Arizona Homebuilder

DECEMBER | JANUARY 2014

ArizonaHomebuilder Eliant Ranks Homeowners Financial Group #1

Steady With Improvement Expected Metro Phoenix New Home Sales

Why do so many builders name HFG their preferred lender?

“Our buyers are always impressed and satisfied with the professionalism and overall service received by Homeowners Financial Group.”

Mark & Julie Hancock, Founders – Camelot Homes

SERVICE LEVEL COMMITMENTS · All Builder Files Receive Initial 30-Day Underwriting · Extended Locks up to 12-Months · Customized Marketing Support PORTFOLIO SELECT PRODUCTS · Expanded FHA and Conventional · Clean Slate Program · Construction Financing

WWW.HOMEOWNERSFG.COM • 480.305.8550

Old Town Scottsdale

16427 N. Scottsdale Rd. Suite #145 Scottsdale, AZ 85254

Arrowhead

16165 N. 83rd Ave. Suite #120 Peoria, AZ 85382

HOMEBUILDER SPOTLIGHT

Chandler

CORPORATE OFFICE

55 N. Arizona Place Suite #204 Chandler, AZ 85225

16427 N. Scottsdale Rd. Suite #145 Scottsdale, AZ 85254

Prescott

140 N. Montezuma Street Suite #100 Prescott, AZ 86301

Brentwood

11777 San Vicente Blvd. Suite #601 Los Angeles, CA 90049

Westlake

340 N. Westlake Blvd. Suite #155 Westlake Village, CA 91361

Homeowners Financial Group USA, LLC NMLS#93718 lends in the following states, AZ BK #0906222; CA Finance Lenders Law License # 603 F033; ID # MBL-5879; NM # 03068; ND #MB102538; OR # ML-5229 WA: #CL-93718 and is registered in CO. 866-305-8059.

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

KNOWLEDGEBASE Featured Builder

FINANCE CORNER

Woodside Homes Inspires with IWALL and Design Flexibility

KnowledgeBase JIM BELFIORE

National award-winning Woodside Homes has been carving its niche in the Phoenix metropolitan area since the early 1990s. By listening to their customers and incorporating feedback, they are well prepared to compete in the current resurgence in the new home market.

“It’s exciting to be part of the homebuilding industry that is experiencing such a comeback – particularly here in Arizona,” said Dana Spencer, Director of Sales and Marketing. “Over the past few years we revamped our product line. As a result we are keenly focused on delivering home designs built with today’s buyer in mind. We are bringing fresh, new ideas that are a reflection of their personality and lifestyle.”

DANA SPENCER

Director of Sales & Marketing Woodside Homes

Founded in 1977 and now in five states, Woodside Homes are built with a commitment to quality construction, and with “lifestyle” designs that express the personality of the homeowner. For example, there are floor plans that include a small office off of the kitchen – a perfect place for children to complete homework while being near the center of family mealtime.

“We are unique in that we are a private builder playing in a big builder arena,” Spencer said. “That means we have the distinction of being able to accommodate many buyers’ requests to customize their new home.”

This degree of flexibility usually is reserved for custom or higher end homes, but it is available from Woodside Homes which offers homes in the starter and move-up categories.

New designs aren’t the only innovation from Woodside Homes. Introduced in 2011, the IWALL – or “inspiration” wall - gives customers the opportunity to see the true cost of the home of their dreams before signing a contract.

The IWALL process lets a buyer design and personalize their home with their budget in mind. They can select many options, from flooring to cabinetry, countertops, and fixtures. With the IWAll, the buyer can categorize their design style by Eclectic, Contemporary, Traditional and these styles are demonstrated in our models. This allows the buyers based on their style to personalize their home just like our featured models.

“We put together a detailed cost sheet so they can make choices based upon what they want, what they need, and what they can afford. With IWALL our buyers leave the sales office with a firm idea of what their home will cost,” Spencer said. “We believe that working with our prospective buyers to give them this peace of mind about what they are purchasing is a great advantage for Woodside Homes.”

Woodside Homes is really all about offering communities that will fit every buyer’s wants and needs with designs and amenities that fit their vision of what they want and their lifestyle.

Woodside Homes currently is building in eight communities in the metropolitan Phoenix area. There are developments underway in Phoenix, Peoria, Gilbert and the Eastmark master-planned community in Mesa, offering homes ranging from 1,300 to nearly 5,000 square feet. Grand openings are on deck for December at Vistancia in Peoria, and in early 2014 at The Bridges in Gilbert.

Steady with improvement expected…..

That's one phrase that could be used to describe the pace of the new housing recovery here in Metropolitan Phoenix, at least as we move closer to the year end.

On the other hand, the region's housing industry is grateful for the continuing improvement that we are seeing as we move from the depths of the "great recession".

It leaves observers to only imagine what the housing recovery and the economy in general here in Metropolitan Phoenix might be like had we not been stymied by the political deadlock, economic policy uncertainties, and the business and consumer confusion that has dominated our daily lives for weeks on end.

It's pretty obvious by now that our own housing market forecast for this year appears to be right on target and that the overly optimistic outlook promoted by some segments of this local housing industry were well off the mark.

It appears quite likely that the our housing market conditions will not improve to any great degree over the balance of the year as both consumers and producers remain in a "caution" mode awaiting comprehensive resolution of the uncertainties regarding the nation's economic future.

Year to date so far in 2013 thru September we have counted 8462 new home closings in the Metropolitan area versus 6870 new home closings in the same period last year.

This represents an increase of 23.17% in new home escrow closing activity for the year

to date.

And what about 2014? If we assume that the uncertainties surrounding the economy and the budget and deficit are mitigated over the next 2 to 3 months, we believe that we can expect to see some additional improvement in the Metropolitan Phoenix housing market in total sales and specifically in the new home segment of the marketplace in 2014, with the full effects of an improving economy probably not being felt in housing until perhaps 2015 and 2016.

The construction labor market can be expected to remain tight until there is a resolution to the immigration challenges, but the flow of materials for new home construction should improve in the months ahead.

The building lot supply picture should also begin to see improvement as developers and large homebuilders crank up their lot development activities anticipating additional housing demand over the next several years.

We do not expect Phoenix housing production to reach the heady levels of the mid-2000’s but we think the expectation for gradual continued improvement in new housing sales and production is well found and that consumers will return to the marketplace in reasonable numbers over the midterm.

For additional insight and market data call Greg Burger at 480-614-0211 or visit our website at www.RLBrownreports.com.

Belifore Real Estate Consulting

If you talk to a Metro Phoenix Area homebuilder today, you might get the wrong impression. Most of those that we have spoken with regarding October and early November have described sales conditions as “horrible” or “terrible” or something similar. Builders expected more; we expected more, but the market has not delivered the boost in buyers this year. Reality is total new home sales were higher this October / November than they were one year ago, and they were higher at much higher prices. Builders have made more money being homebuilders this year than last. How is this horrible? Builders are certainly challenged in continuing to make money in the coming 24 months at the “new” land prices, the new development costs, at the new home construction costs, and at a slightly slower pace (per community) than anticipated. Worry wrinkles may be forming on some foreheads, but employment and population growth continue to come, and people need shelter.

Despite what seems like panic with a few active homebuilders (co-brokerage fees are up and some homebuilders are decreasing prices), recent, real-time housing data suggests the housing market is anything but horrible.

Monthly net new home price gains slowed in September, October, and early November. On a metro-wide basis, prices rose 0.4% from August to September 2013. The gain was the smallest since February 2012. When the data is in and calculated, the October and November gain will be lower.

Still, prices are up 7.5% since the beginning of the year, and if Belfiore’s forecast proves correct, the net gain in prices this year will have been 8.0%. Coupled with last year, prices will have risen nearly 20%, net of incentives.

In the West Valley, subject region of this month’s publication, net new build prices rose 0.6% from August 2013 to October 2013. In four submarkets, prices declined, but in most, prices were flat to increasing. West Valley prices are up 9.7% over the last 12 months.

The total number of sales was up by more than 80 homes over the last month (from the same period last year), but the number of sales per subdivision was down. A total of 2.0 sales per subdivision took place from mid-October to mid-November, down from 2.4 last month and 2.2 sales during the same period one year ago. The sales pace will fall through year-end, before rebounding in mid-to-late January and February.

Permit activity thus far this year is up over the first eight months of last year; it was 7% higher through August, according to the U.S. Census Bureau. Month-to-month issuances are flat, though, so total permits this year are on pace for 12,425 total issuances. Last year, a total of 11,859 were issued.

Belfiore analysts are projecting 12,300 total this year, followed by 17,100 next year, and 22,000 in 2015.

Impact of “Quality Mortgage” Regulations on Homebuyers The Dodd-Frank Wall Street Reform Act of 2010 requires the creation and implementation of 398 rules. Only 160 of those rules have been finalized, but on January 10th a couple rules will be impactful to homebuyers.

The Act requires that lenders “must make a reasonable and good faith determination Vice President of Operations based on verified and documented Homeowners Financial Group information that the consumer has a reasonable ability to repay the loan.” It also establishes a “Safe Harbor” and presumption of compliance for a certain category called “Qualified Mortgages” (QM). It’s obvious that lenders should make sure borrowers can repay the loan, and it’s the way the industry has operated since “No Doc” loans went extinct over five years ago. So what is really changing on January 10th? Basically, lenders have to document that loans meet the characteristics of “Qualified Mortgages” if they want to be protected from litigation.

CHRIS MOZILO

Under the Qualified Mortgage (QM) rule, loans cannot contain risky features (i.e., interest only, negative amortization or balloon payments), and the term cannot exceed 30 years. Points and fees are limited to 3% for loans of $100,000 or more (higher thresholds are permitted below $100,000). In addition, for most QM loans, debt-to-income (DTI) ratio is limited to 43%. The max DTI does not apply to FHA, VA, or USDA eligible loans that have a valid automated underwriting system (AUS) approval. There’s also a temporary waiver for Fannie & Freddie loans to exceed the max 43% DTI with a valid AUS approval while they are under conservatorship of the Federal government. It’s important to note that non-QM loans won’t be prohibited, but the lender must document that the borrower has the ability to repay the loan based on a specific set of rules.

A.B.C.

Builder speculative inventory increased again from September to October, but only by 2% (versus 20% last month). A total of 1,444 inventory homes, 986 of which were within 60 days of completion, existed in September. While the magnitude of the increase over the last year is more significant (22%), levels remain low by historical standards.

MLS inventory has increased, too. A total of more than 27,105 homes were available through Arizona Regional Multiple Listing Service (“MLS”) recently, according to Cromford Report (“Cromford”). The present figure is 5% higher than last month at this time and 16% above the last year. More people are listing homes now, although sales have fallen off.

Less demand and more supply has resulted in a temporary respite in rising prices. Resale prices, Cromford data suggests, have been flat over the last four months. Belfiore anticipates prices continuing along the same flat path through January or February, when seasonal demand returns.

The above is an excerpt from KnowledgeBase by BREC. For the full report visit www.BelfioreConsulting.com.

What is 2014 Agents Benefiting Children? Scottsdale’s 2030 local

Children’s charities Fundraiser for the RESIDENTIAL REAL ESTATE COMMUNITY How does your Team work? Pick a Captain, pick your Team, start Fundraising and Compete to WIN!

Team Olympiad Championship: FRIDAY, February 7th at Tempe Beach Park What’s the Team Olympiad Championship? A fun and competitive day for participants!

An event for all competing teams to network, compete, have fun and WIN a new Right Toyota!

Volleyball, Baggo, Bocce Ball, Quarterback Challenge , Basketball AND MORE!

All Residential Teams come loaded for competition; wear your proudest company logo.

What Charities Benefit? The CARE Fund is the main beneficiary, plus many other local charities! For details visit www.Scottsdale2030.org

Woodside Homes Inspires with IWALL and Design Flexibility

KnowledgeBase JIM BELFIORE

National award-winning Woodside Homes has been carving its niche in the Phoenix metropolitan area since the early 1990s. By listening to their customers and incorporating feedback, they are well prepared to compete in the current resurgence in the new home market.

“It’s exciting to be part of the homebuilding industry that is experiencing such a comeback – particularly here in Arizona,” said Dana Spencer, Director of Sales and Marketing. “Over the past few years we revamped our product line. As a result we are keenly focused on delivering home designs built with today’s buyer in mind. We are bringing fresh, new ideas that are a reflection of their personality and lifestyle.”

DANA SPENCER

Director of Sales & Marketing Woodside Homes

Founded in 1977 and now in five states, Woodside Homes are built with a commitment to quality construction, and with “lifestyle” designs that express the personality of the homeowner. For example, there are floor plans that include a small office off of the kitchen – a perfect place for children to complete homework while being near the center of family mealtime.

“We are unique in that we are a private builder playing in a big builder arena,” Spencer said. “That means we have the distinction of being able to accommodate many buyers’ requests to customize their new home.”

This degree of flexibility usually is reserved for custom or higher end homes, but it is available from Woodside Homes which offers homes in the starter and move-up categories.

New designs aren’t the only innovation from Woodside Homes. Introduced in 2011, the IWALL – or “inspiration” wall - gives customers the opportunity to see the true cost of the home of their dreams before signing a contract.

The IWALL process lets a buyer design and personalize their home with their budget in mind. They can select many options, from flooring to cabinetry, countertops, and fixtures. With the IWAll, the buyer can categorize their design style by Eclectic, Contemporary, Traditional and these styles are demonstrated in our models. This allows the buyers based on their style to personalize their home just like our featured models.

“We put together a detailed cost sheet so they can make choices based upon what they want, what they need, and what they can afford. With IWALL our buyers leave the sales office with a firm idea of what their home will cost,” Spencer said. “We believe that working with our prospective buyers to give them this peace of mind about what they are purchasing is a great advantage for Woodside Homes.”

Woodside Homes is really all about offering communities that will fit every buyer’s wants and needs with designs and amenities that fit their vision of what they want and their lifestyle.

Woodside Homes currently is building in eight communities in the metropolitan Phoenix area. There are developments underway in Phoenix, Peoria, Gilbert and the Eastmark master-planned community in Mesa, offering homes ranging from 1,300 to nearly 5,000 square feet. Grand openings are on deck for December at Vistancia in Peoria, and in early 2014 at The Bridges in Gilbert.

Steady with improvement expected…..

That's one phrase that could be used to describe the pace of the new housing recovery here in Metropolitan Phoenix, at least as we move closer to the year end.

On the other hand, the region's housing industry is grateful for the continuing improvement that we are seeing as we move from the depths of the "great recession".

It leaves observers to only imagine what the housing recovery and the economy in general here in Metropolitan Phoenix might be like had we not been stymied by the political deadlock, economic policy uncertainties, and the business and consumer confusion that has dominated our daily lives for weeks on end.

It's pretty obvious by now that our own housing market forecast for this year appears to be right on target and that the overly optimistic outlook promoted by some segments of this local housing industry were well off the mark.

It appears quite likely that the our housing market conditions will not improve to any great degree over the balance of the year as both consumers and producers remain in a "caution" mode awaiting comprehensive resolution of the uncertainties regarding the nation's economic future.

Year to date so far in 2013 thru September we have counted 8462 new home closings in the Metropolitan area versus 6870 new home closings in the same period last year.

This represents an increase of 23.17% in new home escrow closing activity for the year

to date.

And what about 2014? If we assume that the uncertainties surrounding the economy and the budget and deficit are mitigated over the next 2 to 3 months, we believe that we can expect to see some additional improvement in the Metropolitan Phoenix housing market in total sales and specifically in the new home segment of the marketplace in 2014, with the full effects of an improving economy probably not being felt in housing until perhaps 2015 and 2016.

The construction labor market can be expected to remain tight until there is a resolution to the immigration challenges, but the flow of materials for new home construction should improve in the months ahead.

The building lot supply picture should also begin to see improvement as developers and large homebuilders crank up their lot development activities anticipating additional housing demand over the next several years.

We do not expect Phoenix housing production to reach the heady levels of the mid-2000’s but we think the expectation for gradual continued improvement in new housing sales and production is well found and that consumers will return to the marketplace in reasonable numbers over the midterm.

For additional insight and market data call Greg Burger at 480-614-0211 or visit our website at www.RLBrownreports.com.

Belifore Real Estate Consulting

If you talk to a Metro Phoenix Area homebuilder today, you might get the wrong impression. Most of those that we have spoken with regarding October and early November have described sales conditions as “horrible” or “terrible” or something similar. Builders expected more; we expected more, but the market has not delivered the boost in buyers this year. Reality is total new home sales were higher this October / November than they were one year ago, and they were higher at much higher prices. Builders have made more money being homebuilders this year than last. How is this horrible? Builders are certainly challenged in continuing to make money in the coming 24 months at the “new” land prices, the new development costs, at the new home construction costs, and at a slightly slower pace (per community) than anticipated. Worry wrinkles may be forming on some foreheads, but employment and population growth continue to come, and people need shelter.

Despite what seems like panic with a few active homebuilders (co-brokerage fees are up and some homebuilders are decreasing prices), recent, real-time housing data suggests the housing market is anything but horrible.

Monthly net new home price gains slowed in September, October, and early November. On a metro-wide basis, prices rose 0.4% from August to September 2013. The gain was the smallest since February 2012. When the data is in and calculated, the October and November gain will be lower.

Still, prices are up 7.5% since the beginning of the year, and if Belfiore’s forecast proves correct, the net gain in prices this year will have been 8.0%. Coupled with last year, prices will have risen nearly 20%, net of incentives.

In the West Valley, subject region of this month’s publication, net new build prices rose 0.6% from August 2013 to October 2013. In four submarkets, prices declined, but in most, prices were flat to increasing. West Valley prices are up 9.7% over the last 12 months.

The total number of sales was up by more than 80 homes over the last month (from the same period last year), but the number of sales per subdivision was down. A total of 2.0 sales per subdivision took place from mid-October to mid-November, down from 2.4 last month and 2.2 sales during the same period one year ago. The sales pace will fall through year-end, before rebounding in mid-to-late January and February.

Permit activity thus far this year is up over the first eight months of last year; it was 7% higher through August, according to the U.S. Census Bureau. Month-to-month issuances are flat, though, so total permits this year are on pace for 12,425 total issuances. Last year, a total of 11,859 were issued.

Belfiore analysts are projecting 12,300 total this year, followed by 17,100 next year, and 22,000 in 2015.

Impact of “Quality Mortgage” Regulations on Homebuyers The Dodd-Frank Wall Street Reform Act of 2010 requires the creation and implementation of 398 rules. Only 160 of those rules have been finalized, but on January 10th a couple rules will be impactful to homebuyers.

The Act requires that lenders “must make a reasonable and good faith determination Vice President of Operations based on verified and documented Homeowners Financial Group information that the consumer has a reasonable ability to repay the loan.” It also establishes a “Safe Harbor” and presumption of compliance for a certain category called “Qualified Mortgages” (QM). It’s obvious that lenders should make sure borrowers can repay the loan, and it’s the way the industry has operated since “No Doc” loans went extinct over five years ago. So what is really changing on January 10th? Basically, lenders have to document that loans meet the characteristics of “Qualified Mortgages” if they want to be protected from litigation.

CHRIS MOZILO

Under the Qualified Mortgage (QM) rule, loans cannot contain risky features (i.e., interest only, negative amortization or balloon payments), and the term cannot exceed 30 years. Points and fees are limited to 3% for loans of $100,000 or more (higher thresholds are permitted below $100,000). In addition, for most QM loans, debt-to-income (DTI) ratio is limited to 43%. The max DTI does not apply to FHA, VA, or USDA eligible loans that have a valid automated underwriting system (AUS) approval. There’s also a temporary waiver for Fannie & Freddie loans to exceed the max 43% DTI with a valid AUS approval while they are under conservatorship of the Federal government. It’s important to note that non-QM loans won’t be prohibited, but the lender must document that the borrower has the ability to repay the loan based on a specific set of rules.

A.B.C.

Builder speculative inventory increased again from September to October, but only by 2% (versus 20% last month). A total of 1,444 inventory homes, 986 of which were within 60 days of completion, existed in September. While the magnitude of the increase over the last year is more significant (22%), levels remain low by historical standards.

MLS inventory has increased, too. A total of more than 27,105 homes were available through Arizona Regional Multiple Listing Service (“MLS”) recently, according to Cromford Report (“Cromford”). The present figure is 5% higher than last month at this time and 16% above the last year. More people are listing homes now, although sales have fallen off.

Less demand and more supply has resulted in a temporary respite in rising prices. Resale prices, Cromford data suggests, have been flat over the last four months. Belfiore anticipates prices continuing along the same flat path through January or February, when seasonal demand returns.

The above is an excerpt from KnowledgeBase by BREC. For the full report visit www.BelfioreConsulting.com.

What is 2014 Agents Benefiting Children? Scottsdale’s 2030 local

Children’s charities Fundraiser for the RESIDENTIAL REAL ESTATE COMMUNITY How does your Team work? Pick a Captain, pick your Team, start Fundraising and Compete to WIN!

Team Olympiad Championship: FRIDAY, February 7th at Tempe Beach Park What’s the Team Olympiad Championship? A fun and competitive day for participants!

An event for all competing teams to network, compete, have fun and WIN a new Right Toyota!

Volleyball, Baggo, Bocce Ball, Quarterback Challenge , Basketball AND MORE!

All Residential Teams come loaded for competition; wear your proudest company logo.

What Charities Benefit? The CARE Fund is the main beneficiary, plus many other local charities! For details visit www.Scottsdale2030.org

DECEMBER | JANUARY 2014

ArizonaHomebuilder Eliant Ranks Homeowners Financial Group #1

Steady With Improvement Expected Metro Phoenix New Home Sales

Why do so many builders name HFG their preferred lender?

“Our buyers are always impressed and satisfied with the professionalism and overall service received by Homeowners Financial Group.”

Mark & Julie Hancock, Founders – Camelot Homes

SERVICE LEVEL COMMITMENTS · All Builder Files Receive Initial 30-Day Underwriting · Extended Locks up to 12-Months · Customized Marketing Support PORTFOLIO SELECT PRODUCTS · Expanded FHA and Conventional · Clean Slate Program · Construction Financing

WWW.HOMEOWNERSFG.COM • 480.305.8550

Old Town Scottsdale

16427 N. Scottsdale Rd. Suite #145 Scottsdale, AZ 85254

Arrowhead

16165 N. 83rd Ave. Suite #120 Peoria, AZ 85382

HOMEBUILDER SPOTLIGHT

Chandler

CORPORATE OFFICE

55 N. Arizona Place Suite #204 Chandler, AZ 85225

16427 N. Scottsdale Rd. Suite #145 Scottsdale, AZ 85254

Prescott

140 N. Montezuma Street Suite #100 Prescott, AZ 86301

Brentwood

11777 San Vicente Blvd. Suite #601 Los Angeles, CA 90049

Westlake

340 N. Westlake Blvd. Suite #155 Westlake Village, CA 91361

Homeowners Financial Group USA, LLC NMLS#93718 lends in the following states, AZ BK #0906222; CA Finance Lenders Law License # 603 F033; ID # MBL-5879; NM # 03068; ND #MB102538; OR # ML-5229 WA: #CL-93718 and is registered in CO. 866-305-8059.

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

KNOWLEDGEBASE Featured Builder

FINANCE CORNER