metro phoenix economic snapshot mid year update heilman

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Economic Forecast Rain or Shine? Local Housing Market Who’s Buying & What’s Selling M E T R O P H O E N I X Recession Recovery: Steady or Sporadic? MID-YEAR UPDATE

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MPES 2010 Mid Year

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Page 1: Metro Phoenix Economic Snapshot Mid Year Update Heilman

602.400.0250 [email protected]

RE/MAX Sun Properties16704 E. Avenue of the Fountains #101 • Fountain Hills, AZ 85268

www.MyHassleFreeListings.com

Economic ForecastRain or Shine?

Local Housing Market Who’s Buying & What’s Selling

M E T R O P H O E N I X

Recession Recovery: Steady or Sporadic?

M I D - Y E A R U P D A T E

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

January-June 2010 Average Sales Price By City

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

Scottsdale: $552,027

Mesa: $166,238

Chandler: $223,088

Peoria: $182,312

Carefree: $769,102

Cave Creek: $369,248

Litchfield Park: $206,415

Paradise Valley: $1,458,505

Fountain Hills: $519,651

Glendale: $133,694

Phoenix: $148,161

Gilbert: $212,772

Tempe: $210,123

As a proud Valley resident, I am pleased to specialize my real estate craft in this community. Turn to me for market facts and statistics, questions about buying or selling, or for “in-the-know” referrals for local goods and services!

WHY WORK WITH ME? Buyers and sellers in today’s challenging market need an experienced, knowledgeable REALTOR now more than ever before. Choosing the wrong agent can make or break your entire transaction. Choosing an agent that excels in the industry, has your best interests at heart and can serve as a trusted advisor for you is critical.

YOU CAN HAVE CONFIDENCE IN MY EXPERTISE How do you know a REALTOR is up-to-date with the latest skills necessary in the industry? I believe in continuing education to keep up with today’s Real Estate trends and have completed my CRS (Certified Residential Specialist), GRI (Graduate of Realtors Institute), ABR (Accredited Buyers Representative) and my CDPE (Certified Distressed Property Expert) designations so that I can more effectively represent you, my client.

HOW IS WORKING WITH ME A BENEFIT TO YOU? I believe in empowering my clients with INFORMATION. I will be available to answer all of your questions in a timely and informed manner, drawing on all of my resources. I will listen to all of your needs and objectives and work with you to meet that goal. I also offer a “LOVE it or leave it GUARANTEE!” Contact me to hear more about it!

PROFESSIONAL ASSOCIATIONS• Active Arizona Real Estate License • Active member of the National Association of REALTORS®, Arizona Association of REALTORS®, and Scottsdale Area Association of REALTORS® • Board Member of the Fountain Hills Chamber of Commerce• Member of the Fountain Hills Noon Kiwanis. • Member of StarPower Systems; a top producing real estate agent training network

January-June 2010 Sales Statistics By Zip CodeZip Code Average Days On List/Sell # Sales Price Market Price Ratio Closed

85004..............................................$261,750 ................. 124 ..................87% ...........................5

85008................................................$85,625 .................. 60 ...................98% .........................191

85013..............................................$176,457 .................. 74 ...................96% .........................112

85016..............................................$226,612 .................. 72 ...................93% .........................194

85018..............................................$437,363 ................. 107 ..................93% .........................242

85032..............................................$145,523 .................. 70 ...................97% .........................498

85044..............................................$243,196 ................. 109 ..................96% .........................243

85086..............................................$233,633 .................. 82 ...................98% .........................736

85087..............................................$213,614 .................. 94 ...................98% .........................124

85205..............................................$152,987 .................. 83 ...................96% .........................332

85212..............................................$173,641 .................. 76 ...................99% .........................302

85226..............................................$226,326 .................. 73 ...................97% .........................239

85248..............................................$294,031 ................. 102 ..................95% .........................393

85251..............................................$286,054 .................. 75 ...................91% .........................112

85253...........................................$1,463,107 ................. 214 ..................89% .........................172

85254..............................................$313,744 .................. 92 ...................96% .........................376

85255..............................................$728,373 ................. 121 ..................93% .........................512

85257..............................................$171,129 .................. 78 ...................97% .........................177

85258..............................................$515,006 ................. 138 ..................92% .........................151

85260..............................................$443,988 ................. 112 ..................87% .........................206

85266..............................................$654,688 ................. 151 ..................93% .........................190

85282..............................................$167,100 .................. 74 ...................96% .........................210

85283..............................................$175,629 .................. 80 ...................95% .........................154

85284..............................................$371,892 .................. 89 ...................96% .........................121

85296..............................................$195,481 .................. 69 ...................98% .........................500

85326................................................$93,736 .................. 69 ...................99% .........................971

85340..............................................$206,415 .................. 85 ...................97% .........................364

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

Page 2: Metro Phoenix Economic Snapshot Mid Year Update Heilman

RAIN OR SHINE? Justasameteorologistpredictsweatherpatterns,economistsusedataandindicatorstodeterminethestateofoureconomy.So,asfarasoureconomygoes,whatcanweexpectfortheremainderof2010:Rainorshine?Whileopinionsvaryamongexperts,thecommonconsensusappearstobeaforecastforpartlysunnyskieswithachanceofshowers. Asbeatenandbatteredasmanyofusfeeltoday,it’sencouragingtonotethattheUSeconomyisinabetterpositiontodaythanayearoreventwoyearsago.Whilethegainswe’veexperiencedhavebeengradualandincremental,theyaresolidenoughthattheyshouldprovetoberealanddurable.

THE SUNNY SIDE Arguablythemostcriticalcomponentofourrecoveryisemploymentandwe’veseenapickupinnotonlyemployment,butalsoincome.Joblosseshaveslowedconsiderablyandemployersarebeginningtoaddtotheirworkforce,albeitslowly.Further,hourlywageshaveincreasedby3.5%sinceAugust2007. TheLaborDepartmentreleasedajobopeningsreportforAprilwhichshowsthenumberofjobsadvertisedat3.1million–themostopeningssinceDecember2008.HereinthePhoenixarea,moreemployersareplanningtohireworkersinthethirdquarterthanareplanningtolayoff,accordingtoaManpowerEmploymentOutlooksurvey.Thatmakesthreeconsecutivequarterswithaplannednetgaininlocalemployment. Theeconomicrecoveryisgainingstrengthfromthebiggestriseinconstructionspendinginadecadeandthe10thstraightmonthofexpansionformanufacturers.Alsohelpingtodrivethegrowthisbusinessspendingandtheneedtoreplenishleaninventories. Exportsareexpectedtoreturntoprerecessionlevels,aswe’veseenanexpansionbymorethan14%in2010,thefastestpacesince1988.SalestoCanada,MexicoandAsiawillrecovermorequickly;whileexportstoEuropewillclimbslowerduetothefinancialturmoilinthatpartoftheworld. Alsoplayingaroleinourrecovery:Risingconsumerconfidence.TheConferenceBoardConsumerConfidenceIndexhasincreasedinrecentmonths.Asofpresstime,theIndexnowstandsat63.3.Themonthlyindexiscreepingupfromthelowof55duringthefinancialcrisistotheprerecessionmarkofnearly100.Consumersarebeginningtomakepurchases

again.Weshouldseeabouta2.5%increaseinconsumerspendingthisyear.Modest,butatleastit’spositive.Addingtothepositivetrend,Americans’debtlevelsandsavingsareimprovingandhouseholdnetworthisupoverlastyear.Thingsaremovingintherightdirection.

CLOUDY WITH A CHANCE OF RAIN Whilepositiveemploymenttrendsmayshowasignforrecovery,thefactthatsomanyAmericansarestilloutofworkisacontinualdragontherecovery.Someexpertsbelieveitwilltakeuntillate2012torecoverthejobslostinthisrecessionanduntil2014toreturntoamorenormal5-6%unemploymentrate.Withmillionsoutofwork,wecan’texpectconsumerspendingtoincreasetoprerecessionlevelsanytimesoon. Secondly,untilcreditavailabilityforconsumersaswellasbusinessesloosensup,it’llbedifficultforoureconomytogrow.SmallbusinessemployeesaccountfornearlyhalfofalljobsintheUS.Untilbusinessesareabletosecureneededfinancing,theremaybeadelayinfurtherhiringandexpenditures.

WILDCARDS Thevolatilestockmarket,theEuropeanfinancialcrisis,SB1070….theseareallissuesloomingwithuncertaintythatmayormaynotdragusintoa“double-dip”recessionoraffectourrecovery.Asweneartheendoftheyear,we’llhaveabetterideaastotheimpactornon-impactoftheseissues.

INTEREST RATES & THE TAX CREDIT Mortgageinterestratesarestillatamazinglylowlevels.Atthebeginningoftheyear,theFedwaspurchasingmortgage-backedsecurities,whichkeptrateslow.Whenthatprogramended,therewasspeculationthatwe’dseeaspikeinrates.However,justtheoppositehasoccurred.InterestrateshavefallenastheEuropeanfinancialturmoilhasboostedinternationaldemandforUSgovernmentsecurities. TheFirst-TimeHomebuyerTaxCreditandExistingHomebuyerTaxCreditintroducedin2009andextendedinto2010hasdonejustwhatitwasdesignedtodo:Stimulatehomesales.Nationallyaswellaslocally,buyerscameoutinforcetotakeadvantageofthegenerousgovernmentprogram.Nowthattheincentiveisgone,canthehousingmarketsustainits

momentum?Lowinterestrates,attractivehomepricesandrisingconsumerconfidenceshouldplayaroleincontinuedhomesalesfortheremainderof2010.

THE ECONOMIC RECOVERY: SPEEDY OR SPORADIC? ResearchersfortheFederalReserveBankofSanFranciscoarepredictingthattherecoveryfromthisrecessionwillbefasterthanafterpreviousrecessions.JohnC.Williams,directorofresearchattheFederalReserveBank,believesthattheincreaseinhome,carandretailsalespointtoafastrecovery.“Iseenosignsofadoubledip.Theeconomycontinuestogainmomentum,andconsumerspendingandbusinessinvestmentcontinuetoimprove,”Williamssaid. Ontheotherhand,FederalReserveChairmanBenBernankepredictsasloweconomicrecoveryandsaidthatinterestrateswilllikelyriseevenbeforeemploymentrises.“Eventhoughtechnicallywe’llbeinrecoveryandtheeconomywillbegrowing,unemploymentwillstillbehighforawhileandthatmeansthatalotofpeoplewillbeunderfinancialstress,”Bernankeexplained. Sotheforecastmovingforwardfortheremainderof2010aspartlysunnywithachanceofshowersdepictsaneconomythat’sforgingaheadandshowingimprovement;buttherearestillseveralindicatorsthatcouldsendalittlerainontheparadebeforewemakeittobrightandsunnyskiesonceagain.

HOME VALUES Thetopicofcurrenthomevaluesisenoughtomakeanyhomeownercringe.TheMetroPhoenixareahasexperienceda52%decreaseinhomevaluesfromitshighinJune2006.Infact,figuresfromtheFederalHousingFinanceAgencyshowthathomevaluesinthelastyeardroppedmoreinArizonathaninanyotherstate.MaricopaandPinalcounties,whichmakeupMetroPhoenix,sawadecreaseof17.6%overthelastyear.Whencomparedtothenationalindexofa3.1%declineinhomevalues,it’sclearthatourarea,onceappreciatingatarecordpace,hassuffered. Nowontothegoodnews.Withinthepastyear,we’veseenrecordsalesactivityparticularlyinthelower-price-pointproperties.Manyofthoselistingsexperiencedmultipleoffersandsalesabovelistprice.Wearenowseeingstabilizationandpriceappreciationinthelower-endhomemarket,andnowevenataperingoffofpricedeclinesintheluxurymarket.JayButler,ASUrealestateprofessorsaid,“Ayearago,peoplefoundalotofinexpensivehomesavailable,eitherthroughforeclosures,shortsales,whatever.Thesehavebeensortofcleanedup,sowe’removinguptheladderofhomeprices.” RecentlytheArizonaStateUniversity-RepeatSalesIndexmarkedthesecondconsecutivemonthinwhichtheindexpostedagainratherthanadecline.Thehomepriceindexhadbeenfallingforthepastthreeyears,butshoweda2.7%gaininstead.Mediansalespricesforsingle-familyhomeshaveriseneachmonthduringthefirsthalfof2010(seethechart“January–June2010SalesStatistics”).Homevaluesarecertainlymovingintherightdirection. Theluxurymarket,whichtypicallylagsbehindthelower-endmarket,isnowshowingsmallsignsofimprovement.Withhigherconsumerconfidence,improvementwithournationaleconomyandwealthyindividualsunaffectedbyunemploymentsteadilymovingoffthesidelines,theluxurymarketisbeginningtoseeachangeforthebetter.

InformationgatheredfromTheCromfordReport,alocalrealestateresearchfirm,showsthathomesinthe$1M-$1.5Mmarketnowsitata22-monthsupplyvs.a52-monthsupplyinApril2009anda93-monthsupplyinDecember2008. Needsomemoregoodnews?Realestateiscyclical.Evenwiththerecentsteepdropinprices,mostArizonahomesareworthalmostdoubletodaythanwhattheywereworthin1991.Canweexpecthomepricestodoubleagain?Considerthis:Homepriceshavebeendoublingapproximatelyevery12-15yearsoverthelast100years.PopulationgrowthprojectionsfortheMetroPhoenixareacallforover55,000newhomeseachyearforthenext10yearstosatisfydemand.(Seethechart“MetroPhoenixPopulationandHousingNeedsForecast”.)ThedesirableValleyoftheSunwillbeadestinationfornewhomeownersfordecadestocome.

DISTRESSED PROPERTIES Forthepast18-24months,wecouldn’tdiscussourlocalhousingmarketwithoutthetopicofbank-ownedorforeclosureproperties.Thesedistressedpropertieshavebecomeanunwelcome,stablepartofourhousinglandscapeandhavehadanimpactonsupply&demand,andhomevaluesineverypartoftheValleyandineverypricepoint. Today,theamountofsaleswe’reseeingfromforeclosuresisfallingatasteadyrate.Foreclosuresaleshavedominatedthemix,withshortsalesand“normal”(consideredneitherashortsalenorforeclosure)saleslaggingbehind.Thepeakforforeclosureresaleswas66.2%inMarch2009.We’renowseeingforeclosuresalesaround33%.“Itappearsforeclosuresmayhavefinallymadetheirdownwardturn,”saidTomRuff,analystforTheInformationMarket.Lendershaveincreasinglysteereddistressedhomeownersintoforeclosurealternativessuchasloanmodificationsandshortsales.

WHO’S BUYING AND WHAT’S SELLING? Thegovernmenttaxcreditdeadlinehelpedtofuelpurchasesofhomesunderthe$150,000mark,manybyfirst-timehomebuyers.Now,inthelatterpartof2010,thereisasmallerpercentageofhomessellinginthelowerpriceranges.Earlierintheyear,investorsmadeupalargeamountofhomepurchasers,nowitappearsthattherearemorelong-termbuyersvs.speculativebuyers.Today,morebuyersarefinancingtheirhomeswithlong-termmortgagesandwiththeintentoflivinginthem. Therehasalsobeenashiftinout-of-statebuyers.Canadiansrepresentthedominategroupofbuyers,dethroningCaliforniansaftermanyyears.Californiadidcomeinsecondhowever,withWashingtonstatethird.MidwesternerscontinuetopurchaseheavilyintheValleyaswell.

WHAT’S IN STORE FOR OUR HOUSING MARKET? Thehealthofourmarketdependsmainlyonemploymentandthelocaljobmarket.Secondly,thereneedstobemarkedimprovementwithhousingmarketsacrossthenation,asmanywould-beValleyhomebuyersneedtoselltheirhomesbeforetheycanmigratehere.Also,thepossibilityoffutureforeclosuresfloodingthemarket,particularlywiththeexpectationofmillionsofARMsresettingin2011causinganewwaveofdistressedborrowers,mayhaveanimpact. Ifcurrenttrendscontinue,we’llseemodestbutsteadypriceappreciation,andmorehomessellingviashortsalesandnon-distressedsales.Withwhatexpertscalltheofficial“bottomingout”ofourmarketinAprilof2009,everygainandeachsuccesssincethenisbuildingconfidenceamongconsumers–whichisexactlywhatourmarketneedstogetbackontrack.

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 N A P S H OT

Gross Domestic Product .......................... 3.3%

Nonfarm Payroll Employment (change in millions) .................................. 1.3

Unemployment Rate .............................. 9.6%

S&P 500 Index Price (year end) ............... 1225

Personal Consumption ........................... 2.6%

Business Capital Investment Growth ....... 3.0%

Housing Starts (millions) ........................... 0.7

New Home Sales (millions) ........................ 0.4

Existing Home Sales (millions) ................... 5.3

State & Local Govt. Spending ................. -1.4%Source: SIFMA’s (Securities Industry and Financial Markets Association) Mid-Year 2010 Economic Outlook.

2010 Economic Forecasts

January - June 2010 Sales StatisticsSingle-Family Homes | Metro Phoenix

MedianSalesPrice Avg.DaysonMarket NumberofSalesJanuary .............. $129,900 ...................................86 ................................. 4,855February ............. $131,000 ..................................95 ................................. 5,440March ................. $135,589 ..................................96 ................................. 7,440April ................... $135,838 ..................................93 ................................. 7,774May .................... $137,990 ..................................92 ................................. 7,679June ................... $135,000 ...................................95 ................................. 7,885

Source: ARMLS. Information is deemed reliable but not guaranteed. Data maintained by ARMLS may not reflect all real estate activity in the market.

Top 10 Fastest Growing U.S. Counties1. Kendall County, IL (Chicago) .........................92.1%2.PinalCounty,AZ(Phoenix)................ 89.7%3. Rockwall County, TX (Dallas) ........................88.9%4. Flagler County, FL (Jacksonville) ...................83.9%5. Loudon County, VA (Washington, D.C.) .........77.6%

6. Forsyth County, GA (Atlanta) ........................77.4%7. Lincoln County, SD (Sioux Falls) ................... 70.7%8. Paulding County, GA (Atlanta) ......................67.4%9. Williamson County, TX (Austin) .....................64.3%10. Douglas County, CO (Denver) ......................64.0%

Source: US Census Bureau

Metro Phoenix Population & Housing Needs Forecast 2010 2020 2030Population ....................... 4,388,536 .................. 5,766,480 .................... 7,453,910 Annual % growth ................. 3.0% .......................... 2.8% ............................2.6%Change over decade ............................................ 1,377,944 .................... 1,687,430 New units each year ...............................................55,120 ........................ 67,480

Source: U of A, Elliott D. Pollack & Company. New units each year based on 2.5 persons per household.

Yearly Market ComparisonJan-June 2009 vs. Jan-June 2010 | Single-Family Homes

NUMBEROFSOLDLISTINGS DOLLARVOLUMEOFSOLDLISTINGS MEDIANSALEPRICE 2009 2010 Diff Chg 2009 2010 Diff Chg 2009 2010 Diff ChgJanuary ...... 4,230 ........ 4,853 ......... 623 ..........14.7% $ 777,731,941 ............ $ 911,304,246 ........... 133,572,305 ............ 17.1% 130,000 ...........129,900........-100 .......... -0.1%February ..... 4,849 ........ 5,432 ......... 583 ..........12.0% $ 859,187,212 ............ $ 1,013,402,466 ........ 154,215,254 ............ 17.9% 127,000 ...........131,000........4,000 ........ 3.1%March ......... 6,827 ........ 7,437 ......... 610 ..........8.9% $ 1,100,011,643 ......... $ 1,412,236,023 ........ 312,224,380 ............ 28.3% 120,000 ...........135,700........15,700 ...... 13.1%April ........... 7,601 ........ 7,766 ......... 165 ..........2.2% $ 1,227,951,267 ......... $ 1,421,144,753 ........ 193,193,486 ............ 15.7% 117,500 ...........135,950........18,450 ...... 15.7%May ............ 8,161 ........ 7,662 ......... -499 ........-6.1% $ 1,367,855,390 ......... $ 1,443,694,329 ........ 75,838,939 .............. 5.5% 121,500 ...........137,900........16,400 ...... 13.5%June ........... 8,154 ........ 4,724 ......... -3,430 .....-42.1% $ 1,440,058,524 ......... $ 939,545,285 ........... -500,513,239 ........... -34.8% 130,000 ...........137,000........7,000 ........ 5.4%

Source: ARMLS. Information is deemed reliable but not guaranteed. Data maintained by ARMLS may not reflect all real estate activity in the market.

Housing Affordability IndexGreater Phoenix Area

69.5 49.3 26.6 33.2 65.3 83.6 81.9 2000 Q1 2005 Q2 2006 Q3 2007 Q3 2008 Q2 2009 Q2 2010 Q1

Source: NAHB Housing Opportunity Index

Page 3: Metro Phoenix Economic Snapshot Mid Year Update Heilman

RAIN OR SHINE? Justasameteorologistpredictsweatherpatterns,economistsusedataandindicatorstodeterminethestateofoureconomy.So,asfarasoureconomygoes,whatcanweexpectfortheremainderof2010:Rainorshine?Whileopinionsvaryamongexperts,thecommonconsensusappearstobeaforecastforpartlysunnyskieswithachanceofshowers. Asbeatenandbatteredasmanyofusfeeltoday,it’sencouragingtonotethattheUSeconomyisinabetterpositiontodaythanayearoreventwoyearsago.Whilethegainswe’veexperiencedhavebeengradualandincremental,theyaresolidenoughthattheyshouldprovetoberealanddurable.

THE SUNNY SIDE Arguablythemostcriticalcomponentofourrecoveryisemploymentandwe’veseenapickupinnotonlyemployment,butalsoincome.Joblosseshaveslowedconsiderablyandemployersarebeginningtoaddtotheirworkforce,albeitslowly.Further,hourlywageshaveincreasedby3.5%sinceAugust2007. TheLaborDepartmentreleasedajobopeningsreportforAprilwhichshowsthenumberofjobsadvertisedat3.1million–themostopeningssinceDecember2008.HereinthePhoenixarea,moreemployersareplanningtohireworkersinthethirdquarterthanareplanningtolayoff,accordingtoaManpowerEmploymentOutlooksurvey.Thatmakesthreeconsecutivequarterswithaplannednetgaininlocalemployment. Theeconomicrecoveryisgainingstrengthfromthebiggestriseinconstructionspendinginadecadeandthe10thstraightmonthofexpansionformanufacturers.Alsohelpingtodrivethegrowthisbusinessspendingandtheneedtoreplenishleaninventories. Exportsareexpectedtoreturntoprerecessionlevels,aswe’veseenanexpansionbymorethan14%in2010,thefastestpacesince1988.SalestoCanada,MexicoandAsiawillrecovermorequickly;whileexportstoEuropewillclimbslowerduetothefinancialturmoilinthatpartoftheworld. Alsoplayingaroleinourrecovery:Risingconsumerconfidence.TheConferenceBoardConsumerConfidenceIndexhasincreasedinrecentmonths.Asofpresstime,theIndexnowstandsat63.3.Themonthlyindexiscreepingupfromthelowof55duringthefinancialcrisistotheprerecessionmarkofnearly100.Consumersarebeginningtomakepurchases

again.Weshouldseeabouta2.5%increaseinconsumerspendingthisyear.Modest,butatleastit’spositive.Addingtothepositivetrend,Americans’debtlevelsandsavingsareimprovingandhouseholdnetworthisupoverlastyear.Thingsaremovingintherightdirection.

CLOUDY WITH A CHANCE OF RAIN Whilepositiveemploymenttrendsmayshowasignforrecovery,thefactthatsomanyAmericansarestilloutofworkisacontinualdragontherecovery.Someexpertsbelieveitwilltakeuntillate2012torecoverthejobslostinthisrecessionanduntil2014toreturntoamorenormal5-6%unemploymentrate.Withmillionsoutofwork,wecan’texpectconsumerspendingtoincreasetoprerecessionlevelsanytimesoon. Secondly,untilcreditavailabilityforconsumersaswellasbusinessesloosensup,it’llbedifficultforoureconomytogrow.SmallbusinessemployeesaccountfornearlyhalfofalljobsintheUS.Untilbusinessesareabletosecureneededfinancing,theremaybeadelayinfurtherhiringandexpenditures.

WILDCARDS Thevolatilestockmarket,theEuropeanfinancialcrisis,SB1070….theseareallissuesloomingwithuncertaintythatmayormaynotdragusintoa“double-dip”recessionoraffectourrecovery.Asweneartheendoftheyear,we’llhaveabetterideaastotheimpactornon-impactoftheseissues.

INTEREST RATES & THE TAX CREDIT Mortgageinterestratesarestillatamazinglylowlevels.Atthebeginningoftheyear,theFedwaspurchasingmortgage-backedsecurities,whichkeptrateslow.Whenthatprogramended,therewasspeculationthatwe’dseeaspikeinrates.However,justtheoppositehasoccurred.InterestrateshavefallenastheEuropeanfinancialturmoilhasboostedinternationaldemandforUSgovernmentsecurities. TheFirst-TimeHomebuyerTaxCreditandExistingHomebuyerTaxCreditintroducedin2009andextendedinto2010hasdonejustwhatitwasdesignedtodo:Stimulatehomesales.Nationallyaswellaslocally,buyerscameoutinforcetotakeadvantageofthegenerousgovernmentprogram.Nowthattheincentiveisgone,canthehousingmarketsustainits

momentum?Lowinterestrates,attractivehomepricesandrisingconsumerconfidenceshouldplayaroleincontinuedhomesalesfortheremainderof2010.

THE ECONOMIC RECOVERY: SPEEDY OR SPORADIC? ResearchersfortheFederalReserveBankofSanFranciscoarepredictingthattherecoveryfromthisrecessionwillbefasterthanafterpreviousrecessions.JohnC.Williams,directorofresearchattheFederalReserveBank,believesthattheincreaseinhome,carandretailsalespointtoafastrecovery.“Iseenosignsofadoubledip.Theeconomycontinuestogainmomentum,andconsumerspendingandbusinessinvestmentcontinuetoimprove,”Williamssaid. Ontheotherhand,FederalReserveChairmanBenBernankepredictsasloweconomicrecoveryandsaidthatinterestrateswilllikelyriseevenbeforeemploymentrises.“Eventhoughtechnicallywe’llbeinrecoveryandtheeconomywillbegrowing,unemploymentwillstillbehighforawhileandthatmeansthatalotofpeoplewillbeunderfinancialstress,”Bernankeexplained. Sotheforecastmovingforwardfortheremainderof2010aspartlysunnywithachanceofshowersdepictsaneconomythat’sforgingaheadandshowingimprovement;buttherearestillseveralindicatorsthatcouldsendalittlerainontheparadebeforewemakeittobrightandsunnyskiesonceagain.

HOME VALUES Thetopicofcurrenthomevaluesisenoughtomakeanyhomeownercringe.TheMetroPhoenixareahasexperienceda52%decreaseinhomevaluesfromitshighinJune2006.Infact,figuresfromtheFederalHousingFinanceAgencyshowthathomevaluesinthelastyeardroppedmoreinArizonathaninanyotherstate.MaricopaandPinalcounties,whichmakeupMetroPhoenix,sawadecreaseof17.6%overthelastyear.Whencomparedtothenationalindexofa3.1%declineinhomevalues,it’sclearthatourarea,onceappreciatingatarecordpace,hassuffered. Nowontothegoodnews.Withinthepastyear,we’veseenrecordsalesactivityparticularlyinthelower-price-pointproperties.Manyofthoselistingsexperiencedmultipleoffersandsalesabovelistprice.Wearenowseeingstabilizationandpriceappreciationinthelower-endhomemarket,andnowevenataperingoffofpricedeclinesintheluxurymarket.JayButler,ASUrealestateprofessorsaid,“Ayearago,peoplefoundalotofinexpensivehomesavailable,eitherthroughforeclosures,shortsales,whatever.Thesehavebeensortofcleanedup,sowe’removinguptheladderofhomeprices.” RecentlytheArizonaStateUniversity-RepeatSalesIndexmarkedthesecondconsecutivemonthinwhichtheindexpostedagainratherthanadecline.Thehomepriceindexhadbeenfallingforthepastthreeyears,butshoweda2.7%gaininstead.Mediansalespricesforsingle-familyhomeshaveriseneachmonthduringthefirsthalfof2010(seethechart“January–June2010SalesStatistics”).Homevaluesarecertainlymovingintherightdirection. Theluxurymarket,whichtypicallylagsbehindthelower-endmarket,isnowshowingsmallsignsofimprovement.Withhigherconsumerconfidence,improvementwithournationaleconomyandwealthyindividualsunaffectedbyunemploymentsteadilymovingoffthesidelines,theluxurymarketisbeginningtoseeachangeforthebetter.

InformationgatheredfromTheCromfordReport,alocalrealestateresearchfirm,showsthathomesinthe$1M-$1.5Mmarketnowsitata22-monthsupplyvs.a52-monthsupplyinApril2009anda93-monthsupplyinDecember2008. Needsomemoregoodnews?Realestateiscyclical.Evenwiththerecentsteepdropinprices,mostArizonahomesareworthalmostdoubletodaythanwhattheywereworthin1991.Canweexpecthomepricestodoubleagain?Considerthis:Homepriceshavebeendoublingapproximatelyevery12-15yearsoverthelast100years.PopulationgrowthprojectionsfortheMetroPhoenixareacallforover55,000newhomeseachyearforthenext10yearstosatisfydemand.(Seethechart“MetroPhoenixPopulationandHousingNeedsForecast”.)ThedesirableValleyoftheSunwillbeadestinationfornewhomeownersfordecadestocome.

DISTRESSED PROPERTIES Forthepast18-24months,wecouldn’tdiscussourlocalhousingmarketwithoutthetopicofbank-ownedorforeclosureproperties.Thesedistressedpropertieshavebecomeanunwelcome,stablepartofourhousinglandscapeandhavehadanimpactonsupply&demand,andhomevaluesineverypartoftheValleyandineverypricepoint. Today,theamountofsaleswe’reseeingfromforeclosuresisfallingatasteadyrate.Foreclosuresaleshavedominatedthemix,withshortsalesand“normal”(consideredneitherashortsalenorforeclosure)saleslaggingbehind.Thepeakforforeclosureresaleswas66.2%inMarch2009.We’renowseeingforeclosuresalesaround33%.“Itappearsforeclosuresmayhavefinallymadetheirdownwardturn,”saidTomRuff,analystforTheInformationMarket.Lendershaveincreasinglysteereddistressedhomeownersintoforeclosurealternativessuchasloanmodificationsandshortsales.

WHO’S BUYING AND WHAT’S SELLING? Thegovernmenttaxcreditdeadlinehelpedtofuelpurchasesofhomesunderthe$150,000mark,manybyfirst-timehomebuyers.Now,inthelatterpartof2010,thereisasmallerpercentageofhomessellinginthelowerpriceranges.Earlierintheyear,investorsmadeupalargeamountofhomepurchasers,nowitappearsthattherearemorelong-termbuyersvs.speculativebuyers.Today,morebuyersarefinancingtheirhomeswithlong-termmortgagesandwiththeintentoflivinginthem. Therehasalsobeenashiftinout-of-statebuyers.Canadiansrepresentthedominategroupofbuyers,dethroningCaliforniansaftermanyyears.Californiadidcomeinsecondhowever,withWashingtonstatethird.MidwesternerscontinuetopurchaseheavilyintheValleyaswell.

WHAT’S IN STORE FOR OUR HOUSING MARKET? Thehealthofourmarketdependsmainlyonemploymentandthelocaljobmarket.Secondly,thereneedstobemarkedimprovementwithhousingmarketsacrossthenation,asmanywould-beValleyhomebuyersneedtoselltheirhomesbeforetheycanmigratehere.Also,thepossibilityoffutureforeclosuresfloodingthemarket,particularlywiththeexpectationofmillionsofARMsresettingin2011causinganewwaveofdistressedborrowers,mayhaveanimpact. Ifcurrenttrendscontinue,we’llseemodestbutsteadypriceappreciation,andmorehomessellingviashortsalesandnon-distressedsales.Withwhatexpertscalltheofficial“bottomingout”ofourmarketinAprilof2009,everygainandeachsuccesssincethenisbuildingconfidenceamongconsumers–whichisexactlywhatourmarketneedstogetbackontrack.

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 N A P S H OT

Gross Domestic Product .......................... 3.3%

Nonfarm Payroll Employment (change in millions) .................................. 1.3

Unemployment Rate .............................. 9.6%

S&P 500 Index Price (year end) ............... 1225

Personal Consumption ........................... 2.6%

Business Capital Investment Growth ....... 3.0%

Housing Starts (millions) ........................... 0.7

New Home Sales (millions) ........................ 0.4

Existing Home Sales (millions) ................... 5.3

State & Local Govt. Spending ................. -1.4%Source: SIFMA’s (Securities Industry and Financial Markets Association) Mid-Year 2010 Economic Outlook.

2010 Economic Forecasts

January - June 2010 Sales StatisticsSingle-Family Homes | Metro Phoenix

MedianSalesPrice Avg.DaysonMarket NumberofSalesJanuary .............. $129,900 ...................................86 ................................. 4,855February ............. $131,000 ..................................95 ................................. 5,440March ................. $135,589 ..................................96 ................................. 7,440April ................... $135,838 ..................................93 ................................. 7,774May .................... $137,990 ..................................92 ................................. 7,679June ................... $135,000 ...................................95 ................................. 7,885

Source: ARMLS. Information is deemed reliable but not guaranteed. Data maintained by ARMLS may not reflect all real estate activity in the market.

Top 10 Fastest Growing U.S. Counties1. Kendall County, IL (Chicago) .........................92.1%2.PinalCounty,AZ(Phoenix)................ 89.7%3. Rockwall County, TX (Dallas) ........................88.9%4. Flagler County, FL (Jacksonville) ...................83.9%5. Loudon County, VA (Washington, D.C.) .........77.6%

6. Forsyth County, GA (Atlanta) ........................77.4%7. Lincoln County, SD (Sioux Falls) ................... 70.7%8. Paulding County, GA (Atlanta) ......................67.4%9. Williamson County, TX (Austin) .....................64.3%10. Douglas County, CO (Denver) ......................64.0%

Source: US Census Bureau

Metro Phoenix Population & Housing Needs Forecast 2010 2020 2030Population ....................... 4,388,536 .................. 5,766,480 .................... 7,453,910 Annual % growth ................. 3.0% .......................... 2.8% ............................2.6%Change over decade ............................................ 1,377,944 .................... 1,687,430 New units each year ...............................................55,120 ........................ 67,480

Source: U of A, Elliott D. Pollack & Company. New units each year based on 2.5 persons per household.

Yearly Market ComparisonJan-June 2009 vs. Jan-June 2010 | Single-Family Homes

NUMBEROFSOLDLISTINGS DOLLARVOLUMEOFSOLDLISTINGS MEDIANSALEPRICE 2009 2010 Diff Chg 2009 2010 Diff Chg 2009 2010 Diff ChgJanuary ...... 4,230 ........ 4,853 ......... 623 ..........14.7% $ 777,731,941 ............ $ 911,304,246 ........... 133,572,305 ............ 17.1% 130,000 ...........129,900........-100 .......... -0.1%February ..... 4,849 ........ 5,432 ......... 583 ..........12.0% $ 859,187,212 ............ $ 1,013,402,466 ........ 154,215,254 ............ 17.9% 127,000 ...........131,000........4,000 ........ 3.1%March ......... 6,827 ........ 7,437 ......... 610 ..........8.9% $ 1,100,011,643 ......... $ 1,412,236,023 ........ 312,224,380 ............ 28.3% 120,000 ...........135,700........15,700 ...... 13.1%April ........... 7,601 ........ 7,766 ......... 165 ..........2.2% $ 1,227,951,267 ......... $ 1,421,144,753 ........ 193,193,486 ............ 15.7% 117,500 ...........135,950........18,450 ...... 15.7%May ............ 8,161 ........ 7,662 ......... -499 ........-6.1% $ 1,367,855,390 ......... $ 1,443,694,329 ........ 75,838,939 .............. 5.5% 121,500 ...........137,900........16,400 ...... 13.5%June ........... 8,154 ........ 4,724 ......... -3,430 .....-42.1% $ 1,440,058,524 ......... $ 939,545,285 ........... -500,513,239 ........... -34.8% 130,000 ...........137,000........7,000 ........ 5.4%

Source: ARMLS. Information is deemed reliable but not guaranteed. Data maintained by ARMLS may not reflect all real estate activity in the market.

Housing Affordability IndexGreater Phoenix Area

69.5 49.3 26.6 33.2 65.3 83.6 81.9 2000 Q1 2005 Q2 2006 Q3 2007 Q3 2008 Q2 2009 Q2 2010 Q1

Source: NAHB Housing Opportunity Index

Page 4: Metro Phoenix Economic Snapshot Mid Year Update Heilman

Experiencethedifference.Theconnectionbetweenyouandyouragentisvitalforcompleteunderstandingofwhatyouwantandhowtogetitforyou. WhenworkingwithMarie,youwillfeelasthoughyouareherONLYclient.Shepridesherselfonworkingone-on-onewithyouandwillattendtoyoureveryneedwithpersonalizedservice.“Imeasuremysuccessoneclientatthetime,”shestates. Todaymorethanever,buyersandsellersarerelyingonRealtorsthathaveproventhemselvesintheirindustry.Let’stalkaboutthemarket,yourhome,yourgoalsandhowwecanstrategizeandformulateaplanspecifictoyourpersonalcircumstances.Ilookforwardtoworkingwithyou!

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Phone: 480.570.5555 [email protected]

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Fax: 480.515.0695

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Economic ForecastRain or Shine?

Local Housing Market Who’s Buying & What’s Selling

M E T R O P H O E N I X

Recession Recovery: Steady or Sporadic?

M I D - Y E A R U P D A T E

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

January-June 2010 Sales Statistics By Community

January-June 2010 Average Sales Price By City

Community Average DaysOn List/Sell # SalesPrice Market PriceRatio Closed

Ancala ........................................$1,228,821 ................. 491 ..................91% ..........................16 Bellasera ........................................$532,944 ................. 145 ..................94% ...........................9Boulders .........................................$840,126 ................. 212 ..................92% ..........................17DC Ranch......................................$863,666 ................. 176 ..................91% ..........................63Desert Highlands .......................$1,266,000 ................. 349 ..................91% ..........................10Desert Mountain ........................$1,415,365 ................. 326 ..................86% ..........................59Eagle Mountain ............................$748,088 ................. 145 ..................93% ..........................17Estancia ......................................$1,049,140 ................. 165 ..................80% ..........................35FireRock ......................................$1,317,380 ................. 333 ..................87% ..........................21Gainey Ranch ..............................$887,750 ................. 234 ..................88% ..........................16Grayhawk .....................................$623,613 ................. 139 ..................94% ..........................57Hidden Hills ....................................$503,134 ................. 136 ..................94% ..........................21Ironwood Village ..........................$330,414 ................. 101 ..................96% ..........................29Legend Trail ...................................$482,903 ................. 114 ..................95% ..........................28McCormick Ranch .......................$397,025 ................. 139 ..................94% ..........................16McDowell Mountain Ranch ........$513,985 ................. 126 ..................96% .........................122Mirabel ..........................................$970,171 ................. 353 ..................83% ..........................22Scottsdale Mountain ...................$566,883 ................. 150 ..................94% ..........................31Scottsdale Ranch .........................$530,162 ................. 171 ..................92% ..........................38Sincuidados ..................................$715,250 ................. 190 ..................94% ..........................10Silverleaf .....................................$2,844,714 ................. 190 ..................92% ..........................18Stonegate .....................................$536,750 ................. 124 ..................93% ..........................23Terravita .........................................$467,832 ................. 127 ..................95% ..........................48Troon North ....................................$860,710 ................. 229 ..................91% ..........................38Troon Village .................................$712,694 ................. 106 ..................91% ..........................16Whisper Rock .............................$1,881,875 ................. 516 ..................89% ...........................8Winfield ..........................................$531,045 ................. 303 ..................90% ..........................11

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

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

Scottsdale:$552,027

Mesa:$166,238

Chandler:$223,088

Peoria:$182,312

Carefree:$769,102

CaveCreek:$369,248

LitchfieldPark:$206,415

ParadiseValley:$1,458,505

FountainHills:$519,651

Glendale:$133,694

Phoenix:$148,161

Gilbert:$212,772

Tempe:$210,123

PARADISE VALLEY ~ BILTMORE ~ ARCADIASCOTTSDALE ~ CAREFREE/CAVE CREEK