Mid-Year MPES 2014 | Jeannine Bartniki

Produced by Desert Lifestyle Publishing • 480.460.0996 • www.DesertLifestyle.net

METROPHOENIXeconomic snapshot

mid-year 2014

2013 AVERAGE SALES PRICE BY CITY 2014 AVERAGE SALES PRICE BY CITY

Statistics gathered from ARMLS. All information deemed reliable but not guaranteed. (Single-Family Residences)


2014 SALES STATISTICS BY COMMUNITY

Ancala $1,228,631 141 95% 23Arcadia $813,660 138 91% 23Bellasera $658,386 78 96% 14Biltmore $794,656 106 94% 35DC Ranch $1,374,006 109 96% 64Desert Highlands $1,364,595 133 95% 83Desert Mountain $1,498,338 353 93% 59Eagle Mountain $580,691 101 96% 16Estancia $2,727,000 211 90% 10FireRock $1,547,500 186 95% 8Gainey Ranch $876,646 182 94% 14Grayhawk $734,932 105 97% 52Hidden Hills $609,167 94 97% 18Ironwood Village $446,746 87 97% 24Kierland $503,311 62 98% 12Legend Trail $623,887 111 97% 33McCormick Ranch $529,921 87 97% 31McDowell Mountain Ranch $584,058 79 97% 98Mirabel $1,248,247 84 95% 18Scottsdale Mountain $865,064 144 96% 22Scottsdale Ranch $594,161 122 96% 52Sincuidados $984,992 47 93% 6Silverleaf $3,224,679 172 97% 17Stonegate $611,031 109 96% 28Terravita $553,350 71 97% 44Troon North $617,746 150 96% 26Troon Village $831,793 164 95% 29Whisper Rock $2,200,000 51 83% 1

Community Average Days on List/Sell # Closed Sale Price Market Price Ratio

As the leader in magazine-style newsletters Desert Lifestyle Publishing can position you as the real

estate expert in your area or geo-farm. Metro Phoenix

Economic Snapshot is a review of the first half of

2014 and provides detailed statistics regarding the

Valley’s housing market. To position and market yourself

as the leading real estate professional in your area call

us today at 480.460.0996.

Lori Anna Harrison President

MID-YEAR METRO PHOENIX BY THE NUMBERS

[email protected]

We Know Marketing.We Know Real Estate.

Arizona has weathered quite the economic storm. After posting consistent top five rankings in job growth, the last economic downturn saw us slip to #49 nationally in this key economic statistic. This ranking improved to 10th in 2013, but has since slowed to 15th through the first half of 2014.

Despite the relatively lackluster performance during the current economic expansion, the state is still a good long term bet. None of the core economic fundamentals have really changed. In fact, one could argue that we have improved our position as it relates to economic competitiveness. Following the recession, state leaders decided it was time to reexamine tax rates and economic development tools. Improvements were made and we are now recruiting higher value added jobs. These trends will likely continue and the state will once again be top five in job growth (and hopefully population and income growth as well). This optimistic outlook does come with caveats.

The economic expansion is five years old as of June 2014. This is about the duration of the average expansion. While the risk of recession is currently low, it is still an important point to keep in mind. Businesses and consumers are not currently burying themselves in excesses and debt similar to what we saw in the 2000s. If a downturn does come our way during the next three or four years, it will more likely be “shock” driven and will be very minor. The larger point is that we may be experiencing an expansion in our state that could be void of a true boom period. This may not be the most likely scenario, but it is a real possibility and people should plan accordingly.

Even though business and political leaders are working feverishly on attracting and growing the number of higher wage jobs, the state will continue to be dependent on growth-based industries. This is because it takes a really long time to change the economic profile of an economy as large as Arizona, or even its major sub-markets including Greater Phoenix. We still need people to move here and buy homes. This activity will likely accelerate in 2015 and 2016 as more people qualify for mortgages, find jobs, and become more confident in the economy.

We also need to decide what current trends are permanent and what are transitory. The “Millennials” have indeed impacted the overall demand for single family housing. Homeownership among this age group is relatively low at the moment. However, this issue has been overhyped. The same group purchased single family housing at record rates just five years ago. What we are seeing is economic based, not social. Social changes occur over a much longer period of time and can be more permanent in nature. Economic trends change with the business cycle. This means that the trends will likely shift back to what

we experienced in the past. People will again want to move to areas like Greater Phoenix to work and raise a family and buy houses with backyards.

The most overlooked risk to our optimistic outlook for Arizona and Greater Phoenix relates to the state and local government entities. The state is at risk of experiencing a revenue shortfall of between $500 million and $1.0 billion by 2017. There are current discussions of using the “rainy day” fund to assist with this deficit. However, this is stuff that should only happen during an economic downturn, not during an expansion. This comes at a time when we are also getting behind in our transportation infrastructure investment, and at a time when many questions exist related to how we educate our kids and train the workforce. Similar issues exist at the local government level, but it varies greatly depending on the city or county. Maricopa County is in great shape and is already setting aside reserve funds for the next downturn, while some cities are raising taxes and fees. This needs to be fixed during the next couple of years.

Despite the aforementioned risks to the state and local economies, the overall outlook is very favorable for Greater Phoenix and Arizona. Next year will be better than this year, and 2016 will be better than 2015. Some risks exist but we remain a solid bet. We just need to give it more time and be diligent in some key areas. Our forecast of key economic indicators is provided for additional perspective.

Residential Real Estate By Michael Orr | Director of Real Estate Studies at ASU & Principal of The Cromford Report

Between September 2011 and July 2013 the Greater Phoenix housing market staged an impressive recovery. This recovery started earlier than the rest of the country and for most of this period our home prices increased faster than in any other large metropolis. The monthly median sales price for single family, townhomes and condominiums rose 69% from a low of $112,000 in August 2011 to reach $189,000 by July 2013. However in the 12 months since then we have seen the median sales price add $6,000 to reach $195,000, an increase of only 3%, not a great deal higher than inflation.

Clearly the market in the summer of 2014 is very different from a year ago.

Inventory was low through June 2013 causing competition between buyers. This was particularly true at the lower end of the market. From July onwards, demand started to soften causing sales volumes to decline and available inventory to climb. Financed transactions are once again becoming the norm replacing the all-cash deal.

Investors have reduced their buying from a peak of almost 40% of the market in July 2012 to less than 15% two years later. Instead they are now more focused on managing their substantial inventory of rentals which have high occupancy rates and are meeting a demand for leased homes that continues to grow. With strong demand and little new supply, rental rates have started to climb.

Many ordinary home buyers appear to have decided to sit on the sidelines too. In 2014 this is particularly true of first time home buyers and especially those under 35 years of age. The underlying key problem for entry-level and mid-range housing demand is a lack of household formation. This has been dropping for a long time due to a number of factors including unemployment, falling birth rates, stagnant wages, lower net migration and greater home sharing especially among millennials. If household creation were to return to the normal long term average we would quickly have a housing shortage here in Greater Phoenix.

The luxury market continues to perform well in 2014, and in 2013 had its best year since 2006 buoyed by a rising stock market and improved availability and attractive terms for jumbo financing.

At the start of 2011, nearly half of homes purchased were lender owned foreclosures, but by the middle of 2014 these had dropped to less than 6% of sales. Meanwhile normal sales have increased from just 29% in January 2011 to 90% in June 2013. During 2012 short sales took over from foreclosures as the favorite means of resolving home loan delinquency, but these too became relatively uncommon by the end of 2013. They constituted 19% of sales at the beginning of 2011 and only 4% by the middle of 2014.

Delinquent home loans were running as high as 16.3% in Arizona as recently as February 2010. By April 2014 this had dropped to 4.5% according to reports by Black Knight Financial Services, which is a little below the long-term average. This improvement over 4 years is the largest of any state in the nation. Arizona’s non-judicial foreclosure process allowed it to eliminate delinquent loans at a much faster pace than states with a judicial process. This is bad news for the borrowers involved, but good news for the market since we no longer have the

impending threat of significant distressed inventory coming onto the market. However we do have a large number of potential home buyers who are currently renting and are not yet eligible to qualify for a loan because of the foreclosure in their recent credit history.

In 2013, new home sales increased 11% over the previous year. This was disappointing to many developers given the 49% increase between 2011 and 2012. However 2014 has been even more disappointing with new home closings some 13% lower than the first half of 2013. Demand has waned as a result of much higher pricing and uncertain consumer sentiment. The millennium generation is participating much less in new home buying than older generations for a variety of reasons. Many of those who are financially secure wish to live downtown where there are very few new homes available. Those who are not financially secure find it hard to qualify for a loan or raise the necessary down payment. The majority continue to prefer the flexibility of renting despite the long term financial downside to their choice.

Overall the Greater Phoenix housing market has recovered from the recession but now sits becalmed in a period of weak demand and low activity waiting for normal conditions to return. In many areas buyers are now at an advantage when negotiating with sellers, though not in those areas catering to older age groups such as Sun Lakes, Sun City and Sun City West. In the current market, there is no longer any strong pressure on home prices either up or down so we anticipate that 2014 will see much less price movement than the last two years.

|

It’s Not the Year, It’s the Mileage Economic Update 2014 By Jim Rounds | Elliott D. Pollack & Co.

POPULATION1.7% increase in 20141.8% increase in 2015

EMPLOYMENT2.7% increase in 20143.0% increase in 2015

RETAIL SALES5.0% increase in 20145.0% increase in 2015

SINGLE FAMILY PERMITS-10.0% decrease in 201415.0% increase in 2015





GREATER PHOENIX ECONOMIC FORECAST2014 - 2015

ARIZONA ECONOMIC FORECAST2014 - 2015

Source: Elliott D. Pollack & Co. forecasts as of June 2014.

Arizona has weathered quite the economic storm. After posting consistent top five rankings in job growth, the last economic downturn saw us slip to #49 nationally in this key economic statistic. This ranking improved to 10th in 2013, but has since slowed to 15th through the first half of 2014.

Despite the relatively lackluster performance during the current economic expansion, the state is still a good long term bet. None of the core economic fundamentals have really changed. In fact, one could argue that we have improved our position as it relates to economic competitiveness. Following the recession, state leaders decided it was time to reexamine tax rates and economic development tools. Improvements were made and we are now recruiting higher value added jobs. These trends will likely continue and the state will once again be top five in job growth (and hopefully population and income growth as well). This optimistic outlook does come with caveats.

The economic expansion is five years old as of June 2014. This is about the duration of the average expansion. While the risk of recession is currently low, it is still an important point to keep in mind. Businesses and consumers are not currently burying themselves in excesses and debt similar to what we saw in the 2000s. If a downturn does come our way during the next three or four years, it will more likely be “shock” driven and will be very minor. The larger point is that we may be experiencing an expansion in our state that could be void of a true boom period. This may not be the most likely scenario, but it is a real possibility and people should plan accordingly.

Even though business and political leaders are working feverishly on attracting and growing the number of higher wage jobs, the state will continue to be dependent on growth-based industries. This is because it takes a really long time to change the economic profile of an economy as large as Arizona, or even its major sub-markets including Greater Phoenix. We still need people to move here and buy homes. This activity will likely accelerate in 2015 and 2016 as more people qualify for mortgages, find jobs, and become more confident in the economy.

We also need to decide what current trends are permanent and what are transitory. The “Millennials” have indeed impacted the overall demand for single family housing. Homeownership among this age group is relatively low at the moment. However, this issue has been overhyped. The same group purchased single family housing at record rates just five years ago. What we are seeing is economic based, not social. Social changes occur over a much longer period of time and can be more permanent in nature. Economic trends change with the business cycle. This means that the trends will likely shift back to what

we experienced in the past. People will again want to move to areas like Greater Phoenix to work and raise a family and buy houses with backyards.

The most overlooked risk to our optimistic outlook for Arizona and Greater Phoenix relates to the state and local government entities. The state is at risk of experiencing a revenue shortfall of between $500 million and $1.0 billion by 2017. There are current discussions of using the “rainy day” fund to assist with this deficit. However, this is stuff that should only happen during an economic downturn, not during an expansion. This comes at a time when we are also getting behind in our transportation infrastructure investment, and at a time when many questions exist related to how we educate our kids and train the workforce. Similar issues exist at the local government level, but it varies greatly depending on the city or county. Maricopa County is in great shape and is already setting aside reserve funds for the next downturn, while some cities are raising taxes and fees. This needs to be fixed during the next couple of years.

Despite the aforementioned risks to the state and local economies, the overall outlook is very favorable for Greater Phoenix and Arizona. Next year will be better than this year, and 2016 will be better than 2015. Some risks exist but we remain a solid bet. We just need to give it more time and be diligent in some key areas. Our forecast of key economic indicators is provided for additional perspective.

Residential Real Estate By Michael Orr | Director of Real Estate Studies at ASU & Principal of The Cromford Report

Between September 2011 and July 2013 the Greater Phoenix housing market staged an impressive recovery. This recovery started earlier than the rest of the country and for most of this period our home prices increased faster than in any other large metropolis. The monthly median sales price for single family, townhomes and condominiums rose 69% from a low of $112,000 in August 2011 to reach $189,000 by July 2013. However in the 12 months since then we have seen the median sales price add $6,000 to reach $195,000, an increase of only 3%, not a great deal higher than inflation.

Clearly the market in the summer of 2014 is very different from a year ago.

Inventory was low through June 2013 causing competition between buyers. This was particularly true at the lower end of the market. From July onwards, demand started to soften causing sales volumes to decline and available inventory to climb. Financed transactions are once again becoming the norm replacing the all-cash deal.

Investors have reduced their buying from a peak of almost 40% of the market in July 2012 to less than 15% two years later. Instead they are now more focused on managing their substantial inventory of rentals which have high occupancy rates and are meeting a demand for leased homes that continues to grow. With strong demand and little new supply, rental rates have started to climb.

Many ordinary home buyers appear to have decided to sit on the sidelines too. In 2014 this is particularly true of first time home buyers and especially those under 35 years of age. The underlying key problem for entry-level and mid-range housing demand is a lack of household formation. This has been dropping for a long time due to a number of factors including unemployment, falling birth rates, stagnant wages, lower net migration and greater home sharing especially among millennials. If household creation were to return to the normal long term average we would quickly have a housing shortage here in Greater Phoenix.

The luxury market continues to perform well in 2014, and in 2013 had its best year since 2006 buoyed by a rising stock market and improved availability and attractive terms for jumbo financing.

At the start of 2011, nearly half of homes purchased were lender owned foreclosures, but by the middle of 2014 these had dropped to less than 6% of sales. Meanwhile normal sales have increased from just 29% in January 2011 to 90% in June 2013. During 2012 short sales took over from foreclosures as the favorite means of resolving home loan delinquency, but these too became relatively uncommon by the end of 2013. They constituted 19% of sales at the beginning of 2011 and only 4% by the middle of 2014.

Delinquent home loans were running as high as 16.3% in Arizona as recently as February 2010. By April 2014 this had dropped to 4.5% according to reports by Black Knight Financial Services, which is a little below the long-term average. This improvement over 4 years is the largest of any state in the nation. Arizona’s non-judicial foreclosure process allowed it to eliminate delinquent loans at a much faster pace than states with a judicial process. This is bad news for the borrowers involved, but good news for the market since we no longer have the

impending threat of significant distressed inventory coming onto the market. However we do have a large number of potential home buyers who are currently renting and are not yet eligible to qualify for a loan because of the foreclosure in their recent credit history.

In 2013, new home sales increased 11% over the previous year. This was disappointing to many developers given the 49% increase between 2011 and 2012. However 2014 has been even more disappointing with new home closings some 13% lower than the first half of 2013. Demand has waned as a result of much higher pricing and uncertain consumer sentiment. The millennium generation is participating much less in new home buying than older generations for a variety of reasons. Many of those who are financially secure wish to live downtown where there are very few new homes available. Those who are not financially secure find it hard to qualify for a loan or raise the necessary down payment. The majority continue to prefer the flexibility of renting despite the long term financial downside to their choice.

Overall the Greater Phoenix housing market has recovered from the recession but now sits becalmed in a period of weak demand and low activity waiting for normal conditions to return. In many areas buyers are now at an advantage when negotiating with sellers, though not in those areas catering to older age groups such as Sun Lakes, Sun City and Sun City West. In the current market, there is no longer any strong pressure on home prices either up or down so we anticipate that 2014 will see much less price movement than the last two years.

|

It’s Not the Year, It’s the Mileage Economic Update 2014 By Jim Rounds | Elliott D. Pollack & Co.









GREATER PHOENIX ECONOMIC FORECAST2014 - 2015

ARIZONA ECONOMIC FORECAST2014 - 2015

Source: Elliott D. Pollack & Co. forecasts as of June 2014.

Transaction Type (group) Lender Owned Short Sales Normal

Transaction Type (group) Lender Owned Short Sales Normal

METROPHOENIXeconomic snapshot

mid-year 2014

2013 AVERAGE SALES PRICE BY CITY 2014 AVERAGE SALES PRICE BY CITY



2014 SALES STATISTICS BY COMMUNITY

Ancala $1,228,631 141 95% 23Arcadia $813,660 138 91% 23Bellasera $658,386 78 96% 14Biltmore $794,656 106 94% 35DC Ranch $1,374,006 109 96% 64Desert Highlands $1,364,595 133 95% 83Desert Mountain $1,498,338 353 93% 59Eagle Mountain $580,691 101 96% 16Estancia $2,727,000 211 90% 10FireRock $1,547,500 186 95% 8Gainey Ranch $876,646 182 94% 14Grayhawk $734,932 105 97% 52Hidden Hills $609,167 94 97% 18Ironwood Village $446,746 87 97% 24Kierland $503,311 62 98% 12Legend Trail $623,887 111 97% 33McCormick Ranch $529,921 87 97% 31McDowell Mountain Ranch $584,058 79 97% 98Mirabel $1,248,247 84 95% 18Scottsdale Mountain $865,064 144 96% 22Scottsdale Ranch $594,161 122 96% 52Sincuidados $984,992 47 93% 6Silverleaf $3,224,679 172 97% 17Stonegate $611,031 109 96% 28Terravita $553,350 71 97% 44Troon North $617,746 150 96% 26Troon Village $831,793 164 95% 29Whisper Rock $2,200,000 51 83% 1

Community Average Days on List/Sell # Closed Sale Price Market Price Ratio

MID-YEAR METRO PHOENIX BY THE NUMBERS

Jeannine BartnickiSENIOR SALES & MARKETING CONSULTANT

We are already half way thru 2014! Our Arizona housing market has had a few ups and downs but continues moving in a positive direction. The information I have provided helps provide a road map of expectations.

There has been some nice appreciation in certain areas of the Valley. The stats vary greatly and can only be accurately assessed within the local community and price range of interest. This makes the point that “all real estate is local”, down to your specific neighborhood.

Today’s market is dominated by “normal” sales. Since distressed properties were primarily lower-end properties, we now find substantially fewer homes under $100K. The luxury market remains stable both in sales and inventory.

Interest rates continue to be low and will most likely remain so due to the upcoming November elections. That remains good news for both buyers and sellers.

It is my mission to provide you with the latest information pertaining to your home’s value and the state of the State of Arizona! Take advantage of my 21 years of experience helping people coupled with Russ Lyon Sotheby’s Int’l Realty, the most prestigious real estate brand in the world. We are here for you!

– Jeannine

Jeannine Bartnicki CRS, GRI, ABR, SRS, e-PRO, RSPS, CDPE, CLHMS

Certified Luxury Home Property SpecialistCertified Residential Specialist

[email protected]

JBDreamHomes.com

“It is my mission to provide you with the latest information pertaining to your home’s value and the state of the State of Arizona! “

Produced by Desert Lifestyle Publishing • 480.460.0996 • www.DesertLifestyle.netIf your home is currently listed, this is not a solicitation for that listing.

Mid-Year MPES 2014 | Jeannine Bartniki

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