Home Owners Associations (HOAs) - Love ‘em or hate ‘em? HOAs get a lot of bad press. Rarely do you see people commenting on how much they appreciate their HOAs. Everyone tends to whine about their HOA. My HOA has irritated me in the past. I’ve gotten the letters about weeds and trash cans left out too long. Once I got a letter saying my grass needed mowing, which I found interesting considering there isn’t a blade of grass in my desert landscaped yard…

Despite that, and the near constant complaining I hear as a real estate agent about HOAs, I for one appreciate mine. Yes, I am on my HOA board of directors, so my opinion may be biased. And I happen to think we have an exceptional HOA. Some of our directors are incredibly dedicated. Our property manager is top notch. It wasn’t until I joined the HOA directors that I really understood everything they and the managment company do for our neighborhood.

People whine about the HOA fines. I wish I could share the stories of waived or reduced fines. How about the HOA nominating for a cash credit a family who’d fallen on hard times? How about the HOA director who offered up their services to help paint a homeowners fence that had been damaged in a traffic accident? How about the director that got a group of people together who did all the labor in making a common area repair that saved the association hundreds of dollars? How about the director the walks the entire community and notes plants that need replacing, or common area improvements, or spends his own time and money making improvements and repairs? The list goes on and on.

Yes, getting a letter from an HOA that you need to put the trash can up, or pull your weeds can be annoying. But contrary to popular belief, they don’t write these letters to annoy you. They write these letters to maintain the community, and hence maintain YOUR property values. If you don’t like something your HOA does, get up off the couch and go to the meetings. Make your opinion known. Run for the board and help make changes that way. But don’t just sit back and complain. And if you do see something good in your neighborhood, a friendly nod to your directors isn’t out of order. The vast majority of HOA directors really do care. They aren’t doing it for fun, trust me…

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Developers now eyeing big picture over the quick buck

Link to article

Apr. 23, 2006 12:00 AM

It’s not all about the money these days in metropolitan Phoenix’s real estate world, at least with some developers. Some builders are talking more about planning for the Valley’s future than what they can make on a deal.

[Jay's opine: Trust me, it IS all about the money.]

Look at the Superstition Vistas deal in the far southeast Valley. That giant swath of desert owned by the Arizona State Land Department could easily turn into the next series of Valley subdivisions with congested roads and not enough jobs or retail to support the homes. But for what is likely the first time in Arizona, developers, utilities and a wide range of government agencies are brainstorming how to work together to grow better. [And "grow better" = "more money". Duh.]

The groups even paid the Morrison Institute, a public-policy think tank, to come up with some ideas of how to better develop the 176,000-acre Superstition Vistas site.

Now look at Papago Park. A dozen prominent Valley real estate executives got together to brainstorm how to make it metro Phoenix’s version of New York’s Central Park.

And some in that group will likely never make money off the park’s facelift.

[Jay's opine: If you don't think a well devloped and high traffic Papago Park won't make money for these folks, I can hook you up with an agent selling swampland in Florida. Check the real estate values around Central Park compared to other parts of Manhattan...]

Also, at recent real estate industry forecasts, the talk has been more focused on water shortages, transportation problems and housing affordability than how much a building sold for or how many housing permits a builder pulled in a subdivision.

Some market watchers, like Rob Melnick of the Morrison Institute, say the Valley’s real estate market is at a crossroads. Developers see growth coming and realize there’s more money to be made if it does. [Jay says, "Um, so much for it not being all about the money..."] But if the area’s problems aren’t tackled now, growth will slow.

Talking about the issues is a good start. But it’s time for action.

Pricier apartments

The average rent on a Valley apartment jumped 6.3 percent in the past year. That’s the biggest annual increase since the mid-1990s.

It now costs $772 a month to rent the typical apartment in metro Phoenix, reports RealFacts. Renters are bound to be shocked because the monthly payments on apartments had been basically flat since 2001.

[Jay's opine: And when apartment rents rise, typically rental rates across all types of housing rise. Rents have been flat here for quite some time.]

Sweet home Arizona

Does the band Lynyrd Skynyrd have ties to the Valley’s real estate market?

According to the Arizona Department of Real Estate, a group of people claiming to have connections to the Southern rock band is contacting real estate agents across the state, claiming to have an investor who wants to buy houses or land. They try to rush the deal and ask for the agents to pay for their hotel rooms and meals. Then when the real estate agent finishes all the paperwork, the potential buyer disappears. And the deal never closes.

The Phoenix Police Department has received several complaints from real estate agents foiled by these Lynyrd Skynyrd groupies.

[Jay's opine: The Arizona Department of Real Estate should receive several complaints about idiotic real estate agents. Any agent who falls for this scam ought to have their license revoked. Too bad there's not a minimum IQ requirement for getting a real estate sales license...]

Arizona

Homes: (Data includes Single Family Homes, condo/Townhomes, 2 - 4plex, mobile/mfg and timeshares):
Active Listings: 37,268 (31,343 SFH’s)
Active With Contingencies (AWC): 1,330 (what does AWC mean?)
Pending: 8,616
Sold (April 1 - April 15): 2,480

Land:
Active: 8,275
AWC: 98
Pending: 773
Sold (4/1 - 4/15): 186

Most expensive current listing: $19,900,000
Number of homes listed over $10,000,000 = 11

For more Phoenix Home Sales stats visit the Statistics Page at http://www.ThompsonsRealty.com

Data is extracted from the Arizona Regional MLS (ARMLS) and compiled by yours truly

Mesa isn’t exactly known for luxury condos (though east Mesa has some stunning homes). Redevelopment in this part of Mesa is badly needed in my opinion. Sounds like an interesting development that we’ll definitely be keeping our eye on!

Luxury condo plan moves ahead

JJ Hensley
The Arizona Republic (LINK)
Apr. 14, 2006 12:00 AM

It’s one of the largest luxury condominium developments in Mesa, going in one of the most unusual locations.

Developers have been working to get the Villages at Country Club off the drawing board and under construction for nearly four years. But with groundbreaking scheduled for July, their efforts to bring a gated, luxury condominium development to a part of Mesa better known for trailer parks and low-rent apartments are finally coming to fruition.

The proposed 375-unit project, which will be spread among 125 buildings on more than 30 acres of land near Southern Avenue and Country Club Drive, could also be a sign of things to come for Mesa, as more developers scramble to snap up prime real estate closer to Phoenix than sprawling developments in Pinal County.

Del Mar Communities, the developers behind the Villages at Country Club, said the land’s proximity to U.S. 60, less than a mile away, was a prime selling point to pique their interest in the land that used to house a large mobile home park. Though the developers wouldn’t talk about pricing for the units, which range in size from about 1,400 to 2,100 square feet, they said the development should compete with starter homes and far-flung locations like Maricopa and Johnson Ranch, and they’re banking on its metro-area location to lure buyers.

“What we are appealing to are those people seeking a simple, country-club lifestyle in an urban environment,” said Walter Kukulka, Del Mar Communities’ vice president. “Young individuals that might be in a position to rent could be in a position to buy.”

The project’s proposed 8,000-square-foot clubhouse and three pools complete the country club lifestyle, but it’s the urban environment surrounding the plot of land, bordered by two trailer parks on the north end, that raises eyebrows among real estate experts.

“It is a good location, but it’s not real strong surroundings. The hope is that things will begin to change,” said Jay Butler, director of the Arizona Real Estate Center at Arizona State University Polytechnic. “A lot of people argue that if you build this project, it will be the stimulus to improve this area. Sometimes that works, sometimes that doesn’t. It’s a question of, do other people have the same vision you do? One project does not turn things around.”

Although that might be good for the city to bring higher income earners to an area that hasn’t seen new housing development in decades, John Smith, president of Housing for Mesa, which helps find housing for low-income families, said the city should also be aware of the residents displaced when infill developments like these come along.

“I think the challenge that we see for the families that are currently there, in those trailers, is that most of them are on a very limited income and may even be fixed,” Smith said. “They may not owe much on the trailer but it may or may not be movable. It’s very difficult, especially with older mobile home parks, for those families to take the income they’ve been living on and purchase way beyond what they’ve been budgeting for.”

The 2005 NAR (National Association of Realtors) Profile of Second-Home Buyers revealed that almost one out of three single-family, condo and new home sales were second-homes. NAR’s Keunwon Chung investigates the second-home boom by analyzing mortgage loan data and tells us where second-home buying activity is most prevalent. The following is from the March 2006 Real Estate Insights.

Second-Home Boom

by Keunwon Chung, Statistical Economist

The housing market has just posted its fifth consecutive year of record- setting home sales. And the U.S. homeownership rate bears this out: the U.S. Census Bureau reports that the nation’s homeownership rate was 68.9 percent at the end of the year. More than 74 million American households own their own home.

But this record-breaking housing boom was not just limited to those homes purchased as primary residences. The second-home market also benefited. Generational low interest rates, increased variety of mortgage products and home equity built through strong home appreciation made it easier for home buyers to not only trade up their primary residence homes, but to purchase additional properties as vacation or investment homes.

Behind the Trend

Tax law reforms that took effect in 1997 helped propel the surge in second home demand. These reforms allowed home sellers to exclude up to $500,000 in capital gains from taxation. Homeowners did not have to buy expensive homes to avoid capital gains tax any more. Instead, buying a smaller/less expensive primary residence and a second home (whether used as a vacation home or an investment vehicle) with the tax-free gain made second-home buying more financially attractive to homeowners than ever before.

Many homeowners purchase second homes to diversify investments. Real estate gains have been offsetting stock market declines. For example, from 2000 to 2004, existing home price appreciation increased 55 percent while the Standard & Poor’s 500 index declined 15 percent. As an investment choice, the housing market presented an attractive alternative to stocks for investors.

NAR Research analyzed the trend in the U.S. second-home market using data collected in compliance with the Home Mortgage Disclosure Act (HMDA). Each individual loan application record is submitted with detailed information on the applicant’s demographics, geographic location of the property, and details about the loans (mortgage rate, terms, length of the loan, etc.). Although the use of this data has some limitations*, it provides a rich set of tools to analyze the housing market.

Historical Trends

According to HMDA data, the national share of purchase loans for second homes – defined as ”other than owner-occupied as a principal dwelling” – increased from 8.6% to 14.2% from 2000 to 2004. That represents an annual average growth rate of 16% during that time period. The actual number of purchase loans doubled, increasing from 405,000 to 881,200.

The median incomes of second-home buyers were higher than those of primary home buyers by 50 percent or more. The 2005 National Association of REALTORS® Profile of Second-home Buyers confirms this as well. According to the NAR survey, though, the difference was narrower. In 2004, the median incomes were $66,700 for primary home buyers and $80,700 second home buyers.

The median loan amounts for primary homebuyers were consistently higher than those for second-home buyers. This is quite interesting because the median price of second homes – $172,000 – was higher than the median price of primary homes – $170,000. (The NAR survey report breaks down second-home prices by purpose – $190,000 for vacation homes and $148,000 for investment homes). One possible explanation for the difference between second-home and primary-home prices could be wealthy baby boomers nearing retirement and buying properties in more expensive regions.

Hot Spots

According to the NAR Survey, the majority of second-home buyers desire homes close to their primary residence or job/school. Investment property buyers are more likely to choose a second home near their primary residence than vacation homebuyers. Although vacation home buyers still consider places close to certain vacation spots with appealing climates and lifestyles, the survey results revealed a new trend toward shorter vacation rather than long-term breaks, markets close to major cities are strong.

Second homes are located throughout the country, but there are some areas more “popular” than others. States such as Florida and Hawaii have been all-time favorites for both vacation homes and investment properties; indeed, almost all metropolitan areas in Florida recorded high second-home shares in 2004.

But recently the number of second-home purchases in states such as Nevada, Arizona and Utah is growing faster than in any other states with a measurable second home market. One reason why these states in the West are experiencing such a second-home boom is because they are known for their vacation spots that afford opportunities for skiing, gambling, golf, camping, and other leisure activities. At the same time they are experiencing high population growth with active migration inflows. Other fast growing second-home states are those close to large metropolitan areas including San Francisco CA, Washington DC, Los Angeles CA, Boston MA, New York NY and Seattle WA.

Conclusion

As is the case in the primary home market, the majority of second-home purchasers are baby boomers. Boomers are still in their peak earning years and they can afford second homes for vacation purposes or as investment vehicles to diversify their portfolios. For the next decade, baby boomers still will continue to drive housing markets, particularly the second-home segment.

*Since the data set is collected through loan applications, it does not include those home purchases made with all cash. Another limitation is it does not differentiate between home equity loan or primary mortgage loan applications until 2004.

Reprinted from Real Estate Insights (www.realtor.org/reinsights) March 2006 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2006. All rights reserved.