Yesterday the Phoenix Business Journal reported on two studies finding that the Phoenix market is up 7% from last year – and simultaneously heading down 11 percent this year.

The “up 7 percent” article compares March 2011 to March 2012.  Checked against our own data, the 7 percent is accurate for Phoenix’s luxury real estate neighborhoods like Paradise Valley, Scottsdale, and Arcadia.  Good news!

However, what mystified me was the second study claiming that we would be facing an 11 percent decrease in prices this year after such a strong first quarter — showing no signs of letting up.  And to this point, the Business Journal published a follow-up story  the following day with Fiserv’s Case-Shiller’s top economist meekly defending their findings.  He offers simply that their projections may be wrong, and says they were only looking at data through December 2011.  Nevermind that it is already MAY – five months later,  and anyone who spends even 10 minutes with a local real estate agent would know – the current Phoenix market looks nothing like one set to fall 11 percent.  In fact, average price across metro Phoenix have climbed 24 percent since the start of the year, and 15 percent in the Paradise Valley, Scottsdale and other luxury markets.

I think I speak for most local real estate agents and investors when I say I’ve lost nearly all faith in anyone from outside Arizona with projections on our market.  So far, I haven’t seen a single one get it right.  For more statistical insight and analysis, sign up for our market reports here – created using research from The Cromford Report exclusively for Walt Danley Realty and our clients.

http://waltdanley.com/sell-your-home/market-data/

For the curious (and for fun), I plotted this map highlighting a 300 mile radius of metro Phoenix.  I suspect we will continue seeing Los Angeles and San Diego buyers picking up luxurious homes at an incredible value – especially compared to California’s prices.

]]> http://waltdanley.com/blog/vacation-homes-in-arizona/feed/ 0 http://waltdanley.com/blog/the-foreclosure-wave-that-wont-be/ http://waltdanley.com/blog/the-foreclosure-wave-that-wont-be/#comments Thu, 05 Apr 2012 18:51:52 +0000 WaltDanley http://waltdanley.com/?p=2159

Yesterday Reuters published an article about Americans bracing for the next wave of foreclosures, again reminding us that we’re all doomed.

Except… we’re not. I contacted Mike Orr with The Cromford Report who pointed out that Phoenix foreclosures peaked in 2009 and have been trending downward ever since. His research suggests the “wave of foreclosures” in metro Phoenix is actually 90 percent over.

And across the country, delinquency rates are down and continuing to go down, according to information provided by LPS Applied Analytics. Managing nearly 40 million loans across the U.S., their aggregate data is especially helpful in recognizing national mortgage trends.

The Reuters article even mentions LPS figures (suggesting they saw the same data I did), and they then use this data to point out that foreclosure starts “…jumped 28 percent in January.” (EVERYONE PANIC!!!)  However, they neglect to point out that the rate was unusually low in November and December, and had dropped again by February.  Perhaps, in January, banks were simply playing catch-up from last year’s robo-signing fiasco and relaxed foreclosure guidelines traditionally applied over the holiday season.

Reuters goes on to suggest that this coming “wave” is no longer due to sub-prime shenanigans, but due to broad economic factors like unemployment.  However, the unemployment rate, like the foreclosure rate, is also going down.  According to the Bureau of Labor Statistics, U.S. unemployment is currently 8.3 percent from a previous high of 10 percent, in October 2009.

In Arizona, unemployment peaked at nearly 11 percent towards the end of 2009 and into 2010.  This makes perfect sense – remember that’s right around the time foreclosures peaked, too.  Coincidence?  The good news is that Arizona’s unemployment rate is currently 8.7 percent and improving.  Presuming unemployment rates continue to fall, so should mortgage delinquencies.

If you’d like to take a look at delinquency and foreclosure data data, visit CromfordReport.com for Arizona specific info. LPS’s latest report is here.

Please post your thoughts and comments below.

The Mortgage Forgiveness Debt Relief Act of 2007 was established in an attempt to allow short sellers – presumably in a dire financial situation – to avoid a surprise income tax bill the following year.  Essentially, it exempts sellers from paying income tax on the difference in what is owed versus the short sale price of the home.  The link above will take you to the IRS page with specifics, and absolutely consult your accountant (and probably your attorney) to see if and how it can affect you.

As an example, consider a homeowner who owes $3 million on their home. It sells for $2.5 million. The homeowner realizes “income” of $500,000 – because they were able to satisfy a $3 million debt with only $2.5 million. This Act exempts these sellers from having to pay income tax on the $500,000.

Luxury home sellers face one of the more notable exceptions to this rule.  There is a limit to Uncle Sam’s debt forgiveness, but (of course), this limit is also conditional:

“This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.”

In the markets we serve like Paradise Valley, Scottsdale, Arcadia and the Biltmore, the average number of Days on Market for homes closing this month is approximately 130 days.  In addition, short sales typically take longer, and the traditionally slow summer is just around the corner.  While the average debt to selling price difference is rarely hitting the $2m limit, time is likely to become an issue for short sellers unless they act quickly.

Of course, the Act may also be renewed – it would only take an act of Congress.

Check out the new State of Arizona Official Visitor’s Guide.  We just received a digital copy and it is too good not to share. Even longtime residents are sure to find something new and exciting to explore.  You can download your own copy by clicking on the photo.  Happy trails!

Viewing on a smartphone or tablet?  Click here for a version optimized to display on your device.

Scottsdale Airport at Dawn - Courtesy Scottsdale Airport

One of the nation’s

busiest single runway airports, the Scottsdale Airport has long been a Northeast Valley landmark. Within minutes of some of metro Phoenix’s most prominent businesses, nearby resorts, restaurants and recreation amenities, there’s no reason that the next time you fly, it can’t be for
both business and pleasure.

Scottsdale Airport - Courtesy Scottsdale Historical Society

But it wasn’t always such an idyllic place. Rapidly constructed as an Army Air Corps training facility within months of the attack on Pearl Harbor, the school trained over 5,500 pilots before being shut down shortly before the Allied victory in Europe in 1945. By the time their graduates had finished winning the war, they had flown 26.5 million miles – more than 1,000 times around the Earth at the Equator. In today’s miles, that works out to 265 Chairman’s Club memberships with Phoenix-based U.S. Airways.

Planning a Flight - Courtesy the Scottsdale Historical Society

Since World War II, this dusty patch of undeveloped desert has transformed into one of the region’s vital economic rengines. Last year, the overwhelming majority of their approximately 130,000 “operations” (control tower-speak for takeoff or landing) were privately owned aircraft. Less than one percent were related to military operations. And while flight schools still operate with great appeal to enthusiasts and weekend warriors, dogfighting is unfortunately no longer a part of the curriculum.

If you’d rather leave your Piliot Wings at home, you can easily charter a private flight without the overhead of owning your own plane. While commercial airline travel is increasingly fraught with complications, fees, and security hassle, the sheer simplicity of flying private can be well worth the money spent. A weekend getaway to popular destinations like San Diego, Los Angeles or Las Vegas will start around $10,000 in a jet large enough for seven. Chicago and New York start closer to $40,000. Seasonal residents can enjoy a one way trip into town for considerably less. While flying first class on a big commercial airliner is certainly less costly, the overall experience is anything but first class when compared to flying privately. For the executive on a tight schedule, jets are available at your schedule and are able to land at thousands of smaller airports, potentially saving time by putting you closer to your final destination. No waiting at the airport to board or deplane, no intrusive security checks and no crying children (unless they’re yours!). Your comfort and safety are the primary goals of the flight crew. You are free to be as productive or as relaxed as you like, without all the distractions and inconveniences caused by government regulation and other passengers.

As expected, the economic downturn has clearly had an impact on Scottsdale’s private air traffic. Compared to a recent high of 212,474 in 2005, the number of operations have dropped nearly 40% according to the Federal Aviation Administration. However, that decline hasn’t stopped it from being a key revenue sector for Scottsdale, with estimates placing the economic boost of the airport and surrounding airpark at over $2.5 billion annually.

In 1936, with the country mired in the depths of the Great Depression, an ambitious young hotel manager persuaded a group of investors to fund construction of a resort in the Sonoran Desert.

Arizona had been a state for less than 30 years when hotel manager Jack Stewart proposed the idea of a resort destination in the desert.  His investor?  An Ohio businessman with a name familiar to modern Phoenicians, John C. Lincoln.

Stewart and Lincoln’s partnership created a legacy.  The Inn was originally constructed with 75 rooms and for a cost of about $1.2 million in today’s dollars.  Removed from the hustle of city life, the Camelback Inn’s namesake view and relaxing atmosphere quickly gained a following, particularly among wealthy vacationers from Eastern states.  It was hardly a weekend getaway, however.  Guests endured a lengthy journey by train to Phoenix, followed by a rough and dusty 12-mile trip through open desert to reach the resort.

After arrival, the rugged beauty, mild winters and wide open spaces were a kind reward for a travelers travails, much as they are today.  Guests, often city dwellers, could enjoy rustic activities like horseback riding, exploring the surrounding desert and special events put on by the hotel.  Stewart’s wife, Mabel Louise Shoemaker, was known for hosting elaborate costume parties and her ability to make guests feel at home – as if a part of one big Camelback Inn family.

Mabel also developed Hopalong College, one of the hospitality industry’s first programs for children.  Named for the legendary silver-screen cowboy Hopalong Cassidy, those who earned their diploma had “demonstrated those qualities of courage and resourcefulness which are a tradition of Western ranch life.”

In the years that followed, the Inn’s reputation grew along with its size.  Visiting celebrities like Clark Gable, Jimmy Stewart and Bette Davis added to its allure.  Then came the only guest who’s name is still on the welcome sign – hotelier J.W. Marriott.  His company made it their first of many resorts after purchasing the Inn in 1967.  Two years later, his investment lead to the Inn being awarded its first Five-Star rating from the respected Mobil Travel Guide.  Since then, countless awards and commendations have been granted including the coveted AAA Five Diamond Award.

Continuing his father’s development of the Inn has become the charge of J.W. Marriott, Jr.  In 1989, the resort unveiled The Spa at Camelback Inn and by 2000 it had been ranked as one of the finest spas in the world.  And guests today increasingly prefer their Sonoran adventures to beone of the two  18-hole golf courses instead of a horseback ride down a dusty arroyo.

(Though the concierge can arrange just about anything.  Hi ho Silver!)  Other recent additions include pool restructuring with fountains and fire features as well as two new restaurants.

After all these upgrades and thousands of visitors, the Camelback Inn is still a place, “Where Time Stands Still.”  The words remain emblazoned above the main entry way, reminding guests of their connection to the original 75-room resort, secluded on a dusty patch of desert where even seasoned travelers are known to declare, “In all the world, only one…”

His Stadium Course at the TPC embodies just such a philosophy as it makes the Phoenix Open one of the most exciting tournaments on the PGA Tour. As the TPC gears up for the 76th Open, held this January 30th through February 5th, Tom took a break from designing courses in Asia and Argentina to share some stories about the original design of the Course, why he loves the Phoenix Open and his hopes for its future.

For a little perspective, the Phoenix Open’s first rounds were played in the early 1930s.  After alternating between the Phoenix Country Club and the Arizona Country Club, the PGA obtained the land where the Course currently exists, and requested a course be designed especially for this popular event.

Tom, himself a pro golfer with 16 PGA Tour titles to his name, was tapped to lead the design of the new course in the mid 1980s. The TPC Scottsdale debuted with the 1987 Phoenix Open.
“The easiest thing to do is to make it the hardest course in the world,” Tom said. “The challenge is to design a course where the average player has a chance, while still challenging the best in the world.”
It’s that challenge that regularly brings out over half a million fans, making it the largest spectator golf event in the world. Some of the game’s most memorable moments happened here, from Andrew Magee’s magical ace on a par-4 in 2001 and Tiger’s recruitment of a few fans in 1999 to move a “loose impediment” (see: boulder).

Fortunately, engineering an attractive, lush course in the midst of an arid desert didn’t prove to be the hydrological marvel one might expect. In fact, as some regulars will likely know, the problem here (and for other nearby courses) is actually too much water – the entire region is in the heart of a giant floodplain. Those elevated gallery views the fans love? Purely flood control. The miles-long berm to the south of the course performs the exact same function on a grand scale – keeping the Airpark and other nearby areas from flooding.

Having resolved the City of Scottsdale’s water management concerns, Tom explained that he was able to concentrate on designing a course suitable for the Open’s rapidly growing fan base that would incorporate his risk-and-reward philosophy. The finishing holes deliver loads of both, Tom says, and many of the tournaments have been decided in front of thousands of fans packing the stadium seats around hole 16, the site of Tiger’s famous hole-in-one, which energized a rowdy (by European soccer standards) audience that has become an unofficial trademark of the Open.

While some players may claim the fans gets in the way of “proper” golf, Tom embraces fan enthusiasm. “Where else are you going to play in front of that many people,” he asks. Tom explains that the real issues with the course, and the Open, are related to its design.

Technological improvements in golf ball and club design, as well as increased athleticism amongst the players, have dramatically outpaced the difficulty of the course, changing it from a challenging 71-par design in 1987 to a relatively short design by current standards.

“(A pro golfer) doesn’t want to have to shoot 30-under par to win a championship,” Tom says. Looking back over the last decade, all but two winners were 20-under par or better. In 2001, Mark Calcavecchia won with a 256 – 28 under par. Sure signs that the course is giving up its rewards a little too easily.

Making the course more exciting “wouldn’t take much,” Tom said. “A little rebunkering and length would make it that much better. But I wouldn’t change the last four at all, except for 18, where I’d move the tee up on the back of the dike for just a little more length. That would make for a perfect finish.”

None of these changes, he said, would diminish the excitement for the gallery at all. Talking with Tom, you feel his enthusiasm for the fans similar to their enthusiasm for the game and his course. “Tourism is #1 in Arizona. People come here because they want to play where the pros play. Because of the weather. Because of the restaurants. Because of the cities and what they have offered for the past 25 years.”

“It’s my selfish opinion that the Phoenix Open should be more significant than it is. You’ve got 500,000 people on the ground to watch golf. It should be the Western swing of the World Golf Championships before heading over to Florida. The audience deserves it.”

Setting aside the general (and often incorrect) assumption that wines improve with age, industry experts are appreciating the youthful beauty and flavor of our products.  Respected wine reviewers with The Wall Street Journal, The Wine Advocate, Bon Appetit and Food & Wine have all toasted praises to Arizona’s wines.  The discriminating palates at Wine Spectator have also enjoyed a hearty taste, ranking more than 20 wines from eight Arizona wineries at an ‘88’ or better.  These ratings are a coveted point of pride amongst winemakers, but a good wine is all in the tongue of the taster.  Perhaps the most enjoyable way to find a favorite Arizona wine is to make a leisurely weekend getaway to one of Arizona’s wine region.

Though individual tasting rooms tend to be located in tourist areas with higher amounts of traffic, much of the wine is produced in vineyards found down State Routes less traveled.  Arizona’s prime grape growing occurs in the Verde River Valley and in Southeastern Arizona, where the elevations of the Chiricahua Mountains create an ideal growing environment a mile above the hot sands at sea level.

Located in Southeastern Arizona, Kief-Joshua Vineyards was established just outside Elgin in 2003. Already with 16 acres “under vine”, 28-year-old winemaker and Australian trained viticulturalist Kief Manning says their 5,000-foot elevation places them among the highest vineyards in the United States.

“The altitude itself probably doesn’t affect the grapes, but the elevation’s effect on the climate allows for a longer hang-time and added complexity.  The grapes don’t ripen all night,” says Mr. Manning.  “Plenty of sun and cool nights helps us retain acidity and achieve a good balance.”

Kief-Joshua Vineyards produces around 2,000 cases per year, and is one of the rare Arizona winemakers producing wines from single varietals such as Mourèvdre and Tempranillo, Mediterranean grapes which adapt well to the hot and dry summer climate.

About 60 miles from Elgin, outside Wilcox, Fountain Hills residents and longtime wine collectors Peggy Fiandaca and Curt Dunham own and operate Lawrence Dunham Vineyards.  After falling in love with the area and its wines during numerous tasting trips, they began looking for a small plot of land to try their hand at making their own wine and further explore their passion for collecting.  Before long, five acres became 40 and with eight acres currently under production, Peggy says their Rhone varietals are doing extremely well.  Familiar favorites include Syrah and Petite Sirah, Grenache and Viognier grapes, which are ideal for the Chiricahua climate and soil, Peggy says.  “They’re selling well and getting great reviews,” she adds.

Although Southern Arizona’s climate at 5,000 feet is strikingly similar to Napa Valley – both get about 25” of rainfall annually and blend warm, dry summers with cool, wet winters – producing Estate wines has proven to be more of a challenge.  The “Estate” designation, essentially meaning a wine produced completely by a single winery, is rare amongst Arizona wines.  This is partly due to the occasionally tricky climate and partly due to the relatively young age of the vineyards and wineries.  However, considering the industry’s phenomenal growth, odds are good this seemingly elusive recognition will become a part of Arizona wine culture in the near future.

Every year, the Arizona Wine Growers Association hosts The Festival At The Farm giving winemakers a chance to share their wines with the public and each other.  This year, the event is on November 18th and 19th at The Farms at South Mountain.  James Beard House recognized Executive Chef Greg LaPrad is preparing gastronomical delights to complement this year’s wines.  Other events include meeting the men and women behind Arizona wines, live seminars and, of course, wine tastings.  www.azwinefestivalatthefarm.com