Saturday, March 26, 2011
- Valley's priciest home sales for 2011 | Photos
Foreclosures were down for homes and condos and traditional home sales were up 20 percent.
The Valley's overall median price was $131,660 for homes and $85,000 for condominiums and townhouses.
Home sales: 460 (up 12 percent)
Price: $341,195 (down 8.3 percent)
Traditional sales: 325 (up 20 percent)
Price: $370,000 (down 12 percent)
Foreclosures: 135 (down 3.6 percent)
Price: $286,080 (down 0.8 percent)
Condo sales: 270 (no change)
Price: $146,825 (up 1.3 percent)
Traditional sales: 180 (up 2.86 percent)
Price: $146,750 (up 1.2 percent)
Foreclosures: 90 (down 5.3 percent)
Price: $149,770 (up 3.3 percent)
Home sales: 410
Traditional sales: 270
Condo sales: 270
Traditional sales: 175
by Peter Corbett The Arizona Republic Feb. 22, 2011 09:21 AM
Scottsdale condo prices increase in January
Not surprisingly, the number of licensed agents and brokers statewide has declined almost 22 percent since 2007, just after the Valley's housing market peaked.
There are roughly 51,000 agents and brokers, according to the latest figures from the Arizona Department of Real Estate.
That is down from more than 65,000 in 2007.
On the flip side, the number of inactive license holders is 19,468, an increase of 48 percent since 2007.
The department does not categorize the license holders by city or county.
The Scottsdale Area Association of Realtors has about 8,000 members and 350 affiliate members.
The state's figures show that there is a 3-to-1 ratio of real-estate agents to brokers, with 38,044 agents and 13,040 brokers.
The number of active real-estate companies in Arizona is 8,748, which is up less than 1 percent from 2007.
The National Association of Realtors reported 1 million members in February, down 5.67 percent from earlier. Its membership in Arizona last month was 39,743, down 3.82 percent from 2010.
Agents fled as market cooled
A lot of people jumped into selling real estate in the mid-2000s, lured by the lucrative commissions on houses that were selling in days, if not hours, well above the listing prices.
But when sales flattened out and agents had to hustle to sell homes, many decided not to pay their $150 to $200 license renewal fees.
Scottsdale agent Rick Amos of Realty Executives said he has noticed there are fewer agents but "what makes up for less competition is more hassles with short sales and more phone calls and explanations to clients."
Those agents that are still at it are more seasoned, he said.
"It helps when you have an experienced person on both sides of the transaction," Amos said.
Exodus of agents worse in past
David MacIntyre, Arizona Best Real Estate owner-broker, said he is surprised there was not an even greater loss of agents.
In previous boom-to-bust cycles nearly half the agents would leave the business, said MacIntyre, who has been in Arizona real estate for 41 years.
His Scottsdale real-estate company still has 115 agents.
And while the luxury market in Scottsdale has been challenged, MacIntyre said he sees it recovering this year.
He sent a dozen of his agents to the Luxury Portfolio Summit in Las Vegas this month to learn about emerging opportunities in high-end real estate.
"The million-dollar buyers are coming back," MacIntyre said, adding that they are paying cash for exceptional values in the Valley.
by Peter Corbett The Arizona Republic Mar. 26, 2011 06:39 AM
Housing market's struggles lead to fewer agents
Bernanke said it would be important for the banks to adapt to the changing regulatory environment, in remarks to the annual convention in San Diego of small- and medium-sized banks. Bernanke acknowledged their concerns about the new law. But he said most of the requirements are aimed the country's biggest banks and not them.
Congress passed the regulatory law last year in an effort to prevent a repeat of the 2008 financial crisis. Small-bank executives have complained that it will cost them a lot of money to meet the new rules, even though they were not responsible for causing the financial crisis.
Bernanke said that the hundreds of community banks, those with assets less than $10 billion, would play a vital role in the nation's recovery because they are an important source of loans for small businesses.
"Although we are not yet where we would like to be, the good news is that many community banks have already been doing their part to meet the credit needs of their customers, notably including small business customers," Bernanke said in his speech to the Independent Community Bankers of America.
Bernanke said that it was fortunate that Congress had decided to preserve the Fed's regulatory connection to small banks. In one version of the measure, the Fed would have lost the power to regulate them. But the law maintains the Fed's powers and even broadened it to include thrift holding companies. The thrifts themselves will be regulated by the Office of the Comptroller of the Currency. Congress abolished the Office of Thrift Supervision, which was a weak regulator.
The Fed chairman said the broadened role for the central bank benefits everyone.
In response to an audience question, Bernanke said that the Fed understood that Congress wanted to shield smaller banking institutions from the impact of a new law that requires large banks to trim debit-card fees. At stake is the $16 billion each year that, according to the Fed, stores must pay banks and other credit card issuers when customers use the cards.
The Fed, which must implement a rule to put the new law into effect, understands that banks with assets of less than $10 billion should be protected from losing the fees they now receive, Bernanke said.
Bernanke previously had told lawmakers that the exemption for smaller banks might not work. The concern on the part of the small banks is that merchants might refuse to accept their cards because they carry a higher fee. Bernanke has said that problems in dealing with all the complexities of the new law may mean that the Fed is not able to complete the rule to implement the law by an April 21 deadline.
by Martin Crutsinger Associated Press Mar. 23, 2011 04:44 PM
Bernanke: Overhaul will help small banks
BLB Resources, an asset-management firm based in Irvine, Calif., is tasked with disposing of all Arizona homes foreclosed on by the U.S. Department of Housing and Urban Development.
Saturday's auction, scheduled to begin at 1 p.m. at the JW Marriott Desert Ridge Resort & Spa at 5350 E. Marriott Drive in Phoenix, will feature 150 detached homes and condo units in Phoenix, Maricopa, Mesa, Glendale, Buckeye and other Valley communities.
BLB Outreach Manager Ray Warda said it will be the first HUD foreclosure auction his firm has held in Arizona. It also is something of an experiment, Warda said, and it will be unusual because the only eligible bidders are those seeking a home in which to live.
The owner-occupant auction is part of a pilot program BLB is testing in metro Phoenix. If it proves successful for HUD, the seller, there could be more auctions like it in the future. However, Warda said it also could end up being a one-time opportunity.
All the homes were foreclosed on by HUD because the previous owners defaulted on U.S. Federal Housing Administration-backed mortgages.
Requirements to qualify as a bidder include:
- A cashier's check for $1,000, made out to HUD, to be used as earnest money.
- Pre-qualification from a mortgage lender, or proof of adequate financial resources to buy the home outright.
- A valid Social Security number.
- A commitment to living in the property as the buyer's primary residence for at least 12 months.
The auction will be conducted by Phoenix-based auctioneers Hudson & Marshall.
Warda said each home will have an unpublished reserve price that the winning bidder must meet or exceed.
Although the reserve price generally is not disclosed, a number of informational Web sites focused on HUD homes indicate that HUD usually accepts offers at or slightly below a home's current appraised value.
For more on Saturday's auction, visit hudhouseauction.com.
by J. Craig Anderson The Arizona Republic Mar. 23, 2011 06:42 PM
HUD home sale to ban investors
The lender had asked the case, filed in late December, be moved to federal court.
State Attorney General Tom Horne, who inherited the lawsuit from former Attorney General Terry Goddard, said state-court cases often move more quickly then those tried in federal court.
"Homeowners who have suffered from practices that may violate the Arizona Consumer Fraud Act need timely relief," he said. "And unnecessary delays can be damaging to them."
The suit alleges BofA deceived borrowers who were trying to obtain loan modifications to keep their homes. The lender is accused of violating the state's consumer-fraud laws by not responding to many homeowners' requests for help, rejecting loan-modification applications without supplying sufficient reason and beginning foreclosure proceedings on homeowners at the same time those borrowers were starting loan modifications.
The lawsuit was filed after a one-year investigation into the loan servicing and foreclosures practices of the Charlotte, N.C.-based lender, Arizona's largest mortgage holder and servicer.
In 2010, nearly 500 consumers filed complaints against BofA. Nevada's attorney general filed a similar lawsuit against the bank on Friday.
BofA has described the filing of the lawsuits as hasty.
by Catherine Reagor The Arizona Republic Mar. 22, 2011 04:42 PM
BofA lawsuit to stay in state court
According to "Cromford Report" principal Mike Orr's daily tracking of the region's residential real-estate data, most of the key indicators that turned negative at the end of last year's second quarter are now showing positive signs: Inventory, or supply of homes for sale, has been falling since late November.
Pending listings, a precursor to home sales that tracks buyer interest, has been climbing steadily this year. There were 8,695 pending listings at the beginning of January, compared with almost 13,000 now.
Home sales were up during the first quarter, compared with last year's steady pace.
There are two important market gauges that haven't turned around yet: pending and actual sales prices.
But Orr said the improvement in the other housing indicators could signal prices will climb during the next six to nine months.
Tom Ruff of Information Market, a Phoenix real-estate data firm, shares Orr's opinion.
"The numbers that made us pessimistic last July are the same numbers that are now making me optimistic," he said.
Many homeowners may feel whipsawed by forecasts for a housing recovery during the past few years that didn't happen. But the numbers tracking buyer demand and sales are the ones to watch.
Hope Now is hosting another event for Arizona homeowners facing foreclosure. This year's free, daylong session is set for Thursday at the Phoenix Convention Center.
The event is promoted as a chance for struggling homeowners to sit down with housing counselors and potentially someone from their lender to discuss ways they can avoid foreclosure.
At the past event two years ago, some metro Phoenix homeowners received the help they needed but others came prepared with their mortgage and debt paperwork and left disappointed.
Several lenders are signed up to participate, and representatives from Making Home Affordable, Fannie Mae, Freddie Mac, the Arizona Department of Housing, Arizona Foreclosure Prevention Task Force, Department of Labor and Loan Scam Alert will all also be there.
The homeowner workshop begins at 11 a.m. and lasts until 7:30 p.m.
Lender Wells Fargo is participating in this week's homeowner event but is also hosting its own next week, March 30-31.
Wells Fargo's workshop is also at the Phoenix Convention Center and runs from 9 a.m. to 7 p.m. each day.
by Catherine Reagor The Arizona Republic Mar. 22, 2011 07:20 PM
Home market in Valley may rebound soon
Tuesday, March 22, 2011
Today, the U.S. Department of the Treasury announced that it will begin the orderly wind down of its remaining portfolio of $142 billion in agency-guaranteed mortgage-backed securities (MBS).
Excerpts from the Presser...
Starting this month,Treasury plans to sell up to $10 billion in agency-guaranteed MBS per month, subject to market conditions. At the end of each month, Treasury will post on its website the total agency-guaranteed MBS sales it has made, broken down by coupon and agency.
“We’re continuing to wind down the emergency programs that were put in place in 2008 and 2009 to help restore market stability, and the sale of these securities is consistent with that effort,” said Mary J. Miller, Assistant Secretary for Financial Markets. “We will exit this investment at a gradual and orderly pace to maximize the recovery of taxpayer dollars and help protect the process of repair of the housing finance market.”
The following frequently asked questions provide further information regarding Treasury’s plan to wind down its $142 billion portfolio of agency-guaranteed mortgage-backed securities (MBS) at a gradual and orderly pace. Starting this month, Treasury plans to sell up to $10 billion in agency-guaranteed MBS per month, subject to market conditions.
Why does Treasury hold a portfolio of agency-guaranteed MBS?
The Housing and Economic Recovery Act of 2008 (HERA) gave Treasury the authority to purchase agency-guaranteed MBS to provide stability to financial markets, prevent disruption in the availability of mortgage finance, and protect taxpayers. Treasury’s actions helped stabilize the mortgage market at a time of unprecedented market volatility and illiquidity. Treasury purchased agency-guaranteed MBS between October 2008 and December 2009. As of March 15, the current market value of Treasury’s holdings is approximately $142 billion.
Why is Treasury winding down its MBS portfolio?
Selling MBS is consistent with the general pattern of Treasury divestment of financial assets acquired during 2008 and 2009 as part of the various financial stabilization programs. Aided by such programs, today, the market for agency-guaranteed MBS has notably improved along with broader financial conditions since Treasury acquired the portfolio. Additionally, Treasury’s mission does not typically include managing a large mortgage portfolio.
When will the selling commence?
Treasury will begin to gradually wind down its MBS portfolio starting this month.
Over what time frame will the unwind take place?
Treasury plans to sell up to $10 billion of securities per month, subject to market conditions. This is in addition to principal payments (currently ranging between $3 and $5 billion per month). If the sales proceeded at the full $10 billion per month, the portfolio would be unwound in whole over approximately one year, depending on future rates of prepayments. If market conditions change and Treasury slows asset sales, it is possible that the unwind will take a longer period of time.
Once started, would Treasury consider suspending the sale of its MBS portfolio?
Selling the MBS portfolio is subject to market conditions. There is not a rigid set of criteria that will be used to suspend selling. Evidence of adverse market conditions could lead to a change in the sales frequency of the program. Treasury will constantly monitor the market, and if market conditions become less favorable, the sales could be suspended.
What impact will this program have on primary mortgage rates?
We believe that this portfolio can be sold with minimal impact on the market and a minimal impact on primary mortgage rates.
Under what authority is Treasury winding down its MBS portfolio?
The Housing and Economic Recovery Act of 2008 (HERA) gave Treasury the authority to sell holdings acquired under that act.
What implications will this approach have for Treasury debt issuance?
The sale of these securities will allow Treasury to borrow less in 2011 and 2012, but will not alter Treasury’s previously stated debt management objectives.
Is this action related to the debt limit?
No. This action is consistent with a general pattern of Treasury continued divestment of assets acquired during 2008 and 2009 as part of the various financial stabilization programs. Additionally, the projected pace of sales, $10 billion per month, will not meaningfully extend the expected time until Treasury will reach the debt limit.
Relationship to Housing Finance Reform and Fannie Mae and Freddie Mac (The “Enterprises”)
How does this announcement relate to the broader objectives of housing finance reform?
This action is independent from housing finance reform and is a part of the Administration’s broader efforts to wind down the emergency financial stabilization programs that were put in place in 2008 and 2009.
Will this announcement impact current administration policy regarding the wind down of the agency-guaranteed MBS held in the Enterprises’ portfolios?
No. The Enterprises are currently in the process of gradually reducing the size of their retained portfolios at a pace of no less than 10 percent per year, as they agreed to do in the preferred stock purchase agreements between the Treasury and the Enterprises. Both Enterprises are on track to meet or exceed the scheduled reductions, and the Administration does not anticipate any changes to this policy.
Will this announcement impact the Administration’s commitment to supporting the Enterprises’ obligations?
No. The government is committed to ensuring that Fannie Mae and Freddie Mac have sufficient capital to perform under any guarantees issued now or in the future and the ability to meet their debt obligations.
What types of MBS will be sold?
Treasury intends to sell all of its agency-guaranteed MBS holdings. Treasury’s portfolio consists primarily of 30-year fixed-rate MBS that are guaranteed by either Fannie Mae or Freddie Mac. There is also a smaller amount of 15-year fixed-rate MBS guaranteed by Fannie Mae and Freddie Mac, and one 10/20 MBS guaranteed by Fannie Mae. A complete list of the total MBS holdings by coupon and agency is available on the Treasury website at:
What will be the frequency of the sales?
There will be no pre-scheduled times and sizes of individual trades. Treasury will sell up to $10 billion per month, subject to market conditions. Sales of MBS out of the portfolio can occur daily.
How will you decide which securities to sell at any given time?
Treasury will monitor supply and demand dynamics in the market and determine the optimal timing for the sale of securities. Decisions to sell bonds will be based on both quantitative and qualitative market metrics. Treasury will also consider the composition of its portfolio holdings as well as indications of interest from eligible counterparties when determining security selection. State Street Global Advisors (SSgA) is the manager for Treasury’s portfolio and will assist in this analysis.
Will reverse inquiries be allowed?
Treasury will ensure a competitive bidding process that maximizes value for the taxpayer. Dealers are encouraged to show interest in specific trades or securities, but trades will be executed competitively.
Will these trades be specified pool trades or executed as “To-Be Announced” (TBA) trades?
Many of the securities in Treasury’s portfolio currently have a market value higher than TBA prices. As such, these securities will be traded as specified pools. Those securities that do not have a market value higher then TBA prices may be executed as TBA transactions.
Will the Treasury engage in coupon swaps and dollar rolls?
No. All transactions will be outright sales, as authorized by HERA.
Will you consider structuring Collateralized Mortgage Obligations (CMOs) as part of the unwind strategy?
No. Bonds will be sold as they were initially purchased without any additional structuring.
When will the trades settle?
Most trades will settle at monthly intervals on the regularly scheduled TBA settlement days. It is possible to settle trades on different days. Trades settling away from regularly scheduled TBA settlement days would only occur if they were in the taxpayers’ best interest.
Who will settle trades?
SSgA, as financial agent for the Treasury, will be responsible for facilitating the settlement of all sales in the portfolio.
Is the Treasury planning to reinvest the proceeds in any other assets?
No. As mandated under HERA and the Dodd-Frank Act, the proceeds from the MBS sales will be deposited in the General Fund of the Treasury.
How will Treasury disclose completed sales?
Consistent with current practice, at the end of each month Treasury will post its portfolio holdings, including any sales that were completed, broken down by coupon and agency. That posting will be available on the Treasury website at: http://www.treasury.gov/resource-center/data-chart-center/Pages/mbs-purchase-program.aspx
Will Treasury post the exact CUSIPs that they own?
No. Given the Treasury’s approach to MBS sales, providing CUSIP level data could reduce the ability to efficiently execute sales.
Will Treasury provide a schedule in advance that displays the list of securities they intend to sell and times of transactions?
No. Treasury will retain flexibility to adjust to supply and demand conditions for specific issues and adjust its wind down strategy accordingly. This will provide the greatest opportunity to ensure best execution for the taxpayer through competitive sales.
Will you publish the counterparties in each MBS trade?
No. Treasury will not publish dealer market shares or specific trade details. Doing so would decrease the ability of Treasury to maximize value for taxpayers.
External Money Managers
Why is it necessary for the Treasury to transact through an external investment manager?
The operational characteristics of MBS purchases and sales are complex and external managers have an ability to execute and manage efficiently while, at the same time, minimizing operational and financial risks.
Treasury is not well positioned to actively trade mortgage-backed securities in the market on a day-to-day basis. External investment managers are used to ensure best execution in the market and maximize value for taxpayers.
How was SSgA selected?
SSgA was selected as part of a competitive process at the outset of the Treasury program to acquire, manage and dispose of MBS. Initially, Treasury hired both Barclays Global Investors (BGI) and SSgA. At the end of 2009, when Treasury completed its MBS purchases, administration of the program was consolidated and it is now managed solely by SSgA..
Is Treasury hiring other money managers to assist with security selection and execution strategy?
Yes. Smith, Graham, and Company Investment Advisors (Smith Graham) will provide additional assistance with the security selection process. On a weekly basis, Smith Graham will provide analytical support to Treasury.
Is Treasury considering hiring other money managers to assist with execution of the sales of MBS?
No. Adding additional managers would increase complexity and add to our operational risk. Intensive coordination and additional surveillance would be required to ensure that multiple independent managers did not work at cross purposes in the market. Using a single manager offers the best approach to optimizing the sale of the portfolio and protecting the taxpayers’ best interests.
How will Treasury ensure that SSgA is making prudent decisions on behalf of taxpayers?
In its agreement with Treasury, SSgA has a mandate to protect taxpayers and maximize value through best execution. Treasury will monitor SSgA and receive regular feedback regarding security selection, timing, and general market conditions to ensure that SSgA is fulfilling its obligations to taxpayers. Additionally, other divisions at SSgA will not be allowed to buy securities directly from Treasury’s portfolio.
What measures will Treasury take to ensure that SSgA will not have in unfair advantage relative to other market participants due to the information it receives?
A wall exists at SSgA that appropriately segregates the investment management team that implements the Treasury’s agency MBS program from other advisory trading activities of the firm. When Treasury hired SSgA, SSgA built a team that is focused exclusively on managing Treasury’s portfolio that is separate from the rest of the firm. Treasury monitors compliance with the requirement to maintain the wall.
Who will SSgA trade with?
SSgA will trade with dealers who meet SSgA’s counterparty credit requirements. Dealers may submit bids for themselves or on behalf of their clients.
Will SSgA be required to spread their business between dealers?
There are no pre-set market share targets for dealers. SSgA will ensure competition between dealers that maximizes best execution for the taxpayer. SSgA will also ensure diversity among the dealers. Treasury will constantly monitor the dealer selection process to ensure that no dealers or market participants are provided an unfair advantage.
A few comments...
Treasury did not set a floor on how much MBS they can sell in a given month, but they did set a ceiling at $10 billion. If investor demand warrants, expect Treasury to offer $10 billion a month. If MBS valuations (yield spreads) weaken significantly as Treasury tries to sell, they will back off and let spreads stabilize before resuming operations. We don't expect that to happen unless benchmark yields rise substantially because, for example, the Fed hinted at a rate hike (4.5s would fall off a ledge). If necessary Treasury could halt this program all together, but $10 billion a month only adds $2.5 billion in loan supply per week. When you consider how slow a year it's been for new production MBS, we don't think it'll cause a major disruption.
In terms of timing, it would behoove Treasury to sell their lowest coupons first, especially if Treasury thinks rates will rise in the year ahead. At the moment Treasury is holding mostly 4.5 30-year coupons ($45 billion). With TBA supply very muted at the moment, we don't see many barriers that might prevent Treasury from selling the full $10 billion per month. If rates do drop substantially and the MBS market moves "Down in Coupon", Treasury may run into a barrier as investors look to avoid MBS coupons with heightened prepayment risk like 5.0s and 5.5s. Then again the street has been burned repeatedly over the past year by automatically assuming lower mortgage rates would equal a big jump in prepayment speeds. It just didn't happen. Qualifying for a loan isn't as simple as it used to be...one 30-day late is enough to kill a deal these days. Plus in the past, when prepayment speeds did pick up, investors looked for protection in the specified pool mortgage market. These MBS are backed by loans that have demonstrated a consistent performance (have a pay history). Generally MBS investors are willing to "pay-up" (pay more) to get their mitts on this paper. A large portion of Treasury's MBS holdings will be sold as specified "pay-ups". So even if rates do decline, there should still be demand for Treasury's holdings. (5.0 MBS coupons for example have already entered a "burnout" phase where lower rates will have little impact on prepayment speeds).
Plain and Simple: We don't see this causing a major disturbance in the TBA MBS market. The general direction of benchmark rates will largely dictate the direction of mortgage rates. We don't think this is a hint of things to come from the Fed either. When the Fed is ready to finally start selling their MBS holdings, the market will have already pushed rates higher and the market for their holdings would be weak because the coupons on their balance sheet would be trading at a sizeable discount. Thus the Fed will likely be forced to hold onto a large portion of their MBS portfolio to avoid shocking the market with too much duration.
The mortgage market was caught off-guard by this news though. Consequently there has been a knee-jerk reaction wider in current coupon MBS spreads and lower in current coupon MBS prices. That move has already started correcting though...
by Adam Quinones Mortgage News Daily March 21, 2011
Treasury to Sell MBS Holdings. Minimal Shock Expected
Bair spoke briefly Tuesday morning during a segment on CNBC's "Squawk on the Street," program.
"We want banks to lend to credit-worthy borrowers," Bair said. As the economy improves, Bair said she expects borrowers to commit to new business expansion and banks to be more willing to make loans. "Almost all indicators are for an improved banking sector," she added.
Bank closings peaked in 2010 at 157, up from 140 in 2009. Despite 25 closings already this year, Bair sees improvement on the horizon with significantly less bank failures expected this year.
Prudent lending, she said, will improve bank's earnings statements. "We are seeing a lot of improvement," Bair said, "credit quality is improving."
The FDIC's deposit insurance fund, meanwhile, is continuing to improve, she noted. Under the Dodd-Frank Act, the FDIC is required to set the designated reserve ratio at 2%. The rule took effect in January. Dodd-Frank gave the FDIC greater discretion to manage the DIF, including where to set the DRR. The financial reform law raises the minimum DRR, which the FDIC is required to set each year, to 1.35% from the former minimum of 1.15%. The FDIC has until Sept. 30, 2020, to get the fund reserve ratio up to 1.35%.
by Kerry Curry HousingWire March 22, 2011
FDIC's Bair: Bank lending slowly opening up « HousingWire
Saturday, March 19, 2011
Japan's currency fell from Thursday's record, a relief to Japan's government as it struggles with a humanitarian disaster.
The G7’s clout, diminished in the past couple of years by the rise of the more inclusive Group of 20, will be tested when active trading resumes Monday. Markets in Japan will be closed for a holiday, but that won’t stop traders from buying yen elsewhere – if they dare.
After pushing the yen to a postwar high of 76.25 to the U.S. dollar, an appreciation that included a startling 4.3-per-cent gain in 10 minutes of trading Wednesday evening, investors backed down Friday in the face of concerted selling by central banks in Japan, Europe, the United States and Canada, a co-ordinated move aimed at holding down the currency of an economy already in deep trouble.
Many financial players were caught by surprise Friday, and David Watt, a senior currency strategist at RBC Dominion Securities in Toronto, predicts an uneasy stand-off on Monday.
“There are going to be a lot of people on the sidelines, with no one wanting to flinch and make the first move,” Mr. Watt said.
G7 authorities would prefer that everyone holster their weapons and walk away before there’s any more trouble. That could happen as investors reflect on the contradiction of a country in the midst of a historic crisis being saddled with one of the world's strongest currencies.
The yen appeared to accelerate on speculation that the Japanese will sell tens of billions of dollars in overseas assets to rebuild from last week’s earthquake and ensuing tsunami – a repatriation of funds that analysts say has yet to occur, and that is unlikely to happen to the degree suggested by the yen’s rise. The implication is that the surge was driven by speculators, rather thanJapanese insurance firms gathering yen for reconstruction.
Unlike its previous intervention in September, 2000, to prop up the euro, which was two years old and struggling to gain the confidence of traders, the G7 doesn’t appear to want to fundamentally change the value of the yen.
Until Wednesday’s sudden surge, the Japanese currency was trading fairly close to its historic average, Jens Nordvig, the New York-based global head of G10 currency strategy at Nomura Holdings Inc., said on a conference call Friday.
“There is no economic reason to live with a higher yen at such a dreadful time when it should be much lower,” said Wendy Dobson, co-director of the Institute for International Business at the University of Toronto’s Rotman School of Management and a former associate deputy minister in Canada’s Finance Department.
The G7’s intervention showed the group still has the resolve to rally to the aid of one of its own.
G7 members, the U.S., Japan, Germany, Britain, France, Italy and Canada, have been meeting as a group since the late 1970s under the auspices of steering the global economy. However, the financial crisis demonstrated that the world economy had become more than the postwar economic powers could control on their own. The G20, which includes emerging markets such as China, India and Brazil, was designated the primary body for co-ordinating economic policy at a summit of G20 leaders in Pittsburgh in 2009.
A stronger currency is a burden for Japan’s exporters at a time when the country’s economy can least afford it. The quake and ensuing tsunami killed thousands, and the destruction has disrupted production at companies such as Toyota Corp. and Sony Corp. The country remains on edge as authorities struggle to contain radiation leaks at a shattered nuclear plant.
"A targeted strategy to take some of the pressure off the yen in Japan’s time of exceptional need is a great example of how macro policy co-ordination among the major economies can make a positive difference,” said Glen Hodgson, chief economist at the Conference Board of Canada in Ottawa and a former official at Canada’s Finance Department.
In a statement after the meeting via conference call on Thursday evening, G7 finance ministers and central bankers said they were ready to “provide any needed co-operation” as Japan rebuilds.
But the statement also hinted at concern that this week’s unusual trading in the yen risked triggering a broader crisis in international markets. “As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability,” officials said. “We will monitor exchange markets closely and will co-operate as appropriate.”
That suggests the trigger for further action will be a sudden jump from what officials consider fair value of the Japanese currency. Many analysts reckon the G7’s central banks will hold their fire as long as the yen holds a value of around 80 to the U.S. dollar.
“Above all, the G7’s role was an attempt to stabilize markets,” Camilla Sutton, chief currency strategist at Scotia Capital in Toronto, said in a research note Friday. “Any further disorderly movements in (the dollar-yen rate) will likely be met with renewed commitment from the G7.”
The Bank of Japan led the action, exchanging some ¥2-trillion for dollars, a transaction worth about $25-billion (U.S.), Bloomberg News reported, citing a Japanese official. The European Central Bank, the Bank of France, Germany’s Bundesbank, and the Bank of Italy followed as markets opened in Europe, selling yen to weaken the Japanese currency’s value. The Federal Reserve and the Bank of Canada did the same as trading began in North America.
Central banks in Europe and North America declined to reveal the scale of their yen sales. Currency analysts estimated their contributions were largely symbolic – the equivalent of a shot across the bow to show traders that their monetary authorities are watching.
In September, Japan intervened unilaterally to weaken the yen after the currency had strengthened at that point to about 83 to the dollar, a decision that drew scorn from European officials, who accused the Japanese government of seeking an advantage for its exporters.
The Bank of Japan sold ¥2-trillion in that effort and then backed down. Japanese authorities will have a better chance of fighting currency traders with the backing of the G7, analysts said.
“It’s very important to remember what happened in September,” Mr. Nordvig said. The Japanese government now has “the clear backing of the G7,” he said. “It makes the operation that much more likely to have a permanent impact.”
by Kevin Carmichael The Globe and Mail March 18, 2011
G7 takes on the yen speculators - The Globe and Mail
Many of the region's edge communities experienced big increases in population, but homebuilding still outpaced new residents. Buckeye's population climbed by 678 percent, but the city's number of housing units climbed even more. So now, it has a 21 percent vacancy rate.
Some other Phoenix-area cities with higher-than-average housing vacancies: Apache Junction, 31 percent; Scottsdale, 18.3 percent; and Surprise, 17.7 percent.
Arizona's overall housing-vacancy rate is 15.6 percent.
Three southeast Valley communities posted lower-than-average housing vacancies: Tempe, 10.2 percent; Chandler, 7.9 percent; and Gilbert, 7.4 percent.
Phoenix's housing-vacancy rate is 12.8 percent.
Some Arizona cities with many second-home owners, including Scottsdale and Apache Junction, have housing vacancies that look high to market watchers. Data to be released later this year for Arizona will give those second-home hubs better counts.
More than half underwater
As many as 51 percent of Arizona homeowners are underwater, according to new data from CoreLogic. Nevada has the highest rate of homeowners owing more than their house is worth, at 65 percent. Florida is right behind Arizona, with 47 percent of its homeowners dealing with negative equity.
The national rate for negative equity is 23 percent.
Arizona's rate has actually dropped as more homeowners have lost houses to foreclosure. That means fewer people owe more on a mortgage than their house is worth.
The federal Home Affordable Refinancing Program, better known as HARP, has been extended for another year. The program was due to expire at the end of June but was extended despite congressional debates on killing the Home Affordable Modification Program because it has helped fewer than expected.
HARP helps homeowners who owe more than their house is worth to refinance but is limited to 125 percent loan-to-value, so many prospective borrowers in metro Phoenix don't qualify.
by Catherine Reagor The Arizona Republic Mar. 16, 2011 12:00 AM
Housing-vacancy rates high in outlying Valley
Some employees of Remington Capital Inc. of Scottsdale were at times sequestered in the firm's lobby while roughly a dozen FBI agents, some in bulletproof vests, collected company records and documents as evidence. Its headquarters is on Raintree Drive east of Loop 101 in the Raintree Corporate Center.
The premise for the warrant was unavailable and will remain so until the document is unsealed by a federal judge, said Brenda Nath, an FBI spokeswoman. "We can't give any other information," Nath said.
She said the warrant does not necessarily mean that the firm is or will be under federal investigation.
Hard-money lending firms offer alternative financing options, at much higher interest rates and service fees, to projects in which traditional financial institutions deem too risky to invest. Such firms have been under scrutiny since the real-estate crash a few years ago.
A spokeswoman for the office of Arizona Attorney General Tom Horne said the agency was unable to disclose whether staff members were investigating Remington. Jon Hamel of Cavan Property Management said Remington Capital has been a tenant for about a year.
Company officials were unavailable for comment.
In Arizona Corporation Commission records, Andrew Bogdanoff is listed as the president of Remington Capital Inc., which was founded in 1993 and specializes in securing domestic and international commercial-real-estate financing for its clients.
Other Remington executives listed on its website include Shayne Fowler, chief operating officer and managing partner; Donavon Ostrom, head of Remington's Capital Markets Group; and Tyler Hufford, managing director of operations.
Bogdanoff was listed as the owner of Remington Financial Group Inc., which also lists the Raintree Corporate Center as its office location on its website.
In 2008, Remington Financial and a related firm, BlueStone Real Estate Capital, were reported by the Wall Street Journal to be under investigation by the FBI and securities regulators in California and Philadelphia to determine whether the firms were accepting service fees without trying to obtain financing for its clients.
Remington also was a defendant in six lawsuits in California Superior Court involving similar accusations, the article said.
No updated information could be immediately found in court records or media reports. Remington denied the accusations, according to the Journal. The firm also has taken a public stance against fraud.
In May 2010, Bogdanoff was cited in a Remington Financial news release that he had alerted the FBI and other agencies that an Internet scam was using his name to obtain information that could be used in ID theft. On Feb. 25, the company changed its name to Remington Capital.
Don Gaffney of Snell & Wilmer in Phoenix represented one of the plaintiffs in a lawsuit against hard-money lender firm Mortgages Ltd. a few years ago. Generally, problems arise when there are issues with liquidity, he said.
by Kristena Hansen The Arizona Republic Mar. 16, 2011 12:00 AM
FBI raids Scottsdale financial firm
Leaders of the Virginia-based Associated General Contractors of America held a news conference Tuesday morning in front of the stalled Hotel Monroe project, 15 E. Monroe St.
The group's CEO, Stephen Sandherr, said his organization chose Phoenix as the site where it would announce its list of job-boosting recommendations because metro Phoenix has lost the most construction jobs in the current economic downturn.
Sandherr said Phoenix has lost more than 91,000 full-time construction jobs during the four years that ended in January. That's more than half of the roughly 170,000 workers employed in January 2007.
"Looking at a project like this, it's easy to understand why the construction industry is still in a recession," Sandherr said about the boarded-up Hotel Monroe, one of the failed projects funded by the now-defunct Scottsdale investment broker and construction lender Mortgages Ltd.
Sandherr said the unemployment rate in his industry is 21.8 percent, noting that the lack of construction jobs has ripple effects that hinder the country's overall economic recovery.
With that in mind, the trade group issued a list of recommendations that Sandherr said would give the construction industry a needed boost.
They included an increase in federal spending on public-infrastructure projects. The federal government spent about $135 billion in 2009 and 2010 in economic-stimulus funds on construction projects, but most of the projects have been completed and are no longer a source of work for construction firms.
Sandherr called for Congress to make permanent President George W. Bush's tax cuts of 2001 and 2003, which apply to income taxes on small businesses and individuals earning more than $250,000 a year.
Congress recently renewed the tax cuts for two years, but the Obama administration has said it doesn't want them to be made permanent.
The group also wants reforms that would reduce taxes on construction projects and companies, including the expansion of "loss-carryback" tax rules, which allow companies currently operating at a loss to obtain refunds on tax payments made during profitable years.
In addition, it called for a revival of the expired Build America Bonds program, in which the federal government subsidized 35 percent of the interest payments on public construction projects.
The group's other recommendations included lifting federal trade restrictions that discourage manufacturing in the U.S., easing U.S. Environmental Protection Agency regulation of construction projects, encouraging public-private partnerships with tax breaks, revenue subsidies or other measures, and accelerating projects aimed at providing the country with cleaner and more renewable energy, such as by fast-tracking the licensing of new nuclear plants.
by J. Craig Anderson The Arizona Republic Mar. 16, 2011 12:00 AM
Group pushes construction boost
The "home certificate" program laid out in a new bill is intended to help homeowners lower their mortgage payments even if they can't refinance their mortgages through a traditional bank.
The proposal is both unprecedented and controversial. Essentially, it would create a separate market for mortgage financing from private investors, bypassing banks. Investors could benefit by earning interest paid by reliable borrowers, while homeowners could benefit from lower monthly payments and lower interest rates than they currently have.
Although the plan's backer says it could help many homeowners, critics say lenders will be reluctant to agree to the system.
The program, which is intended to be short-term, might also put borrowers at risk and won't work if home values don't rebound enough for borrowers to refinance later, letting investors get back the money they put in.
Since the crash in home values, many Valley residents now owe more on their mortgages than their homes are worth. In that situation, they typically can't qualify to refinance. Their homes aren't worth enough for lenders to issue them a new mortgage at a lower interest rate.
That situation leaves homeowners, even those with good credit who can make their payments, unable to take advantage of lower interest rates.
Those are the homeowners the bill aims to help.
The legislation, backed by Scottsdale Republican Sen. Michelle Reagan, has passed the Senate and has been assigned to be heard in the House Commerce Committee, but that hearing is not yet scheduled.
Reagan said she believes the bill can help responsible homeowners unable to refinance to current low interest rates and set up a system for investors to make money.
"It's a private program that is based on free-market principles," Reagan said.
How it works
The system would work this way:
- Arizona homeowners would qualify if they were current on their mortgage payments but owed more than their houses were worth.
- Qualifying homeowners would enter a marketplace managed by a state agency that has not yet been designated. They would publicly post the monthly payment they were willing to make - typically a payment lower than their current bill and equivalent to their current mortgage but with an interest rate of 2 to 5 percent.
- Investors would evaluate those mortgage requests and then bid on the loans they wanted to buy.
- When investors and borrowers were matched up, the investors would pay off the homeowners' old loans. Homeowners then could make payments, at a lower interest rate, to the investors. Investors would make 2 to 5 percent interest, which Reagan noted is more than they can currently earn by saving cash in a bank.
- Borrowers would have to sign away their "anti-deficiency" rights. Laws in Arizona say banks in most cases cannot pursue homeowners to recoup any losses after foreclosing on a home. Waiving anti-deficiency rights is meant to reassure investors that borrowers wouldn't abandon their homes without repaying.
- Investors would receive a home certificate giving them lender rights to the house as collateral for the short-term loan. Each month, 3 percent of a homeowner's payment would go into an insurance fund that would help cover potential losses for investors. The fund would be managed by a government agency.
The system would make the deals temporary. After five to 10 years, homeowners would have to pay back investors' principal. The bill anticipates that, by then, home values will have rebounded, allowing borrowers to refinance through a traditional home lender.
The idea is stirring controversy. The bill is difficult to understand; the plan has never been tried before and the system would require changes to current Arizona real-estate laws and property records.
"The legislation sounds similar to how people bid on tax liens in Arizona, but the bill is very vague and hard to figure out," said Jay Butler, director of realty studies at Arizona State University. "Also, who says lenders are going to agree to it?"
That issue is key to the program. Once a private investor agrees to take over a mortgage, the original lender has to agree to the deal.
Typically, a homeowner is allowed to pay off the balance of a loan at any time. But, in this case, the homeowner is not the one paying off the loan. A third-party investor provides the cash and then that investor, not the bank, profits off the borrower's payments.
In essence, the banks would have to agree to give up their future profits to OK the deals.
Other questions remain: Would enough investors be willing to participate in the program, given that the homes are worth less than the value of the loans? Would homeowners who have signed over their anti-deficiency rights but who later lose their jobs and their homes end up also being sued by investors?
"The program has noble intentions," said Marc McCain, a Phoenix real-estate attorney, "but without widespread lender . . . support and participation, it is not likely to provide much practical benefit."
Reagan is addressing the lender issue with plans to add an amendment calling for "deemed foreclosures" in Arizona.
The move appears to be intended to force banks to give up the mortgages. But specifics on how it would work are not yet clear.
Reagan said it would help ensure that lenders must sell mortgages to investors.
"Any term with foreclosure is scary to homeowners, but deemed foreclosures will not hurt their credit," Reagan said.
Last week, Reagan met with Gov. Jan Brewer's office to discuss the legislation and what agency could handle the insurance fund.
Ira Hecht, a New York attorney and accountant who crafted the idea behind the bill, participated in one of the meetings via conference call.
Reagan said Hecht approached her about launching the program in Arizona because many homeowners in the state are still making their payments despite a huge drop in home values.
Reagan is proposing to run the insurance part of the program through the Arizona Housing Authority, which is part of the state's Housing Department.
Mike Trailor, director of the Housing Department, said his agency is asking questions about the proposed program. The finance division of the Housing Department can issue bonds and provide other financial instruments potentially needed for the program.
Rep. Debbie McCune Davis, D-Phoenix, said legislation to help homeowners avoid foreclosures, instead of refinancing a loan they can afford, should be a bigger concern for the Legislature.
Arizona banking lobbyist Wendy Briggs said the banking industry is "neutral" on the legislation.
"This is a completely voluntary program for homeowners and investors," Reagan said. "If people don't like the terms, they don't have to participate. But, for so many of us underwater on our mortgages, it's our only option to take advantage of the current low interest rates."
by Catherine Reagor The Arizona Republic Mar. 15, 2011 12:00 AM
New Arizona mortgage-aid plan: Investors lend to owners
Beginning next year, owners who live in their homes must sign an affidavit affirming as much to retain a state subsidy that cuts their property-tax bill by up to $600 a year.
If they rent out their house or fail to return the affidavit, they will lose the subsidy and face a higher bill.
The idea is that, by weeding out people who wrongly get the subsidy, the savings will be used to offset a property-tax break for businesses.
No one knows how many homeowners this will affect, though legislative analysts estimated that 25 percent of the rental homes in the state are misclassified and 6.5 percent of homes are second homes. Officials involved in Arizona's real-estate community fear the new requirement could trigger undeserved property-tax hikes.
Tom Farley, CEO of the Arizona Association of Realtors, as well as the county assessors who will have to enforce the new procedure, suspect many property owners will ignore or overlook the requirement to sign the affidavit, which will be attached to the notice of valuation mailed to all property owners each year.
"We think innocent people are going to get hit," Farley said.
That, they say, could result in angry taxpayers and add more costs for local governments to correct the problem.
The requirement to declare that a property is owner-occupied, as opposed to a rental, is part of the tax-cut and jobs bill Gov. Jan Brewer signed into law last month.
One section of the legislation reduces the rate at which business and agricultural properties are assessed for taxation.
Because of the way Arizona's property taxes work, a cut in one category forces an increase in another - in this case, residential properties - so that there is no net loss in tax dollars collected. But lawmakers, not wanting to see residential taxes rise, increased the amount of the state subsidy, which has been 40 percent of the property-tax bill.
To cover the cost of the business-tax breaks and the increased rebate, lawmakers had to find money to fill the gap. The solution: Crack down on property owners who wrongly claim the rebate.
To do that, the legislation puts the burden on owners to attest that they actually live in the house they own. If they don't, the county will reclassify it as a rental, and the homeowner rebate will no longer be used to reduce the property-tax bill.
Currently, property owners indicate if a home is their residence when they buy a home, and they continue to receive the tax break indefinitely. The new legislation will require them to affirm that every other year, beginning in 2012.
Lawmakers figure they can save $39 million a year by withholding the rebate from people who rent out their properties.
Unintended tax hikes
Real-estate agents and others fear unintended consequences.
Farley told lawmakers people give scant attention to the property-valuation notices the county mails each year.
This year's batch went out in late February.
"It's a small little notice," he said of the current form, which is the size of a post card.
When it is mailed out next year, with an affidavit form included, Farley worries it will still be overlooked.
"We think most people will do what we've been conditioned to do, which is put it in our income-tax file or throw it away," he said.
"I'm sure there will be a lot of non-compliance because people don't pay attention," said Paul Petersen, information officer for the Maricopa County Assessor's Office.
Once the program begins, people will have 60 days to return the affidavit or the assessor will classify the property as a rental.
And that, said Cochise County Assessor Philip Leiendecker, is when the "mushroom cloud" will hit.
Although affidavits may not get noticed, higher taxes will, he predicted.
It's unclear if the new policy will affect property taxes due in fall 2012 or if there will be a delay until 2013. Counties are waiting for guidance from the state Department of Revenue, which must create the affidavit and related instructions.
Lawmakers, such as Rep. Debbie Lesko, R-Glendale, said there will be a remedy. People have up to three years after getting a tax bill to provide the proper documentation to restore the homeowner rebate.
County assessors say that they're bracing for higher costs and bigger headaches when the affidavit requirement takes effect.
The new legislation assumes county governments will front the costs of creating, mailing and processing the forms.
After that, the legislation states that counties will be reimbursed from the higher tax collections from rental properties.
But many assessors question whether the policy will yield the $39 million that budget analysts predict.
"The results on the financial end won't be worth it," said Ron Gibbs, chief deputy assessor in Yavapai County.
First, some rentals are eligible for the homeowner rebate.
If a house is rented to a direct relative of the owner, it qualifies. Second homes, or vacation homes, also qualify as long as they are not used for more than three months.
Second, assessors say they've already weeded out many properties that shouldn't be getting the state subsidy.
In Cochise County, Leiendecker estimates 85 to 90 percent of the residential properties are properly classified as owner-occupied.
In Maricopa County, the Assessor's Office last year removed 4,700 rental properties from the rebate list.
Still, no one has a good handle on how many homeowners are wrongfully benefiting from the long-standing state rebate.
That's all the more reason to use the affidavit, said Kevin McCarthy, executive director of the Arizona Tax Research Association, a business-supported advocacy group.
He also said the process, although almost guaranteed to cause unwarranted angst with some taxpayers, should provide a clearer view of how taxes work.
"I think it would be healthy for people to understand this system is in place and their taxes are being subsidized by the state of Arizona," McCarthy said.
Assessors as well as real-estate agents say they're talking with the Governor's Office about changes that could avert some of the headaches they foresee.
But to avoid problems, they would need legislation this year.
Leiendecker said it would be simpler to have homeowners pay the full tax and then apply the rebate to their income taxes.
That would provide a consistent statewide standard and avoid the risk of, say, winter visitors - who don't qualify - benefiting from the homeowner rebate.
"The snowbirds are not filing income tax in Arizona," he said.
There's no sign of a follow-up bill, as lawmakers are bearing down on the state budget and aiming for an April adjournment.
Rep. Steve Farley, D-Tucson (no relation to Tom Farley), said the new law wrongly puts the burden on the property owner to prove he or she merits the homeowner rebate.
"This has the potential for massive unintended consequences," he said. If people claim a benefit to which they're not entitled, he said, they "put the burden back on the government to investigate."
by Mary Jo Pitzl The Arizona Republic Mar. 14, 2011 12:00 AM
Some Arizonans will see hikes in property-tax bills
Tuesday, March 15, 2011
The world's largest bond fund has moved out almost entirely from US debt and into that of emerging markets and corporations, Pimco's Bill Gross told CNBC.
Speaking a day after news broke that Pacific Investment Management Company had dumped its Treasurys holdings from its $236.9 billion Total Return fund, the Newport Beach, Calif.-based firm's managing director said it would return once yields grew more attractive.
"It's not a question of dissing the United States or questioning the credit of the United States, but simply a maturity reflection," Gross said. Treasurys are "mispriced relative to the inflationary environment and the growth we see ahead and there are better alternatives in order to capture yield."
Gross primarily based his evaluation on the reduction in yields caused by the Federal Reserve's buying of close to $2 trillion in Treasurys, with more slated before the second leg of the program—often called QE 2—comes to an end.
"When a trillion and a half dollars worth of annualized purchasing power disappears I simply question as to who will buy them and at what yield," he said. "We're suggesting at these yields it might be problematic."
Instead, the firm has moved its money to other debt until the rate structure changes.
"Those would be corporate bonds, those would be a smattering of high yield bonds and a growing proportion of emerging market debt which yields in the 5 to 6 percent category," he said. "Are these bonds as safe as Treasurys? No, they are not triple-A types of investments but they're not overvalued based on quantitative easing procedures that we've seen over the past 12 months.
"So we've moved into Brazil and Mexico and moved money, yes, at the margin into Spain, which has a better balance sheet than the United States."
He said the Total Return fund has returned about 5 percent, whereas a Treasurys portfolio would yield about 2 percent.
Saturday, March 12, 2011
In December, he chose a 734-square-foot condo in One Lexington, a high-rise on Central and Lexington avenues.
Once called Century Plaza, the steel-and-glass former commercial building went through bankruptcy during the housing collapse, and the new owner cut condo prices by about half.
Less than a year after One Lexington restarted sales, more than 70 percent of its 145 units are sold or under contract.
Hauer thinks his new home is a good investment at $181,950 plus a $299 monthly HOA fee (based on his unit's square footage), which he'll start paying at the end of the year.
Such luxury-condo developments, meant to capture buyers wanting an urban lifestyle with access to Metro light rail and Phoenix's burgeoning restaurant and nightlife scene, are showing signs of life after the housing crisis sent several such properties into bankruptcy.
Will Daly, a Phoenix broker who specializes in urban properties and lives in a midtown-Phoenix high-rise, said he's starting to see an uptick in interest for high-rise and urban-living options.
"The urban-condo market in Phoenix is relatively small and relatively new," he said. As the economy picks up, he says, "it seems like some major pieces are now in place for development to continue along light rail and in downtown Phoenix."
Mini urban mansions
Just down the road from One Lexington at Central Avenue and Palm Lane (just north of the Phoenix Art Museum) is another luxury development that went through months of financial turmoil but is back on the market under new ownership.
Chateau on Central is a development of 21 luxury townhomes that looks like miniature brick castles, complete with turrets. These Queen Anne Victorian-style townhomes boast 5,200 square feet of living space or more on five floors.
Chateau on Central
The homes went on the market for $1.389 million to $2.459 million in December (plus a $575 monthly HOA fee), when the new developers unveiled two model homes decorated by the Scottsdale design firm Est Est.
None of the units has sold yet.
Prices are about half of the townhomes' original asking price of $2.8 million to $4.5 million in 2007.
MSI West Investments bought the 21-townhouse development for $7 million last year after its financer, Mortgages Ltd., declared bankruptcy.
Each home has four floors plus a basement, a private four-person elevator, a two-car garage, a top-floor terrace and balconies.
There are no shared community amenities, such as gyms, swimming pools or cigar clubs, at Chateau. Joe Morales, a real-estate agent with Arizona Great Estates-Realty One Group, said that's because luxury buyers prize privacy over shared spaces. All the townhomes are zoned as work/live spaces, so buyers could set up professional offices in the basement or on the first floor.
Morales said he may seek a light-commercial buyer, such as a high-end restaurant or law firm, for the largest townhome: an 8,252-square-foot corner property on Central Avenue, currently listed at $2.459 million.
Sell vs. rent
One Lexington and Chateau on Central are bucking a trend. Other developers are putting rental signs on luxury and high-rise urban properties built during the height of the market and meant to sell as luxury condos. The 44 Monroe building in downtown Phoenix and West Sixth, formerly called Centerpoint in Tempe, are two such properties whose units will be leased rather than sold.
Two years ago, Daly, the Phoenix broker, conducted bus tours, taking dozens of urban-living enthusiasts to see high-rises and new condo developments around the Phoenix, Scottsdale and Tempe city centers. The economy put many of those developments, and his tours, on hiatus.
Today, Daly said he's getting more inquiries from out-of-towners looking for investment properties and second homes. And Valley residents are asking when his tours will resume.
"Right now, it's just a matter of time and energy," he said. "I think we'll be firing them up again in the next two to three months."
For Hauer, an architect in training with Gabor Lorant Architects, the clean lines of the contemporary One Lexington building won out over some older downtown high-rise properties he considered.
Remaining units at One Lexington (owned by the Macdonald Development Corp.) range from $165,400 to $981,900 for a two-story, 2,846-square-foot penthouse.
"The finishes were a big part of it," Hauer said, listing the Caesarstone countertops, stainless-steel Bosch appliances, bamboo floors and modern kitchen cabinetry.
The building's amenities include a pool, gym, community room, parking and a small dog run, which comes in handy for Hauer's longhaired Chihuahua, Margarita.
Hauer said he also enjoys sitting on his small 14th-floor balcony, looking north over the stunning midtown Phoenix skyline and the distant mountains, reading his iPad.
"That's the icing on the cake," he said.
by Kara G. Morrison The Arizona Republic Mar. 10, 2011 01:06 PM
High-rise living on Central
Three proposals are for apartment complexes, with one of them including nearly 100 single-family homes.
The other two plans are more unusual. One is for a wakeboard water park that uses electrical motors to pull participants across two man-made lakes totaling 7.4 acres.
Another proposal is for Stagecoach Gap, a Western-themed town to include the Scottsdale Museum of the West.
Scottsdale has postponed its review of each of the five plans until after April 5, when proposals are due for a new multipurpose building for WestWorld, said Mark Hunsberger, Scottsdale revitalization specialist.
That project south of Bell Road could have an impact on what is developed on the city's 80-acre site north of Bell and is split by 94th Street.
Stagecoach Gap would be a Western version of Colonial Williamsburg in Virginia with blacksmiths and craftsmen in period costumes making cowboy boots, said Jim Bruner, Scottsdale Museum of the West board chairman.
The nonprofit group Bruner heads has been trying to raise funds to develop a Western museum downtown. That is still a goal but a smaller museum at Stagecoach Gap is a more immediate opportunity because financing might be available for the entire $38 million Western village, he said.
It would include a 30,000-square-foot museum, theater, movie house, restaurant, pool hall and horse stables.
Stagecoach Gap would require no city investment. It would operate under a long-term lease with Scottsdale sharing in the museum's receipts.
The wakeboard water park from 1440 Inc. would operate on a long-term lease of $250,000 annually for the eastern half of the city's 80-acre site. The developer said the park would generate about $624,000 annually in local and state taxes.
There are 10 wakeboard parks operating nationally but none are west of Texas, according to 1440 Inc. principals Todd Arnold and Matt Shannon.
The residential-development proposals for the site include a partnership involving Shea Homes, Alliance Residential Co. and Cassidy Turley/BRE Commercial.
Shea would build 95 homes and Alliance would add 283 apartments on a 37-acre site northeast of Bell Road and 94th Street. That would include 42 homes of 1,700 to 4,000 square feet on larger lots and 53 houses of 1,300 to 2,400 square feet on smaller lots.
Alliance's apartment complex would feature two- and three-bedroom units of 700 to 1,400 square feet.
Shea would pay the city 10 percent of the price, or about $4.5 million, and Alliance would pay Scottsdale $3.5 million for its 12-acre apartment site.
Mark-Taylor Inc. is proposing a 380-unit apartment complex on 24 acres northwest of Bell Road and 94th Street and using 4.4 acres for a retail-office park along 94th Street and 3.1 acres for a commercial parcel on Bell Road. The developer would include two- and three-story buildings with apartments of one to three bedrooms.
Mark-Taylor would pay the city $10 million for land plus $3 million for building and impact fees.
JLB Partners has proposed 412 apartments on 37 acres northwest of Bell Road and 94th Street. It would include units of 600 to 1,300 square feet in two- and three-story buildings. JLB would pay Scottsdale $11 million for the land and another $2.5 million in taxes over five years.
by Peter Corbett The Arizona Republic Mar. 11, 2011 10:50 AM
5 developers float plans for Bell Road, 94th Street property
The New Markets Tax Credit allocation will go to the Phoenix Community Development and Investment Corp., a non-profit started by the city. It, in turn, will work with local banks to make low-cost loans for the purchase, expansion or renovation of commercial and non-profit buildings. The program is operated by the U.S. Department of the Treasury.
Phoenix previously received two tax-credit grants: $170 million in 2002 and $40 million in 2008.
"I'm really glad Phoenix has gotten another round of funding," said Greg Heiland, president of ValuTek, which outfits high-tech clean rooms. "Having products like this makes it more appealing for high-tech businesses and high-end jobs."
ValuTek took advantage of a $4.4 million loan to buy a vacant Motorola building in east Phoenix that had a clean room, enabling the company to customize products for its customers.
"It's given us a competitive advantage in the market," Heiland said.
The loan enabled ValuTek to hire 15 to 20 new employees.
The money has been used for projects as large as the remodeling of Christown Spectrum Mall at 19th Avenue and Bethany Home Road and the expansion of the Phoenix Biomedical Campus downtown. Those projects received loans of $37.5 million and $25 million, respectively.
It also has gone to much-smaller projects, including a $700,000 loan to Desert Taco at 19th and Northern avenues, and a $2.4 million loan to 3-Dawg Real Estate for the purchase of a building near Cave Creek Road and Greenway Parkway.
Several non-profit organizations have taken advantage of the loans, including Arizona Bridge to Independent Living, which borrowed $16 million for a new Disability Empowerment Center. Phil Pangrazio, its executive director, said 11 disability agencies use the new building.
"It's a good deal, it really is," he said of the loan program.
Don Keuth, president of the Phoenix Community Alliance and a member of the Phoenix Community Development and Investment Corp. board, said the corporation has been able to make $276 million in loans, with an economic impact of double or triple that.
Roberto Franco, deputy director of the Phoenix Community and Economic Development Department, is president of the corporation. He said the loans result in several thousand new or retained jobs.
Many of those jobs are in the distressed construction industry; loans supported the building of the downtown Phoenix CityScape, creating an estimated 5,400 positions.
The loans will focus on parts of the city where the poverty rate exceeds 30 percent or the income level is at 60 percent or less of the metro area's norm. That includes a broad swath of central, west and south Phoenix, the Sunnyslope area, the Palomino neighborhood and a large area northeast of Loop 101 and Interstate 17, near Deer Valley Airport.
The loans are issued for seven years.
Several of the loans already have been repaid. If they are repaid early, the money can be reused for additional lending.
by Michael Clancy The Arizona Republic Mar. 12, 2011 12:00 AM
Tax credit lets Phoenix pave way to area lending
The development of the Westin Phoenix Downtown came as a welcome surprise, several years after construction plans for One Central Park East took shape.
The hotel, which opened Thursday, brings another option for visitors and a boost for downtown.
It wasn't meant to end like this. One Central Park East was designed and built to offer Class A office space. Freeport-McMoRan Copper & Gold Inc. occupies the top floors and has its name on the building. But seismic shifts in the economy brought office-vacancy rates to a peak. The building's ownership group, the National Electrical Benefit Plan, had to switch gears.
The idea of a hotel was first floated in June 2009, six months before construction on the 26-story skyscraper was completed. A study conducted by PKF Consulting validated the ownership group's idea: A hotel would be lucrative, especially if it catered to an underserved niche market - independent business travelers.
The study proposed a number of brands for the hotel, including Marriott, Kimpton and Westin. The owners selected Westin, and a deal was struck in spring 2010.
"In 2009, at the depths of the recession, we were coming to them (the Westin) with a shell building that was already in place and the financing to build out the hotel," said Ryan Whitaker, director of equity investments for National Real Estate Advisors, which manages investments for the National Electrical Benefit Fund.
"We were, so to speak, the prettiest girl at the dance."
In August, Perini Building Co., the general contractor hired to build out the hotel, began to transform the space. On the building's first floor are lobbies for each of the building's tenants, followed by nine floors of parking. The Westin sits on floors 11 through 18.
A hotel was born in seven months, with a budget of about $40 million.
"This has been a very short project," said Debra Barton, the hotel's general manager, who started on the job in July. "Typically, this type of project takes about 24 months, but we did this in about 12."
Suppliers and subcontractors pitched in, and the Westin management team grew. Soon, opening day loomed. In the two weeks before the first guest signed in, the hotel's new employees worked to put the finishing touches on the property, train their jobs and learn what it meant to provide Westin service. Each of them already has made a mark on the culture of the hotel.
On Feb. 24, the Westin launched its employee-training program.
The lobby and hotel floors were still a hive of construction activity, with nearly 200 subcontractors on the premises.
The steady buzz of construction began in August and continued until Wednesday, the day before the hotel's grand opening.
Last summer, the eight floors that would become the Westin's meeting space and guest rooms were void of walls, flooring and plumbing infrastructure that could accommodate bathrooms for individual guest rooms.
Each floor looked like a vacant warehouse, spanning from glass wall to glass wall.
Even the air-conditioning ducts had to be revised to accommodate individual guest rooms, said Ken Schacherbauer, vice president of operations for Perini.
"It's been a really complex project because of the time frame and because we had to work in an existing and operating building without disturbing its tenant, Freeport-McMoRan," Schacherbauer said.
Altering the building to accommodate a hotel meant putting up walls and adding all the basic amenities, such as bathtubs, showers and sink fixtures.
Extensive construction also had to be completed on the first floor. The western side of the building was extended outward, making room for the hotel's entryway on Central Avenue, signature restaurant Province's indoor and outdoor seating, and a second-story pool. Part of what was Freeport-McMoRan's lobby was partitioned off to become the new Westin's lobby.
Down a hallway and past a library sitting area, a new elevator bank for the hotel's customers was built, keeping the building's two tenants separate.
On Feb. 24, Perini's contractors worked feverishly to finish the lobby, restaurant and outdoor area. Chandeliers had yet to be hung, the wall's vinyl had yet to be applied, an outdoor staircase that led to the pool deck had yet to be completed and the reception agents' desks had yet to be placed.
The hotel was set to open in two weeks.
That morning, Paula Muñoz Chavez woke up for the first time in one of the hotel's rooms.
It had not yet opened to the public, but Chavez, 24 and from Mexico City, had been given permission by her new employer to stay in one of the 242 guest rooms while she searched for an apartment. She would live in the hotel for two weeks.
Muñoz Chavez was one of 145 employees chosen to work at the new Westin. The hotel received more than 7,500 applications.
She works in the kitchen, preparing cold-food items. Eventually, she will prepare hot entrees for Province customers, in-room diners and poolside guests.
Her passion has always been cooking and traveling, she said.
Just one day before her flight to Phoenix, Muñoz Chavez received her work visa. She began her new job a day after arriving in the Valley.
"My transition has been very fast, very busy," Muñoz Chavez said on Feb. 28. "I'm living in the hotel right now - kind of the Monopoly lifestyle."
On the same day, Lemuel Hill jotted notes in a little black notebook, reminders of areas he needed to tidy.
Hill is one the new Westin's housekeeping employees. While Perini's contractors would clean up after themselves, construction in the building meant the constant presence of dust, he said.
"I really believe in this place," Hill said. "I really believe it will succeed. I want to ensure it's as clean as possible for the guests who are arriving soon."
Before the opening, Hill worked long hours, tidying up the hallways and rooms.
So did the so-called road warriors, such as Timothy Swanson, project manager at Kane Hospitality Services, and Kevin Lawrence, operations project manager at Starwood Hotels & Resorts Worldwide, Westin's parent company. Both men moved to the city for a short while to aid the hotel in opening.
Lawrence led the team that ensured the hotel's supplies - such as pillows, towels and coffeepots - arrived on time. Although he didn't create the budget for fixtures, furniture and equipment - the building owner's role - he did budget for the hotel's operating supplies and equipment.
"If you shook the hotel, everything that falls out, I buy," Lawrence said.
Swanson was responsible for the shipment of all furniture and supplies. But the structure of the building - which only has one dock and one service elevator that is shared with Freeport-McMoRan - prevented scheduling of shipments during daytime hours. From December to March, Swanson scheduled about 140 nighttime hotel shipments and was there to accept them.
In the last weeks before the hotel's grand opening, the hotel received as many as three truckloads of furniture and "pick and packs." They contain all the room's miscellaneous items, such as towels, pillows and hangers, in individual boxes.
"The pick and packs mean that we aren't running through the hallways throwing items into rooms just before opening like we used to," Lawrence said, laughing.
On Monday, three days before the hotel's grand opening, the hotel's outdoor and entry areas were coming together.
Province's outside patio was landscaped, and the lobby's reception desks were in place. Vinyl had been applied to walls, and all the flooring was installed.
Inside, Chloe Woods, one of the hotel's reception agents, was practicing via live simulations.
"I have you down for a one-night stay, is that correct?" Woods recited.
With employees and Starwood executives arriving daily, the crunch to put rooms "in service" was felt on floors 11 through 18.
When Perini's contractors finished a floor, a project manager and an engineer, both affiliated with Starwood, inspected each room and either accepted it as is or accepted it with conditions. A "punch list" was then provided to the general contractor detailing any defects in the rooms.
Rooms with defects generally are kept out of the hotel's inventory until they're fixed, said Barton, the hotel general manager.
By the grand opening, floors 11 through 15 had been accepted by hotel management. Floor 16 likely will be accepted late this week, and floors 17 and 18 by the end of the March, Barton said.
Although not all floors have been accepted, construction is finished and the hotel has received its certificate of occupancy. Rooms still must be outfitted on the upper floors.
That means about one-half of the hotel's 242 rooms are available to guests at this time.
"You don't want to open a hotel in June," said Whitaker of National Real Estate Advisors. "Being open at only partial capacity for the first couple weeks is not a big deal. It's important that we are catching the last half of the spring season."
On Thursday morning, a red ribbon on the entryway to the hotel was cut, symbolizing the end of one phase and the beginning of the hotel's public life.
The Westin's employees stood on a walkway leading to the second-story pool deck as Barton, city officials and other dignitaries marked the day.
"The exciting thing for me is when I'm at home and I look at the hotel, and there are lights on in the windows," Hill, of housekeeping, said. "I know I was a part of that."
by Megan Neighbor The Arizona Republic Mar. 13, 2011 12:00 AM
Westin quickly opens in Phoenix office space left empty in downturn
Household net worth rose to $56.8 trillion in the October-December quarter, even though the value of real-estate holdings fell 1.6 percent, the Federal Reserve said Thursday. Last quarter's gain exceeded the 2.6 percent increase in net worth in the July-September period.
So far this year, stocks have risen about 3 percent. Further gains in wealth could lead Americans - especially higher-income consumers - to spend more, strengthening the economy.
Net worth is the value of assets such as homes, checking accounts and investments, minus debts such as mortgages and credit cards. It's now risen for two straight quarters after shrinking last spring.
Americans' net worth is well above the bottom hit during the recession: $49 trillion in the January-March quarter of 2009. Still, it would have to rise an additional 16 percent to reach its pre-recession peak of $66 trillion.
Companies are still holding tight to their cash. Their cash piles grew to $1.89 trillion last quarter. That's the most on quarterly records dating to 1952.
Economists predict that companies will use more of their cash this year to make capital investments and boost hiring.
In the April-June quarter, net worth posted its first decline since 2009, when Europe's debt crisis bred turmoil on Wall Street. Since then, stock gains have continued to rebuild Americans' wealth.
The value of households' stock portfolios reached $8.5 trillion in the final three months of 2010. That was a 12.3 percent increase from the prior three months.
The Standard & Poor's 500 index surged 10.2 percent in the October-December quarter. It was the second straight quarter of double-digit gains. The S&P index soared 22 percent in the second half of last year.
Stock values as measured by the Dow Jones U.S. Total Stock Market Index rose $1.6 trillion in value in the final quarter of 2010 and an additional $840 billion so far in 2011. About $16.3 trillion is now invested in U.S. stocks.
About 91 percent of people who have 401(k) retirement savings plans now have more money in their accounts than at the market top in October 2007, according to estimates by Jack VanDerhei of the Employee Benefit Research Institute in Washington. That percentage would be considerably lower without factoring in workers' continued contributions.
Stocks still have a long way to go to return to where they were 3 1/2 years ago. The S&P 500 is about 17 percent below its peak of 1,565. But it's back to the level of June 2008, just before the financial crisis erupted.
by Jeannine Aversa and Dave Carpenter Associated Press Mar. 11, 2011 12:00 AM
Americans' net worth grows 3.8%
Reuters: Business News
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