September 2014 - Phoenix Real Estate Newsletter

To our valued clients:

I hope you enjoy this monthly newsletter. Remember whether you are buying a new or resale home it is important to have a realtor to represent your interests. If you know of anyone who is thinking about buying or selling please let me know.  You can search the MLS from my website at

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Do you have a rental property and need a property manager?  Is your Homeowner's Association is looking for a new management company?  Please call or email Karen Van Vugt at 602-316-7028 or Karen manages many rental units and several Homeowner's Associations in the greater Phoenix area.


Pat Hune


1st Southwest Realty

Search the real MLS from my website!

Cell 480-703-1976

Fax 480-304-9099

Tempe, AZ

Equal Housing Opportunity

First Half Property Taxes are due!  If you own your property free and clear or your mortgage company does not pay your property taxes they will be due no later than November 3, 2014.  To view the tax bill got to and enter the parcel number.  Call 602-506-8511 if you have questions.   

Market Overview -  Rather than continue to say not much has changed in the greater Phoenix real estate market I looked for things that have changed.  Rents are going up and houses are renting faster.  In August 2014 the median lease was $1,175 and average was $1,306 with 31 average days on market. A year ago the August 2013 median lease was $1,100 and average was $1,260 with 38 average days on market.  Some property managers have report bidding wars on single family homes.  This indicates tenants are shifting away from apartment style housing into single family house.  Experts say the most an average tenant will pay for a typical single family home is $1395 per month.  As rents trend higher tenants with good credit will look at buying homes.

Blame the children - Mike Orr,  ASU WP Carey School of Business, says the millennial's are not making home ownership a priority.  Most of them are still living at home or with roommates.  The main reason is the high college debt. Another is they are having children later.  Eventually the millenials will enter the housing market as children will make them want to change their living conditions.  Phoenix was listed as one of the faster growing cities in the country increasing 130 from 1970 to 2010 according to a Washington Post report.  The youth demographic aged 25 to 34 makes up the majority of the Arizona population and has also seen 130% increase.

USDA Changes Postponed - USDA has delayed changing the areas eligible for Section 502 loans to 12/11/2014.   Queen Creek, Anthem, Florence, Coolidge and parts of Buckeye will remain eligible until 9/30/2015. This is great news for buyers interested in these areas.  USDA loans are geared towards buyers with low incomes and good credit who want to buy a principal residence in rural areas.  These loans are attractive because buyers can finance 100% of the purchase price, the mortgage insurance premiums are lower than FHA and the interest rates rates are often lower than FHA, VA and conventional loans.  Buyers who want to live in these areas need  write contracts soon before the USDA loans are no longer available.


1)  STAT Newsletter, PPI and Rent Check Link 

2)  Park Lucero Development to bring more than 1,000 jobs to Gilbert

3)  Investor Purchases Gilbert Site Targeted for Mixed-use Business Park

4)  Real Estate Briefs

a) USA Place construction to start early in 2015

b) Lennar Multifamily Buys Crux 5.46 Acres of Land at Central & McDowell 

5)  Tales from the Real Estate Trenches


1) STAT Newsletter Link - STAT is produced monthly  by the Arizona Regional Multiple Listing Service - the database realtors use to list homes for sale and that have sold.   ARMLS® COPYRIGHT 2014

September STAT

STAT Newsletter Highlights

Commentary by Tom Ruff, Information Market

We’ve never seen a low demand / slow new inventory equation like this before. How slow is sales demand? Through the first seven months of 2014, MLS sales volume has been running 17% lower compared to the same months in 2013. Total sales in August of 6,428 were only 8.9% lower than sales in August 2013 at 7,055. Yes, sales volume was higher last year but some interesting dynamics are unfolding inside the numbers. The number of normal sales in August 2014 was greater than the number of normal sales in August 2013, although total sales were higher in August 2013. The balance between distressed sales and normal sales has improved.

On the new inventory side of the equation, the number of new listings in August was extremely low with only 8,175 new listings added. First in June, then July, and now again in August we’ve seen the lowest total of new listings for each of these months respectively in the last 14 years. So, why is new inventory so low? The answer can be found when we analyze current homeowners and what impact they have on new inventory.

Homeowners who purchased a home in February 2005 to July 2008 or refinanced in this period will most likely have to sell their home for less than they paid, which contributes to a lack of new listings. Without equity, the pools of move-up buyers are eliminated, restricting new listings and demand. Short sales are part of this group and short sales are way down, this restricts new listings. Homeowner’s without equity have limited options, unless they return to the market as a bank sale after having been foreclosed on. Options: stay put, short sale, or foreclosure.

Homeowners who purchased a home before May 2004 and did not refinance between February 2005 and July 2009, should have equity. The possible equity can be seen when we compare the median sales prices now and back then. The current median sales price is $195,000, In January 2009 our median sales price was $130,000 and in February 2013 the median was $160,000. This group provides positive new inventory potential, mostly found in those trading up to another property.

Investors who purchased homes between January 2009 and February 2013 to create rental income are happy collecting rents and are not interested in selling, this restricts supply.

Switching gears from the demand / new inventory problem, there is another issue perplexing the media and consumers alike. One of the worst things to come out the housing boom and subsequent crash and recovery is the perception that home values change wildly and frequently. This madness is further fueled by readily available computer models that remove professional intervention and hand out home values like clowns in a parade dispersing candy. The companies providing these value estimates encourage consumers to check on home values frequently, implying the value of their home is in constant flux, even going as far as giving you a precise number as to how much your home value has changed in the last 30 days. In doing research for this commentary I checked on my personal residence. One nationally recognized leader in home estimates reported my home falling nearly 33% in a 60-day period. No wonder there is confusion amongst the media and general public. Simply put, pricing metrics can be confusing, particularly when left in the hands of a layperson, or worse, someone with an agenda. Don’t get me wrong, I’m all for transparency and sharing data, but let’s couple that with quality data and professional insight.

Historically, home prices move quite slowly where the common theory is that long-term appreciation should be pretty close to the general rate of inflation, which is currently running about 2%. The median sales price was $185,000 in July 2013 and September 2013, whereas the median price August 2014 was $195,000, a 5.4% increase. The average price in August 2013 was $235,800 and $249,000 in August 2014, a 5.6% increase. The median and average prices are a summation of all homes sold through ARMLS. If we shift the paradigm and view only Maricopa County public records data and compare the median sales price for normal sales only, and compare the median price for August 2013 to August 2014 the end result is 1.7% higher. No matter how many different ways I slice and dice the data, home prices over the last 13 months have been remarkably stable, and even though the number looks painstakingly precise, I guess I’ll just ignore the latest email telling me my home value just decreased $103,389.

Rent Check - Rent Check is an ARMLS's  publication tracking single family home rentals.  Click on the link for the statistics.

Rent Stats

Commercial Real Estate Trends

Current Phoenix market trends data indicates an increase of +7.3% in the median asking price per unit for Multifamily properties compared to the prior 3 months, with an increase of +13.3% compared to last year's prices. County-wide, asking prices for Multifamily properties are 7.3% higher at $53,538 per unit compared to the current median price of $53,273 per unit for Multifamily properties in Phoenix, AZ

Loopnet Commercial Trends

(The areas and property types  included in the MLS  statistics are:  The figures shown are for the entire Arizona Regional area as defined by ARMLS. All residential resale transactions recorded by ARMLS are  included. Geographically, this includes Maricopa county, the majority  of Pinal county and a small part of Yavapai county. In addition, "out  of area" listings recorded in ARMLS are included, although these constitute a very small percentage (typically less than 1%) of total  sales and have very little effect on the statistics.  All dwelling types are included. For-sale-by-owner, trustee auctions  and other non-MLS transactions are not included. Land, commercial units, and multiple dwelling units are also excluded.  In addition very few new new home builders list their new homes in the MLS so these numbers are tracked separately in the RL Brown Reports.)


2)  Park Lucero Development to bring more than 1,000 jobs to Gilbert

AZ Big Media, September 2014

Trammell Crow Company, in partnership with Artis REIT, broke ground on the first phase of the Park Lucero project in Gilbert, AZ.  The industrial park and buildings were designed by Butler Design Group and is being constructed by D.L. Withers Construction, both Phoenix-based companies. Phase I, at build-out, will feature three buildings totaling 210,000 square feet of warehouse/distribution space.

“We saw a need in this market. We brought our vision to the Town, and the Town said ‘absolutely, this is exactly what we need,’” stated Cathy Thuringer, Principal at Trammell Crow Company.  Earlier this year, Catherine Lorbeer, principal planner in Gilbert, noted that the Town did not have an abundance of inventory of flexible warehouse/distribution space. The Park Lucero project answers the market’s demand for this size and type of project and it is projected to generate more than 1,000 jobs.

“Gilbert is honored that Trammell Crow and Artis REIT have decided to invest in the Gilbert community,” said Gilbert Mayor John Lewis. “Their investment of state-of-the-art, LEED certified, Class A industrial space helps Gilbert achieve its goal of attracting, retaining and growing science and technology industries which are supported by our talented and highly-educated workforce.”  Phase I of Park Lucero is moving quickly on an aggressive schedule with anticipated completion in March 2015.


3)  Investor Purchases Gilbert Site Targeted for Mixed-use Business Park

The Brew, September 2014

Galahad LLC in Phoenix (Steven Johnson, principal) paid just under $13.746 million ($3.50 per foot) to acquire a prime site along the 202 Loop in Gilbert that could eventually be developed as a business park of up to 1 million sq. ft. The 90.16-acre parcel, which is now being farmed for alfalfa, is located at the southeast corner of the 202 Loop (Santan Freeway) and Lindsay Road. The seller was The Lamoreaux Family LLC and related trusts (Edwin Lamoreaux, Linda Lamoreaux, et al., principals). It may be several years before the land is developed, but the tract is expected to be in high demand with its visibility along the 202 Loop and its proximity just east of the Chandler Municipal Airport. That area in the Southeast Valley is becoming a Mecca for real estate development activity. 

Maricopa County records show Galahad LLC acquired the property with a private loan equal to the purchase price from Verde Investments Inc. in Phoenix (E.C. "Ernie" Garcia, principal). Galahad LLC, an affiliate of Verde Investments, intends to lease the land for farming purposes until it is ready for development. The Lamoreauxs, who are fourth generation farmers, hold the lease on the property. The land previously was under contract to be sold to Grace Holdings LLC, an entity formed by Bernadette Wolfswinkel of W Holdings LLC in Tempe. As it turned out, Wolfswinkel assigned her interest to Galahad LLC and is participating in profits from the future land sale. Karen Pratte of the Walt Danley Co. in Scottsdale assisted in bringing the parties together. 

New buildings have been popping up on both sides of the 202 Loop and that trend figures to continue. Across the freeway from the Galahad site at the northwest corner of the 202 Loop and Lindsay Road, Nationwide Realty Investors has started development of its 250-acre Rivulon mixed-use project. That property is targeted for 3 million sq. ft. of offices and 500,000 sq. ft. of retail space and hotels. Trammell Crow Co. is underway with a 618,000-square-foot industrial park on 48 acres located across the freeway from Rivulon along the south side of the 202 Loop and east of Gilbert Road. Just west of the Trammell Crow project is the 1.3 million-square-foot Crossroads Towne Center retail project. And on the north side of the Santan Freeway, both east and west of the Galahad property, there are two auto malls. Garcia, who heads DriveTime Automotive Group Inc. in Phoenix, may decide down the road to use a portion of the Gilbert land for his rapidly growing national used car business. That company now has a large sales operation in East Mesa, but it is no secret that Garcia has been considering other Valley sites to house a DriveTime location. Being wedged between the two auto malls along the 202 Loop may be a good fit for DriveTime.


4) Real Estate Briefs

a) USA Place construction to start early in 2015

Mark Sunnucks and Eric Jay Toll, Phoenix Business Journal, October 2014

The $450 million USA Place development in Tempe is poised to start construction early next year, according to its developer.  A representative of developer Susan Eastridge said financing is moving forward and construction on the 10.5-acre project is scheduled to start in early 2015.  Timetables and financing plans have changed for the project, which will move USA Basketball, the group that puts together teams for the Olympics and World Championships, from Colorado Springs to Tempe. USA Place is on Arizona State University land at Mill Avenue and University Drive and includes offices, event facilities and 330-room Omni Hotel.  Eastridge, development partners and USA Basketball originally talked about having construction start by the end of 2013. But financing plans changed and so have construction timetables.

Tempe Mayor Mark Mitchell believes financing for USA Place has been progressing and the development is on track. The city of Tempe and ASU are also providing some incentives to developers of the project.  Previous plans to move USA Basketball to Glendale faltered when the Main Street development in the West Valley went under.  Phoenix area sports and business mogul Jerry Colangelo is the USA Basketball’s chairman.

b) Lennar Multifamily Buys 5.46 Acres of Land at Central & McDowell 

Sarah Gortarez, Vizzda, October  2014

Lennar Multifamily has purchased 5.46 acres of vacant land (zoned Downtown Core) at the northwest corner of Central and McDowell avenues. The land parcel was sold for $12.75 million ($53.55 per square foot). There was no debt with the sale. An active entitlement case with the City of Phoenix calls for a 368 unit 4-story multifamily project. Preliminary site plans have been approved as of October 16th. Lennar is awaiting final site plan approval from the City of Phoenix.

BSR Projects, headquartered in Ramat Gan, Israel and a division of The BSR Group, previously acquired this land in October of 2006 for a price of $25,600,900 ($107.52 per square foot). BSR had planned to build approximately 1,200 luxury apartments and 50,000 square feet of office/retail in three high-rise towers of up to 375 ft. This project was to be built in four stages, with income from each completed stage of the development helping to fund the next stage of development. Nothing materialized from these previous plans.

The BSR Group accepted a joint venture for this project, transferring ownership of the property to the entity “A-I BSR”. BSR claims 50% of the ownership interest of this entity, sharing the other half with New York-based Africa Israel Investments Limited. The related sale to this entity was disclosed at $29.07 million ($122.10 per square foot). 


5)  Tales from the Real Estate Trenches

Pat Hune, Broker at 1st Southwest Realty

I don’t have much to report real estate related so will talk about the weather.  The incredible Phoenix weather has made the national news including one day when we received more than three inches!  This broke the 1895 record.   Of course this is the year I decided to convert my front lawn to desert landscape.  Now I spend more time spraying for weeds than I did mowing.  But ultimately was a good decision as the Phoenix area reservoirs were very low so is important to conserve water.