and then, McPheters says. Three percent job growth means recovery in 2014.

Arizona’s economy likely will creak along at its trough through the second half of the year but “2011 should be a year when home prices, population and jobs show modest improvement,” McPheters says.

He forecasts a gain of 48,000 jobs next year, a 2 percent increase over 2010. Population should grow 1.8 percent, a nudge of 0.3 percent. Homebuilders will take out 17,800 single-family housing permits this year and 28,480 next year, but “you would expect Arizona to generate 40,000 to 50,000 permits in a ‘normal year,’ ” McPheters says. “The housing recovery really hasn’t unfolded the way I thought it would.”

He won’t forecast retail sales until he has more data in hand.

A labor shortage?

Dennis Hoffman, professor of economics at the W.P. Carey School of Business, sees more questions than answers in Arizona’s immediate future.

“If you look at any kind of model about Arizona, you see significant growth coming in 2011 and 2012,” Hoffman says. “But that is nothing more than a reflection of history. The question is, are the dynamics that drove (economic) bounces in the past in place this time? This one may be different.”

Arizona’s rapid-paced recoveries from prior recessions “were fueled by the immediate availability of an abundant supply of undocumented cheap labor,” Hoffman says. “With Arizona’s attitude toward undocumented laborers, it’s pretty clear that abundant undocumented workers may be a headwind for us.”

With much of their assets tied up in real estate, Arizonans suffered “wealth erosion of massive proportions” as home prices slid 40 percent to 60 percent, Hoffman adds. Personal spending cratered and tax revenues plunged. Hoffman says the country’s household wealth fell 3 percent from December 1928 to December 1929 during the Great Depression. National wealth deteriorated 17 percent from December 2007 to December 2008 during the current recession, and Arizona was at least twice that bad, he notes.

“If we could regain consumer confidence and begin consuming close to historical norms, you’re talking between $14 billion and $16 billion in taxable spending,” Hoffman says. “That would do a lot to cure the ills of our very wounded economy.”

Arizona must become a magnet for new residents again, according to Hoffman, because in-migration fuels tax receipts as new arrivals buy homes, cars, furniture and other goods and services.

Residents needed

Indeed, economist Elliott Pollack, CEO of Elliott D. Pollack & Company, says Arizona will recover only if more people relocate to the state.

“We won’t need another square foot of housing, we won’t need another square foot of office space if people don’t move here,” Pollack says. “I expected population inflows to slow, but I never dreamed it would come to a screeching halt.”

Arizona’s total population growth (in-migration, plus births, minus deaths) was 3.1 percent in 2007 and 0.8 percent in 2009, Pollack says, noting that population will pick up slowly over the next four or five years.

He adds that Arizona’s recovery will be gradual and painful because the national recovery will be sluggish.

“Consumers are not nearly as able to spend as they have coming out of past recessions because they have to pay down debt and increase savings,” Pollack says. “That is not something they had to do in past recoveries.”

Becoming business friendly

Don Cardon, director of the Arizona Department of Commerce, sees “significant things happening in invisible areas.” He is bullish on the re-emergence of investment capital in Arizona this year.

“I am sincerely positive about what’s anticipated for the third and fourth quarters,” Cardon says. “I think we will see a re-engagement of capital streams, a softening of the ability of large investors to be interested in Arizona industry.”

Large investors will “beta test” the state and then secondary investors will decide they “have been out of the water way too long,” Cardon says. He sees Arizona businesses gaining traction over the next year. He also believes new capital will flow to energy-related industries, particularly renewable energy, the technology sector, small business and entrepreneurial ventures.

Last year, Gov. Jan Brewer appointed a commerce advisory council to identify an economic development model for the state and, following the group’s recommendations, has proposed scrapping the Commerce Department and replacing it with a so-called public-private commerce authority. Cardon says the authority would give Arizona a vital ingredient for improving the economy — focus.

“(The authority) has received unparalleled favor across party lines and in all sectors of business because it represents a sense of focus,” Cardon says. “We’re saying that at the state level, we haven’t been focused and we lost our connection with legislative support and confidence.”

Once necessary laws are passed to establish the authority, it “will create a tool for the private sector to say, ‘I understand this. We can count on them.’ We will go from an intangible entity to something that is specific and highly energized,” Cardon says.

The authority will emphasize energy and business attraction, retention and expansion, he says.

A boost to Arizona’s competitive position is critical to an economic recovery, and a statewide economic development program backed by a supportive tax policy is overdue, says Barry Broome, president and CEO of the Greater Phoenix Economic Council. In the meantime, he believes Arizona’s economy will bounce back “quicker than people realize, that it will be strong and that it will result in a faster rate of job recovery than economists are projecting for Phoenix and Arizona.”

Over the next year and a half, Broome says, Arizona will develop a full-fledged, renewable-energy cluster and transform itself into a solar energy hub; health care will experience a strong expansion with emphasis on information technology and telemedicine; and the aerospace market will hold its own. In addition, Broome expects an uptick in regional headquarter activity.

www.azcommerce.com | www.ebr.eller.arizona.edu |www.elliottpollack.com | www.gpec.org | www.wpcarey.asu.edu

Arizona Business Magazine Jul/Aug 2010

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