Metro Phoenix Economic Snapshot 2012 presented by Marie Heilman

If your home is currently listed, this is not a solicitation for that listing.

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

R E S I D E N T I A L R E A L E S TAT E

G E N E R A L E C O N O M I C S NA P S H OT Welcome to 2012: a year with plenty of expectations attached to it. From the possible end of the world – we like to think it’s just one more doomed doomsday prediction – to the coming presidential election, many of us are holding our breath in anticipation of what this year will bring for our world, the US and of course more close to home, Arizona. While our economy experienced many challenges last year, the year ended with some positive notes and most analysts predict continued improvement throughout the coming year.

2011 IN REVIEW As we look forward to 2012, let’s first take a look back at last year on a national level: • Unemployment levels improved last year, down to 8.5%.

• The European debt crisis and impending European recession have thrown the entire globe into financial uncertainty.

• The Gross Domestic Product finished 2011 weakly at about 2%, maybe even lower once future revisions are finished.

• Politics played a role in the American people’s confidence in our government’s ability to fix our financial problems, especially with the first official downgrade of US debt in history.

• Housing continued to confuse, with uneven ups and downs throughout the year.

• Mortgage interest rates stayed even lower last year than many economists anticipated.

• A volatile roller coaster with the stock market finished the year just about where it started.

• Inflation hit 3.3%.

UPWARD MOMENTUM Depending on where your “optimism/ pessimism meter” lies, it’s possible to find data and trends to support your expectations for the coming year.

However, many economic indicators are showing signs of improvement that can’t be discounted. Although a recovery is in the works, it’s happening slowly. A full

return to pre-recession levels is still years away and Americans are anxious for improvement. However, upward growth is certainly welcomed and a clear sign that our economy is avoiding a double-dip recession.

Recent reports show that consumer confidence is up, manufacturing activity has increased and the unemployment rate, while still high, is at a 3 ½-year low.

Consumer debt is better than just a couple of years ago. Corporations have slimmed down. The Department of Commerce and the National Retail Federation (NRF) report that total 2011 retail sales were up 7.7% from 2010.

Construction spending is up, indicating a boost for the nation’s hard-hit housing sector. Daniel Silver, an economist with JPMorgan Chase noted, “While spending on single-family construction still remains extremely depressed, it has now increased for six straight months and looks consistent with other indicators signaling some improvement in the housing market.”

The labor market has made modest improvements of late. Kiplinger.com notes that 2012 will bring more jobs in the health care sector and for restaurant workers, IT specialists, accountants, engineers and temporary workers.

ARIZONA ON THE MEND The Grand Canyon State can once again be a beacon for those seeking work and affordable housing. Research firm HIS Global Insight predicts that Arizona will rank #3 in projected job growth for the next five years at 2.8%, just slightly below the #1 and #2 states of Texas and Nevada both tied at 2.9%. The JPMorgan Chase Economic Outlook Center at ASU’s W.P. Carey School of Business forecasts the state’s unemployment rate to drop to 8.5% from its current 9%.

It seems Valley employers have a more positive outlook for hiring in 2012 as well. The Manpower Employer Outlook Survey shows that 20% of employers plan to hire while just 6% expect to reduce staff. That overall 14% net

2012 ECONOMIC FORECASTS GDP GROWTH Rising to 2.3% this year, from 1.8% in 2011 INTEREST RATES 10-year Treasuries near 2.5% in mid-2012 INFLATION Slipping back to 2% in 2012, after hitting 3.3% in 2011 UNEMPLOYMENT Below 8.5% by year-end, despite upticks in early 2012 CRUDE OIL Highly volatile, but trending toward $90-$95/bbl. into spring

STEADY AS SHE GOES The biggest news in Metro Phoenix housing is that of stabilization and an improving market. A look back at real estate activity in 2011 shows healthy strides toward a recovery.

• Sales activity was strong. In 2011 there were 100,928 sales, a 12% increase over 2010’s booming figure of 90,115. Did you know 2011 had the second highest amount of sales in history, just behind 2005, the banner year for home sales? (See chart: Metro Phoenix Real Estate Sales.)

• Inventory declined drastically. As of December 31st, there were 26,405 properties on the market vs. 44,097 on January 1st.

• List prices were down, but actual sold prices were up. The median sales price for December 2011 was $117,000 as opposed to $110,000 in January 2011.

• Prices for distressed properties (short sales and bank-owned) are on the rise from the beginning of last year.

• While the amount of foreclosures was higher last year than in 2010, the volume of pending foreclosures (perhaps the best barometer of future inventory and pricing) is down, signaling an opportunity for price stabilization. In November 2009 there were 50,568 foreclosures pending, the highest amount over the last decade. 2011 finished with just 19,979, a huge 60.49% decrease from the high just over two years ago.

• 46.5% of all real estate purchases in Arizona last year were made with cash, many by investors. That’s very positive news as cash purchases won’t be foreclosed upon and homeowners and investors aren’t likely to “walk away” from the property as we’ve seen over the last several years.

Data includes all residential dwelling types. Data gathered from ARMLS.

Tom Ruff of the Information Market is seeing the trend in home sales prices moving up. “Stability is certainly a possibility if demand subsides, but if it continues at current levels or higher, a significant rise in prices is far more likely.”

THANK GOODNESS FOR... …crazy-low interest rates and the long-awaited HARP 2.0 program. First, home loan rates. The Federal Reserve has vowed to keep rates low through 2013. Many experts say we can expect the current record lows to continue through the first part of 2012 and to inch up from there. According to economists’ estimates at Freddie Mac, the 30-year fixed-rate mortgage may rise to 4.5% for 2012 and increase to 5.4% in 2013.

Such favorable interest rates are of course an incentive to potential home buyers. And now, even homeowners that are upside-down on their mortgage will be able to take advantage of refinancing into today’s low rates.

The Home Affordable Refinancing Plan (HARP), developed by the US Department of Housing and Urban Development, is getting an update rolled out in early 2012 that will allow some homeowners who have been unable to refinance due to negative equity, to secure a new mortgage. To qualify, the existing loans must be either Fannie Mae or Freddie Mac – however that qualifies almost half of the mortgage loans in the US. The goal is to help homeowners save money and fend off foreclosures by lowering payments. A reduction of mortgage defaults and distressed properties flooding the inventory is further great news for Metro Phoenix’s housing recovery.

S I N G L E FA M I LY H O M E T R E N D S

WILL YOU ANSWER? For many, it’s clear that opportunity is knocking in 2012. If you are a first-time homebuyer or are planning to jump back into home ownership again, you’re welcomed into the real estate market with a double advantage on your side: incredible housing affordability and record-low financing.

Did you purchase investment properties during the boom of 2004 and 2005? Why buy high when now you can buy low? The demand for single-family rental properties is very strong as our current economy and housing environment has turned America into a nation of renters. Rental vacancies are down, rents are up and the supply of rental homes on the market is limited: all a recipe for opportunities in single-family and multi-family investments.

If you’ve been waiting for the right time to acquire your dream home, there may be no better time than now. Michael Orr, real estate analyst with the Cromford Report, urged in December of last year, “The idea that average Phoenix home prices are falling is a myth. The price bottom occurred on September 15, 2011. For almost three months now they have been on a strong and clear upward trend.” Now that prices are on the rise, buyers are stepping off the sidelines and making their move. If you’re able to keep your current property as a rental, you’ll come out way ahead by holding it until prices return to levels in which you’d like to sell.

When you make a purchase and look ahead just three to five years, the possibility of healthy home appreciation looms large.

With Metro Phoenix expected to rank #3 in the nation for job creation, and our continued desirability as a destination for retirement and relocation, there will be new demand for housing.

The Metro Phoenix real estate market is poised for a surge and some excellent return on investment!

S I N G L E FA M I LY H O M E T R E N D S

RETAIL Solid 6% growth, but slower than in 2011 Source: The Kiplinger Letter increase is up from 11% for the fourth quarter of 2011.

Arizona means business. At least that’s what Governor Brewer is promising with her initiatives to lure more businesses to the state. Plans for tax reductions, simplifications to the tax code and cuts to unfriendly regulations for businesses are in hopes of positioning Arizona as a destination for opportunities to prosper.

Additionally, the state budget is balanced and more money is flowing into the treasury than is paid out for services. Things appear to be on the right track.

The overall consensus for 2012 is one of economic improvement, albeit weaker than recoveries from prior recessions – but growth nonetheless.

Elliott D. Pollack, local economist notes, “The long-term economic outlook remains favorable. The near-term outlook calls for modest growth.

Arizona will once again be a national growth leader by mid-decade.”

Source: ARMLS. Information is deemed reliable but not guaranteed.

Source: ARMLS. Information is deemed reliable but not guaranteed.

METRO PHOENIX REAL ESTATE SALES

2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

C LO S E S BY L I S T I N G C O N D I T I O N

100,928 90,115 91,759 59,221 54,228 74,105 104,133 98,294 79,512 68,411

Source: ARMLS. Data reflects all types of residential dwellings.

Information is deemed reliable but not guaranteed.

Source: ARMLS. Information is deemed reliable but not guaranteed.

R E S I D E N T I A L R E A L E S TAT E

G E N E R A L E C O N O M I C S NA P S H OT Welcome to 2012: a year with plenty of expectations attached to it. From the possible end of the world – we like to think it’s just one more doomed doomsday prediction – to the coming presidential election, many of us are holding our breath in anticipation of what this year will bring for our world, the US and of course more close to home, Arizona. While our economy experienced many challenges last year, the year ended with some positive notes and most analysts predict continued improvement throughout the coming year.

2011 IN REVIEW As we look forward to 2012, let’s first take a look back at last year on a national level: • Unemployment levels improved last year, down to 8.5%.

• The European debt crisis and impending European recession have thrown the entire globe into financial uncertainty.

• The Gross Domestic Product finished 2011 weakly at about 2%, maybe even lower once future revisions are finished.

• Politics played a role in the American people’s confidence in our government’s ability to fix our financial problems, especially with the first official downgrade of US debt in history.

• Housing continued to confuse, with uneven ups and downs throughout the year.

• Mortgage interest rates stayed even lower last year than many economists anticipated.

• A volatile roller coaster with the stock market finished the year just about where it started.

• Inflation hit 3.3%.

UPWARD MOMENTUM Depending on where your “optimism/ pessimism meter” lies, it’s possible to find data and trends to support your expectations for the coming year.

However, many economic indicators are showing signs of improvement that can’t be discounted. Although a recovery is in the works, it’s happening slowly. A full

return to pre-recession levels is still years away and Americans are anxious for improvement. However, upward growth is certainly welcomed and a clear sign that our economy is avoiding a double-dip recession.

Recent reports show that consumer confidence is up, manufacturing activity has increased and the unemployment rate, while still high, is at a 3 ½-year low.

Consumer debt is better than just a couple of years ago. Corporations have slimmed down. The Department of Commerce and the National Retail Federation (NRF) report that total 2011 retail sales were up 7.7% from 2010.

Construction spending is up, indicating a boost for the nation’s hard-hit housing sector. Daniel Silver, an economist with JPMorgan Chase noted, “While spending on single-family construction still remains extremely depressed, it has now increased for six straight months and looks consistent with other indicators signaling some improvement in the housing market.”

The labor market has made modest improvements of late. Kiplinger.com notes that 2012 will bring more jobs in the health care sector and for restaurant workers, IT specialists, accountants, engineers and temporary workers.

ARIZONA ON THE MEND The Grand Canyon State can once again be a beacon for those seeking work and affordable housing. Research firm HIS Global Insight predicts that Arizona will rank #3 in projected job growth for the next five years at 2.8%, just slightly below the #1 and #2 states of Texas and Nevada both tied at 2.9%. The JPMorgan Chase Economic Outlook Center at ASU’s W.P. Carey School of Business forecasts the state’s unemployment rate to drop to 8.5% from its current 9%.

It seems Valley employers have a more positive outlook for hiring in 2012 as well. The Manpower Employer Outlook Survey shows that 20% of employers plan to hire while just 6% expect to reduce staff. That overall 14% net

2012 ECONOMIC FORECASTS GDP GROWTH Rising to 2.3% this year, from 1.8% in 2011 INTEREST RATES 10-year Treasuries near 2.5% in mid-2012 INFLATION Slipping back to 2% in 2012, after hitting 3.3% in 2011 UNEMPLOYMENT Below 8.5% by year-end, despite upticks in early 2012 CRUDE OIL Highly volatile, but trending toward $90-$95/bbl. into spring

STEADY AS SHE GOES The biggest news in Metro Phoenix housing is that of stabilization and an improving market. A look back at real estate activity in 2011 shows healthy strides toward a recovery.

• Sales activity was strong. In 2011 there were 100,928 sales, a 12% increase over 2010’s booming figure of 90,115. Did you know 2011 had the second highest amount of sales in history, just behind 2005, the banner year for home sales? (See chart: Metro Phoenix Real Estate Sales.)

• Inventory declined drastically. As of December 31st, there were 26,405 properties on the market vs. 44,097 on January 1st.

• List prices were down, but actual sold prices were up. The median sales price for December 2011 was $117,000 as opposed to $110,000 in January 2011.

• Prices for distressed properties (short sales and bank-owned) are on the rise from the beginning of last year.

• While the amount of foreclosures was higher last year than in 2010, the volume of pending foreclosures (perhaps the best barometer of future inventory and pricing) is down, signaling an opportunity for price stabilization. In November 2009 there were 50,568 foreclosures pending, the highest amount over the last decade. 2011 finished with just 19,979, a huge 60.49% decrease from the high just over two years ago.

• 46.5% of all real estate purchases in Arizona last year were made with cash, many by investors. That’s very positive news as cash purchases won’t be foreclosed upon and homeowners and investors aren’t likely to “walk away” from the property as we’ve seen over the last several years.

Data includes all residential dwelling types. Data gathered from ARMLS.

Tom Ruff of the Information Market is seeing the trend in home sales prices moving up. “Stability is certainly a possibility if demand subsides, but if it continues at current levels or higher, a significant rise in prices is far more likely.”

THANK GOODNESS FOR... …crazy-low interest rates and the long-awaited HARP 2.0 program. First, home loan rates. The Federal Reserve has vowed to keep rates low through 2013. Many experts say we can expect the current record lows to continue through the first part of 2012 and to inch up from there. According to economists’ estimates at Freddie Mac, the 30-year fixed-rate mortgage may rise to 4.5% for 2012 and increase to 5.4% in 2013.

Such favorable interest rates are of course an incentive to potential home buyers. And now, even homeowners that are upside-down on their mortgage will be able to take advantage of refinancing into today’s low rates.

The Home Affordable Refinancing Plan (HARP), developed by the US Department of Housing and Urban Development, is getting an update rolled out in early 2012 that will allow some homeowners who have been unable to refinance due to negative equity, to secure a new mortgage. To qualify, the existing loans must be either Fannie Mae or Freddie Mac – however that qualifies almost half of the mortgage loans in the US. The goal is to help homeowners save money and fend off foreclosures by lowering payments. A reduction of mortgage defaults and distressed properties flooding the inventory is further great news for Metro Phoenix’s housing recovery.

S I N G L E FA M I LY H O M E T R E N D S

WILL YOU ANSWER? For many, it’s clear that opportunity is knocking in 2012. If you are a first-time homebuyer or are planning to jump back into home ownership again, you’re welcomed into the real estate market with a double advantage on your side: incredible housing affordability and record-low financing.

Did you purchase investment properties during the boom of 2004 and 2005? Why buy high when now you can buy low? The demand for single-family rental properties is very strong as our current economy and housing environment has turned America into a nation of renters. Rental vacancies are down, rents are up and the supply of rental homes on the market is limited: all a recipe for opportunities in single-family and multi-family investments.

If you’ve been waiting for the right time to acquire your dream home, there may be no better time than now. Michael Orr, real estate analyst with the Cromford Report, urged in December of last year, “The idea that average Phoenix home prices are falling is a myth. The price bottom occurred on September 15, 2011. For almost three months now they have been on a strong and clear upward trend.” Now that prices are on the rise, buyers are stepping off the sidelines and making their move. If you’re able to keep your current property as a rental, you’ll come out way ahead by holding it until prices return to levels in which you’d like to sell.

When you make a purchase and look ahead just three to five years, the possibility of healthy home appreciation looms large.

With Metro Phoenix expected to rank #3 in the nation for job creation, and our continued desirability as a destination for retirement and relocation, there will be new demand for housing.

The Metro Phoenix real estate market is poised for a surge and some excellent return on investment!

S I N G L E FA M I LY H O M E T R E N D S

RETAIL Solid 6% growth, but slower than in 2011 Source: The Kiplinger Letter increase is up from 11% for the fourth quarter of 2011.

Arizona means business. At least that’s what Governor Brewer is promising with her initiatives to lure more businesses to the state. Plans for tax reductions, simplifications to the tax code and cuts to unfriendly regulations for businesses are in hopes of positioning Arizona as a destination for opportunities to prosper.

Additionally, the state budget is balanced and more money is flowing into the treasury than is paid out for services. Things appear to be on the right track.

The overall consensus for 2012 is one of economic improvement, albeit weaker than recoveries from prior recessions – but growth nonetheless.

Elliott D. Pollack, local economist notes, “The long-term economic outlook remains favorable. The near-term outlook calls for modest growth.

Arizona will once again be a national growth leader by mid-decade.”

Source: ARMLS. Information is deemed reliable but not guaranteed.

Source: ARMLS. Information is deemed reliable but not guaranteed.

METRO PHOENIX REAL ESTATE SALES

2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

C LO S E S BY L I S T I N G C O N D I T I O N

100,928 90,115 91,759 59,221 54,228 74,105 104,133 98,294 79,512 68,411

Source: ARMLS. Data reflects all types of residential dwellings.

Information is deemed reliable but not guaranteed.

Source: ARMLS. Information is deemed reliable but not guaranteed.

Arizona Homeowner July | August 2012

SILVERLEAF MARKET REPORT

Active PRESTIGIOUS GOLF COMMUNITIES PARADISE VALLEY ~ BILTMORE SCOTTSDALE ~ CAREFREE/CAVE CREEK

In today’s market, where home values seem to be at an all-time-low, luxury homes have become more affordable. Luxury Home Buyers: This is the time to purchase your dream home in the Valley’s most prestigious communities, with the quality and the service you deserve. Turn your dreams into reality before the market changes to a seller’s market. Market trends show that to be on our horizon. Over the years, statistics have proven these cycles in our industry.

Today more than ever, buyers and sellers are relying on Realtors that have proven themselves in their field.

Let’s talk about the present market, your home, your goals and how we can strategize and formulate a plan to your personal circumstances. I look forward to working with you!

If your community is • Second home, golf and luxury not shown, please residence specialist contact me to • A reputation for personal attention receive an updated and full commitment report for your • 26 years of real estate experience neighborhood. with international clientele • Outstanding market knowledge, always current with available inventory • Fluent in French and Spanish

Marie Heilman ASSOCIATE BROKER

Phone: 480.570.5555 Fax: 480.634.8513 Properties@MarieHeilman.com “Real Estate is a lifetime of loyal relationships”

www.MarieHeilmanHomes.com If your home is currently listed, this is not a solicitation for that listing.

AWC

Pending

# Listings

47

1

4

22

74

List/Sold Volume List/Sold Low Price Avg

High List/Sold Low Price Per Avg Approx SF High Days On Low Market Avg

High

$193,936,599 $1,330,000 $4,126,311 $24,500,000 $259.29 $537.17 $1,177.60 7 255 1,268

$1,950,000 $1,950,000 $1,950,000 $1,950,000 $298.39 $298.39 $298.39 451 451 451

$6,370,000 $1,385,000 $1,592,500 $1,995,000 $262.64 $384.54 $465.70 0 62 190

$40,246,250 $1,015,000 $1,829,375 $3,700,000 $223.91 $377.93 $631.99 9 192 595

$246,572,099 $1,250,000 $3,332,055 $24,500,000 $225.72 $488.46 $1,177.60 0 229 1,268

Active

AWC

Pending

# Listings

36

9

5

31

81

List/Sold Volume List/Sold Low Price Avg

High List/Sold Low Price Per Avg Approx SF High Days On Low Market Avg

High

$36,000,045 $279,400 $1,000,001 $3,995,000 $136.29 $236.09 $537.61 6 222 1,177

$9,044,400 $269,500 $1,004,933 $1,595,000 $110.18 $213.54 $269.02 28 320 1,015

$3,823,900 $425,000 $764,780 $1,625,000 $149.54 $209.34 $270.85 29 319 1,238

$19,449,300 $265,000 $627,397 $1,725,000 $130.36 $203.74 $345.00 5 189 542

$69,696,645 $269,500 $860,452 $3,995,000 $110.18 $224.43 $537.61 5 226 1,238

Active

TROON MARKET REPORT

DC RANCH MARKET REPORT

Closed Last 90 Days Overall

Closed Last 90 Days Overall

AWC

Pending

# Listings

15

1

7

10

33

List/Sold Volume List/Sold Low Price Avg

High List/Sold Low Price Per Avg Approx SF High Days On Low Market Avg

High

$31,564,900 $519,900 $2,104,327 $3,895,000 $235.68 $390.94 $572.79 6 203 766

$2,595,000 $2,595,000 $2,595,000 $2,595,000 $401.14 $401.14 $401.14 258 258 258

$5,471,100 $474,900 $781,586 $1,299,000 $166.52 $267.02 $431.85 5 51 114

$11,840,000 $350,000 $1,184,000 $3,550,000 $158.66 $242.39 $407.39 27 286 802

$52,392,800 $399,900 $1,587,661 $3,995,000 $166.52 $325.08 $572.79 5 197 802

Active

Closed Last 90 Days Overall

DESERT HIGHLANDS MARKET REPORT

AWC

Pending

Your Survival Guide

Closed Last 90 Days Overall

# Listings

46

1

1

10

58

List/Sold Volume List/Sold Low Price Avg

High List/Sold Low Price Per Avg Approx SF High Days On Low Market Avg

High

$86,374,485 $649,000 $1,877,706 $9,995,000 $161.20 $349.01 $1,175.88 15 278 2,464

$975,000 $975,000 $975,000 $975,000 $191.33 $191.33 $191.33 1,263 1,263 1,263

$1,150,000 $1,150,000 $1,150,000 $1,150,000 $248.97 $248.97 $248.97 173 173 173

$13,810,750 $625,000 $1,381,075 $2,600,000 $136.40 $294.40 $440.75 80 375 895

$103,822,485 $649,000 $1,790,043 $9,995,000 $145.13 $340.40 $1,175.88 15 310 2,464

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

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