Wednesday, May 30, 2012

Silverleaf developer perseveres after recession of '08

Silverleaf
Charlie Leight/The Republic Silverleaf, a north Scottsdale development, is centered on the scenic 18-hole golf course in the McDowell Mountains.



Two coyotes are sunning themselves on the Silverleaf Club golf course on a recent morning as DMB President Charley Freericks looks on from inside the clubhouse.

Breakfast guests are admiring the animals, and Freericks jokes that it is not going to be appetizing if a jackrabbit makes a run for it across the emerald fairway.

As a Valley real-estate veteran of nearly 30 years, Freericks is well aware that only the strong survive in the wild and in development.

DMB Associates Inc., developer of Silverleaf, DC Ranch and One Scottsdale, has emerged from the steepest canyons of the real-estate crater with plenty of vacancies in its office and retail space. But new tenants are moving in, new homes are going up and more than 500 apartments are planned at One Scottsdale and east of the DC Ranch Crossing shopping center.

"The recession slowed things down but a lot of people kept chugging along," he said as he drove through Silverleaf, among the Valley's most exclusive addresses, at the foot of the McDowell Mountains, just east of Pima Road on Thompson Peak Parkway within DC Ranch.

It's not uncommon for valets at the Silverleaf clubhouse to find themselves at the wheel of a Bentley, Rolls-Royce, Porsche 911 or Mercedes SL63 AMG.

Many of DC Ranch's residential neighborhoods southeast of Pima Road and Thompson Peak Parkway were completed by the time the recession hit four years ago.

Meanwhile, DMB's Market Street commercial district has long searched for the right mix of tenants. The economic downturn of 2008 did not help. Restaurants and retailers fled, leaving the strong like Herb Box,Fleming's and Armitage to survive.

At the same time, DMB opened its Canyon Village, with 92,427 square feet of offices and retail space.

The timing was a perfect storm that made it a challenge to fill the space, said Freericks, who was promoted to DMB president in April.

Zog Media is Canyon Village's biggest tenant and DMB is working to bring medical tenants into the complex.

The Sterling Collection Development Group is moving into Canyon Village, said Nathan Day, company president.

Sterling revived a stalled villas project in November east of Canyon Village in Silverleaf. It sold five of its nine villas for an average price of $465 per square foot. The villas start at $1.29 million.

A second phase is planned with one- and two-story options.

Ciao Wine Bar and Bistro is set to open in September at Canyon Village.

DMB also faced stiff headwinds in opening DC Ranch Crossing in late 2008. The Scottsdale-based development company sold the shopping center last June for $16.5 million.

Now Archstone, an apartment developer, plans to build 224 units on 9.2 acres east of the shopping center, which is located at Pima Road and Legacy Boulevard.

Freericks said DMB is marketing a 2.3-acre site south of DC Ranch Crossing for a limited-service hotel.

One Scottsdale, 362 apartments

Another planned apartment project would bring new life to DMB's One Scottsdale project northeast of Scottsdale Road and Loop 101. Henkel North America opened its headquarters there in December 2008 but the remainder of the site has been vacant.

TDI Real Estate Holdings LLC of Irving, Texas, plans to build 362 apartments in its first phase on 10.62 acres south of Thompson Peak Parkway and 74th Street.

The land deal for the project is set to close at the end of June. TDI hopes to have its building permit by then and complete a rental office by the first quarter of 2013, Freericks said.

The 120-acre One Scottsdale includes excavation for a parking garage to support a planned retail development. But lenders pulled back on the project.

Freericks said he regrets that the garage was not finished but it could have been worse if DMB had gone ahead with retail development as the recession hit.

"It reminds me of the Garth Brooks song with the line 'thank god for unanswered prayers,' " he said.

DMB is patiently optimistic about the future of One Scottsdale, Freericks added.

New to Market Street

He also expressed optimism about the changes and new tenants at Market Street. That includes new signage along Pima Road that makes it easier for motorists to find the shopping center, which is tucked amid desert landscaping southeast of Pima and Thompson Peak Parkway.

An Italian restaurant, Mia Francesca, opened in February and Grimaldi's has expanded.

Plus, a former hotel food-and-beverage executive, Paul Keeler, said he plans to open the Market Street Kitchen by mid-August in the space formerly occupied by the Beauregard restaurant and Krispy Kreme doughnut shop.

On the downside, the Heirloom restaurant has closed and Eddie V's restaurant space remains vacant after it moved last year to the Scottsdale Quarter.

"Eddie V's is a big hole in the doughnut," Freericks said.

by Peter Corbett - May. 29, 2012 12:40 PM The Republic | azcentral.com




Silverleaf developer perseveres after recession of '08

Report: Phoenix-area home prices posting fastest rise in U.S.

Metro Phoenix home prices are rising faster than anywhere else in the country, according to the latest national data.

The Case-Shiller Home Price Index shows the average existing home price in the Phoenix metro area in March increased 2.2 percent over February of this year. That's the largest increase of any of the 20 major U.S. cities tracked.

Seattle's average home price climbed 1.7 percent during March, the second-biggest increase on the index.

For the year, metro Phoenix also had the highest price increase: 6.6 percent. Denver ranked second with a 2.6 percent uptick in its average house price.

Metro Phoenix's home prices started to climb in September and have steadily increased since then. Recent data showed the region's median resale-home price was a little more than $138,000, a 24 percent increase since the post-boom low in August.

The Case-Shiller report lags a few months because of the time it takes to compile national data and the seasonally adjusted average.

Nationally, Case-Shiller reports, March home prices posted their smallest decline since the crash that started in early 2008.

Still, home prices remain far below previous highs. National and Phoenix home values are around mid-2002 levels.

by Catherine Reagor - May. 29, 2012 07:19 PM The Republic | azcentral.com



Report: Phoenix-area home prices posting fastest rise in U.S.

Monday, May 28, 2012

Maricopa County approves housing project

The Maricopa County Board of Supervisors has decided to spend $3.8 million in federal funds to purchase and rehabilitate a Phoenix complex to house veterans and low-income and formerly homeless residents.

Catholic Charities Community Services, a non-profit, is in escrow for the Villa Tomas Apartments near 52nd Street and Thomas Road in Phoenix. After renovation, slated to begin this fall, there will be at least 46 studio, one-bedroom and two-bedroom units.

The complex is scheduled to open in summer 2013.

Maricopa County will use part of its Neighborhood Stabilization Program funds from the U.S. Department of Housing and Urban Development. The county uses the money to work with community partners to buy abandoned homes, fix them up and sell or rent them to low-income families.

The county is required to provide at least 25 percent of the available units for residents who do not exceed 50 percent of the area's median income.

But at this property, all of the residents will fit that criterion, meaning they need help finding permanent housing. The target population is veterans or formerly homeless families coming out of transitional housing.

The county Board of Supervisors unanimously voted last week to use neighborhood-stabilization funds for the project.

"It creates less burden on taxpayers. Otherwise, you recycle them through emergency services," said Ursula Strephans, acting assistant director of community development at the county Human Services Department.

Catholic Charities will own the property and provide services for residents.

Steve Capobres, vice president of Catholic Charities in Phoenix, said the goal is to create a community environment for the residents to help them get reintegrated into society.

Veterans are used to working and living with a group of soldiers and homeless families may have lived at transitional shelters for up to two years, interacting with volunteers, staff and other families, he said.

"They need that support system. A lot of times, these clients, the reason they have issues is they've lost that support system. They've lost that family," Capobres said. "So where we come in is, essentially, we create that family and create that community."

Services and programming will be voluntary for residents.

They will range from events like barbecues and farmers markets to counseling and classes on various topics, such as parenting.

by Michelle Ye Hee Lee - May. 27, 2012 09:11 PM The Republic | azcentral.com



Maricopa County approves housing project

New Elevation Chandler hearing pursued

The Elevation Chandler legal case isn't over after all.

The million-dollar bidder who lost the case says he's hiring new lawyers to ask the Arizona Supreme Court to reconsider its decision. He also owes the winner attorneys fees of nearly a quarter-million dollars.

After a three-year battle over who owns the 10.5-acre abandoned construction site near Loops 101 and 202, the Supreme Court ruled May 4 that the property belongs to investors in Point Center Financial, the California-based lender.

Foreclosure speculator Tom Peltier, a principal in BT Capital, lost the case after claiming he won the site when he bid $1,000,001 in a botched trustee's sale on June 15, 2009.

The court on May 16 granted BT Capital a deadline extension to May 24 to file a motion asking the court to reconsider its ownership decision.

BT Capital "will be substituting in new counsel," court papers said.

One of Peltier's current attorneys, Bob Lord, declined to comment.

Joseph Cotterman, an attorney for Point Center, doubts the justices will reconsider.

"The chances are very slim because I think the decision was right and well-reasoned. It's a solid decision. I just don't see any questions left that they might look at and see the other way," he said.

"More often than not, motions to reconsider are not granted because we have good judges and they take care to get it right the first time."

by Luci Scott - May. 27, 2012 07:40 PM The Republic | azcentral.com



New Elevation Chandler hearing pursued

Phoenix-area homeowners getting relief through federal plan

After more than $500 million in federal allotments to Arizona to try to slow foreclosures, the latest federal housing-assistance program seems to be the first one to provide widespread help.

A growing number of metro Phoenix homeowners who owe more than their homes are worth are lowering their interest rates and monthly payments with the federal government's second version of its Home Affordable Refinancing Plan.

Facts on programs

While the federal government has yet to release figures on the number of homeowners in the program, mortgage brokers, homeowners and housing counselors are both surprised and encouraged by its early success.

The program allows homeowners with loans held by the federal government's biggest mortgage entities to refinance to current interest rates without meeting the typical appraisal requirement. These borrowers often had been stymied in past attempts to refinance because their homes were no longer worth enough to cover the value of a new loan.

When the program was announced in October, Cathy Lucero of Glendale was ready to apply. She called a mortgage broker, and he told her to get her credit report and mortgage paperwork in order and call him back in February when more details of the plan were to be released.

"We are seriously underwater with our home," said Lucero, who works for Maricopa County. "But we have never missed a payment. It seems right to help the homeowners who are trying to do the right thing."

Her HARP refinance was approved earlier this month. The interest rate on Lucero's loan will drop to 4.5 percent from 6.5 percent, and she will save almost $350 a month on her payment -- about $4,200 a year she can instead put toward other bills.

The goal of the expanded refinancing plan is to help homeowners save money and fend off foreclosures by lowering payments.

A raft of programs with similar goals have found moderate success at best in Arizona since the housing crash: federal funds to speed the process of modifying loans, assist homeowners struggling to make their payments, and help cities and local groups deal with swaths of abandoned houses.

Many of those programs haven't been able to quickly spend the funds allotted to them, either because the federal government was slow to approve them, the qualifications were too stringent for homeowners, or because banks were reluctant to cooperate.

The latest refinance program, brokers and borrowers say, seems to be the best yet.

"We ran into a few problems when the new HARP was launched in March and were concerned the program was going to be another disappointment," said Jay Luber, president of Phoenix-based Galaxy Lending. "But now we are seeing homeowners approved every day."

Home-refinance program

The original HARP program, which began in summer 2009, allowed homeowners to refinance, but only if the new loan needed was no more than 125 percent of the home's value. This so-called loan-to-value ratio meant the program didn't help many in metro Phoenix, where a home bought during the boom might have a loan balance twice as big as the home's current value because home prices have plunged so far from the 2006 peak.

The new refinancing program has no loan-to-value limit.

Luber said he recently helped a homeowner whose loan-to-value ratio is 170 percent refinance under the federal plan.

To be eligible, homeowners must have mortgages backed by Fannie Mae or Freddie Mac. The two government agencies own more than half of the loans in Arizona.

Freddie Mac has been slow to implement HARP 2, say mortgage brokers. One Phoenix homeowner with a mortgage backed by Freddie was even told by her lender that she was ineligible because only Fannie was participating in the revamped refinancing plan.

But Freddie Mac is now approving HARP 2 loans in metro Phoenix.

Eligible homeowners can have missed only one payment or been late on one payment in the past year and must still bring in enough monthly income to afford their lower payment. Most borrowers are being required to show proof of income to qualify, a provision that wasn't in early drafts of the plan.

Also, early versions of HARP 2 called for using automated appraisals for all applications, but some metro Phoenix applicants are being required to pay for appraisals because the federal mortgage backers have asked for them.

"On a few HARP 2 applications, the lender has required the borrower to get an appraisal," said Mike Metz of Sun State Home Loans. "That typically costs the homeowner $400, but so far we have only seen appraisals required for homes in communities on the edge of the Valley like Queen Creek."

He said the expanded refinancing plan is helping most homeowners who apply.

"About 80 percent of our applications for homeowners trying to refinance with HARP 2 have been approved," Metz said.

Frustrations remain

As with all the government housing plans, the big lenders continue to frustrate some homeowners.

Rob Myers, a Phoenix public-relations executive, contacted a lender in February about HARP 2. He was told to gather all of his paperwork and call back in mid-March when the program was scheduled to launch.

Myers called back and was told he couldn't refinance because he had a second mortgage. So, "frustrated beyond belief," Myers contacted several other lenders who turned him down because they didn't want to work with the bank servicing his loan or were still using old HARP guideline.

"I had researched the program and believed we would qualify," Myers said. "We owe $274,000 on our house, and I have been told it's valued at $210,000. I have never missed a payment or made a late one in the 81/2 years we have been in the home."

On April 5, after many calls and efforts to refinance with another lender, Myers accepted an offer from Bank of America for a loan with a 5.1 percent interest rate. His current rate is 6 percent.

"It looks like we will be saving about $270 a month, he said. "That's not great, but at least it's something."

Not all lenders are offering the same deals. Some homeowners are working with mortgage brokers to shop around for lower interest rates. Under the federal program, borrowers who qualify can seek a new loan from any participating lender, not just the one that currently holds their loan.

Other programs

Since 2008, Arizona has been allotted more than half a billion dollars in federal funds to help homeowners and slow foreclosures.

But municipalities, the Arizona Housing Department and housing non-profits have found it difficult to actually spend the money because of tough federal guidelines; too-stringent qualifications for many homeowners; and the requirement in most of the plans that lenders cooperate. Less than half of the state's federal housing funds have been used to help homeowners, and deadlines are looming for some of the money to be spent.

The Neighborhood Stabilization Program was the first federal program to help states fight foreclosures. Much of the money in Arizona was originally going to be used to help homeowners buy foreclosure homes and fix them up. But when the federal money became available in mid-2009, investors had begun buying inexpensive foreclosure homes and turning them into rentals, outbidding many potential homeowners who had sought NSP help.

Regular buyers trying to use NSP funds had trouble competing with the investors.

"We had to jump through a lot of hoops to buy this home, but Phoenix has a great NSP program," said Jim Hansen. He and his wife, Rosalva, are buying a three-bedroom former foreclosure home in west Phoenix for less than $78,000. The home originally cost $92,000, but NSP provided $15,000 for the couple's down payment and funded a renovation of the house that includes a new air-conditioner and appliances.

The couple became the 300th homebuyer for Phoenix's NSP program, which started three years ago. Housing advocates say the program had a slow start but is helping first-time buyers like the Hansens and neighborhoods with too many empty foreclosure homes.

Recipients of the federal funds in Arizona, including the cities of Avondale, Mesa and Phoenix, tried to revamp their plans and spend the money in other ways to help neighborhoods, including renovating run-down apartments for low-income residents. But all plans had to be approved by the U.S. Department of Housing and Urban Development, and city officials said that became an arduous process.

"Municipalities tried to customize their programs, but it was slow," said Patricia Garcia Duarte, CEO of the housing non-profit Neighborhood Housing Services of Phoenix. "The many variations on the program created confusion. But overall, the funds weren't available to do what the program really intended to do."

The federal Home Affordable Modification Program was announced by President Barack Obama during a February 2009 speech in Mesa. Many metro Phoenix residents were hopeful they would be able to lower their payments and keep their homes through the program called HAMP. The goal was to push lenders to simply alter the terms of mortgages -- reducing payments, changing interest rates or forgiving principal.

But lenders took several months to implement the program, and homeowners trying to hold on waited months before receiving responses from their lenders. Paperwork was lost. Homeowners were granted "trial modifications," then foreclosed on. And most of those trials were not made permanent.

Few of the loan modifications included principal reductions, yet lenders have made the program costly for the federal government.

The federal government responded to the problems with HAMP by creating the Hardest Hit Housing fund with unused money from the federal banking bailout in early 2010. Arizona was one of five states to receive the funding.

The Arizona Housing Department spent months working on a plan that would help struggling homeowners who had not been helped by a loan modification. The main component of the state's plan called for enticing lenders to reduce principal by offering matching funds.

A homeowner could see his outstanding loan balance cut by $100,000, with $50,000 from the housing agency and the other $50,000 forgiven by the lender.

Housing advocates and homeowners were optimistic. The applications for the program poured in. But the approval process was tough, and few lenders seemed willing to cooperate -- housing officials could offer the money as an enticement but couldn't force banks to go along. So far, only a handful of homeowners have had principal forgiven.

"The Treasury Department called the Hardest Hit program an innovation fund," said Mike Trailor, director of the state's Housing Department. "But what I have found is you can't innovate the lending industry when it won't work with you."

He said the state agency has had better luck with its unemployment/underemployment program that helps homeowners pay their mortgages for up to two years. The state has until 2017 to use the remaining funds, more than $200 million.

Now, the Housing Department is looking at ways it can expand on the HARP 2 program and use its Hardest Hit money to help arrange refinancing for people who don't have loans owned by Fannie or Freddie.

Arizona isn't alone in having problems spending these federal funds.

Nationally, a report from the inspector general for the Troubled Asset Relief Program, TARP, released a report showing that less than 5 percent of the Hardest Hit funds have been spent.

What's next

Metro Phoenix's home prices have begun to climb again, and foreclosures are half of what they were two years ago.

Now, it might be too late to help many homeowners. Experts think foreclosures are on the decline because most homeowners who were going to lose their houses already have, and rising prices indicate a recovering market.

Much of the federal funds set aside to slow foreclosures and help the housing market recover faster could go unspent.

"I have told Congress HARP 2 would have helped a lot more people and the housing market two years ago," said Anthony Sanders, a professor of real-estate finance with George Mason University. He was previously with Arizona State University.

"The federal housing programs were poorly designed and didn't help the people who needed it," he said. "We will still have to see if it's not too late for HARP 2."

by Catherine Reagor - May. 26, 2012 10:36 PM The Republic | azcentral.com



Phoenix-area homeowners getting relief through federal plan

Big projects boost West Valley

When executives with Tanger Factory Outlet Centers Inc. were scouting metro Phoenix last fall, they found their target site in Glendale's Westgate City Center. It had a lot going for it.

The 38-acre site bumped against Loop 101. Nearby sports stadiums would draw in potential shoppers. Best of all was the speed with which the deal could be done.

"We felt the city was going to be cooperative," said Tom McDonough, Tanger's executive vice president and chief operating officer. "In general, this went quicker than most."

Those are all factors that have helped West Valley cities rebound from the economic recession.

Major projects set for Surprise, Peoria, Glendale and the Southwest Valley could take off as the state continues to improve Loop 303 and make large pieces of the West Valley more accessible.

Barry Broome, president and chief executive of the Greater Phoenix Economic Council, noted in a recent talk that the West Valley consistently delivers large business sites.

Broome said companies planning to build or relocate make side-by-side comparisons of cities and states. Such factors as taxes, real-estate and operating costs, infrastructure, incentives and workforce all come into play. Often, the prospective cities are unaware that they are in the running, giving them incentive to streamline bureaucracies.

"All your hard work is paying off," said Broome, who added that he was aware of two Chinese companies surveying the West Valley. "If somebody is looking for 150 to 200 acres, the West Valley is the only place."

Speed was a factor with the Glendale location of the Tanger Outlet Mall, which is under construction and expected to open for the holiday season. City officials did not offer any financial incentives, but they did use an expedited two-day planning process called a "design review charette," according to Jon Froke, Glendale's planning director.

by Lesley Wright - May. 25, 2012 05:17 PM The Republic | azcentral.com





Big projects boost West Valley

FHA program streamlines refinance procedure

Many homeowners with mortgages backed by the Federal Housing Administration soon will be able to lower their monthly payment.

FHA's streamlined refinancing program officially will launch June 11, and borrowers can start submitting applications now. No appraisal is required as long as the borrower reduces their payment by 5 percent, so if a homeowner is underwater it's not an issue. To be eligible, a borrower has to have taken out an FHA loan before 2009.

A new FHA loan has a 1.75 percent upfront premium on the total loan amount, and a 1.25 percent annual premium. The refinancing program lowers the premium to .01 percent of the loan amount and carries an annual premium of about half a percentage point.

The federal government's revamped refinancing program, known as HARP 2.0, was introduced a few months ago, and already thousands of metro-Phoenix residents have been able to refinance to lower interest rates, no matter how upside down they are on their mortgage. But only borrowers with loans held by Fannie Mae and Freddie Mac are eligible.

"This is a program the government has made the right decision on," said Jay Luber, president of Galaxy Lending in Phoenix.

He said borrowers are not being penalized by having to pay duplicate premiums on loans they have had for years, reducing the fees dramatically.

Still missing is a refinancing program to help underwater borrowers with loans held by investors. The federal government is trying to find a way to encourage or even require investors to agree to lower interest rates for those borrowers. But the government doesn't hold those loans and can't make investors participate, even if it would prevent more foreclosures.

To find out more about HARP 2.0 and the success of other federal housing programs in Arizona, read my front-page story in Sunday's Arizona Republic.

Homebuilding recovery?

New-home permits in metro Phoenix climbed again in April. There were 1,184 single-family permits issued last month, compared with 1,036 in March, the "Phoenix Housing Market Letter" reports.

If these figures don't impress, remember that a year ago, permits were hovering about 600 a month.

The report's publishers, RL Brown and Greg Burger, say that last month's home-building activity "confirms the early stages of a house recovery in metro Phoenix."

by Catherine Reagor - May. 25, 2012 04:29 PM The Republic | azcentral.com



FHA program streamlines refinance procedure

Big profits for home-flippers signal Phoenix-area rebound

In another sign that metro Phoenix's housing market is slowly recovering, hundreds of homes across the region sold by banks after foreclosure or through short sales are being flipped by investors for almost double the price they paid just a few months earlier.

With metro Phoenix's median home price steadily climbing this year, speculators have seized on an opportunity to make fast profits and are selling houses across the region at prices not seen since the beginning of the housing boom in 2003-04.

Home prices have climbed as the supply of houses for sale has shrunk. The number of homes for sale in the Phoenix area is half of what it was last May, and the median price is up by an astonishing 30 percent since then.

Lenders clearing inventories of foreclosure and short-sale homes, coupled with a shortage of other homes for sale, have led to a rapid increase in home prices this year. And the bounce in prices has given cash buyers a chance to make hundreds of thousands of dollars flipping homes.

Real-estate experts say that's also good news for homeowners who have been battered by falling prices for six years due to record foreclosure homes flooding the market and selling for bargain prices. Now that foreclosures have dropped and home prices have started to rebound, many more homeowners may be able to sell for a profit again.

Also, investors are fixing up homes before reselling them for higher prices, which improves neighborhoods and nearby home values, said Mike Orr, real- estate analyst with Arizona State University's W.P. Carey School of Business.

"Investors fixing and flipping homes are adding to the supply of homes for sale that the regular buyer wants," he said. "This is good for the market and good for home values."

The trend has unfolded fast. Foreclosures started steadily falling last year, and lenders began moving to sell the homes they had already taken back and close short sales.

Most of the flipped houses are getting at least minor renovations and upgrades and selling to people who intend to live in them, another sign that regular buyers are returning to the market in big enough numbers to push prices higher.

A sample of the jaw-dropping price run-ups:

An east Phoenix home bought through a short sale for $218,000 in September sold in late February for $560,000. The home was completely remodeled, but the price was still an eye-popping 156 percent more than the investor paid.

A home in Chandler, built in 2005, sold through a short sale in November for $255,000 and was then flipped by an investor for $410,000 in March -- a 61 percent profit in five months.

A former foreclosure home in central Glendale was bought for $131,000 in January and flipped in mid-April for $243,000, an 85 percent jump. The investor added stainless-steel appliances and replastered the swimming pool at the ranch-style home.

In Goodyear, a 2,000-square-foot home in the Estrella Vista community was purchased from the lender for $88,000 in January. The investor repainted the home, put in new carpet and resold it for $188,000 in mid-April for a 113 percent gain.

"There are hundreds of recent examples of foreclosure or short-sale homes that have sold to investors who have been able to resell them quickly for much higher prices," said Tom Ruff, managing director of AZ Bidder, a Phoenix-based online foreclosure-auction firm.

He said these deals are giving metro Phoenix's housing market a huge boost and aiding in its recovery.

Ruff, who has been researching the trend and created a database of thousands of sales, said the market has been building toward this trend for the past year.

A slowing of foreclosures means fewer bargain homes on the market, while at the same time demand for homes has jumped as investors and regular buyers try to purchase at the bottom of the market.

It's now clear metro Phoenix's housing market hit bottom last fall, according to the experts.

Foreclosure auctions

Investors looking for bargains on foreclosure homes fight for them at daily auctions in front of Maricopa County's courthouse.

Lenders foreclose on homes in Arizona through trustee-sale auctions, where buyers must pay cash, make the winning bid and take the home "as is." Many of the investors making the most money are buying at the auctions.

In an effort to save money and avoid having to take the house back, fix it up and pay a real-estate agent to market it, banks are making more deals with investors at foreclosure auctions. Bidding wars are common among investors, who know what shape a house is in and what they can spend on it to still make a profit.

Those homes are providing buyers with the biggest profits:

In a central Phoenix historic district, a home built in 1925 was purchased at a foreclosure auction in late February for $281,000. Less than a month later, the home was resold for $361,000.

Last November, a north Phoenix house was grabbed at a foreclosure auction for $150,200. The investor renovated the 3,000-square-foot home, redoing everything from the plumbing and electrical to the kitchen. It resold for $319,000 in March.

A house in the north Scottsdale golf community Troon Village sold at auction in December for $628,000. The buyer was able to flip the property by March for $850,000 without having to put much more money or work into remodeling it. The original owner paid $771,500 for the 4,000-square-foot upscale home with three bedrooms, four bathrooms and a negative-edge pool.

Orr said the strong resale market for investors who buy homes directly from lenders at foreclosure auctions will continue at least for the rest of the year as Valley home values continue to rise.

But Orr, who also publishes the "Cromford Report," an online daily real-estate analysis, said that will make it tougher for buyers to find inexpensive foreclosure homes for sale by lenders because they are selling at the auctions.

"The model for flippers works best when prices are rising, even though they have to work hard to find the right homes to buy," he said.

However, housing analysts say the current big jumps in prices on former foreclosure homes won't last for long because the number of foreclosures is falling. The number of metro Phoenix homes taken back by lenders in April was 1,650, the lowest level since late December 2007.

Can it last?

Although flipping homes for profit is reminiscent of the boom times in metro Phoenix, those golden days are a long way off for regular homeowners.

But real-estate experts say a rising number of people who were underwater on their mortgages last year are seeing they suddenly have equity in their properties.

Metro Phoenix's median resale-home price has climbed 23 percent since August from a 12-year low of $112,000 to $138,400 last month.

Today's metro Phoenix home prices are nowhere near boom levels. The area's resale median reached a record high of $253,000 in May 2006, according to Information Market, a real-estate research firm. But home prices are now rising fast. This year alone, the median has climbed 15 percent.

Experts say what will help the housing market continue to recover is if regular homeowners see they can make a profit and sell. That is beginning to happen now.

Last month, a 1,600-square-foot south Scottsdale condominium bought by an investor in January for $125,000 in a normal transacation -- not a foreclosure or short sale -- sold for $238,500 in cash. The owner who sold the condo in January paid $100,000 for it in 1994.

"When the typical homeowners see they can sell for a profit, supply will increase and the housing market will truly recover," Orr said. "But it will be awhile before all the great deals go away.''

by Catherine Reagor - May. 25, 2012 11:16 PM The Republic | azcentral.com



Big profits for home-flippers signal Phoenix-area rebound

Scottsdale's economic picture brightens as unemployment drops to 5.9%

Scottsdale's economy is showing signs of improvement after big job losses over the past few years.

The city's unemployment rate in March of 5.9 percent is down a full point from a year ago and the number of jobs is higher than it has been since December 2009, according to the latest figures from the U.S. Bureau of Labor Statistics.

"Scottsdale's economy is mirroring the U.S. economy in a recovery that is extremely anemic by historic standards, but it's a recovery," said Elliott Pollack, a Scottsdale-based economist and real-estate consultant.

City sales-tax collections are up 5 percent for the current fiscal year, real estate prices are stabilizing and the jobs picture is getting better with some small and large employers adding staff.

The city's 5.9 percent unemployment rate is well below the 7.4 percent figure for Maricopa County and 8.6 percent statewide. The national unemployment rate was 8.2 percent in March and fell to 8.1 percent in April.

Scottsdale has added 578 jobs in the past year, the bureau reported.

West Pharmaceutical Services Inc. added 50 employees and $18 million in investment to its Scottsdale Airpark facilities, said Bob Tunis, Scottsdale economic development manager.

Starwood Hotels and Resorts Worldwide Inc. brought a regional financial headquarters with about 300 jobs to the Scottsdale Quarter.

Fender Musical Instruments, with 400 employees, relocated from the Salt River Reservation to Scottsdale's Perimeter Center and Yelp is continuing to hire for its expanding office at the downtown Galleria Corporate Centre, Tunis said.

San Francisco-based Yelp, which allows consumers to rate local businesses, started with 15Scottsdale employees in January 2010 and now has about 380 full-time employees with plans for more hiring over the next year, said Yelp spokeswoman Kristen Whisenand.

Global Med, a 10-year-old company in the Scottsdale Airpark, has gone from 18 to 84 employees in the past two years and had an additional 30 temporary employees at the end of 2011, spokesman Roger Downey said.

Global Med is adding jobs and picking up steam with its sophisticated cameras, software and telemedicine cart that allows doctors to examine and communicate with patients hundreds or thousands of miles away.

Global Med's biggest client is the U.S. Department of Veterans Affairs, which bought about 2,000 of its telemedicine stations at an average cost of about $30,000,Downey said.

Some jobs lost

Some of Scottsdale's largest employers have shed jobs in the past few years.

General Dynamics C4 Systems, based in Falls Church, Va., cut its Scottsdale workforce from a full-time equivalency of 3,187 two years ago to 2,551, spokeswoman Fran Jacques said. That included a layoff of 500 engineers and other workers last June.

The company's Advanced Communications Systems in Scottsdale has cut its FTE by 21 percent since 2010 to 567.

"The workforce adjustments are based on improving our efficiency," Jacques said, adding that it's vital for government contractors to streamline their operations.

The city cut its payroll to an FTE of 2,455 for the current fiscal year, down 92 jobs from last year, and is expected to cut 33 jobs in the 2012-13 fiscal year.

The Scottsdale Unified School District went from an FTE of 3,210 for the 2008-09 school year to 3,015 this year, with a projected increase of 33 jobs next year.

Scottsdale Healthcare has an FTE of 6,714 workers, up 2.4 percent from 2009.

A long road back

Pollack said the Valley has added about 37,000 jobs the past year but has a long way to go to replace about 250,000 jobs lost in the recession.

"It's going to be 2015 to 2016 until we get all those lost jobs back," he said.

Scottsdale's vital tourism sector is likely to pick up as the national economy improves and people feel more comfortable about taking vacations, Pollack said.

New residents are moving to Scottsdale at a brisker pace, including younger adults who are not saddled with houses to sell while other new residents are looking to buy a second or retirement home before prices start to go up, he said.

Construction of new homes and apartments is expected to have a ripple effect on the economy and create new jobs.

Those gains could be tempered, Pollack said, by labor shortages in the construction trades.

"We've always had our mystery labor force," he said. "We don't know how many had green cards and came across the border to work but I guess we're going to find out."

by Peter Corbett - May. 25, 2012 08:44 AM The Republic | azcentral.com



Scottsdale's economic picture brightens as unemployment drops to 5.9%

U.S. bank earnings rose this winter to 5-year high

WASHINGTON - U.S. bank earnings rose in the first three months of the year to the highest level in nearly five years and the number of troubled banks fell for the fourth straight quarter.

The mostly positive first-quarter earnings released Thursday illustrate how far the banking industry has come since the 2008 financial crisis. Still, the report noted that many banks remain cautious about lending, a necessary driver of economic growth.

The report is "broadly in line with what we've seen in the economy as a whole," said Bert Ely, an independent banking analyst based in Alexandria, Va. "Sluggish improvement, but nonetheless improvement."

The Federal Deposit Insurance Corp. said the banking industry earned $35.3 billion in the January-March period. That's up from $28.7 billion in the first quarter of 2011 and the highest level since the second quarter of 2007.

About 67 percent of U.S. banks reported improved earnings. Overall revenue increased from the first quarter of 2011, bolstered by higher profits from loans and fees on customers' bank accounts.

The news wasn't all good. Bank loans to consumers fell in most categories. Credit card loans and home mortgages were among those showing lower balances.

Acting FDIC Chairman Martin Gruenberg called the decrease in lending "disappointing, after we saw three quarters of growth last year."

Weakness in the housing market has weighed on broader lending, said James Chessen, chief economist of the American Bankers Association, the industry's biggest trade group.

"The overall lending volume for banks will continue to grow at a gradual pace until the housing market improves," Chessen said in a statement.

An exception is loans to commercial and industrial borrowers. Those rose about 14 percent from a year earlier and suggest businesses are expanding.

Banks with assets exceeding $10 billion accounted for most of the earnings growth in the January-March period. While they make up just 1.4 percent of U.S. banks, they accounted for about 81 percent of the earnings.

Those banks include Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. Most of them have recovered with help from federal bailout money and record-low borrowing rates.

The number of banks on the FDIC's confidential "problem" list fell in the first quarter to 772, or around 9.5 percent of all federally insured banks. That compares with 813 troubled banks in the fourth quarter.

The surge in first-quarter earnings follows the industry's most profitable year since 2006, a sign that many banks have put the 2008 financial crisis behind them. Still, last year's increase came largely because banks suffered fewer losses -- not because they took in more money.

The slow recovery, record-low interest rates and weak demand for loans left bank revenue mostly flat for the year.

Banks are starting to take in more money this year. The industry posted a 3 percent increase in revenue from a year earlier. It was only the second time in the last five quarters that revenue rose, the FDIC said.

And bank losses on loans declined in the January-March period to $21.8 billion -- the lowest level in four years.

Gruenberg said the overall financial health of the banking industry continues to show gradual improvement.

So far this year, 24 banks have failed. That's far below the 92 banks that shuttered last year and the 157 that closed in 2010 -- the most for one year since the height of the savings and loan crisis in 1992.

In the first quarter, fewer bank failures allowed the insurance fund to strengthen. The fund, which turned from deficit to positive in the second quarter of 2011, had a $15.3 billion balance as of March 31, according to the FDIC. That compares with $11.8 billion at the end of last year.

The FDIC is backed by the government, and its deposits are guaranteed up to $250,000 per account. Apart from its deposit insurance fund, the agency also has tens of billions in loss reserves.

by Marcy Gordon - May. 24, 2012 04:26 PM Associated Press



U.S. bank earnings rose this winter to 5-year high

Company wants to invest in shuttered Paradise Valley resort

Mountain Shadows resort,
Courtesy of OZ Architects Inc. Solage Hotels and Resorts wants to bring a social environment to Mountain Shadows resort, which is in danger of foreclosure.



A luxury hotel development and management company is in negotiations with the owner of the Mountain Shadows resort to help brand the long-shuttered hotel and keep it from foreclosing.

Officials say Solage Hotels and Resorts is planning to invest a "substantial amount" of money in the historic resort.

The 68-acre Paradise Valley property, at 56th Street and Lincoln Drive, went into default on a $32 million loan in April, according to Ion Data, a Mesa-based real-estate analysis company.

A trustee's sale has been set for July 26.

Mountain Shadows owner Robert Flaxman said he has reached a preliminary agreement with the Solage group that will keep the sale from happening.

According to the agreement, Solage also would manage the property.

Flaxman said both sides are committing eight-figure sums to the project.

"We would become joint-venture partners of the entire product, with more than enough equity going to pay off the loan," he said.

Robert Watson, president of Solage Hotels and Resorts, said he wants to bring a very social environment to the resort and make it a large amenity for the surrounding community.

Solage and its sister company, Auberge Resorts, have at least eight resort properties in North America, including Solage Calistoga and Auberge du Soleil in northern California, as well as Esperanza in Los Cabos, Mexico.

Watson said this includes more than 20 restaurant groups within those resorts.

Watson said the independently branded luxury resorts are approachable, and he has similar plans for Mountain Shadows.

"We don't like our resorts overly exclusive. We intend to make Mountain Shadows very much a part of the community, and expect locals to take advantage of the resort, and look at it as their's," Watson said. "From the guest's perspective, it will be a more engaging environment."

Flaxman said Solage has been involved with the development of Mountain Shadows since 2006, but got more involved in April and now is deep in the planning process.

On Thursday, the Paradise Valley Town Council will review a revised special-use permit application to develop the resort. The plan will include specifics about the site plan and other aspects of the proposed project. The vetting process will include two additional council work-study sessions, June 7 and June 28.

The Planning Commission will have about 75 days to review the application, with a Sept. 11 deadline to submit a recommendation to the town council.

by Philip Haldiman - May. 24, 2012 12:55 PM The Republic |azcentral.com



Company wants to invest in shuttered Paradise Valley resort

Scottsdale condo project gets OK for changes

A five-building condominium complex under construction west of Scottsdale Fashion Square now will include an 11-story building along Camelback Road and 288 additional units.

The City Council on Tuesday voted to approve an amended site plan, amended development standards and a downtown infill-incentive district application for Optima Sonoran Village, at the southeastern corner of Camelback and 68th Street. In 2010, the council approved a site plan that included 493 units and a maximum building height of 65 feet.

Scottsdale new development projects

Optima, the developer, sought the increased height and unit count under the city's downtown infill-incentive district and plan, which allow developers to request amended development standards.

Bob Littlefield was the only council member to vote no. He opposes the infill-incentive district and plan, saying developers are using them to increase the value of their property while offering public benefits the council already should require for approval.

"You had an approval and you should have stuck with it," he said. "This is gold digging."

Mayor Jim Lane said he had concerns about the impact on traffic and the surrounding neighborhood, but he now believes "this will be a positive addition to Scottsdale."

The approval allows Optima to increase the height of the building along Camelback by four stories. The complex descends in height toward the south, with the lowest buildings adjacent to single-family residences.

Optima plans to invest $400 million in the complex, and the first phase should be completed in 2014. Optima also developed the Optima Camelview Village condominiums at Scottsdale Road and Rancho Vista Drive.

The length of the building along Camelback has been reduced by more than 40 percent, while the amount of commercial space in the complex also has been decreased from 40,000 square feet to 12,500 square feet, said John Berry, a zoning attorney representing Optima.

David Hovey Sr.,Optima's president and owner, said Optima Sonoran Village will be the "best development Optima has ever done." This past weekend, Optima received a top award from the American Institute of Architects for Optima Camelview Village.

"We as a family have personally invested $800 million in downtown Scottsdale," he said. "Within three years, this will be a completely finished development that will be a great asset to Scottsdale."

Some nearby residents, such as Howard Schwartz, expressed concerns that the higher unit count will lead to more vehicles and more traffic on 68th Street. Others, like Paula Christensen, thanked Hovey for cooperating with neighbors and addressing their concerns.

Councilwoman Lisa Borowsky said she has opposed the infill-incentive district and plan because they hadn't prompted projects that were beneficial to the public. Optima Sonoran Village, however, is an exception, she said. She once resided at Optima Camelview Village.

"We should all be thrilled that the Hoveys and their projects are a part of our community," she said.

Councilman Ron McCullagh said he agrees with much of Littlefield's perception that the district and plan will change the character of the city, "but it's done and it's time to move on."

"I'm very happy once again to see that this project has the neighborhood's support," he said.

by Edward Gately - May. 24, 2012 08:37 AM The Republic | azcentral.com



Scottsdale condo project gets OK for changes

Fannie and Freddie: "Where the Money Went."

As part of its semi-annual report to Congress, the Federal Housing Finance Agency's (FHFA) Office of the Inspector General (OIG) included a section detailing, in financial terms, the fall of the two government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac which were placed under FHFA conservatorship in September 2008. The GSEs' fall was both swift and devastating so it is helpful to see, in one place, the numbers and the time-line underlying their implosion.

Background

The GSEs' historic mission was to provide liquidity to the housing finance system. They did this primarily by supporting the secondary mortgage market through the purchase of residential mortgages from originators who then used the proceeds to originate more loans. The GSEs either held the mortgages in investment portfolios or packaged them into mortgage-backed securities (MBS) they then sold to investors. For a fee the GSEs guaranteed the performance of the MBS they sold. GSE operations were financed through MBS sales and through funds borrowed from large individual, institutional and foreign investors.

Because some homeowners will inevitably default on the mortgages the GSEs hold they maintained special accounts or reserves to which they made regular contributions called provisions for loan losses. In the case of the guarantees for loans associated with MBS, the fees they charged for their guarantees were intended to cover the small subset of loans that were expected to default and reserves were established for those losses.

When a homeowner does default, the loan servicers may commence foreclosure and take possession of the collateral property. When this process is completed the GSE erases or charges off the unpaid mortgage balance, debiting the corresponding loss reserves. If the collateral property is subsequently sold the proceeds will offset losses.

The GSEs aimed to sufficiently contribute to their loan and guarantee portfolio reserves to cover expected losses. However, when the housing market collapsed, losses on loans and guarantees vastly exceeded that loss-covering capacity.

The Crisis

Between 2001 and 2006 the US housing market experienced a "housing bubble" wherein the prices of single-family homes increased an average of 12 percent each year. This increase was accompanied by mortgage debt that more than doubled from $5.1 trillion in 2000 to $11.2 trillion by June 2008. In about the same time frame Fannie Mae's mortgage-related assets and guarantees went from 1.3 trillion to $3.1 trillion and Freddie Mac's from $1 trillion to $2.2 trillion (representing annual increases of approximately 11 percent for each GSE.) Then, starting in 2007 home prices began to plummet and defaults to rise. After more than doubling over six years, home prices fell by 27 percent between 2006 and 2008.



The GSEs had grown rapidly with only a thin capital cushion to provide protection against losses. The capital they were required to hold met regulatory standards but fell well below the capital levels maintained by many large financial institutions so they were not prepared to manage the sharp decline in housing prices. In 2007, with prices down an average of 9 percent, the GSEs businesses began to feel increasing stress and by the next year rates of seriously delinquent mortgages they either owned or guaranteed exceeded any levels of the previous decade.

Gains, Losses, and the Use of Funds

Fannie Mae lost $5 billion in the second half of 2007 and another $4.5 billion in the first half of 2008 and Freddie Mac lost $3.7 billion and $1 billion. Then the collapse of the MBS market in the Fall of 2008 resulted in even larger losses. During 2008 the two GSEs had combined losses of more than $100 billion. For some perspective, over the 37 year history of the two companies (1971-2008) they earned $95 billion less than they lost in 2008 alone. During the next three years ending in Q3 2011 the GSEs lost another $251 billion. "In other words, the losses incurred during the conservatorships are more than double the cumulative net income the GSEs reported as public companies."

On September 6, 2008, FHFA in concert with the Department of the Treasury put the GSEs into conservatorship citing concerns about their financial conditions, their ability to raise capital and to continue funding themselves, and the critical importance of each company to the residential mortgage market. At the same time Treasury entered into an agreement to provide the GSEs with cash sufficient to eliminate what deficits they might occur in exchange for ownership of the GSEs senior preferred stock. Since that time Treasury has made equity investments in the GSEs every quarter and, by the end of 2011 the cumulative amount was $185 billion.



Initially the Treasury's investment was capped at $200 billion, subsequently increased to $400 billion and increased again to $400 billion over the amount actually drawn as of December 31, 2012. As a condition o this support the GSEs agreed to pay to Treasury quarterly dividends at an annual rate of 10 percent on Treasury's outstanding investment.

According to OIG, these dividend obligations, exacerbated by the 10 percent annual rate, are so large that the GSEs have yet to earn enough to pay them annually so Treasury has had to advance additional sums to pay the dividends. At the end of 2011, Treasury's $185 billion investment in the GSEs included $32 billion to pay its own dividends. At present the required annual payment from the GSEs is $19.2 billion. The two, in their best year, earned a total of $14 billion, so they have never in their history earned enough to cover the required dividend on Treasury's current investment.



As stated above, the GSEs cumulative losses as of the end of Q3 2011 totaled $261 billion, offset by $78 billion in unobligated capital at the beginning of 2008. The figure below quantifies the relative losses, dividend obligations, and gains of GSE operations through that third quarter.



The GSEs' single-family business line has had a net loss of $208 billion since 2008 after accounting for revenues for new and existing loans. This represents the bulk of the GSE losses. Moreover, the vast majority of these losses are attributable to loans made from 2004 through 2008.

During conservatorship the GSEs accrued $86 billion in expenses related to mortgage loans on their books. However, this sum is affected by an accounting change in 2010. Prior to that time these losses related only to loans purchased and immediately placed in their portfolios but the change required them to account for loans they had guaranteed in the same was as those they owned and held on their books. Thus the GSEs reduced their reserve for MBS guarantee losses and increased the reserves for retained mortgage losses.

The GSEs began to rapidly expand their MBS business in the early 1990s. By 2008 they were guaranteeing mortgages securitized into MBS at a value nearly seven times the amount held in their portfolios. As the housing market collapsed and homeowners defaulted, the GSEs satisfied their guarantee obligations and made the required payments to MBS investors. In spite of the 2010 accounting change, the GSEs' provisions for guarantee-related losses have totaled $132 billion during the conservatorships.



Multi-family mortgages in which the GSE participate have contributed a gain of $7 billion from 2008 to the end of the third quarter of 2011 and investments have contributed $4 billion to overall losses. However, gains through investments have gone to partially offset the $83 billion loss in this category suffered in 2008.

GSE investments consist primarily of private-label MBS and derivative contracts. The value of private-label MBS, especially those related to subprime, option, and Alt-A loans plummeted in 2008. In addition, many of the underlying loans were concentrated in states (California, Nevada, Arizona, and Florida) which were particularly hard hit by the crisis. None-the-less, the heavy losses in 2008 have subsequently been offset by income from the investments and a recovery in value.



Another source of significant GSE losses was the write-down of low-income housing tax credits during the fourth quarter of 2009. Because they have no taxable income, these credits which had been acquired where there was profit, have no value. Treasury denied the GSEs request to sell the credits so they were written off which contributed $8 billion of the $16 billion "other losses" recorded in that quarter.

Putting the losses in Perspective

OIG said that in the last quarter before conservatorship (April-June 2008) the GSEs had $1.6 trillion in short-and long-term outstanding debt, $3.7 trillion in MBS guarantees, and stockholders' equity of only $54 billion. It is unlikely OIG says, that the GSEs could have made scheduled debt payments and satisfied their guarantee obligations without Treasury support.

The big losers from the fall of GSE are the stockholders. The Treasury-GSE agreement states that no dividends can be paid to them without Treasury approval until Treasury is fully repaid and Treasury has the right to purchase up to 80 percent of the GSEs' common stock at a nominal amount. This has made the common stock of both GSEs virtually worthless.

The big winners are the holders of bonds and Guaranteed MBS. By placing the GSEs into conservatorship and committing to capital investments in them, FHFA and Treasury provided assurance that the GSEs would be able to make contractually required payments. While neither GSE publishes a comprehensive list of creditors they are known to include foreign central banks, commercial banks, fund managers, insurance companies, state and local governments, corporate pensions, individuals and nonprofit foundations which invested in GSE debt and guaranteed MBS.

Further since conservatorship the private sector has almost abandoned the secondary market and the GSEs and Ginnie Mae have stepped up to fill the void. Treasury's intervention has provided assurance to future investors and creditors and they too will get their money back.

Outlook

On top of the $185 billion invested by Treasury through the end of 2011, FHFA projects three scenarios for future capital draws by the GSEs through the end of 2014.

Under each, the amount of additional support depends on the outlook for home prices - whether they continue to fall, by how much, and for how long - and when and how strongly circumstances turn around so prices begin to increase. According to the most recent projection in October 2011, estimates of additional taxpayer financing for the GSEs range from $37 billion to as much as $128 billion which would bring the total support for the GSEs to a range from $220 billion to $311 billion.

by Jann Swanson Mortgage News Daily May 24, 2012


Fannie and Freddie: "Where the Money Went."

'Genuine Rebound' Seen In Housing As Sales And Prices Lift - Yahoo! Finance

Once-tentative signs of a housing recovery are hardening into a more solid foundation, lifting prospects for a sector that's been a major drag on the economy.

The latest signal came from existing-home sales, which rose 3.4% in April vs. March, according to National Association of Realtors data out Tuesday. While the annualized rate of 4.62 million units was slightly below forecasts, the gains were broad and echoed reports of rising new home sales and construction.

"There is a genuine rebound occurring in the housing market," said Celia Chen, a senior director at Moody's Analytics.

The data helped send major U.S. stock market indexes up during the trading day, before other news erased gains. Homebuilders like PulteGroup (PHM - News) rose, along with Home Depot (HD - News) and top lenders like Bank of America (BAC - News) and JPMorgan Chase (JPM - News).

Data out last week showed homebuilder sentiment at a five-year high. April housing starts rose, and building permits for single-family homes were higher.

Overall, housing is turning up slowly, Chen said. Activity is still far below pre-bust levels.

"It's a very weak upward trend," she noted.

The median price of existing homes jumped 7.6% in April vs. March to reach $177,400.

Compared with a year ago, prices were up 10.1%, the biggest increase in more than six years.

More sellers were drawn back to the market. The number of homes for sale spiked 9.5% from the prior month to 2.54 million, though they are still almost 21% below year-ago levels.

The sharp price rise isn't all due to more demand, Chen said. It could also reflect a different mix of homes sold in April vs. March.

Investors looking for cheap properties to rent out have also been supporting prices, she added. Distressed sales are drawing interest from Wall Street hedge funds, and banks are experimenting with ways to convert owners to renters.

A still-large inventory of distressed homes hangs over the market. While a predicted flood of foreclosures hasn't yet materialized, Chen sees a steady rise that will bring prices down somewhat later in the year.

But the momentum is shifting.

A few months ago the housing market seemed to have turned a corner, said Lawrence Yun, NAR chief economist. "2012 looks to be a breakout year," he said.

Sales are being driven by affordability, modest job creation and rising rents, he said. First-time buyers are more active, and sales of foreclosed properties are improving.

Foreclosures and short sales sold at deep discounts made up 28% of April sales, down from 29% in March and 37% a year earlier, the NAR said.

Homeowners seriously delinquent on their mortgage are also down from last year, reducing the "shadow inventory" of homes that may become distressed sales.

The housing boom led to underdevelopment of rental properties, and the bust caused more people to shift to renting.

Rents are rising, and as renters get squeezed, some see owning as attractive again, Yun said.

Sales of existing single-family homes rose 3% to an annual rate of 4.09 million. Overall sales and median prices were higher in all four geographic regions.

by Investor's Business Daily May 22, 2012


'Genuine Rebound' Seen In Housing As Sales And Prices Lift - Yahoo! Finance

Scottsdale property tax increase to offset lower home values

To offset plunging home values, Scottsdale property owners will pay a higher property-tax rate for the fiscal year beginning July 1.

The city issued a "Truth in Taxation" notice, saying that next year's combined tax rate is expected to increase to about $1.23 per $100 of a home's assessed value, up from about $1.09.

Priciest home sales | Photos


The owner of a $100,000 home, for example, would pay about $122.50 in city property taxes.

A public hearing is scheduled at 5 p.m. June 5 in City Hall, 3939 N. Drinkwater Blvd.

Arizona has a two-tiered property-tax system. The "primary" tax covers government operations while a "secondary" tax supports bond debt for capital projects.

During budget talks, a majority of the Scottsdale City Council opposed a 2 percent increase allowed in the primary "levy," which represents the total amount collected in taxes.

But as property values plunge, the tax rate increases to offset lower land values. The total amount collected -- the levy -- remains similar.

The primary rate is expected to rise to about 50 cents of every $100 of assessed valuation, up from about 44 cents.

Likewise, the secondary rate will rise to about 72 cents, from about 65 cents.

While the amount collected in secondary taxes will drop by $300,000, assessed valuations have also fallen, resulting in the higher rate, said Scottsdale Finance Manager Lee Guillory.

In Scottsdale, about 13 cents of every dollar in property taxes goes to the city. The rest are taxes for public schools, the county, community colleges and special taxing districts.

by Beth Duckett - May. 23, 2012 08:54 AM The Republic | azcentral.com



Scottsdale property tax increase to offset lower home values

Strong month for home sales

WASHINGTON - Americans are buying more homes in every region of the country, the latest indication that the housing market could be on the mend. An increasing portion of those sales are from first-time buyers, who are critical to a housing recovery.

Sales of previously occupied homes rose 3.4 percent in April from March to a seasonally adjusted annual rate of 4.62 million, the National Association of Realtors said Tuesday. That nearly matches January's pace of 4.63 million --the best in two years. It is still well below the nearly 6 million that most economists equate with healthy markets.

A pickup in hiring and cheaper mortgages, combined with lower home prices in most markets, has made homebuying more attractive. Though many economists acknowledged that the market has a long way to go, most said the April sales report was encouraging.

"The trend in sales is upward, and we think it has a good deal further to go over the next few months as payrolls pick up further and mortgage availability improves," said Ian Shepherdson, chief U.S. economist for High Frequency Economics.

Sales rose last month from March in all regions of the country. They increased 5.1 percent rise in the Northeast, 3.5 percent in the South, 4.4 percent in the West and 1 percent in the Midwest.

And more first-time buyers entered the market. In April, they made up 35 percent of sales, up from 32 percent in March.

"First-time homebuyers are slowly making their way back," said Jennifer Lee, an economist at BMO Capital Markets. "That is still below the 40 percent-to-45 percent range during healthy times, but the highest in almost half a year."

by Associated Press May 22, 2012



Strong month for home sales

Scottsdale units may boost customer base - USATODAY.com

Downtown Scottsdale merchants can look forward to more shoppers and diners with the addition of more than 2,000 multifamily units anticipated within the next three years.

Downtown projects
Investment dollars are flowing into downtown Scottsdale, including:

$400 million for Optima Sonoran Village.

$220 million for Blue Sky apartments.

$65 million for the Portales complex.

$55 million for Alliance Residential's apartment/retail complex at the Scottsdale Waterfront.

The City Council's subcommittee on economic development recently received an update on numerous projects totaling hundreds of millions of dollars in new investment within the past 12 months and during the next 12 months in the downtown area.

Much of the investment involves residential projects, such as the Optima Sonoran Village condominium complex (781 units), Gray Development Group's Blue Sky apartment complex (749 units) and Alliance Residential's apartment/retail complex at the Scottsdale Waterfront (259 units).

Optima Sonoran Village has been approved for 493 units but is seeking an additional 288 units. The council on Tuesday will consider amended development standards and a downtown infill-incentive district application for the expansion.

Other complexes will bring even more new residents to the downtown area, such as 369 units at JLB Partners' Portales apartment complex, 160 units in the second phase of ST Residential's Safari Drive condominium complex and 420 units in Zaremba Residential Co.'s Scottsdale Goldwater apartment complex.

"I think the retailers are very excited because anything to activate folks in the community, walking on the sidewalks and frequenting their shops and restaurants, gets them excited," said Ben Moriarity, the city's downtown business specialist.

Brian Kearney, Gray's chief operating officer, said that owning a home is no longer the "American dream" and that more young professionals will be renting instead of buying a home in the foreseeable future.

The first phase of Blue Sky should be under construction by the end of the year, he said.

"The money is there for quality locations like downtown Scottsdale," Kearney said. "This is a proven high-end residential market."

Ian Swiergol, Alliance Residential's managing director, said multifamily is desirable at the Waterfront because of downtown's strong, established amenity base. The Waterfront project is expected to be under construction in the fourth quarter.

"Downtown has such a strong draw, and, historically, it has had a lack of available rentals," he said. "(The goal) is to bring the residential component to the existing retail and office components."

by Edward Gately USA Today May 21, 2012


Scottsdale units may boost customer base - USATODAY.com

Signs of revitalization at Desert Ridge

Two projects at Desert Ridge may signal that the troubled northeast Phoenix community is on the rebound after it was hit hard by the economic downturn.

The last phase of Fireside at Desert Ridge is under way, and a site plan has been approved for the first phase of an apartment project, Valley Desert Ridge Apartments.

"Desert Ridge has survived the storm," said Doug Dickson, president of the area's community association. "We are on the other side of the lowest point."

For about 15 years after the initial land was sold in the area, the community thrived. Land prices were the highest in the state, with some parcels exceeding $1 million per acre. But the recession and slow recovery resulted in a virtual shutdown of construction in the area, and many developers forfeited their land to the Arizona State Land Department.

That now may be starting to change.

Desert Ridge, a 5,700-acre master-planned community, is bounded by Pinnacle Peak Road on the north, the Central Arizona Project canal on the south, 64th Street on the east, and has an irregular border on the west bounded by 32nd and 40th streets, as well as Black Mountain Boulevard.

At Fireside, Pulte Homes/Del Webb will have about 900 homes when construction is complete. The final phase, Copper View, has 74 home sites. Still remaining from earlier phases are 100 sites.

The company has survived the economic downturn by reducing prices and building only when homes are sold.

"The primary demographic for the community is move-up families," said Jacque Petroulakis, a company spokeswoman. "The demographics are quite diverse with a little scattering of all ages."

She said the final phase will include the project's smallest single-family homes, with the smallest at 1,903 square feet. Prices start at $329,900.

Completion of the project will leave only three areas of the master-planned community left to sell on the west side of Tatum Boulevard, which bisects the community.

One is at Tatum Boulevard and Pinnacle Peak Road, next to where D.R. Horton is selling homes.

The company bought the 189-acre parcel in March 2004 but returned the east portion to the land department as the economy hit bottom.

Another is 81 acres south of Deer Valley Road on the western edge of Desert Ridge. Toll Brothers bought the land in April 2006, but it also decided to return the land to the state.

Finally, the land department still has 269 acres south of Deer Valley between Tatum and 40th Street.

On the east side of the project, the Valley Desert Ridge Apartments would be the first construction east of 56th Street.

The project, which last year was divided into two phases to aid in financing, got the go-ahead for the north section after a meeting with city officials this month.

The 26-acre parcel, at the northeastern corner of Deer Valley and 56th Street, was among two that sold for more than $1 million an acre in the Desert Ridge area.

The developer, Westfield/Greystone Master Partnership, hopes to ultimately erect 722 units.

A new city waterline will run from Loop 101 north to Pinnacle Peak Road, paving the way for additional construction in the area. Completion of 56th Street north also is planned.

Most of the land east of 56th Street was sold at one point, but developers responded to the economic woes by returning the land to state inventory. Except for the Valley Desert Ridge Apartments and one other small parcel owned by an apartment developer, none of the land east of 56th Street has been sold.

The state land department retains an area around the outside of the golf course at J.W. Marriott Desert Ridge Resort and the two parcels on the west side of Tatum.

The land department is in no hurry to sell them.

"We have had discussions and proposals regarding bringing some lands back, and we are still evaluating based on the market and pricing, but we have no definitive plans yet," said Vanessa Hickman, deputy commissioner of the Arizona State Land Department.

Vacant land at Desert Ridge

Everything north of Deer Valley Road and east of 56th Street, except for Valley Desert Ridge Apartments' 26-acre plot on 56th at Deer Valley.

Everything south of Deer Valley and east of 56th, except for a 32-acre parcel at Loop 101 and 56th.

Land on the north and east sides of the Wildfire Golf Club, between Tatum Boulevard and 56th.

41 acres on the northeastern corner of Deer Valley and Tatum. This land was the subject of a major lawsuit between the developer, Gray Development Group, and the master planner, Northeast Phoenix Partners.

Undeveloped CityNorth property. Once expected to be the crown jewel of the community, it fell on hard times during the recession.

269 acres south of Deer Valley between the commercial property along Tatum and 40th Street.

106 acres at the southwestern corner of Tatum and Pinnacle Peak Road.

81 acres at the west end of Desert Ridge.

Undeveloped land south of Loop 101 between Arizona 51 and 64th Street.

by Michael Clancy - May. 20, 2012 06:55 PM The Republic | azcentral.com




Signs of revitalization at Desert Ridge

Construction industry showing pulse

Maracay Homes project manager Brandon McArthur checks construction of a new Maracay home in Buckeye's Verrado subdivision. The Scottsdale builder plans to open five more communities by the second quarter of 2013.
Mark Henle/The Republic Maracay Homes project manager Brandon McArthur checks construction of a new Maracay home in Buckeye's Verrado subdivision. The Scottsdale builder plans to open five more communities by the second quarter of 2013.



The Great Recession swung a wrecking ball through Arizona's construction industry, but this key sector -- with some help from rising consumer spending and stronger home prices -- has begun to recover.

Residential- and commercial-construction jobs long have been the backbone of the state economy, which traditionally has relied on spending from new residents to help create jobs.

As shoppers gradually spend more at stores and return to car dealerships, they also have begun to spend on housing. Home prices are up, and owners are making repairs and upgrades.

Many of the new construction jobs are in specialty trades, such as plumbing and drywall, state economist Aruna Murthy said.

The construction industry has a lot of rebuilding ahead. It lost 74,600 jobs in 2009 and 2010, according to state figures. It gained 200 jobs in 2011 and is forecast to gain 5,900 this year, she said.

Job growth

Arizona's April jobless rate was 8.2 percent, down from 8.6 percent from March. The state jobless rate is higher than the U.S. unemployment rate in April -- 8.1 percent -- but Arizona's is falling at a faster clip. In April, Arizona had 46,000 more jobs than it had in the same month the year before.

Jobless claims

The number of workers who filed for jobless benefits for the first time fell in March by more than 3,000 compared with the same month in 2011, an 11 percent decline. For three years in a row, March first-time jobless claims have fallen. It's a sign that the pace of layoffs has slowed.

Motor-vehicle sales

February car and truck sales, which are reported in March, were brisk in Arizona. Dealers rang up $515 million in sales, up nearly 16 percent from February 2011. Vehicle sales through 2011 surpassed 2010 numbers every month. Strong 2012 sales may repeat that trend.

Retail sales

Arizona shoppers continued gradually to spend more money. February sales, which are reported in March, climbed to $4 billion. That figure is 7 percent higher than what consumers spent during February 2011. Consumer spending is closely watched, because it helps generate jobs.

Gasoline prices

The price of a gallon of fuel fell 7 cents in April, to $3.83, after three months of increases. That's slightly higher than the national average of $3.80. This chart shows the average statewide gas price in AAA Arizona's April fuel report; it doesn't include any price fluctuations since that time.

by Jahna Berry - May. 19, 2012 02:11 PM The Republic | azcentral.com




Construction industry showing pulse

Investors buy $180M 1 day in area commercial real estate

Metro Phoenix's commercial real-estate market had a banner day on May 11. Investors closed on deals worth more than $180 million for warehouses, apartments and vacant land.

The Black Creek Group of Denver bought two warehouses, one leased to Amazon.com, in Phoenix's Riverside Industrial Complex. It paid nearly $132 million for the buildings located on nearly 100 acres, according to the commercial real-estate foreclosure research and data firm Vizzda.

The second-biggest deal on May 11 was the $41 million sale of the Scottsdale Gateway apartments. Also closed that day was the $7.4 million purchase of 2,400 acres of land in the Buckeye development Elianto.

The region is drawing both more residential and commercial development, and prices are rising for all types of real estate. Do the big deals that closed on May 11 signal the commercial market is roaring back? Experts say no, particularly for the office market.

Apartments have been popular among investors since metro Phoenix's rental market rebounded more than a year ago, and vacant residential land is becoming a popular purchase again as homebuilding in the area begins to increase. The industrial buildings purchased were a good buy because of the tenants. Home Depot is leasing the other warehouse purchased.

But still, $180 million invested in metro Phoenix's commercial real-estate market in one day is worth noting.

Mortgage-scam complaint filed

The Arizona attorney general has filed a complaint against a Surprise woman in another scheme to take advantage of struggling homeowners.

The state prosecutor has filed a lawsuit against Rosa Galope alleging she defrauded homeowners looking for help in obtaining mortgage modifications to avoid foreclosure.

"The economic crisis has created a number of vulnerable consumers who are often targeted for predatory schemes," Attorney General Tom Horne aid.

The lawsuit alleges Galope charged thousands of dollars in up-front fees for mortgage-loan modification and foreclosure help, and then later claimed the money was donated to her church, Nation to Nation Ministries. The lawsuit also contends Galope told her clients not to communicate with their lenders and to send her any mortgage payments.

Galope is accused of keeping the funds from her clients and endorsing checks made payable to lenders and cashing them at a local check-cashing store.

by Catherine Reagor - May. 18, 2012 02:51 PM The Arizona Republic | azcentral.com




Investors buy $180M 1 day in area commercial real estate

Friday, May 18, 2012

Realtors Optimistic On Spring Home Sales Season, As Investors Eye Builders LEN DHI MHO RYL - Investors.com





Anyone who makes a living in residential real estate knows better than to crack open the champagne just because of some encouraging housing data.

Still, it's hard not to get cautiously upbeat over recent trends that point to an improving U.S. housing market and indicate some further strengthening in months to come.

National real estate analysts and local real estate agents sound encouraged by the state of housing as it enters the stretch drive of the spring home-selling season.

Foot traffic is up, prices are stabilizing by some measures and sales are trending higher. Recent housing statistics suggest the market is at its strongest point in years.

"Demand is up, and the psyche of the consumer is much better than it has been in years," said the National Association of Realtors' Ken Fears, manager of regional economics.

Agents See Change

How much spring homebuying are real estate agents noticing right now? Nate Johnson, with Keller Williams Realty in northern Virginia, says his team is "seeing a lot of buyers out there" and getting multiple offers on short-sale properties. His work is concentrated in Fairfax County, just across the Potomac River from Washington, D.C.

Although down 2.6% monthly in March, the pace of U.S. existing home sales reached its highest level since 2007 in the first quarter, up 4.7% from the previous quarter and more than 5% from the prior year.

Prospects for new home sales are looking better too. Investor optimism has pushed IBD's Building — Residential/Commercial industry group to the top-ranked spot among 197 groups tracked, with Lennar (LEN), Standard Pacific (SPF), MI Homes (MHO), Ryland Group (RYL) and D.R. Horton (DHI) among highly rated stock market performers. Still, after an exuberant rise, several builder stocks gave up some gains Thursday ahead of April home sales numbers due out next week.

Near Washington, D.C., the main challenge now is finding homes people want to sell, Johnson says.

"The inventory is very low in some places," he said. "Many people are upside-down on their mortgages and can't sell."

Short sales occur when more is owed on a home than it sells for, when a lender does agree to a sale.

"A lot of our short-sale inventory are condos," Johnson said. "A lot of investors are snapping those up at inexpensive prices with the idea of renting them out."

Looking For Listings

A lack of inventory is also a problem in certain Atlanta neighborhoods, says Thom Abbott, an associate broker at Thomas Ramon Realty at Palmer House Properties. His firm specializes in midtown condos at prices ranging from $80,000 to more than $600,000.

by Vince Cariaga Investor's Business Daily May 17, 2012


Realtors Optimistic On Spring Home Sales Season, As Investors Eye Builders LEN DHI MHO RYL - Investors.com


PV Mountain Shadows resort owner defaults on loan

The owner of the Mountain Shadows resort in Paradise Valley has defaulted on his loan but says the long-shuttered property's redevelopment will move forward.

A trustee's sale for the resort has been set for July 26.

However, officials with California-based Crown Realty and Development Inc., say that the firm wants to avoid the foreclosure, and is negotiating with lender U.S. Bank Special Assets Groupon a resolution.

Crown Realty, owned by Robert Flaxman, also developed the InterContinental Montelucia Resort & Spa in Paradise Valley, which defaulted on a $180 million loan about three years ago.

Flaxman owes at least $360,000 in taxes on the Mountain Shadows property, according the the Maricopa County Treasurer's Office.

Jason Rose, a spokesman for Crown Realty, said if they are successful in negotiations, there will be no sale. If they are not, Crown can bid on the property at the auction.

"They are optimistic about a resolution," Rose said. "They feel confident in a favorable resolution with the bank that will translate into a favorable re-development of Mountain Shadows for the town."

Dozens of residents showed up for a preliminary presentation of their plans for re-developing the resort, at a Town Council meeting Thursday afternoon.

The plan includes resort hotel, residential, golf and retail facilities.

At the meeting, Flaxman, said his firm plans to work through the loan default.

He bought the 68-acre property from Host Marriott Corp. for $42 million, in January 2007. Host Marriott Corp. is now known as Host Hotels & Resorts.

"We are committed to this project and plan to see it through," Flaxman said.

Town Manager Jim Bacon said Crown Realty has had an application on file with Paradise Valley for several years.

The firm plans to submit a revised application this week.

"The owner has the right to move forward with an application," Bacon said, whether the property is in default or not.

The Mountain Shadows resort, which remains closed at 56th Street and Lincoln Drive, has drawn potential re-development possibilities in recent months.

Residents became hopeful when Phoenix-based JDM Partners, co-owned by sports mogul Jerry Colangelo, entered into a purchase agreement for Mountain Shadows in December.

JDM's projects include Chase Field, US Airways Center,Comerica Theatre and the remodel of the Wigwam resort in Litchfield Park, which represented the company's first foray into the hospitality industry.

However, the firm announced last month that it was unable to reach a final agreement with Crown Realty and is no longer under contract for the property.

JDM officials provided no more information, citing a confidentiality provision in the purchase agreement.

by Philip Haldiman - May. 15, 2012 10:06 AM The Republic | azcentral.com



PV Mountain Shadows resort owner defaults on loan

Investment group buys Buckeye parcel for $7.4 million

An investment group has purchased 2,389 acres of bank-owned land at the northeast corner of Sun Valley Parkway and Thomas Road in Buckeye for about $7.4 million, or $3,098 per acre, a broker involved in the deal said.

The buyer was Elianto LANDVEST, an Arizona entity formed by LANDVEST North America, of California, according to commercial real estate firm Colliers International in Phoenix, which represented LANDVEST.

The seller, Bank Midwest of Kansas City, Mo., was represented by commercial real estate firm Land Advisors in Scottsdale.

Previously the land was to become a residential community for Lennar Homes, which had spent more than $16 million on entitlements alone, Colliers said.

by J. Craig Anderson - May. 15, 2012 04:36 PM The Republic | azcentral.com



Investment group buys Buckeye parcel for $7.4 million

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