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Rental Housing Journal Arizona

February 2017 - Vol. 9 Issue 2

2. Health and Housing Policy 5. Prepared Property Managers Can Handle Recommendations for New Administration What Comes Down the Pipeline

9. Dear Maintenance Men – Caulk, Plumbing, Doors and Curtains

3. Pending Home Sales Bounce Back in December

10. Arizona Company Ranks in Top Best Places to Work in Multifamily

7. U.S. Home Sales Finish Strong in 2016

4. Pockets of Affordable Housing Exist Within the Most Expensive Markets

8. Valley's Demand Drivers, Growth Prospects Heightening Appeal to Investors

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any communities require their employees to live onsite, and the often include an apartment as part of their compensation. As in any business, management must sometimes terminate employees. This article will examine the acceptable grounds for termination and the procedures to require terminated workers to vacate the premises. Most employees are “at will.” This means they work at the pleasure of the employer. The law presumes every employment contract for an indefinite term to be terminable at will. As an “at will” employee, his or her employment is for an indefinite term at sufferance. Either party could terminate employment at will for no cause or any cause. Another term for this is the employment-at-will doctrine. Management can fire an employee for good cause or no cause, but not for “bad” cause. For example, an employer and employee agree that the employee will do the required work and employer will continued on page 11

T

Home Values Rise 7 Percent

he median home value in the U.S. is now $193,800, according to Zillow's December Real Estate Market Reports. Rents grew 1.5 percent annually to a $1,403 median monthly payment. Home values rose 6.8 percent from last December, the fastest annual pace of the year. The Zillow® Home Value Indexi (ZHVI) is $193,800, just below the highest value set in April 2007, according to the December Zillow Real Estate Market Reportsii. Home value appreciation slowed slightly in Portland, but remains the fastest in the nation, up 13.8 percent from last December. Tampa, Seattle and Dallas saw similarly high home value growth, with home values growing nearly 12 percent from a year ago. Hot home values characterized 2016 all the way to the end – and they show no sign of slowing in 2017. However, as the new year begins, flattening rents could take the heat off buyers who are struggling to find a home amid low continued on page 6

Home Buyers in Expensive Markets See a Longer Wait to Break Even than a Year Ago It takes at least 1.5 years longer to break even on buying a home in the Bay Area than it did a year ago

H

ome value appreciation is expected to slow in some of the nation's most expensive markets, and as a result, it now takes longer to break even on a home in those markets compared to renting it. Nationally, buying a home becomes a better financial decision than renting it in just under two years, according to the Q4 2016 Zillow® Breakeven Horizoni. When home values grow quickly, home equity also accumulates faster, helping to offset and eventually recoup

the large upfront costs of buying a home more quickly. But home value appreciation is slowing down in some places, especially expensive areas like Silicon Valley and the San Francisco Bay Area. This makes building home equity a slower process, and the Breakeven Horizons in both the San Jose and San Francisco metros are nearly two years and 1.5 years longer, respectively, than they were the year before. No other major metros saw the Breakeven Horizon grow as much in a single year.

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Home value appreciation isn't slowing everywhere. Home values in the Washington metro, for example, are expected to grow at a faster pace over the next year after staying largely flat recently, leading to a shorter Breakeven Horizon. Buyers in this area can now expect to break even after 3.5 years. Overall, U.S. home value growth accelerated at the end of 2016, ending the year at a 6.8 percent annual appreciation rate. At the same time, rent continued on page 11

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Rental Housing Journal Arizona

Health and Housing Policy Recommendations for New Administration Active Design Improves Tenant Wellness While Saving Costs for Developers and Tax Payer

H

ome and personal well-being go hand in hand, according to a new policy brief that highlights a direct relationship between the design of affordable housing that promotes resident health and potential cost savings for developers, tenants, and public and private health providers. Leaders in the health and development community highlighted this positive ROI in a letter this week to new Housing and Urban Development (HUD) Secretary Ben Carson, M.D.

The Partnership for a Healthier America (PHA) and Center for Active Design (CfAD) have prioritized key design elements that can have a big impact on resident's health with minimal costs to the developer. These include features such as facilities for physical activity, well-designed stairs that encourage everyday use, infrastructure to support walking and biking and free, and low-cost programming to support resident health. A pilot study conducted by Icahn School of Medicine at Mount

Sinai in the South Bronx found that on average, 58 percent of residents reported an increase in the number of flights they ascended per week in an Active Design building compared to 20 percent of residents in a control non-Active Design building. "This is a win for everyone involved. Tenants and their children are demonstrating a boost in physical and mental well-being which leads to higher productivity and reliability. Developers are seeing potential cost savings. All of this

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will have a bearing on the bottom line of public housing and health care costs and should be a consideration in any future regulatory policies and funding mechanisms," said Lawrence A. Soler, PHA President and CEO. Active Design Verified (ADV) recognizes leaders in the development community who prioritize health in the design and development of affordable housing. "The design of communities and homes is a crucial component to promoting health equity, and addressing the social determinants of health that have implication for the well-being of the children and families. ADV and the associated policy brief provide the tools that developers can leverage to build homes that foster greater health for all families," said Joanna Frank, Executive Director, Center for Active Design. Recently, the first ADV-certified building was completed in Prospect Plaza by Blue Sea Development in Brownsville, Brooklyn, which had the highest death rates of preventable diseases, as compared to the rest of New York City. Residents of Prospect Plaza will access 24,000 square feet of supermarket/ retail space and an 8,400 square foot community facility by project completion. Residents like Kiana are already expressing excitement. She said that before moving into her apartment in Prospect Plaza, she had to take her daughter, Jada, on a bus and a train just to play in a park. Kiana and others living in the community share their experiences here: https://vimeo.com/195871053. SOURCE Partnership for a Healthier America http://ahealthieramerica.org

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Rental Housing Journal Arizona

P

Pending Home Sales Bounce Back in December

ending home sales picked up in December as solid increases in the South and West offset weakening activity in the Northeast and Midwest, according to the National Association of Realtors®. The Pending Home Sales Index,* a forward-looking indicator based on contract signings, increased 1.6 percent to 109.0 in December from 107.3 in November. With last month's uptick in activity, the index is now 0.3 percent above last December (108.7). Lawrence Yun, NAR chief economist, says contract activity was mixed throughout the country in December but ultimately ended on a high note to close out 2016. "Pending sales rebounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels1 to sign a contract," he said. "The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing costs. Sales will struggle to build on last year's strong pace if inventory conditions don't improve." According to Yun, a large portion of overall supply right now is at the upper end of the market. This is evident by looking at December data on the year-

over-year change in single-family sales by price range. Last month, sales were up around 10 percent compared to December 2015 for homes sold at or above $250,000, while homes sold between $100,000 and $250,000 only increased 2.3 percent. Meanwhile, sales of homes under $100,000 were down 11.6 percent compared to a year ago. "The dismal number of listings in the affordable price range is squeezing prospective first-time buyers the most," said Yun. "As a result, young households are missing out on the wealth gains most homeowners have accrued from the 41 percent cumulative rise in

existing home prices since 2011." Existing-home sales are forecast to be around 5.54 million this year, an increase of 1.7 percent from 2016, which was the best year of sales since 2006. The national median existing-home price in 2017 is expected to increase around 4 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.2 percent. Yun expects housing starts – which for another year undershot overall demand – to jump to around 1.26 million units, an increase of 7.9 percent from 2016 (1.16 million). "Especially if construction-related regulations are relaxed, all eyes will be on the homebuilding industry this year to see if they can finally start making up lost ground on the severe housing shortages impacting much of the country," added Yun. The PHSI in the Northeast declined 1.6 percent to 96.4 in December, and is now 1.2 percent below a year ago. In the Midwest the index decreased 0.8 percent to 102.7 in December, and is now 3.4 percent lower than December 2015. Pending home sales in the South rose 2.4 percent to an index of 121.3 in December and are now 0.5 percent above last December. The index in the West jumped 5.0 percent in December to 106.1, and is now 5.0 percent higher than a year ago. The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing

1.2 million members involved in all aspects of the residential and commercial real estate industries. 1Total housing inventory at the end of December was at 1.65 million existing homes available for sale, which is the lowest level since NAR began tracking the supply of all housing types in 1999. *The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months. An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population. NOTE: NAR's metropolitan area home price report for the fourth quarter of 2016 will be released February 9, Existing-Home Sales for January will be reported February 22, the first quarter Commercial Real Estate Report/ Forecast will be released on February 23, and the next Pending Home Sales Index will be February 27; all release times are 10:00 a.m. ET. Information about NAR is available at www. nar.realtor. This and other news releases are posted in the "News, Blogs and Videos" tab on the website. Statistical data in this release, as well as other tables and surveys, are posted in the "Research and Statistics" tab. SOURCE National Association of Realtors Related Links – http://www.realtor.org

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Rental Housing Journal Arizona

Pockets of Affordable Housing Exist Within the Most Expensive Markets Even in metros where homebuyers have the biggest mortgage burdens, some cities within those metros provide relatively affordable housing options.

T

he San Jose metro has been one of the hottest housing markets in the country. Homebuyers in Palo Alto can expect to spend 75 percent of their income on a house paymenti. But just 15 miles away, buyers in Milpitas, Calif. need only spend 35 percent. This example of disparity in the Silicon Valley demonstrates how hot housing markets are fueled by cities where high demand for jobs and amenities drive housing values to far outpace incomes. The phenomenon is one reason there is more inequality in very expensive markets. Zillow's latest research on mortgage burdens at the city level illustrates how hot spots within popular housing markets have caused runaway housing costs that place significant burdens on the

people who live and work there, even as the cities next door remain more affordable. However, choosing a more affordable city likely requires trade-offs, such as fewer amenities or longer commutes. "The Bay Area and other expensive West Coast markets get a lot of attention for being unaffordable, but even they have some areas where the share of income spent on housing is relatively low," said Zillow Chief Economist Dr. Svenja Gudell. "Of course, buyers have to be willing to make some trade-offs to live in more affordable cities within the metro. Some cities in the most in-demand housing markets across the country have such a high housing burden that they are simply not feasible for buyers with lower incomes. If income growth doesn't keep pace with home

value growth, especially as mortgage rates rise, inequality will persist." In San Francisco, the flourishing tech industry and physical boundaries of the city have created a housing market with a high housing burden – buyers in San Francisco need to spend nearly 54 percent of their income on mortgage payments. Across the bay, homebuyers in Oakland fare a little better. Mortgage payments there require 42 percent of the typical household income. Within the Seattle metro, Bellevue buyers would have to spend the greatest share of income on housing – 29.6 percent. Less than 10 miles away, Kirkland buyers only need to set aside 22 percent of their income to pay their mortgage. This phenomenon doesn't play out in less heated housing markets. Buyers

Metropolitan Area

Metro-level Mortgage Burdenii, 2015

City with the Smallest Mortgage Burden, 2015

City with the Greatest Mortgage Burden, 2015

United States

14.6%

Detroit, MI – 5.9%

Palo Alto, CA – 75.4%

New York/Northern New Jersey

24.9%

Brentwood, NY -- 14.7%

Passaic, NJ -- 45.7%

Los Angeles-Long Beach-Anaheim, CA

39.7%

Lancaster, CA -- 18.5%

Santa Monica, CA -- 66.1%

Chicago, IL

14.0%

Gary, IN -- 6.8%

Evanston, IL -- 20.1%

Dallas-Fort Worth, TX

12.6%

Grand Prairie, TX -- 10.6%

Lewisville, TX -- 16.1%

Philadelphia, PA

14.2%

Camden, NJ -- 11.8%

Wilmington, DE -- 13.7%

Houston, TX

11.9%

Pasadena, TX -- 9.6%

Baytown, TX -- 9.9%

Washington, DC

17.8%

Waldorf, MD -- 13.1%

Washington, DC -- 29.9%

Miami-Fort Lauderdale, FL

19.5%

Lauderhill, FL -- 10.3%

Miami, FL -- 42.8%

Atlanta, GA

11.8%

Johns Creek, GA -- 14.0%

Sandy Springs, GA -- 26.4%

Boston, MA

21.7%

Lowell, MA -- 21.3%

Boston, MA -- 35.9%

San Francisco, CA

39.0%

Antioch, CA -- 21.9%

Berkeley, CA -- 58.4%

Detroit, MI

10.3%

Detroit, MI -- 5.9%

Rochester Hills, MI -- 15.3%

Riverside, CA

23.6%

Victorville, CA -- 18.1%

Upland, CA -- 35.2%

Phoenix, AZ

16.8%

San Tan Valley, AZ -- 12.0%

Scottsdale, AZ -- 23.6%

Seattle, WA

21.4%

Marysville, WA -- 16.2%

Bellevue, WA -- 29.6%

Minneapolis-St Paul, MN

13.8%

Maple Grove, MN -- 12.4%

Minneapolis, MN -- 17.1%

San Diego, CA

33.0%

Chula Vista, CA -- 29.5%

El Cajon, CA -- 39.4%

St. Louis, MO

11.0%

Saint Louis, MO -- 11.6%

Saint Charles, MO -- 12.7%

Tampa, FL

14.3%

Riverview, FL -- 11.3%

Clearwater, FL -- 16.0%

Baltimore, MD

15.5%

Baltimore, MD -- 11.8%

Ellicott City, MD -- 20.4%

Denver, CO

19.6%

Highlands Ranch, CO -- 16.3%

Denver, CO -- 25.0%

Pittsburgh, PA

10.6%

Pittsburgh, PA -- 11.1%

n/aiii

Portland, OR

20.8%

Hillsboro, OR -- 17.1%

Portland, OR -- 24.1%

Charlotte, NC

12.7%

Gastonia, NC -- 11.3%

Rock Hill, SC -- 14.9%

Sacramento, CA

23.3%

Elk Grove, CA -- 18.3%

Davis, CA -- 44.4%

San Antonio, TX

11.8%

New Braunfels, TX -- 14.3%

n/a

Orlando, FL

15.5%

Pine Hills, FL -- 10.5%

Kissimmee, FL -- 14.9%

Cincinnati, OH

11.1%

Cincinnati, OH -- 14.2%

n/a

Cleveland, OH

11.1%

Parma, OH -- 8.3%

Lorain, OH -- 8.3%

Kansas City, MO

10.8%

Kansas City, KS -- 7.3%

Overland Park, KS -- 13.2%

Las Vegas, NV

16.8%

Enterprise, NV -- 14.4%

Paradise, NV -- 18.9%

Columbus, OH

11.9%

Columbus, OH -- 10.7%

n/a

Indianapolis, IN

11.4%

Fishers, IN -- 8.5%

Carmel, IN -- 12.1%

San Jose, CA

39.4%

Milpitas, CA -- 34.8%

Palo Alto, CA -- 75.4%

Austin, TX

15.9%

Round Rock, TX -- 13.0%

Austin, TX -- 20.3%

4

in almost any part of the Kansas City metro, for example, can expect to spend between 7.3 percent and 13.2 percent of their income on a mortgage. Similarly, buyers in the Las Vegas metro can expect to spend between 14.4 and 18.9 percent of their income on mortgage payments, no matter which city they are in. Buyers moving to the Detroit suburbs will have similar mortgage burdens, with buyers having to spend between 10.2 and 15.3 percent of their income on mortgage payments. The city of Detroit itself has the smallest mortgage burden in the country – just 5.9 percent of the typical income needed to pay the monthly mortgage.

Rental Housing Journal Arizona · February 2017


Rental Housing Journal Arizona

Prepared Property Managers Can Handle What Comes Down the Pipeline By Marc Courtenay in Articles, www.propertymanager.com

I

n case you haven’t read the following quote in awhile, “an ounce of prevention is worth a pound of cure.” Benjamin Franklin gets the credit for this piece of powerful wisdom. Whether it’s taking on a new partner, new employees, more risk, less risk or using intuition to keep up with the latest trends in our industry, we can’t be too prepared.

Tip #1 is to be “written ready.” What that means is to write yourself a list of possibilities for the immediate future. It’s not like predicting the future. It’s about anticipating what you’ll need and what may change in your area. Start a written list today of what you’re hearing, seeing, feeling and knowing regarding the rental housing market, the property management business. Write it on the list even if it’s unlikely or absurd. Why would you want to be “written ready”? It’s because you want your unconscious to be able to expect the unexpected, or at least be processing all the possibilities. Psychologists and neurologists know that the operating system of our human awareness is mostly subliminal and below the surface of

our waking thoughts. What they’ve also recognized is that we can “program” the subconscious to create possible scenarios and relevant responses. Yes, it’s amazing!

Tip #2 is to know the trends that are already in full momentum. You can do this by reading articles like this one and subscribing to trade journals and the publications of our industry’s associations. If you haven’t joined your local and national associations, don’t hesitate to do so soon. A good example is The National Association of Residential Property Managers (NARPM®), which I recently wrote about.

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One trend that’s getting lots of publicity now is an increase in inner-city evictions. Researchers found that one of the major reasons is that institutional investors now own more rentals than ever. These large, corporate investors evicted at higher rates even after accounting for the demographics of the community where the rental units were located. They know the eviction laws and have investors or shareholders to answer to. The National Rental Home Council reports that institutional investors have purchased large blocks of homes and used them for rentals. This is one of the reasons that in many areas of the country there is a limited supply of lower-priced houses for sale. The corporate

㻯㼍㼏㼠㼡㼟㻌㼔㼍㼟㻌㼐㼑㼢㼑㼘㼛㼜㼑㼐㻌㼛㼡㼞㻌㼠㼑㼍㼙㻌 㼍㼚㼐㻌㼜㼞㼍㼏㼠㼕㼏㼑㼟㻌㼠㼛㻌㼜㼞㼛㼢㼕㼐㼑㻌㼠㼔㼑㻌㼎㼑㼟㼠㻌 㼟㼛㼘㼡㼠㼕㼛㼚㼟㻌㼍㼚㼐㻌㼘㼍㼠㼑㼟㼠㻌㼠㼑㼏㼔㼚㼛㼘㼛㼓㼕㼑㼟㻌㻌 㼕㼚㻌㼜㼍㼢㼑㼙㼑㼚㼠㻌㼜㼞㼑㼟㼑㼞㼢㼍㼠㼕㼛㼚㻚㻌㻮㼑㼏㼍㼡㼟㼑㻌 㼛㼒㻌㼛㼡㼞㻌㼏㼛㼙㼙㼕㼠㼙㼑㼚㼠㻌㼠㼛㻌㼝㼡㼍㼘㼕㼠㼥㻌㼍㼚㼐㻌 㼟㼑㼞㼢㼕㼏㼑㻌㻯㼍㼏㼠㼡㼟㻌㼔㼍㼟㻌㼓㼞㼛㼣㼚㻌㼠㼛㻌㼎㼑㻌 㼛㼚㼑㻌㼛㼒㻌㼠㼔㼑㻌㼙㼛㼟㼠㻌㼞㼑㼟㼜㼑㼏㼠㼑㼐㻌㻌 㼜㼍㼢㼑㼙㼑㼚㼠㻌㼏㼛㼚㼠㼞㼍㼏㼠㼛㼞㼟㻌㼕㼚㻌㼠㼔㼑㻌 㻿㼛㼡㼠㼔㼣㼑㼟㼠㻚㻌㻌 㻌 Invite us to bid and we’ll show you 㼑㼤㼍㼏㼠㼘㼥㻌㼣㼔㼍㼠㻌㼣㼑㻌㼙㼑㼍㼚㻚㻌㻌

㼠㻌㻢㻞㻟㻙㻟㻠㻠㻙㻣㻢㻣㻡㻌㻌 㼑㻌㼗㼙㻬㼏㼍㼏㼠㼡㼟㼍㼟㼜㼔㼍㼘㼠㻚㼏㼛㼙㻌㻌 㼣㼣㼣㻚㻯㼍㼏㼠㼡㼟㻭㼟㼜㼔㼍㼘㼠㻚㼏㼛㼙㻌㻌

or syndicate investors also purchased rental units from other landlords and inherited residents who sometimes can’t afford to pay rent. Anecdotally, they also tend to evict more quickly. Government researchers don’t say why many institutional investors evict at higher rates. Some say it’s because their size enables them to negotiate less expensive legal rates and replace renters more quickly than smaller, local property managers. Be aware of that possibility going forward. Local landlords and managers tend to treat responsible residents more patiently. They’re more likely to work with someone who has lost a job or can’t pay for the short term. Emphasize this in your marketing. Prepare for the advantages and disadvantages of what may impact your corner of the property management world. Remember “Brexit” and the 2016 presidential elections as poignant examples of unexpected outcomes. Every time you hear a rumor, opinion or statistic that’s relevant to your work, add it to your list. Have a fist full of preventive “ounces” so you won’t need a “pound of cure.”

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Rental Housing Journal Arizona · February 2017

5


Rental Housing Journal Arizona

Home Values Rise ...continued from page 1 inventory and give them more time to search for the right home. "Home values ended 2016 growing at their fastest pace of the year, which could be an indication of what to expect in 2017," said Zillow Chief Economist Dr. Svenja Gudell. "Lack of inventory will remain a major concern for home buyers this year. Especially lack of available entry-level homes coupled with high demand will continue

The median monthly rent payment in the U.S. is $1,403. The fastest rent appreciation occurred along the West Coast. Seattle led the nation in rising rents, with rents growing 8.4 percent in December, followed by Portland and Sacramento. Inventory is still a concern for home buyers across the country; finding an affordable home is the top concern for people searching for homesiii. There are

4.6 percent fewer available homes than there were a year ago. Among the nation's largest markets, Boston and Minneapolis saw the biggest declines in inventory over the past year.

Metropolitan Area

Zillow Home Value Index (ZHVI)

Year-over-Year ZHVI Change

Zillow Rent Indexiv (ZRI)

Year-over-Year ZRI Change

Year-over-Year Inventory Change

United States

$193,800

6.8%

$1,403

1.5%

-4.6%

New York/Northern New Jersey

$402,700

6.3%

$2,392

0.2%

-9.0%

Los Angeles-Long Beach-Anaheim, CA

$594,100

6.5%

$2,625

5.3%

-5.0%

Chicago, IL

$204,700

5.4%

$1,632

-0.2%

-8.1%

Dallas-Fort Worth, TX

$201,400

11.6%

$1,560

3.9%

-7.7%

Philadelphia, PA

$214,800

4.6%

$1,573

0.9%

-12.1%

Houston, TX

$176,100

6.6%

$1,556

-1.5%

0.6%

Washington, DC

$380,200

3.4%

$2,122

0.7%

-13.8%

Miami-Fort Lauderdale, FL

$247,000

9.0%

$1,871

2.3%

14.6%

Atlanta, GA

$173,300

7.4%

$1,333

4.6%

-3.2%

Boston, MA

$412,300

6.5%

$2,329

3.7%

-21.6%

San Francisco, CA

$829,700

4.8%

$3,371

1.0%

-6.5%

Detroit, MI

$135,900

10.0%

$1,170

3.1%

-17.9%

Riverside, CA

$319,400

6.8%

$1,746

3.2%

-9.0%

Phoenix, AZ

$230,500

6.8%

$1,304

4.2%

4.9%

Seattle, WA

$413,700

11.7%

$2,097

8.4%

-8.3%

Minneapolis-St Paul, MN

$236,200

6.5%

$1,558

3.9%

-19.9%

San Diego, CA

$529,500

6.3%

$2,443

5.3%

-0.6%

St. Louis, MO

$148,900

7.1%

$1,126

0.3%

-13.0%

Tampa, FL

$179,600

11.8%

$1,340

3.3%

-11.6%

Baltimore, MD

$257,800

3.8%

$1,728

0.8%

-14.1%

Denver, CO

$355,400

9.6%

$2,003

2.6%

2.7%

Pittsburgh, PA

$133,700

4.7%

$1,074

-1.9%

-1.0%

Portland, OR

$354,400

13.8%

$1,805

6.8%

1.9%

Charlotte, NC

$168,000

7.4%

$1,246

2.0%

-10.4%

Sacramento, CA

$352,700

7.4%

$1,708

6.7%

-4.0%

San Antonio, TX

$156,900

6.4%

$1,324

1.8%

8.0%

Orlando, FL

$200,500

10.7%

$1,387

3.4%

-12.3%

Cincinnati, OH

$148,700

5.8%

$1,249

2.1%

-16.8%

Cleveland, OH

$130,700

4.7%

$1,143

1.5%

-10.0%

Kansas City, MO

$152,900

5.9%

$1,246

3.8%

-18.4%

Las Vegas, NV

$215,400

9.8%

$1,245

2.7%

25.7%

Columbus, OH

$162,200

5.1%

$1,292

1.7%

-16.5%

Indianapolis, IN

$134,300

2.1%

$1,186

0.3%

-12.9%

San Jose, CA

$963,700

4.0%

$3,470

0.9%

-13.9%

Austin, TX

$261,500

8.2%

$1,698

0.8%

15.1%

Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home

6

to rapidly drive up home values in the near future. Buyers should make sure they get pre-approved for a mortgage, and be prepared to move quickly, especially in hot markets like Seattle and Portland. It's not uncommon for buyers to make at least two offers during their home search." Rent appreciation stabilized at 1.5 percent annual growth, less than half the pace rents were growing at last year.

Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle. Zillow and Zestimate are registered trademarks of Zillow, Inc. The Zillow Home Value Index (ZHVI) is the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless i

of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted.

accessed at www.zillow.com/local-info/ and www.zillow.com/research/data.

The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow's Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder's office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be

iii

ii

This survey was conducted from Nov. 30, 2015 through Dec 2, 2015 of 1,010 adults by ORC International on behalf of Zillow, Inc. The Zillow Rent Index (ZRI) is the median Rent Zestimate® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent. It is expressed in dollars. iv

Zillow - http://www.zillow.com

Rental Housing Journal Arizona · February 2017


Rental Housing Journal Arizona

U.S. Home Sales Finish Strong in 2016 RE/MAX National Housing Report on MLS Data from 53 Metro Areas

C

apped off by a strong December, 2016 was the best year for U.S. home sales since the recession, according to the January 2017 RE/ MAX National Housing Report. Home sales in 2016 were the highest in the housing report's eight-year history, topping the sales of 2015, the previously strongest year. Nine months of 2016 posted sales greater than in the same months of 2015. According to the 53-market report, the trend of rising prices and shrinking inventory continued in December, even though December was one of the three months that trailed 2015, with sales 1.8% below December 2015. Even so, nearly half of the markets reported increased sales over December 2015, and almost two-thirds saw sales higher than November 2016. The median increase over November 2016 was 1.7%. The median sales price of $216,000 was 4.9% above one year ago and only 1.8% below November's. Inventory declined 17.9% year-overyear in December, continuing a yearlong streak of double-digit declines. Months Supply of Inventory was 4.2, with 47 markets below the 6 months normally considered a balanced market. The average Days on Market of 62 was the lowest of any December in the report's history. For this month's housing report infographic, visit rem.ax/2cYFT50. "Much like 2015, we saw a mostly healthy housing market in 2016 that posted steady growth in sales and prices," said Dave Liniger, RE/MAX CEO, Chairman of the Board and Co-Founder. "We're back to pre-recession levels in many markets, with 2017 forecast to be another solid year. We'll have to wait and see what impact rising interest rates will have."

Closed Transactions Of the 53 metro areas surveyed in December, the overall average number of home sales fell 1.8% compared to December 2015. But nearly half of the 53 metro areas experienced an increase in sales year-over-year, with three experiencing double-digit increases. The markets with the largest increase in sales included Wilmington/Dover, DE +21.4%, Honolulu, HI +19.7%, Augusta, ME +16.1%, Las Vegas, NV +7.9% and Providence, RI +7.3%. Median Sales Price – Median of 53 metro median prices In December, the median of all 53 metro Median Sales Prices was $216,000, down 1.8% from November but up 4.9% from December 2015. Of the 53 metro areas surveyed, all but two (Des Moines, IA and New Orleans, LA) saw year-over-year increases or remained unchanged with nine rising by double-digit percentages. The largest double-digit increases were seen in Birmingham, AL +17.1%, Tampa, FL +16.8%, Charlotte, NC +13.2%, Seattle, WA 12.9% and Orlando, FL +12.3%.

Days on Market – Average of 53 metro areas The average Days on Market for homes sold in December was 62, up three days from the average in November 2016, but down five days from the December 2015 average. The two metro areas with the lowest Days on Market were Omaha, NE and Denver, CO both at 36. The highest Days on Market averages continued to be in Augusta, ME at 141, and Burlington, VT at 101. Days on Market is the number of days between when a home is first listed in an MLS and a sales contract is signed. Months Supply of Inventory – Average of 53 metro areas The number of homes for sale in December was down 14.0% from November, and down 17.9% from December 2015. Based on the rate of home sales in December, the Months Supply of Inventory was 4.2, compared to November at 4.0 and December 2015 at 4.9. A 6.0-month supply indicates a market balanced equally between buyers and sellers. In December, 47 of the 53 metro areas surveyed reported a months supply of less than 6.0, which is typically considered a seller's market. One reported a balanced market at 6.0, while the remaining five saw a months supply above 6.0, which is typically considered a buyer's market. The markets with the lowest Months Supply of Inventory continued to be in the West, with San Francisco, CA at 1.2, Seattle, WA at 1.5 and Denver, CO at 1.6.

Description The RE/MAX National Housing Report is distributed each month on or about the 15th. The first Report was distributed in August 2008. The Report is based on MLS data in approximately 53 metropolitan areas, includes all residential property types, and is not annualized. For maximum representation, many of the largest metro areas in the country are represented, and an attempt is made to include at least one metro from each state. Metro area definitions include the specific counties established by the U.S. Government's Office of Management and Budget, with some exceptions. Definitions Transactions are the total number of closed residential transactions during the given month. Months Supply of Inventory is the total number of residential properties listed for sale at the end of the month (current inventory) divided by the number of sales contracts signed (pended) during the month. Where "pended" data is unavailable, this calculation is made using closed

transactions. Days on Market is the number of days that pass from the time a property is listed until the property goes under contract for all residential properties sold during the month. Median Sales Price is the median of the median sales prices in each of the metro areas included in the survey. MLS data is provided by contracted data aggregators, RE/MAX brokerages and regional offices. While MLS data is believed to be accurate, it cannot be guaranteed. MLS data is constantly being updated, making any analysis a snapshot at a particular time. Every month the RE/MAX National Housing Report re-calculates the previous period's data to ensure accuracy over time. All raw data remains the intellectual property of each local MLS organization. SOURCE RE/MAX, LLC http://www.remax.com

About the RE/MAX Network: RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. Over 110,000 agents provide RE/MAX a global reach of more than 100 countries and territories. Nobody sells more real estate than RE/MAX, when measured by residential transaction sides. RE/MAX, LLC, one of the world's leading franchisors of real estate brokerage services, is a wholly-owned subsidiary of RMCO, LLC, which is controlled and managed by RE/MAX Holdings, Inc. (NYSE: RMAX). With a passion for the communities in which its agents live and work, RE/MAX is proud to have raised more than $150 million for Children's Miracle Network Hospitals® and other charities. For more information about RE/MAX, to search home listings or find an agent in your community, please visit www.remax.com. For the latest news about RE/MAX, please visit www.remax. com/newsroom.

Rental Housing Journal Arizona · February 2017

7


Rental Housing Journal Arizona

Valley’s Demand Drivers, Growth Prospects Heightening Appeal to Investors Arrival of new residents enlarging renter pool. The substantial fl ow of relocations to the Valley is driving household formation and stoking rental housing demand, creating a highly favorable operating climate for multifamily property owners and investors. More than 200,000 new residents came to the metro since 2014, a level that rivals in-migration trends prior to the recession. Many are coming to work in higher-paying professional fields or the area’s expanding insurance industry. The completion of corporate campuses over the past two years for national insurance companies and the expansion of degreed employment at those places and their local vendors and subcontractors are feeding demand for higher-end apartments. Class A vacancy in the Valley dipped last year to the 5 percent range, indicating that strong demand persists, and vacancy in newly built units also fell. Completions are due to rise this year and the unit tally features a heavy dose of market-rate units in central Phoenix and Mesa. Investors intensify search for value. Elevated transaction velocity lifted the average price to a post-recession high during the past 12 months. Equity flows will likely persist in the coming year, with investors seeking to take advantage of new opportunities or strong rental housing demand in specific sections of the metro. In the city of Phoenix, upside opportunities near the light rail should garner attention, and the proposed expansion of the line could open up previously overlooked neighborhoods for investment. Scottsdale contains some of the Valley’s most desirable neighborhoods and a sizable block of Class A and Class B properties. Low vacancy here and a thin construction pipeline will likely garner investor attention. Additional transactions will provide transparency on value and encourage more listings. Overall, the average cap rate in Phoenix has compressed to the low-6 percent range in the past few years, a level that will elicit interest from out-of-area buyers seeking higher returns. 2017 Market Forecast NMI Rank The large jump in this year’s NMI comes on robust employment 12, up 7 places growth and improvements in vacancy and rent Employment Expansions of local businesses support an increase of 55,000 jobs up 2.7% in 2017. Growth in leisure and hospitality as well as financial services contributed to a gain of 52,000 positions last year. Construction The pipeline contains 7,800 units scheduled for delivery in 2017. 7,800 units An additional 3,500 rentals are lined up for completion in 2018. In 2016, 7,500 units were delivered. Vacancy Projected net absorption of 10,900 rentals in 2017 substantially down 100 bps exceeds supply additions and generates a decline in the vacancy rate to 3.4 percent. The vacancy rate receded 20 basis points in 2016 amid strong tenant demand in all asset classes. Rent Low vacancy and a wave of luxury completions will push the up 6.5% average rent up to $998 per month this year. Gains of more than 6 percent were also posted in the preceding two years. Investment Strong operations will maintain intense investor demand this year, with sights shifting to neighborhoods with growing population density and emerging transportation corridors.

Text REALESTATE-ROI to 44222 to receive a digital copy of this year's Real Estate Opportunities in Investing (ROI) Finding Investing Success in Today's Housing Market

8

Rental Housing Journal Arizona · February 2017


Rental Housing Journal Arizona

DEAR MAINTENANCE MEN: Caulk, Plumbing, Doors and Curtains

By Jerry L’Ecuyer & Frank Alvarez

Dear Maintenance Men: I’m attempting to remove old caulking from around a bathtub. Are there any tricks or chemicals to help with this job?

Steve

Dear Steve: Most bathtub caulking is either silicon or latex based. If originally installed properly, it should stick pretty well. Most household chemicals will not affect the caulking or help in its removal. The best method is to use a razor knife to cut along either side of the bead. Then pull the bead out by hand as you cut. The balance of the material can be removed with a flat razor, either along the old bead or perpendicular to the bead. After all the material is removed, use a damp rag to remove any loose bits. Before installing the new caulk, be sure the area is clean and dry. You can use a wet/dry vacuum to suck up any water left over from your cleaning. Dear Maintenance Men: I have two units that have back to back kitchen plumbing that drain into a single pipe. They are constantly blocking up. We snake them on a regular basis, but to no avail. How can I solve this problem?

ter the disposer is turned off. This will insure that the waste has been washed all the way down the pipe. The garbage disposer must run a sufficient amount of time to insure the proper breakup of the waste. The residents should also be instructed to feed the disposer slower, and not to cram food down the drain. For persistent drain problems, we highly recommend getting the drain line Hydro Jetted and then have the line inspected with a camera. This will determine exactly where and why you have a constant problem with your drain line.

Julia Dear Maintenance Men:

Dear Julia: Unfortunately with two units draining into one drainpipe, you double the drain’s workload. This means the drain line has twice the grease, twice the soap and twice the food etc. In this case we will assume that your waste plumbing system consists of galvanized & cast iron piping. These two types of metal drainpipe’s inner lining tends to corrode and become rough and flake. This allows solid waste to form on the rough surface. A solution to the problem is to instruct your residents on the proper use of the garbage disposal. The water must be running before you turn on the disposer and continue running af-

I’m starting a rehab in my unit’s bathroom and thinking of replacing the shower curtain as part of the work. A shower curtain is a fast and easy job. What are the pros and cons of a shower door versus a shower curtain in my rental unit’s bathtub? How do you install a shower door? I don’t want to poke holes in the bathtub.

Bryan

Dear Bryan: While appearing as a guest on "The Tonight Show" one evening many, many years ago, famed hotelier Conrad Hilton was asked by his host (Johnny Carson) whether he had a "message" for the American people. With great

gravity, Hilton paused momentarily before turning to the camera. "Please," he pleaded, "put the shower curtain inside the tub!" Keeping with Mr. Hilton’s thoughts, we are big fans of shower doors as opposed to shower curtains, because residents also leave the shower curtain outside the tub. Shower door installations are a great do-it-yourself project, because it is easy to do and the results looks great. After removing the existing shower curtain, clean the tub and walls to remove any accumulated soap scum. Measure the tub ledge wall to wall and subtract 3/16th of an inch (to leave room for the wall channels) and transfer the measurement to the bottom rail track of the shower enclosure. After measuring twice and cutting once, temporally set the bottom track on the tub ledge and tape it in place. Next, set the wall channels in place, use a level to make sure it is plumb with the wall. Mark the mounting holes of the wall channel with your pencil. Do the same thing for the other side. Remove the channels and before drilling, center punch the hole mark to keep the drill bit centered. If drilling through tile, use a ceramic drill bit. Once you have made your holes, insert wall anchors. Now you are ready to set the bottom track. Use adhesive caulk and if you feel the track may be abused,

also use some Liquid Nails adhesive at several spots under the track. Remove any excess caulk and then use duct tape to temporally hold the track in place. Before fitting the side channels, run a bead of adhesive caulk on the backside of the channel. Install the channel, use the supplied screws and bumper to fasten the channel to the wall, repeat on the other side. Wipe away any excess caulk. To install the top rail channel, measure from wall to wall at the top of the wall channels. Subtract 1/16 of an inch and cut the top channel to that length. Again, measure twice. The top channel should fit snug between top of the wall channels. Lastly it is time to hang the doors and adjust the fit. Most doors come with good instructions, read them, as there may be details not included in our explanation. Bio: If you need maintenance work or consultation for your building or project, please feel free to contact us. We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371 Jerry L'Ecuyer is a licensed contractor & real estate broker. He is currently on the Board of Directors and Chairman of the Education Committee of the Apartment Association of Orange County. Jerry has been involved with apartments as a professional since 1988. Frank Alvarez is the Operations Director and co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20 years. He is also a lecturer & educational instructor. Frank can be reached at (714) 956-8371 Frankie@BuffaloMaintenance.com For more info please go to: www.BuffaloMaintenance.com

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Rental Housing Journal Arizona is a monthly publication published by Professional Publishing Inc., publishers of Real Estate Opportunities in Investing & Real Estate Investor Quarterly

www.rentalhousingjournal.com The statements and representations made in advertising and news articles contained in this publication are those of the advertiser and authors and as such do not necessarily reflect the views or opinions of Professional Publishing, Inc. The inclusion of advertising in this publications does not, in any way, comport an endorsement of or support for the products or services offered. To request a reprint or reprint rights contact Professional Publishing Inc. PO Box 6244 Beaverton, OR 97007. (503) 221-1260 - (800) 398-6751 © 2015 All rights reserved.

Rental Housing Journal Arizona · February 2017

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Rental Housing Journal Arizona

Arizona Company Ranks In Top Best Places to Work in Multifamily

M

C Companies of Scottsdale was ranked No. 9 in the nation as a top place to work in the multifamily industry in a survey by the Best Companies Group, according to a release. “Being ranked No. 9 in the nation is an incredible honor. We were up against companies from 42 states so to come out on top is both humbling and reaffirming that our culture and practices work," Lesley Brice, president of MC Companies of Scottsdale, Arizona, said in a release. "75% of our score came from employee surveys, without our employees this award would not have been possible. Our incredible team members and residents are the reason we are able to succeed in the industry." The rigorous assessment process, administered by the Best Companies Group, evaluates each company’s employee policies and procedures as well as responses from the company’s employees. The program is part of a longterm initiative to encourage growth and excellence throughout the Multifamily Apartment Industry and to attract new leaders to the industry. The award was

10

announced at the Multifamily Leadership Summit in Scottsdale, Arizona. As CEOs and executive teams create culture and innovation around the resident experience, employee engagement is seen as a key driver to meet multiple challenges. The 2017 Best Places to Work Multifamily program recognizes those companies that have established and consistently fosters outstanding workplace environments. Giving is at the heart of what we do here at MC," Brice said. "From assisting our residents, to charity drives at our office, the importance of altruism is in everything we do. Winning this award is a reflection of the ways giving back to those within our own company has helped create engagement within our own organization." MC Companies has been recognized in the past for their top reputation in the multi-housing industry. This year they have received the honor of being named one of the Most Admired Companies in Arizona and one of the Top Companies to Work for in Arizona 2016 by Azcentral.com.

2017 Best Places to Work in Multifamily Rank

Company Name

U.S. Employees

1

LMC

386

2

Apartment Dynamics

49

3

Fogelman Management Group

551

4

Matrix Residential and Pollack Shores Real Estate Group

356

5

ZRS Management, LLC

592

6

Lincoln Property Company

3456

7

Carter-Haston

247

8

Drucker & Falk, LLC

1031

9

MC Residential Communities

282

10

Q10 Property Advisors

47

11

IMT Residential

584

12

Benson Integrated Marketing Solutions

140

13

JVM Realty

123

14

Gables Residential

985

About MC Companies: Headquartered in Scottsdale, Arizona, MC Companies is a real estate investment, development, construction, and management company specializing in the multifamily properties and commercial markets. MC Companies has completed over $500 million in multi-family and commercial value-added transactions since 1985.

Rental Housing Journal Arizona · February 2017


Rental Housing Journal Arizona

Home Buyers in Expensive Markets ...continued from page 1 Handling Employee Evictions ...continued from page 1 appreciation slowed significantly, only growing at 1.5 percent annually. These shifting dynamics can make the question of whether to buy or rent less clear in many markets. "There are many factors that go into the decision on whether to rent or buy," said Zillow Chief Economist Dr. Svenja Gudell. "Zillow's Breakeven Horizon can help people better understand the longer-term financial calculation. It's also helpful for buyers to understand that as home value appreciation moderates, it will take them longer to break even than in past years. San Jose buyers, for example, will have to stay in a

home for at least five years to offset the high upfront costs necessary to make that purchase." Among the biggest U.S. metros, it takes the longest to break even on a home purchase in large California markets. In San Jose, San Francisco, Los Angeles and San Diego, the Breakeven Horizon is at least four years. Buyers will break even fastest in the South and Midwest. In Indianapolis, Orlando, Detroit, Atlanta, and Tampa, it takes less than 1.5 years to break even on a home.

Breakeven Horizon, 2016 Q4 United States 1 year, 11 months New York/Northern New Jersey 2 years, 6 months Los Angeles-Long Beach4 years, 2 months Anaheim, CA Chicago, IL 2 years Dallas-Fort Worth, TX 1 year, 6 months Philadelphia, PA 2 years, 5 months Houston, TX 1 year, 11 months Washington, DC 3 years, 6 months Miami-Fort Lauderdale, FL 2 years, 3 months Atlanta, GA 1 year, 5 months Boston, MA 2 years, 8 months San Francisco, CA 4 years, 6 months Detroit, MI 1 year, 5 months Riverside, CA 2 years, 2 months Phoenix, AZ 2 years, 5 months Seattle, WA 2 years, 5 months Minneapolis-St Paul, MN 2 years, 3 months San Diego, CA 4 years, 1 month St. Louis, MO 1 year, 10 months Tampa, FL 1 year, 5 months Baltimore, MD 2 years, 5 months Denver, CO 2 years, 3 months Pittsburgh, PA 2 years Portland, OR 2 years, 1 month Charlotte, NC 1 year, 8 months Sacramento, CA 2 years, 5 months San Antonio, TX 1 year, 9 months Orlando, FL 1 year, 5 months Cincinnati, OH 1 year, 8 months Cleveland, OH 1 year, 10 months Kansas City, MO 1 year, 7 months Las Vegas, NV 1 year, 10 months Columbus, OH 1 year, 9 months Indianapolis, IN 1 year, 4 months San Jose, CA 5 years, 2 months Austin, TX 2 years, 5 months Metropolitan Area

Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.

Breakeven Horizon, 2015 Q4 1 year, 10 months 3 years, 2 months 4 years, 1 month 2 years, 1 month 1 year, 3 months 2 years, 10 months 1 year, 5 months 4 years, 5 months 2 years, 6 months 1 year, 5 months 3 years, 1 month 2 years, 11 months 1 year, 4 months 1 year, 10 months 2 years, 4 months 1 year, 11 months 2 years, 3 months 3 years, 5 months 1 year, 9 months 1 year, 11 months 3 years 1 year, 9 months 1 year, 9 months 2 years, 1 month 1 year, 9 months 2 years, 1 month 1 year, 6 months 1 year, 11 months 1 year, 7 months 1 year, 6 months 1 year, 6 months 1 year, 8 months 1 year, 8 months 1 year, 4 months 3 years, 3 months 1 year, 11 months

The breakeven horizon is the number of years after which buying is more financially advantageous than renting (at the precise breakeven horizon one can be indifferent between buying and renting). We compute the breakeven horizon for each household by comparing the costs of owning a home versus renting a home at the end of each year for 30 years (assuming the house is purchased using a 30 year fixed mortgage). Our buy versus rent analysis incorporated all possible costs incurred when purchasing a home as well as those incurred when renting a home to make the comparison between these costs as realistic as possible. The full methodology can be found here: http://www.zillow. com/research/rent-vs-buy-breakeven-horizon-analysis-methodology-updated-3549/ Zillow –http://www.zillow.com i

Rental Housing Journal Arizona · February 2017

provide the necessary working conditions, as well as pay the employee for the work done. However, there cannot be a guarantee of continued employment or tenure. The very nature of the “at-will” precludes any claim for a prospective benefit. Either employer or employee may terminate the contract at any time.

Good Cause Good cause for termination includes lying, fighting, destroying company property, inability to perform the duties of the job, and insubordination. The employer can terminate the employment if he or she makes a subjective determination that the employee’s work is unsatisfactory. Often times, multi-housing employees receive housing as part of their compensation. The Arizona Residential Landlord and Tenant Act does not protect these individuals in employee-termination situations. A.R.S. § 33-1308 states in part: Exclusions from application of chapter Unless created to avoid the application of this chapter, the following arrangements are not covered by this chapter... 5. Occupancy by an employee of a landlord as a manager or custodian whose right to occupancy is conditional upon employment in and about the premises. Management should draft a written agreement stating that employees are not residents; the agreement is not a lease and the time frame for vacating the unit following termination. If the employee is a current resident, the landlord should cancel their lease agreement and inform the individual that the employee agreement takes precedence over the lease. Once management terminates an employee, it should personally deliver to him or her a five-day notice to vacate under the conditions of A.R.S. § 12-1173 (the forcible detainer statute). However, if, at the time of hiring, the employ-

ee signed an agreement specifying the amount of time he or she has to vacate, this takes precedence over the statute. Additionally, it is a good idea to issue this notice at the time of termination. Although lockouts are permissible as long as they do not cause a breach of peace, most courts do not look favorably on them. For example, a judgment has in the past awarded $5,000 in punitive damages to a former employee because of a lockout situation. At the end of the notice period, management may file a forcible detainer eviction requesting possession of the unit, fair rental value from the termination date, attorney fees and costs. This procedure is identical to a normal eviction for nonpayment of rent. Following the hearing and judgment, the constable can evict the employee under a writ of restitution after five days.

Example Consider the following example: Clydesdale Apartments hire Miller Tyme and his girlfriend, Amber Lager, to perform maintenance and housekeeping duties. Apartment manager Bud Wizer requires that the two sign an employee agreement stating they must move out within 48 hours in the event of their termination. After a few weeks, Bud Wizer smells alcohol on their breath, frequent absences and poor work performances. The property owners, Mr. Brew and Mr. Stout, elect to terminate Miller Tyme and Amber Lager. They verbally request that the two vacate within the 48-hour period stated in their contract. Miller Tyme and Amber Lager refuse to move and the owners file eviction proceedings against them. At court, Judge Fosters dismisses the eviction because management did not deliver written notice. On the way out the courthouse, Miller Tyme tells Amber Lager, “It doesn’t get any better than this.” Andrew M. Hull, Esq. Hull, Holliday & Holliday, PLC www.doctorevictor.com 602.230.0088

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Rental Housing Journal Arizona

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Rental Housing Journal Arizona ¡ February 2017

Rental Housing Journal Arizona February 2017  

Rental Housing Journal is the business journal for the Arizona rental housing and multi-family property management industry.

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