Mortgage And Real Estate News

Tuesday, May 31, 2011

Cities that weathered housing bust now suffering - Yahoo! Finance

WASHINGTON (AP) -- Even cities that weathered the housing market crash with relatively little damage are suffering now.

Severe price declines have spread to Dallas, Denver, Minneapolis and Cleveland, which had mostly withstood the bust in housing since 2006. The damage has now gone well beyond cities hit hardest by unemployment and foreclosures, such as Phoenix and Las Vegas.

"We didn't enjoy the highs and the lows like other cities," said Kay Weeks, a Realtor with Ebby Halliday in Dallas, where prices fell nearly 1 percent in March and are expected to keep falling. "But when we get bad news nationally, people take notice and cut back on spending and buying homes."

Home prices in big metro areas have sunk to their lowest since 2002, the Standard & Poor's/Case-Shiller 20-city monthly index showed Tuesday. Since the bubble burst in 2006, prices have fallen more than they did during the Great Depression.

The index, which covers metro areas that include about 70 percent of U.S. households, is updated every quarter and provides a three-month average. The March data is the latest available.

Foreclosures have forced prices down so much that some middle-class neighborhoods have turned into lower-income areas within months.

Prices are expected to keep falling until the glut of foreclosures for sale is reduced, companies start hiring in greater force, banks ease lending rules and more people think it makes sense again to buy a house. In some markets, that could take years.

The latest report points to a "double dip in home prices across much of the nation," said David Blitzer, chairman of the Index Committee at Standard & Poor's.

Prices fell from February to March in 18 of the metro areas tracked by the Standard & Poor's/Case-Shiller index. And prices in a dozen markets have reached their lowest points since the housing bubble burst in late 2006.

The overall index fell for the eighth straight month and has dropped 3.6 percent in the past year. Prices had risen last summer, fueled by a temporary federal homebuying tax credit. But they've tumbled 7 percent since then. After adjusting for inflation, the home-price index has sunk to the level of 1999.

Cities with high foreclosures such as Phoenix, Las Vegas and Tampa, Fla., are flooded with homes sitting vacant, awaiting buyers. Many banks have agreed to allow homes at risk of foreclosure to be sold for less than what is owed on their mortgages. That has pulled down prices.

In Phoenix, for example, home prices rose about 5 to 6 percent annually in the pre-boom years before exploding nearly 23 percent in 2004. The next year, in 2005, they skyrocketed nearly 43 percent. Prices there soon leveled off before plunging in 2007 and 2008. They're now back to 2000 levels.

Coastal areas, such as San Francisco, San Diego, Los Angeles, Washington and Boston, have fared comparatively better in the past two years. They have been helped by healthy local economies, desirable city centers and limited space for new housing. In New York, homes are still 63 percent more expensive than in 2000.

In the middle are cities like Dallas, Denver, Minneapolis and Cleveland, which are seen as bellwethers for the national housing market.

Before the housing boom, prices in Minneapolis rose 7 percent or more a year. Then they stalled in 2006, fell in 2007 and 2008, and rose modestly in 2009. Last year, prices started falling again and haven't stopped.

Over the past decade, Dallas has grown faster than any other metro area. Among companies that have moved their headquarters there are Comerica Inc. and AT&T. Construction surged to meet the demand.

But since the housing bubble burst, foreclosures have risen. Many homes have been sold at steep discounts. Dallas-area foreclosures bought at auction in March sold for just 57 percent of their appraised value, according to Foreclosure Listing Service.

Denver had also avoided the peaks and valleys of the bubble and bust. It enjoys a diversified local economy that has expanded to include the telecommunications, wind-energy and space-technology industries.

Foreclosures haven't flooded the Denver market. But many of Denver's potential buyers, most of whom would otherwise be first-timers, are opting to rent instead.

"When they're doing the calculations to rent versus buy, they're choosing to rent," said Gary Bauer, a broker in Littleton, Colo., outside Denver. "It's simple math, and for many people, it's too expensive to own."

As a result, falling prices have turned once-costly, newer subdivisions, including those in Aurora and Commerce City, into largely vacant neighborhoods.

"The closer to the mountains you are here, the pricier it is, so people built a lot of new, big homes during the housing boom," said Yve Roberts, a Denver real estate agent. "They thought that's where the next wave of houses would be. But many of the young people that bought there can't afford it anymore."

In the next two months, prices in Dallas and Denver are expected to reach their lowest since the housing downturn began.

In 12 other cities, prices are already at the lowest point since the end of the boom: Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland, Ore., and Tampa, Fla.

Minneapolis fared the worst in March, with prices down 3.7 percent. They dropped 2.4 percent in Charlotte and Chicago and 2 percent in Detroit. Prices rose 0.1 percent in Seattle and 1.1 percent in Washington. The nation's capital is the only metro area in the index where prices have risen in the past year.

One obstacle to a rebound in prices: A delay in processing foreclosures. Homes in foreclosure sell at a 20 percent discount on average, which can hurt prices in the neighborhood. But many foreclosure sales have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out over the past two years.

Once those homes are eventually foreclosed upon, they will cause prices to fall even further. Those declines are "etched in stone," said Patrick Newport, U.S. economist at IHS Global Insight.

Falling home prices led Neil Isakson of Amery, Wis., about an hour and a half from Minneapolis, to pull his four-bedroom lakefront house off the market this spring after it went unsold for nearly two years.

Isakson chose to rent out the home rather than reduce the price further. He had listed it in June 2009 for $359,000. Last summer, he cut it to $339,000. Yet fewer than a dozen people showed up to look at the house. He's holding out for the market to recover.

"I'm willing to wait two to three years," Isakson said.

Home equity accounts for most of the wealth of typical households. So when prices fall, they have "important spillover effects on other sectors of the economy," said Yelena Shulyatyeva, an analyst at BNP Paribas. Those sectors include consumer spending and state and local property tax collections. Consumer spending fuels about 70 percent of the overall economy.

"Folks are having so much difficulty in getting financing for a home," said Mark Vitner, senior economist at Wells Fargo. "And foreclosures will likely bring about a third dip. It may be early next year before prices hit bottom."

That won't change soon. Roughly 92 percent of homeowners say it's a bad time to sell their home, according to the latest Thomson Reuters/University of Michigan index of consumer sentiment.

In the seven years before its peak in July 2006, the home-price index surged 155 percent. Since then, it's fallen 33 percent.

During the Great Depression, prices fell 31 percent. It took 19 years for the housing market to regain its losses after the Depression ended.

May 31, 2011

Cities that weathered housing bust now suffering - Yahoo! Finance


It's springtime. The chaos of the holidays is long gone, spring break is over, and summer hasn't arrived yet. Excuses are easy to come by when summer is in full-swing, so why not take advantage of this temporary lull and get your finances in order now? These six tips will help you get your finances organized and get your credit score cleaned up.

1. Check Your Credit Report

Any time you're trying to improve your credit score, your first step should be to check your credit report. You can get one free report every 12 months from each of the three credit bureaus (Experian, Equifax and TransUnion) by going to Look closely at each account on your report to make sure that there are no mistakes dragging down your score. Also, make sure that you recognize all of the accounts on your report. Unfamiliar accounts could be a sign of identity theft, though often they are just old accounts that you've forgotten about or accounts for which you are an authorized user but not the primary account holder. Don't panic until you research them further.

2. Assess Your Credit Card Debt

If you don't know the details of your debt, you probably don't have an effective plan for paying it off. Make a list of all the cards that you carry a balance on, how much you owe on each, and what the interest rate is. This way, you'll know which accounts are costing you the most and you can plan to pay them off first.

If you've living off your credit cards because you're unemployed or underemployed, assess your available balances. Also note which cards have lower interest rates and use those for your purchases if possible.

If you added to your debt last Christmas, start thinking now about how you will avoid doing the same thing this year. May isn't too early to plan for the holidays -- you still have time to gradually buy gifts over the course of the year, as you can afford them, or time to save up a holiday fund so you don't have to pay interest on 2011's gifts in 2012 and beyond. A Black Friday deal isn't a deal at 30% APR.

3. Improve Your Interest-Rate Situation

It may not be possible to qualify for a new card with a lower interest rate if you have poor credit, but it might be worth trying. If you do get approved, make sure you understand the balance transfer fees before moving your high-interest debt, and make sure you'll come out ahead even after the fees. Applying for new credit does temporarily ding your credit score, but the savings from lowering your interest rate can be substantial.

You can also try calling your creditors to negotiate a lower interest rate. If that doesn't work, see if you can at least get your card's annual fee waived (if it has one). Develop a strategy before you call because you'll need a way to convince your creditors that there's something in it for them if they give you a break.

4. Prioritize Your High-Interest Debt

Whichever card has the highest interest rate is the one you need to pay off first. Keep paying the minimum on your other cards (and pay on time), and put what you can afford toward your highest-interest balance. The sooner you knock out your high-interest debt, the more money you'll have to work with each month and the easier it will be to work your way through your remaining debts and contribute to your emergency fund.

5. Create a Bill Payment System

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Thirty-five percent of your credit score is based on whether you pay your bills on time, so if you want to improve your credit score, getting on top of your due dates is a great place to start. Look at recent bills and add the due dates to your credit card list. Then, use an electronic calendar system like Outlook or an old-fashioned paper calendar to remind yourself of these due dates each and every month. A checking account with online bill pay can also help you get organized by allowing you to see and pay all of your bills in one place. Some online bill payment systems, like Ally Bank's, can be synched up with your other accounts to let you know how much you owe and when it's due.

In addition to hurting your credit score, late payments cost you money. If you avoided just one $30 late fee per month you would save $360 in a year. That's money you could put toward paying down your debt instead of adding to it.

6. Start Budgeting

If you know exactly how much money you have coming in and going out every month, not only are you likely to spend less because you will be holding yourself accountable for your spending, but you'll also know how much you can afford to put toward paying down your credit card debt each month.

The Bottom Line

In the process of improving your credit score, you'll also be improving your overall financial situation. So even if you don't plan to do anything that will require you have an attractive credit score (like open a new credit card account, take out an auto loan or apply for a mortgage), taking these actions will be worthwhile.

by Amy Fontinelle Yahoo Finance May 31, 2011


Mortgage Formulas

In case you were wondering how to calculate the monthly payment and loan balance with an algebraic formula:

Monthly Payment and Loan Balance

Many readers, for reasons of their own, request the algebraic formulas used to calculate the monthly payment and loan balance on amortized mortgages. Here they are:

The following formula is used to calculate the fixed monthly payment (P) required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of c. [If the
quoted rate is 6%, for example, c is .06/12 or .005].
P = L[c(1 + c)n]/[(1 + c)n - 1]

The next formula is used to calculate the remaining loan balance (B) of a fixed payment loan after p months.

B = L[(1 + c)n - (1 + c)p]/[(1 + c)n - 1]

Annual percentage Rate (APR)

Other readers ask about the formula used to calculate the APR. The APR is what economists call an "internal rate of return" (IRR), or the discount rate that equates a future stream of dollars with the present value of that stream. In the case of a home mortgage, the formula is

L - F = P1/(1 + i) + P2/(1 + i)2 +… (Pn + Bn)/(1 + i)n

i = IRR
L = Loan amount
F = Points and all other lender fees
P = Monthly payment
n = Month when the balance is paid in full
Bn = Balance in month n

This equation can be solved for i only through a series of successive approximations, which must be done by computer. Many calculators will also do it provided that all the values of P are the same.

The APR is a special case of the IRR, because it assumes that the loan runs to term. In the equation, this means that n is equal to the term, and Bn is zero.

If there is a monthly mortgage insurance premium, that premium must be included in P for as long as the balance exceeds 78% of the original property value. If there is an upfront premium, it is included in F. If the upfront premium is financed, P should be calculated based on the larger loan amount, but L should not include the premium.

Note that on ARMs, the payments used to calculate the APR are those that would occur under the assumption that the index rate does not change over the life of the loan.

On a cash-out refinance, the APR ignores the existing mortgage that is paid off, which makes it a poor guide to the decision (see The APR on a Cash-Out Refinance). The better guide is a "net-cash APR", in which the balance of the existing loan (including interest accrued to the day of payoff) is subtracted from the left side of the equation, and the "Ps" represent the difference in payment between the old and new mortgage.

Future Values

Many of my calculators measure financial results in terms of "future values" -- the borrower's net wealth at the end of a specified period.

The future value of a single sum today is:
FVn = S(1+c)n

FVn is the value of the single sum after n periods
S is the amount of the single sum now
c is the applicable interest rate
n is the length of the period

The future value of a series of payments of equal size, beginning after one period, is:

FVn = P[(1+c)n - 1]/c

Where P is the periodic payment, and the other terms are as defined above.

by Jack Guttenag Revised November 26, 2008, Reviewed July 24, 2009

Mortgage Formulas

Monday, May 30, 2011

Judges hear Elevation Chandler land dispute

The feud over who owns Elevation Chandler was fought by lawyers who appeared before a three-judge panel at the Arizona Court of Appeals on Wednesday. Attorney Bob Lord argued for investor Tom Peltier of BT Capital, who insists he won the property with a bid of $1,000,001 at a trustee sale on June 15, 2009.

A series of errors occurred before and during that sale, prompting TD Service Co., which held the sale, to refuse to accept Peltier's payment.

Later that year, Peltier sued in Maricopa County Superior Court, where Judge Bethany Hicks dismissed his lawsuit.

"Inadequacy in the sales price, coupled with irregularities in the sales process, may justify setting aside a foreclosure sale as a matter of equity," she said at the time.

Another trustee sale was held July 1, 2010, when Elevation Chandler's lender, California-based Point Center Financial, took possession.

Peltier appealed his loss of Elevation Chandler, a 10.5-acre parcel near Loops 101 and 202, south of Chandler Fashion Center. It contains a partly built hotel.

Lawyers on Wednesday argued state statutes, case law and common sense.

Lord told the appellate judges that Hicks had erred by saying the million-dollar bid was too low, referring to an earlier appraisal setting the value at $36 million.

Lord maintained the property is worth less than $2.7 million and that the buyer may even need to tear down the concrete and steel skeleton.

"The trial court determined the bid price was inadequate, but (Hicks) can't if there's no determination of value," the attorney said.

At the trustee sale in 2009, bidding had started at $1 million. Steve Vadas, the auctioneer with TD Service, was supposed to continue the bidding until Point Center could weigh in with a credit bid of $25 million. However, after Peltier bid $1,000,001, Vadas called his office and was told Peltier could have it.

The next day, TD Service refused to accept Peltier's money, and Peltier refused to take back his $10,000 down payment. TD Service declared the sale invalid.

Joseph Cotterman, who appeared Wednesday for Point Center Financial, described the 2009 auction as a failed sale.

"It blocks a party from coming back after the sale and undoing it," he said.

"What happened on the day of the failed sale were invalidating mistakes. . . . We were denied the opportunity to make the last bid."

Judge John Gemmill last week said Point Center could have had its own agent at the sale. Cotterman replied that regardless of that, TD Service "blew it."

Complicating matters is that Vadas, the auctioneer from TD Service, actually held two trustee sales for Elevation Chandler on June 15, 2009. Arguments have centered on the second sale that day, in which Peltier participated.

But the auctioneer had already "cried" the sale earlier than its scheduled time, and Cotterman said Point Center got Elevation Chandler then.

However, Peltier showed up a few hours later, after the scheduled time, and asked about the Elevation Chandler foreclosure. When he was told the sale had been held, Peltier insisted he be allowed to bid. So Vadas cried the sale again; it was at that sale that Peltier says he won the property.

The auctioneer "sold it twice in one day, and the first sale should have been conclusive," Cotterman said.

Gemmill said, "If the trustee (TD Service) decides there are problems with the sale, the trustee has the power to say, 'There are too many problems; I'm invalidating the sale.' "

Cotterman replied, "Not only does it have the power, it has the obligation to do it over and do it right."

In 2010, after Hicks ruled in favor of Point Center Financial, a trustee sale was held July 1, at which Point Center took back the property. Cotterman said if BT Capital were serious, it would have tried to stop that sale.

"No pre-sale injunction gives us title," Cotterman said.

Representing TD Service was Roger Cohen, who mentioned the two sales on June 15, 2009, and said the auctioneer had called the second sale to accommodate Peltier.

"If the first sale was invalid, why wasn't the second sale invalid?" Cohen asked.

Judge Patrick Irvine told Cohen on Wednesday, "If your client hadn't done the second sale, we wouldn't be here."

The judges took the matter under advisement.

TD Service also made errors in posting notices before the 2009 sale. It posted the notice at the wrong location, and the description of the property was not accurate.

Construction stopped on Elevation Chandler in April 2006. Developer Jeff Cline filed for bankruptcy protection in April 2008. The bankruptcy case was later dismissed as a failure.

by Luci Scott The Arizona Republic May. 30, 2011 12:00 AM

Judges hear Elevation Chandler land dispute

Sunday, May 29, 2011

Be alert: Fees, taxes eat into fund returns

If you've ever bought the Shed-No-Mor cat sweater or the Swiss Army Fork from a late-night television commercial, you know that some things aren't quite what they are advertised to be.

If you look at what you've actually earned in your mutual fund over time, you might be surprised to find that your returns don't match what you find advertised. While you can't control what Mr. Market will give you, you can control how much you earn from your fund.

Let's look at the American Funds Growth Fund of America, one of the largest funds in the universe. The A shares - the largest share class, and the one most likely sold to individual investors - have gained an average 4.17 percent a year for the past decade. That may not sound like much, but it's better than the Standard & Poor's 500-stock index, up an average 2.82 percent in the same period.

To put this in some perspective: A $10,000 investment in the fund would have gained $5,046 in 10 years.

If you paid the fund's maximum 5.75 percent sales charge, however, your total return was 3.55 percent, according to Lipper, which tracks mutual funds. Your gain has now shrunk to $4,174.

But wait, there's more - because it gets worse. Most funds distribute income and capital gains at least once a year. You owe taxes on those distributions. Assuming you were in the highest tax bracket, your after-tax return would be 3.21 percent, according to Lipper.

And if you had sold the fund after 10 years and paid taxes on your gains, you'd be left with a 2.96 percent average annual gain.

So: You invested $10,000 in a taxable account, paid the sales charges and paid taxes on distributions and gains. Your $10,000 is now $13,387. At that rate, you'd double your money in about 24 years.

What's an investor to do?

You could fervently wish for higher returns from the stock market. While you're at it, you may as well ask for an albino pony, too. You really can't do anything about your future returns from the stock market.

But you can reduce your costs as much as possible. One easy way, of course, is to buy a no-load fund. You pay no commission, but you get relatively little advice. If you absolutely must invest through a broker, you can save money on commissions by learning the different ways to reduce them.

Typically, the more you buy of a load fund, the less you pay in commissions, or loads. The sales charge for the Growth Fund of America drops to 5 percent if you invest $25,000, and 4.5 percent if you invest $50,000.

You can often combine holdings within one fund family to reach the break points. A complete list of ways to lower your load is at

Loads on nearly all funds vanish at $1 million, which might be rich for your blood, but probably isn't for your 401(k) savings plan. If you're dying to invest in a popular loaded fund, your 401(k) might offer it at no load - and, even better, with institutional fees, which are nearly always lower than retail fees.

You can also control taxes to some extent. When you invest in a tax-deferred account, your earnings compound tax-free. But be careful. If you invest in a stock fund in a 401(k) or IRA, your gains will all be taxed at your ordinary-income rate, which is probably higher than the capital-gains rate, currently a maximum 15 percent.

If you can, open a Roth IRA: Although you invest with after-tax money, your gains aren't taxed at all.

Reducing costs and taxes can make a tremendous difference in your returns over time. And if you want a sure-fire way to increase your balances, invest more. Unlike the things you see advertised on late-night television, increasing your savings rate always works wonders.

by John Waggoner USA Today May. 29, 2011 12:00 AM

Be alert: Fees, taxes eat into fund returns

Rocky Point vacation units hit by drop in buyers

The vacation-home market in Mexico's coastal city of Rocky Point, Sonora, is bound to the rise and fall of Arizona's economic prosperity, like the ocean's tide to the moon.

That fact will come as no surprise to the hundreds of Phoenix-area residents who have purchased an estimated 2,400 beachfront condominium units and detached vacation homes in the city also known as Puerto Peñasco.

Richard Savino, president of the Rocky Point Board of Realtors, estimates that Valley residents own about 60 percent of all vacation properties built in Rocky Point in the past decade.

At the moment, the Rocky Point housing market is in a major slump. Of the city's estimated 4,000 vacation condos and houses, about 650 properties are listed for sale, Savino said.

Based on the Puerto Peñasco vacation-home market's average transaction flow of about 16 sales per month, those listings represent a more than three-year supply of inventory.

A healthy housing market generally has about six months' inventory listed for sale.

Although he expressed confidence that the Rocky Point housing market eventually would rebound, Savino said it would have to be preceded by significant economic recovery north of the border.

"We're all kind of waiting for the U.S. economy to turn around," he said.

Savino visited the Phoenix area last week to meet with administrators of the Arizona Regional Multiple Listing Service, which for the past two months has been involved in a mutual exchange of home listings with its Rocky Point counterpart.

Savino, an American who has been living in Rocky Point since 2007 and brokering real-estate deals there since 2008, hopes the sharing of Rocky Point listings with metro Phoenix real-estate agents will bring added visibility to his area's housing market while giving U.S. agents an opportunity to get more involved and potentially earn some additional referral fees.

To represent either the buyer or seller in a Rocky Point real-estate transaction, agents must have a Sonoran real-estate license. Savino obtained his Sonoran license in 2008. He continues to work as a real-estate agent while managing two local condominium communities to make ends meet.

Despite the market's current problems, Savino said he is confident that buyer interest in the Rocky Point vacation-home market eventually will return.

The introduction of direct commercial flights to and from Puerto Peñasco's recently built, but barely used, airport would provide a significant boost to the area's housing market, he said.

One of Savino's goals is to persuade a major airline to add Rocky Point to its itinerary. A small Mexican air carrier had been offering flights about a year ago, he said, but it canceled the service about six months later.

Not enough passengers, according to Savino.

He blamed the dearth of travelers not on the weak economy but on a string of news reports that started coming out just before spring break in 2010.

The news reports linked Rocky Point to a public scare over recent drug-related murders in Mexico, Savino said, adding that most of the drug-related violence has been in major cities and not around Puerto Peñasco, which has a population of 45,000.
"It is a safe place," Savino said. "I would not be living there if it wasn't."

by J. Craig Anderson The Arizona Republic May. 29, 2011 12:00 AM

Rocky Point vacation units hit by drop in buyers

Tempe land sold for $3.24 million

The high-profile, sought-after parcel of vacant land that once housed Gentle Strength Cooperative in Tempe has sold for about $40 a square foot.

That's $3,240,000 for 1.84 acres on the northwestern corner of University Drive and Ash Avenue, a block west of Mill Avenue.

"We were very pleased with the price," said Mindy Korth of the Phoenix office of CB Richard Ellis, which represented the seller.

"It was definitely competitive. . . . A number of people thought we weren't going to achieve that kind of pricing."

Barry Gabel of CBRE also worked on the deal for the seller, ML Manager LLC of Phoenix, the lender that acquired the property at a trustee sale in November.

ML Manager is the successor to the bankrupt Mortgages Ltd., once a high-flying Valley company.

The buyer, who won out over multiple offers, is Brookfield Asset Management of Toronto, owner of 100 and 150 W. University Drive, totaling 300,000 square feet in the Centerpoint office complex. The company also owns two nearby parking garages, a public one and another used only by employees of JPMorgan Chase.

Brookfield is a large REIT, or real-estate investment trust, and investment firm with holdings throughout North America and an active player in the Arizona market.

"They wanted to own it so they could have the authority over the development of the site since their investment was right there," Korth said.

"They didn't have a specific development plan they had already cooked up and were ready to serve."

Brad Wilde is a broker with Scottsdale-based Land Advisors Organization and an infill expert.

He described the sale for $40 a square foot as a "terrific price."

It shows a lot of confidence in the downtown Tempe market and that Brookfield wants to control the site, he said.

"The buyer is an adjoining property owner, and I believe they paid that high price to cover its flank and protect its interests," Wilde said.

Had the land been sold to an individual retail user, Wilde said, the square-foot price likely would have been $20 to $25.

by Luci Scott The Arizona Republic May. 28, 2011 12:00 AM

Tempe land sold for $3.24 million

Expert: Recovery falls short of target

Barry Broome, president of the Greater Phoenix Economic Council, often hears that Arizona's economy is on the road to recovery.

"Big deal," he says.

In an economic forecast presented by the Gilbert Chamber of Commerce earlier this week, Broome shared an up-and-down outlook on the state's financial future.

Optimists may cheer upon hearing that Arizona could regain nearly 300,000 jobs by 2015, but when Broome takes a deeper look, he doesn't like what he sees.

The state's recovering economy is even more dependent on retail, real estate and construction than it was before the recession, and those industries will continue to be the state's breadwinner in 2014, Broome said.

"We're creating jobs that won't pay for themselves again," Broome said. "The economy we had in '04, '05 and '06 - I don't want it back. I'm not interested."

Broome's organization focuses on attracting more sustainable industries to the Valley.

In Gilbert, that includes bio-medical companies in areas such as nanotechnology, pharmaceuticals and medical equipment, said Dan Henderson, the town's business-development manager. He also made a presentation at the luncheon.

Although Arizona lags far behind bioscience leaders such as San Francisco and New England, Henderson said the current fiscal year has been Gilbert's most successful for business development since he joined the town four years ago.

While Henderson works to bring quality jobs to Gilbert, Broome is fighting for a better business environment throughout the state, which helps individual communities market themselves.

This year, the Legislature passed two GPEC-supported bills that the organization said would create a more favorable business environment and make Arizona more competitive.

House Bill 2001, passed during a special session in February, established the Arizona Commerce Authority and reduced corporate-income taxes. Broome called it "the best bill that's ever been passed in Arizona for the economy."

The legislation also provides a tax credit for companies that are either expanding or making a new capital investment within the state, Broome said.

Within urban areas, a company must generate at least 25 new jobs and $5 million in capital investment to qualify.

The bill reduces Arizona's corporate income tax, a move that will improve the state's national ranking from 25th to eighth place in that category, Broome said.

GPEC also supported Senate Bill 1041, which would have reduced property taxes for certain businesses.

The bill easily passed the Legislature but was vetoed by Gov. Jan Brewer, who said the incentive would "allow one industry to jump the line in front of other industries."

But Broome said it would have improved the state's regional competitive ranking and could have helped generate up to $371 million in new revenue for the state over 10 years.

Despite his disappointment in the veto, Broome praised Brewer for her support of business-friendly legislation.

"Relative to the history of gubernatorial leadership . . . Jan Brewer's done a better job on the economy than any governor in the last 50 years," Broome said.

Still, the state faces stiff competition from several "star players" throughout the Mountain West region, including Texas, Washington and Colorado.

To keep up, Arizonans must expect more from their political leaders instead of growing complacent with the status quo, Broome said.

There are 90 communities in Arizona with an unemployment rate between 18 percent and 35 percent, he said.

"The idea that we're in this comfort zone relative to our future is one of those things we have to boot out."

by Parker Leavitt The Arizona Republic May. 28, 2011 12:00 AM

Expert: Recovery falls short of target

Phoenix-area "shadow inventory" of homes doing well in market

Metro Phoenix has a "shadow inventory" of nearly 100,000 homes, the kind that market watchers sometimes fear could flood the region's long-suffering housing market and drive down prices.

These homes are either in foreclosure or the owners are behind on their mortgage payments, signaling that the houses could eventually join the supply of properties offered by lenders for sale at a deep discount.

But the region is actually in much better shape than other parts of the U.S. hit hard by foreclosures, according to new analysis from a national real-estate group.

Foreclosure homes are selling fast in the Valley as investors jump at the low prices, and experts don't think the area's shadow inventory will suppress prices further.

Analysts and investors have warily eyed the tough-to-measure shadow inventory since last year, when worries arose that banks were delaying foreclosures and holding onto large numbers of homes after foreclosing.

Market watchers saw the potential for the growing backlog of homes to drive the entire market. If buyers believed more bargains were coming, they would wait and prices would fall.

New data from California-based John Burns Real Estate Consulting, one of the nation's leading housing researchers, puts the number of homes in the Phoenix area's shadow inventory at about 92,000, the size of a small Valley suburb.

But that number, which includes Pinal County, isn't alarming housing analysts.

That's because the rate of sales is as important as the raw number of homes. If sales are brisk, the homes are snapped up quickly, meaning they won't lead to lower prices.

And homes in the Valley, especially low-priced foreclosure homes, are selling.

Other markets racked by the housing downturn since 2007, including Las Vegas, Orlando and Sacramento, are in worse shape - sometimes much worse.

Based on historical rates of home sales, the Valley's inventory would clear out much faster than other cities'.

"(Metro) Phoenix's shadow-inventory figure may look scary, but the area is in much better shape than other markets," said Tim Sullivan, a principal with Burns Real Estate. "Foreclosure homes are selling and selling fast in Phoenix, which makes a big difference."

Measuring the inventory

The supply of homes is as its name implies: shadowy, difficult to gauge.

Burns Real Estate estimates the number through a series of steps.

First, the group counts the number of homes already in foreclosure, including homes taken back by a bank and not yet resold: at least 40,000 in metro Phoenix as of January.

Then, it adds the number of homes in which the owner is at least 30 days' delinquent on the mortgage. From that number, it calculates how many are likely to end up being foreclosed on and resold, based on its formula tracking the same data during the past year.

In all, metro Phoenix has 110,000 houses in or approaching foreclosure, based on the estimates.

Bank-owned homes already listed are taken out. Also removed are homes listed for a short sale, in which the buyer is seeking the bank's OK to sell for less than the house is worth, thus staying out of foreclosure. These homes total about 18,000 in the Valley.

The remainder, about 92,000 houses, is considered the area's shadow inventory.

The rate at which homes sell is important to gauging the health of any market.

Based on the region's long-term sales rate over the past 10 years, the number of homes in the shadows is about as many as would sell in a year. Thus, the firm calls it a 12-month supply.

That puts the Valley in better shape than many similar markets.

Based on their local 10-year average sales rates, according to Burns Real Estate's estimates:

- Orlando has a 23-month supply of shadow inventory.

- Modesto, Calif., a boom market inland from the Bay Area, has a 20-month supply.

- Sacramento has a 16-month supply.

- Las Vegas has a 14-month supply.

"Shadow inventory isn't a big problem looming for the (metro) Phoenix market," said real-estate analyst Tom Ruff with Information Market. "The numbers have to be put in perspective. When you look at everything that's going on with home sales in Phoenix, you see that shadow inventory isn't something to worry about."

He said the number of pending foreclosures in Maricopa County is falling rapidly because new foreclosure filings are down and lenders are clearing out more of their foreclosure backlogs.

Foreclosure sales

Homes taken back by lenders through foreclosure have become a major part of metro Phoenix's housing market during the past few years.

Today, though prices have plummeted from their 2006 highs, the Valley housing market is moving at a healthy pace, partly because the low-priced foreclosure homes attract plenty of willing buyers.

Homes are selling at foreclosure auctions at record-setting paces, with more than 1,300 sold in Maricopa County last month.

The number of foreclosure and normal resale homes on the Arizona Multiple Listing Service is a five-month supply, based on the long-term rate of sales.

These homes, because they're already listed, aren't part of the shadow inventory.

So, Phoenix's combined supply of homes, including shadow inventory and current inventory, should take 17 months to sell.

Other cities with high foreclosure rates all have higher levels of total supply. Las Vegas has a 21-month combined supply, according to Burns Real Estate. Orlando's overall supply is 29 months.

Experts say Phoenix-area homes are selling because investors see them as a good value. Many can hold the houses and turn them into rentals, earning a good return on the investment. Others move to resell or "flip" the properties quickly, still turning a profit because the up-front price was so low.

Another benefit of investment buyers: Many pay cash. Many homeowners who abandoned their homes during the crash did so because they lost little in the process, forfeiting only their small down-payments. A cash buyer owns a house free and clear and is less likely to walk away.

The combination of more buyers and bargain prices is making the region's housing market more competitive, and bidding wars have broken out for houses priced right. Investors are eager to get in before the deals end.

"(Metro) Phoenix's inventory of homes for sale has been shrinking fast this year," said Julie Bieganski, a real-estate agent and investor. "It's getting harder to find bargains."

Impact on prices

What buyers are doing now - and what they expect to happen soon - is key to the direction of any market. The experience of early 2009 shows how the shadow inventory can affect those expectations.

In early 2009, after seeing mortgages fail in historic numbers, lenders tried to resell a record supply of foreclosure homes in the Phoenix area, all at once.

Buyers saw the supply was huge and kept their offers low, believing there were even more homes to come. The region's median home price, already battered by two years of downturn and recession, sank to 2003's level.

However, metro Phoenix's shadow inventory now doesn't appear large enough to prompt a waiting game. The area's supply of homes for sale continues to shrink, even as more foreclosure homes are listed or put up for auction.

Last spring, some analysts estimated the Valley had 18 months of shadow inventory looming over its housing market.

New estimates of a smaller supply could mean metro Phoenix's housing market is poised to recover sooner than other areas.

"(Metro) Phoenix has seen an overcorrection in prices" said housing analyst John Burns. "There are vacancies and shadow inventory. But now is the most affordable time to buy in my lifetime."

by Catherine Reagor The Arizona Republic May. 28, 2011 12:00 AM

Phoenix-area "shadow inventory" of homes doing well in market

Slower growth felt worldwide

WASHINGTON - From the United States to Europe and even to booming China, the global economy is showing signs of strain.

Most major economies are expected to keep growing. But evidence is mounting that many around the world are struggling to expand as fast as they did last year.

In China, interest-rate hikes designed to reduce inflation are slowing growth. European governments are struggling with debts and squeezing budgets. Britain's economy scarcely grew at the start of the year.

High unemployment, depressed real estate and still-high oil prices are slowing the U.S. economy, which grew at a scant 1.8 percent annual rate from January through March. Even Europe's strongest economy, Germany, faces a slowdown. And after its earthquake and nuclear crisis, Japan has sunk back into a recession.

Overall, the world economy will likely grow just 3.5 percent this year, down from 4.1 percent in 2010, according to the research firm IHS Global Insight. IHS has cut that forecast from 3.8 percent.

As leaders of the Group of Eight rich democracies meet in Paris, slowing global growth is on an agenda already packed with concerns about instability in the Middle East, Greece's debt crisis and who will be the next head of the International Monetary Fund. It isn't a priority item at the meeting, though.

"The eurozone is a big mess, and the Europeans don't want to talk about it," said Simon Johnson, a former chief economist of the IMF.

The most serious such problems exist in Greece, Spain, Portugal and Ireland, which are overwhelmed with debts run up during the financial crisis and the recession that followed.

Financial markets have been signaling concerns about a worldwide slowdown. The Dow Jones industrial average has shed 450 points, or 3.5 percent, this month. Stocks have slid 3 percent or more this month in Japan, Britain and Hong Kong.

IHS chief economist Nariman Behravesh said "three headwinds are hitting the global economy at the same time":

• High commodities prices. Despite a recent dip, oil prices are still up 50 percent over the past year. Those prices have squeezed household budgets in the United States and other rich countries and held back consumer spending. Rising food prices are hurting the middle class and the poor around the world.

• Government budget cuts. Many European countries had to slash spending after the financial crisis swelled their budget deficits. Britain last year cut spending and raised taxes, choking the economy. Britain's economy eked out just 0.5 percent growth in the January-March quarter after shrinking from October through December last year.

• Japan's earthquake and nuclear crisis. After factory production was disrupted, the Japanese economy shrank at a 3.7 percent annual pace in the first quarter. It will likely contract an additional 3.7 percent in the April-June quarter, according to the Organization for Economic Cooperation and Development.

"The highest degree of uncertainty lies in the effects of the disaster on Japan's economy," Bank of Japan Gov. Masaaki Shirakawa said in a speech this week in Tokyo.

Economists do expect Japan's economy to rebound in the second half of the year. Reopened factories and reconstruction projects in the quake zone should create jobs.

The U.S. economy is also expected to accelerate in the next several months. More hiring will likely encourage consumers to spend more. Companies are expected to dip into profits to expand. And banks, having shed bad loans from financial crisis, will likely lend more to businesses and consumers.

Still, economists are increasingly worried about China. Four interest-rate hikes since October have yet to do much to cool China's inflation, which is running above 5 percent. Goldman Sachs this week cut its forecast for Chinese growth to 9.4 percent from 10 percent this year and to 9.2 percent from 9.5 percent in 2012.

By raising rates and taking other steps to tighten bank lending, Beijing wants to slow growth to 7 percent this year to stem inflation. Some worry that Beijing's controls, combined with power shortages in some manufacturing areas, are steering China toward an economic disaster. Still, most analysts expect a controlled slowing of growth.

Other booming countries, such as Brazil and Turkey, are also trying to slow growth to control rising inflation.

U.S. exporters had been counting on robust purchases in the developing world to offset lackluster growth at home. Those expectations might need to be scaled back. "A hard landing for the emerging markets could significantly set back the world economic recovery," said Eswar Prasad, professor of trade policy at Cornell University. "They have been the key drivers of global growth in the aftermath of the financial crisis."

by Paul Wiseman Associated Press May. 27, 2011 12:00 AM

Slower growth felt worldwide

'It's a niche market'

The market for multimillion-dollar vacation homes has experienced a slow but steady recovery since the housing market crashed, with a slight increase in sales of luxury getaways for the ultrarich each year.

But builders and sellers of vacation properties aimed at the upper middle class said they are struggling to find a marketing pitch that will resonate with prospective buyers who still have the means but seem to have lost the will.

Jim Chaffin, a Colorado recreational real-estate developer, was among a group of panelists who spoke earlier this month about the challenges that vacation-home sellers face at a time when the only thing wealthy Americans feel inclined to flaunt is their frugality.

Chaffin, chairman of Aspen-based Chaffin Light LLC, said the challenge is on developers to construct a more relevant, persuasive pitch that keys into would-be buyers' desire to feel smart, responsible and practical.

"It is no longer because you can or because you deserve it," said Chaffin, speaking on the May 19 panel at the Urban Land Institute's 2011 Spring Council Forum in downtown Phoenix.

Chaffin and others said luxury vacation-home developers are likely to shift their focus from straight sales to lower-cost alternatives such as time-shares, fractional ownerships and private residence-club memberships - all of which allow consumers to vacation in style for considerably less than the cost of buying a luxury vacation home.

In addition, they said, future vacation-home developers will need to build in places that are easily accessible from major metropolitan areas, set in breathtakingly beautiful locales and offer a compelling experience in addition to a pretty view.

Drew Brown, chairman of Scottsdale-based developer DMB Associates Inc., who moderated the Urban Land Institute panel discussion, said that time-share and fractional-ownership projects have struggled along with traditional sales in the current recession.

Brown said that is likely due to public perception that time-shares, fractional shares and club memberships are difficult to resell if the owners want or need out of the deal.

Panelist Chuck Cobb, chief executive of Cobb Partners, a Florida-based investor in resort properties, said resort-community developers and operators still have a long way to go toward recovery, with a huge inventory of vacation homes yet to be sold.

He said the most successful among them likely will offer a range of options for buyers, renters and traditional resort guests.

Vicki Kaplan is a Scottsdale-based real-estate agent who represents buyers and sellers of fractional-ownership shares in vacation villas at the Rocks Luxury Residence Club, a resort community in north Scottsdale managed by Troon Golf.

Kaplan, of Arizona Best Real Estate, said that the resale market for fractionals has been slow lately and that it can take up to a year to find a qualified buyer.

Fractional ownership differs from time-sharing in several ways. Unlike time-share buyers, fractional owners actually purchase a portion of the vacation-home or condo.

Private residence clubs are another variation on the time-share concept. With residence clubs, participants buy a membership that entitles them to a certain amount of guaranteed vacation time at the resort.

Buyers of time-shares, fractional shares and residence-club memberships all must sell their stake in the resort community on the open market to be released from monthly homeowners' association or maintenance-fee obligations, which can be considerable. At the Rocks, the standard fraction is one-seventh, which entitles the owners to a guaranteed six weeks of occupancy each year.

They can stay even longer and can use any of the resort's seven fractionally owned villas as long as no one else is using them.

In addition, the resort community participates in a "reciprocity program," administered by Timbers Resorts, a fractional-ownership and private residence-club resort operator based in Carbondale, Colo.

The program allows owners to stay at any of the company's nine participating resort communities, which include locations in Colorado, California, Mexico and Italy.

Kaplan said fractional shares in the Rocks have sold recently for under $200,000 - considerably less than the developer's original sale price of $325,000 to $335,000.

The monthly HOA dues, which cover maintenance plus services comparable to a high-end resort and spa, is about $900 a month, 12 months a year.

Kaplan said the recession has made it much easier for owners to take advantage of the reciprocity program because sister Timbers communities aren't as likely to be fully occupied at any given time.

Still, Kaplan was quick to point out that fractional ownership is not for everyone. When talking to potential buyers, she spends a good portion of the time explaining the downside of buying a fractional vacation-home share.

Kaplan said she would much rather have prospects walk away than buy and later realize they made the wrong decision for their particular lifestyle.

For instance, she said, fractional owners can't book six solid weeks at their villa in the winter, so if the buyer is looking for a winter home, a fractional is not a good fit.

About two years ago, banks stopped offering mortgage loans on fractional purchases, Kaplan said, so today's buyer must be willing and able to pay cash.

"It's not an easy product to sell," she said. "It's a niche market."

by J. Craig Anderson The Arizona Republic May. 27, 2011 12:00 AM

'It's a niche market'

Investors optimistic about housing market, survey says

Investors in the housing market remain bullish about their chances for turning a profit, according to results of a survey issued today by online real-estate firm Move Inc., based in Campbell, Calif.

Among their reasons to be optimistic were weak competition from traditional homebuyers, strong demand for single-family rental properties and the relatively low cost of buying and fixing up homes.

However, the survey's results also point to some perceived weak spots in the market, including stagnant resale prices and difficulty obtaining purchase loans.

Move Inc., a publicly held company that trades on the NASDAQ exchange under the symbol "MOVE," sponsored the survey, which included responses from about 200 real-estate investors and 800 non-investors. All respondents were 18 or older.

According to the survey's results, real-estate investors were three times as likely as traditional buyers to express interest in buying a home within the next two years, and nearly two-thirds of investors said they believe lack of competition from traditional buyers will make it easier to find bargain purchases during the next six months.

The survey results, which only include responses from U.S. investors and do not break them down by geographic area, also suggest that investor interest and activity could be on the rise.

About 62 percent of investors said they are paying more attention to home values in their local markets than they were a year earlier.

Responses indicated a widespread belief that prices will remain flat in the near future, with 22 percent of investors expecting prices to rise in the next six to 12 months, 23 percent expecting further price declines and 54 percent predicting no significant changes.

Nearly 66 percent said they expect competition from first-time homebuyers to diminish because of difficulty obtaining financing.

However, the majority of investors said they also planned to finance future home purchases, at least partly. The majority, about 57 percent, also cited difficulty obtaining loans as one of the biggest challenges they faced.

Only about 19 percent said they planned to buy with cash, with about 81 percent of those expecting to receive a cash-only discount from sellers.

Nearly 76 percent of investors said they plan to borrow money to cover a portion of future home purchases, with nearly 60 percent expecting to finance more than 50 percent of their investments.

Just 16 percent said they would use cash to cover more than 50 percent of future home purchases.

"The fact that most real-estate investors plan on combining cash and credit for their purchases goes against the conventional wisdom that investor transactions today are mostly cash-only sales," Move Inc. Chief Executive Steve Berkowitz said. "The data also shows they're expecting high returns to match the level of investment they're making in an arena that is new to many investors."

Only a small portion of respondents said their goal was to "flip" the homes within the next 12 months.

About half said they planned to rent out their homes for at least five years.

About one-third of self-identified investors said they were in the process of researching or preparing to invest in a home but had not yet done so.

Among active investors, about 59 percent said they had made at least one other real-estate investment in the past, while the other 41 percent identified themselves as first-timers.

About 42 percent said they planned to do future repairs themselves, about 30 percent said they planned to hire a contractor for repairs, and the other 28 percent planned to buy homes that weren't in need of any repairs.

About 66 percent of respondents said they did not expect repair costs to exceed 20 percent of the property's purchase price.

"This data suggests today's climate is hot for investing and is attracting a lot of new people that don't fit the stereotypical, deal-driven flippers that buy and sell properties quickly," Berkowitz said. "They're mostly entrepreneurial individuals that will make vital contributions to local communities by investing their own money and sweat equity."

In exchange for their risk and hard work, investors responding to the survey expressed high expectations for reaping financial rewards.

Nearly half said they expected a profit of 20 percent or more, such as with 4 percent annual rate of return over five years. Another 40 percent expected a profit of at least 10 percent.

Just 7 percent said they expected to make a return of 5 percent or less.

While the survey indicates investors will outnumber traditional homebuyers 3-to-1 during the next two years, it also revealed significant overlap between first-time investing and buying a home to occupy.

About 27 percent of first-time investors said they also planned to buy a primary residence. Almost half said they planned to live in their investment property until it was sold or turned into a rental property.

Slightly more than half planned to put their investments to work as rental properties, and 28 percent said they planned to buy a vacation property that they would sell eventually.

The survey also found 30 percent of real-estate investors are interested in buying a retirement property as an investment.

"The survey suggests some first-time buyers may be looking at investment as a strategy to becoming homeowners," Berkowitz said. "While today's market is tough for some, it's also motivating millions to take an unconventional approach and creatively search for new ways of entering the housing market."

Move Inc. operates, a Web portal for home-sales and rental listings;, the official website of the National Association of Realtors; and other sites including, and

The survey was conducted by telephone in April and had a margin of error of plus or minus 3 percentage points.

by J. Craig Anderson The Arizona Republic May. 25, 2011 07:14 PM

Investors optimistic about housing market, survey says

Saturday, May 28, 2011

2 REIT veterans begin new venture

The third time should be a charm for Valley financiers Christopher Volk and Morton Fleischer. The first two certainly were.

Volk and Fleischer, who previously grew and sold two real-estate investment trusts in multimillion-dollar deals, have started a new firm, STORE Capital, with a similar model of extending financing to single-tenant properties such as chain restaurants, drugstores, supermarkets and other retail businesses.

Volk and Fleischer announced Wednesday that they have raised $500 million in private equity, with proceeds used to fund the Scottsdale company's initial real-estate investments.

That includes a $400 million commitment from OCM STR Holdings, a subsidiary of Oaktree Capital Management, a Los Angeles firm managing $85 billion in assets.

STORE, which stands for Single Tenant Operational Real Estate, was organized as a REIT. Volk and Fleischer previously led Franchise Finance Corporation of America until its sale for $2.1 billion in 2001, and Spirit Finance, which sold for $3.5 billion in 2007.

REITs don't pay income taxes and thus have a relatively low cost of capital.

"The strategy is similar to what we used to do at Spirit," said Volk, the entity's chief executive officer, adding that he believes now is a good time to form a firm like STORE.

"Banks are less active, especially in lending to the middle-market area," he said. "While the economy is fragile, companies that are surviving have good prospects for the future."

Fleischer is chairman of the new company.

Other members of the senior management team, several of whom have worked together since the early 1980s, include Catherine Long, executive vice president and chief financial officer; Michael Zieg, executive vice president of portfolio management; Michael Bennett, executive vice president of operations; and Mary Fedewa, executive vice president of acquisitions.

The Volk-Fleischer team has invested nearly $10 billion in more than 7,000 properties over the past three decades, raised about $3 billion in capital and paid more than $5 billion to investors.

Volk said he expects STORE to begin financing properties by early 2012 and anticipates the firm to have about 40 employees. It is looking for people in accounting, finance, sales and credit analysis.

Potential job or financing applicants should visit store

by Russ Wiles The Arizona Republic May. 25, 2011 07:15 PM

2 REIT veterans begin new venture

12% of U.S.-backed banks were at risk in quarter

WASHINGTON - The number of banks at risk of failing made up nearly 12 percent of all federally insured banks in the first three months of 2011, the highest level in 18 years.

That proportion is about the same as in the October-December quarter last year, though the increase in the number of banks on the Federal Deposit Insurance Corp.'s confidential "problem" list is slowing.

The FDIC added only four banks to its list in the January-March quarter. That brought the total to 888 from 884. Banks on the list are deemed by examiners to have very low capital cushions against risk.

In the January-March period, the industry reported its highest earnings, $29 billion, since before the financial crisis hit more than three years ago. But only a small fraction of the 7,574 federally insured banks - the 1.4 percent with assets exceeding $10 billion - drove the bulk of the earnings growth. They accounted for about $24.4 billion of the industry's earnings last quarter.

These are the largest banks, such as Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. Most of these banks have recovered with help from federal bailout money and record-low borrowing rates.

By contrast, most of the banks that have struggled or failed have been small or regional institutions. These banks depend heavily on loans for commercial property and development - sectors that have suffered huge losses. As companies shut down during the recession, they vacated shopping malls and office buildings financed by those loans.

The amount that banks set aside for possible losses on loans fell by more than half last quarter, to $20.7 billion from $51.6 billion in the year-earlier quarter. But many banks pulled in less revenue in the January-March period than they did a year earlier.

And overall net revenue declined 3.2 percent to $5.5 billion. It was just the second time in 27 years that the industry has reported less revenue than in the year-earlier quarter. As with the increased earnings, the drop in revenue was concentrated among the banks with more than $10 billion in assets.

FDIC Chairman Sheila Bair said some of the revenue decline was likely due to new rules that limit banks' charges for overdrafts on checking accounts. Banks are now barred, for example, from automatically enrolling customers in checking-overdraft programs, which often charge $35 or more per violation.

Bair said the financial overhaul enacted last year wasn't the root cause of the decline in revenue. "I think it's a broader problem with the economy," she said.

Speaking to reporters, Bair said, "While the industry as a whole shows signs of improvement, many institutions are still struggling."

Forty-three banks have failed so far this year, though the pace has slowed from last year, when 157 banks failed. That was the most in a year since 1992, at the height of the savings and loan crisis.

Bair will step down as FDIC chairman in early July, ending a five-year term in which she helped craft the government's response to the 2008 financial crisis. On her watch, the number of problem banks jumped more than seventeenfold, from 50 banks totaling $6 billion in assets in June 2006 to 888 banks with $397 billion in assets.

Last year's 157 bank failures cost the deposit-insurance fund an estimated $21 billion. But in the January-March quarter, fewer failures allowed the FDIC's deposit-insurance fund, which fell into the red in 2009, to strengthen.

The fund's deficit narrowed to about $1 billion from $7.4 billion in the October-December period. Bair said the agency expects the fund to turn positive in the current April-June quarter.

Bair said banks may set aside less money for potential losses in the coming months, giving a boost to their earnings.

Still, she said most institutions have already realized such gains.

"We may face the risk of the pendulum swinging too far back in the other direction, with banks having incentives to substantially relax lending standards in the pursuit of scarce loans," she said.

The FDIC is backed by the government, and its deposits are guaranteed up to $250,000 per account.

by Marcy Gordon Associated Press May. 25, 2011 12:00 AM

12% of U.S.-backed banks were at risk in quarter

U.S. April new home sales up 7.3% - MarketWatch

WASHINGTON (MarketWatch) - U.S. new home sales rose 7.3% in April, the Commerce Department estimated Tuesday. The increase in new-home sales to a seasonally adjusted annual rate of 323,000 was well above the 295,000 pace expected by economists surveyed by MarketWatch. New-home sales in March rose a revised 8.3% to a 301,000 level compared with the previous estimate of an 11.1% rise to 300,000. New-home sales are down 23.1% compared with a year ago. The supply of new homes fell 2.8% to a record low 175,000. The supply in relation to sales fell to 6.5 months in April from 7.2 months in March. Median sales prices have risen 4.6% in the past year to $217,900.

by Greg Robb MarketWatch May 24, 2011

U.S. April new home sales up 7.3% - MarketWatch

Montelucia Resort and Spa has better outlook under new ownership

Montelucia Resort and Spa in Paradise Valley
Montelucia The Montelucia Resort and Spa in Paradise Valley is less than 3 years old but has already had three owners. Its new owners do bring experience in dealing with the Phoenix luxury-hotel market: They owned the Biltmore from 2000 to 2004.

The Montelucia Resort and Spa, still less than 3 years old, has changed hands for the third time.

The buyer is no newcomer to the metro Phoenix luxury-hotel market. KSL Capital Partners LLC, a Denver-based private-equity firm specializing in travel and leisure enterprises, owned the Arizona Biltmore from 2000 to 2004.

The purchase price: $105 million, including $12.6 million in hotel furnishings, according to an affidavit of property value provided by Ion Data, a real-estate analysis firm.

The transaction marks the end of a turbulent financial history for the resort in Paradise Valley. The resort's previous owner, Eurohypo AG, was the original lender for Crown Realty & Development Inc. but became the resort's owner when the developer defaulted on a $180 million loan.

Until Friday, the German bank owned the resort and InterContinental Hotels and Resorts managed the property.

"When you go through a developer who leaves the project, and then you go through a foreclosure process and are bank-owned, there's nothing really comforting about that from a long-range standpoint," said Greg Hanss, the resort's director of sales and marketing. "This certainly brings an end to that uncertainty."

In addition to the new ownership group, KSL's management arm, KSL Resorts, has replaced InterContinental as the property's management company. But even though the property no longer will be branded as an InterContinental, KSL and InterContinental will continue to collaborate.

The Montelucia will be an InterContinental Alliance Resort, meaning KSL Resorts will still have access to InterContinental's global-reservations system and marketing channels. The Montelucia will also remain part of InterContinental's loyalty-rewards program.

"Everything that InterContinental has done since their inception here, we can build upon that and then share resources," said Matthew Hart, new vice president and managing director at the Montelucia.

"And now we have twice as many sales resources, so we should run 102 percent occupancy next year," he joked.

In the coming months, Hart will look to diversify the hotel's revenue by catering not only to its guests but to the surrounding community.

"On the broadest level, we wanted to be back in the Scottsdale-Phoenix area because of our heritage," Hart said. "We'd been here before, and we know the dynamics of this market."

A bevy of clubs

The Montelucia will partner with ClubCorp, a sister company of KSL Resorts that owns or operates a network of more than 150 golf and country clubs, business clubs, sports clubs and alumni clubs.

ClubCorp members will have access to the Montelucia's amenities, such as Joya Spa.

"It's really about getting an asset in the right ZIP code, knowing that the people within a 20-minute drive might be interested in coming to a resort," Hart said.

Bill Murney, senior vice president at HREC Investment Advisors, said the purchase of Montelucia also illustrated a larger trend: a pickup in the number of hotel transactions that have occurred within the past 12 months.

Last week, Murney, representing FelCore Lodging Trust, finalized the sale of Embassy Suites Phoenix-Tempe, at U.S. 60 and Rural Road in Tempe. In February, he brokered the Hotel Theodore sale in Scottsdale.

"I really think that one of the things that helps drive people's confidence in doing transactions in the market is seeing that it has bottomed out," Murney said. "The (room) rate improvement that we saw in the first quarter of this year was that indication."

by Megan Neighbor The Arizona Republic May. 25, 2011 12:00 AM

Montelucia Resort and Spa has better outlook under new ownership

Sunday, May 22, 2011

Foreclosure-auction website AZ Bidder a hot property

Dan Mayes spends most of his days in a former church painted bright blue in south Phoenix. He rarely leaves his desk or takes his eyes off his computer.

Mayes runs the first real-time, live online bidding service for foreclosure homes sold at trustee-sale auctions in metro Phoenix. His team of four bidders is at the auctions each day making bids for clients and tracking and reporting all the bids at other auctions.

The service posts those numbers on its website,, where clients can place bids or just monitor sales.

Most of metro Phoenix's trustee-sale auctions are held in front of the Maricopa County Courthouse in downtown Phoenix.

But to track all the auctions in the county, AZ Bidder also has to monitor sales that may be done in-house at five or six law offices that handle their own trustee sales.

So anytime between 9 a.m. and 5 p.m., an auction may be going on somewhere.

Mayes watches the numbers from every auction on two large computer screens at his desk. If one of his clients is the top bidder on a home, he and the client know seconds after the auction closes.

Often, he's watching two to three auctions at the same time, the data being fed to the system by team members on the scene with smartphones.

"I am like the air-traffic controller for our system," said Mayes, who helped build the bidding system for travel site Priceline before starting the firm. "If something goes wrong or right, I see it within in seconds and can fix it or alert my bidders or clients if it's something they need to know."

Watching the auctions online can be addictive for clients and those who see them for the first time. Mayes said sometimes he looks up and realizes he hasn't moved from his desk in four hours.

Mayes along with three other partners including his brother Tim Mayes, a former banker and prominent Chicago-based investor, started AZ late last year. The siblings had been operating the system for several months and realized as trustee sales started to climb in metro Phoenix it could be a popular tool for other investors besides themselves.

AZ Bidder started taking subscribers early this year, charging $150 a month for access to the system, which includes a calculator to figure out rents for buyers who plan to become landlords.

Although most clients log in and set their maximum bid, some bidders like to bid live. The requests are transmitted to an iPad or smartphone carried by bidders such as Anthony Thomas, who make the bids.

Hundreds of people who knew Thomas from the auction or heard about AZ Bidder from friends and clients signed up - so many that AZ Bidder realized it could up its subscription to $1,500 a month.

Then Mayes realized competitors were using the system, so he changed the fee structure.

Now, to subscribe and bid on as many homes as they want, clients must pay a $10,000 deposit. The money is used to fund a cashier's check required to buy a foreclosure home at a trustee sale in Arizona.

AZ Bidder doesn't receive a fee unless the bidder is successful. Commissions vary by client and volume of sales but generally are $1,500 to $2,500 a house.

The company averages six successful purchases for foreclosure homes a day.

AZ Bidder has more than 800 registered users now.

"I think we have opened the door to Phoenix's trustee-sales auction for a lot of people who had trepidation about bidding before," Mayes said.

"We probably also have some customers who are willing to pay the $10,000 just to check out the auctions as they happen everyday. They might start bidding when they are comfortable."

by Catherine Reagor The Arizona Republic May. 22, 2011 12:00 AM

Foreclosure-auction website AZ Bidder a hot property

Phoenix-area housing auctions fast and furious

Anthony Thomas held his iPad to his chest, clutched his cellphone in one hand and used his free hand to vault over the 3-foot fence around the food court in front of the Maricopa County Courthouse.

It was noon, but he wasn't in a rush to get something to eat. He had seconds to bid on a Mesa foreclosure home that one of his firm's clients wanted to buy.

The house was one of more than 100 that lenders intended to sell at auction that day. It was one of dozens that Thomas and his team were trying to buy.

Despite hopping the fence to get into position, and then upping the bid more than a dozen times, he didn't win the auction. His client didn't want to go higher than $90,000, and the Mesa house sold for $98,000.

On this day, a Thursday in late April, Thomas didn't have time to linger. Another client wanted to bid on a house going up for auction at the next table. He weaved through the crowd and queued up with several other bidders to wait for the auctioneer to call out the address of the next house to go on the block.

Five different auctions can go on at the same time in front of the courthouse.

A record number of foreclosure houses were sold at these daily events, officially known as trustee-sale auctions, in metro Phoenix in April. The number of sales has been growing for months and the record pace is expected to continue through next year.

The outdoor food court in downtown Phoenix has effectively become the trading floor for the region's hottest commodity: foreclosed houses.

Most days, more than 30 people surround the tables. At least five auctioneers set up their laptops and sell to the highest bidder.

Like the exchanges for stocks, bonds and pork bellies in New York and Chicago, the scene outside the courthouse is fast-paced and appears chaotic to casual observers.

But the method for auctioning foreclosure homes through trustee sales has evolved. A decade ago, foreclosures were so rare that only a handful of bidders regularly showed up at the trustee-sale auctions.

Then after the housing crash, foreclosures and trustee-sale auctions soared, but the public auctions remained dominated by a few insiders. They huddled around auctioneers speaking in whispers. Outsiders found it hard to break into the process.

Then the growing number of foreclosures drew more bargain hunters. The increased number of bidders, and firms like AZ Bidder, the one Thomas works for, has added competitiveness and more transparency to the auction system.

Several firms bid for multiple prospective buyers, so a bidder outside the courthouse may be an agent using a cellular phone and a laptop to communicate with clients from around the world.

Newcomers aren't shunned. Instead, they are looked at as potential clients for the more than half-dozen bidding services that have representatives like Thomas at the auctions every day.

The increased competition for foreclosure homes is pushing up prices, which may bode well for the housing market at large. Foreclosure homes at rock-bottom prices have kept the region's median home price suppressed for several years.

The increasing interest in the auctions also has more lenders moving to sell homes quickly, rather than let them sit empty after they seize them through foreclosure. Bidders see the flood of homes as a get-them-before-they're-gone opportunity.

"The auction frenzy for Phoenix foreclosure homes won't last forever," said Tom Ruff, a Phoenix real-estate analyst with Information Market and partner with AZ Bidder. "Foreclosures appear to be peaking, but lenders still have big backlogs to get through."

Trading floor

Though he may handle tens of thousands of dollars in transactions a day, Thomas doesn't have a business-suit job. He shows up for work in shorts, T-shirt, baseball hat and sport shoes, toting a backpack with a water bottle.

The first foreclosure auction in Phoenix actually starts at 9 a.m. on weekdays in the offices of one of the law firms hired to be trustees for lenders. Several larger trustees hold these in-house auctions. But most foreclosed houses that are put on the block are sold in front of the courthouse, starting at noon every weekday.

Thomas' employers maintain a database of every auction being run by every trustee in the county. Clients review the information on AZ Bidder's website and watch the auction data update in real time, an eBay of sorts for foreclosure homes. The system feeds clients' requests to Thomas via smartphone, and he sends back updates on the auctions as they happen.

At the food court, bidders crowd around the auctioneers. Thomas easily weaves through the crowd from auction to auction. The main table, where three auctioneers sit, is next to a fence, so it's typical for bidders to stand outside of it while they listen to the bids. Most bidders are ready to jump a fence or run to another table when another auction starts.

The regulars are like co-workers, with nicknames for one another - here, Anthony Thomas is Tony. They even make occasional efforts to help each other by calling out when an auction has started or relaying bids for those who can't get close enough to hear.

Under Arizona law, when a homeowner falls behind on a mortgage, a lender must try to sell the home through a trustee sale. The trustee, usually an attorney, alerts the borrower and sets a date for the auction. According to AZ Bidder's website, it provides the only live, online auctions of trustee sales in Maricopa County. Some states, including Florida, have judicial foreclosures carried out in courts so the live auctions aren't an option for investors there.

Trustees are self-regulated in Arizona. If an auction is conducted incorrectly or illegally, the trustee involved must fix it.

After allegations in 2009 of some trustee sales being "done under the table" illegally without a public auction, one trustee's auctioneer set up a video camera beside her and records every auction she runs.

"Phoenix trustee-sale auctions used to be an experience straight out of the wild, wild West," said Frank Gerola of, another group that bids at Phoenix foreclosure auctions for clients. "But the process is definitely much more open and competitive now. Now, I call the front of the Maricopa courthouse Phoenix's Wall Street. Money from Canada to Australia is there bidding on those houses."

To bid at an Arizona trustee sale, potential buyers must bring a certified check for $10,000 and have a photo ID. The money is used as a deposit on the house if a bidder is successful. The full amount of the bid must be paid in cash the next day.

Customers of bidding services pay the companies, which handle the cashiers' checks. Clients can transfer the money to AZ Bidder and other bidding services and let them handle closing the deals.

When Thomas bids, he's acting on behalf of people like Goodyear mortgage broker Steve Westerberg.

Westerberg wanted to invest in foreclosure homes sold at auction because they are often less expensive than homes taken back by lenders and resold through real-estate agents. Last winter, he went to check out the auctions at the courthouse.

"I was totally confused by what was going on. There are lists of foreclosure homes that could or could not sell that day. Those lists are like books," he said. "Anthony (Thomas) actually helped me understand what was going on down there, but then I realized I didn't want to be there bidding. I'd rather rely on him for that."

Westerberg signed up for AZ Bidder and started bidding online. After losing out to other bidders for six weeks, he successfully bought his first foreclosure home through the company's online auction three weeks ago. Bidding started at $55,000, and the west Phoenix house drew several bidders. But Westerberg got it for $68,000, plus a $2,500 commission to AZ Bidder. The house was in pretty good shape, and Westerberg knew that from checking it out in person. He painted the inside and then planned to "flip" it, reselling for a profit. He received a cash offer last week to sell it for $94,000.

"I almost hate to share my story because now the auctions are going to be even more competitive," he said.

His experience isn't the norm for flipping foreclosure homes. Still, most investors make $10,000 to $20,000 on a flip, say auction experts.

The trade

Thomas checked his iPad to see if there were any new bids from clients. At the same time, he was plugging in the bids for a home then being auctioned.

The data he supplies shows up on his firm's website with less than five seconds of lag time.

None of his clients was bidding on the home, but many would want to see how the bidding went and what it sold for. As he was multitasking, he heard that a home two clients were interested in was going on the block.

Without looking up, he moved closer to the table where the new auction had started. He called out a bid for $100 over the last bid and continued to enter the bids for the auction a table away. The auctioneer repeated "$100 from Tony," every time he upped his bid. Two other bidders from different groups saw that the auction had started. They jumped over and started bidding while also making bids on a home being auctioned off at another table.

The bids climbed to $80,000 for the house that Thomas was bidding on. He checked his phone to see if the clients had upped their maximum offers. He saw that one client was open to paying more, so he kept bidding.

Then another new bidder joined the fray and upped the price by $1,000. Thomas' client was out.

Thomas doesn't know who he is bidding for at the auctions. He logs into first thing in the morning to see what auctions he and his team need to be at. They figure out who will bid and monitor each one. Thomas bids on more than 50 houses a day.

Typically, all he knows about the investor is what they are willing to pay, and he bids to their price. He doesn't know anything about the houses.

"It's not my job to know if a house is a good deal. I am not the real-estate expert," he said. "I am here to bid for people who do their research. When I reach their max bid, I stop and move onto the next auction."

Last month, $137 million was spent on a record 1,369 metro Phoenix homes purchased at trustee-sale auctions. Those sales accounted for 30 percent of all foreclosures last month. In April 2008, foreclosures were near 4,000, but then only 5 percent of all foreclosure homes sold at auction.

The call

Thomas' cellphone rang while he was trying to track bids for an auction. He wasn't bidding but was listening for bids and for the start of another auction that he had a client signed up for. The caller was Matt Thomas, his cousin, who works in the AZ Bidder corporate office. Anthony tried to get off the phone so he could hear the auctions, but his cousin had important news: Another auction was about to start, and the seller had just lowered the opening bid.

Anthony entered the last bid on the auction he was watching and dashed to another table, where only one other person was bidding. He almost didn't make it, and the lone bidder almost got the house for $40,000.

Anthony started bidding aggressively, matching the other bidder. The price topped $80,000 before he dropped out. The other bidder was on his phone during the auction, talking to a client. At the end of the auction, he told the client, "If the auction would have started 20 minutes earlier, we would have gotten the home for $40,000."

The opening bid on the house that morning had been $75,000, but the lender dropped it to $40,000 a half-hour before the auction started. Matt saw the drop bid on the trustee's website and called Anthony. "We didn't win that bid, but we drove up the price to $80,000," Anthony said.

When an opening bid on a trustee sale is lowered hours or less before an auction, it's known as a drop bid. The practice is considered illegal by some trustees who say Arizona statutes require all opening bids to be finalized and posted 24 hours before the auction. Some trustees from other states, where drop bids are part of the process for foreclosure auctions, continue the practice in Phoenix. Most Arizona trustees and bidders are against drop bids because they give buyers who know about the change an unfair advantage.

Technology is leveling the playing field some. AZ Bidder's system constantly tracks updates on prices and found the drop bid in time for Thomas to react.

An $80,000 price, instead of $40,000, means more money for the lender and a better comparable sale for the neighborhoods where the house is located.

"When I first went to a Phoenix courthouse auction, I thought there's no way I want to get involved with this murky process," said Dan Mayes, president of AZ Bidder. "By showing auctions online in real time, I feel like we open up the process and make it much less mysterious."

Close of market

By 5 p.m., Anthony Thomas was exhausted. The temperature soared to 100 that Thursday in late April. He and his team were so successful at auctions that day, Matt Thomas had to run over with another cashier's check. Anthony looked at how many houses AZ Bidder bought for clients that day - six, an average day. He was hungry. He didn't have a lot of time to stop for food even though he was at a food court. He packed up and headed for his car, knowing he would go through the same routine the next day.

"This is great training to work with clients and real estate. I know I have to put in the hours out here now, but it's teaching me a lot," he said. "Plus, the auctions won't last at this pace forever. We need to be here while the market is hot."

And the market is hot. Lenders are now trying to sell so many homes at auction that the traditional start time may move to 10 a.m. Trustee sales at the Maricopa County courthouse have started at noon for decades, but lately the auctioneers can't get through all of the scheduled sales for a day by 5 p.m.

But the pace isn't likely to last.

Foreclosures have been falling this year. Notices of trustee sales, or pre-foreclosures, are half of what they were a year ago. The number of pending foreclosures in Maricopa County is down to 19,000, half of what it was two years ago.

"Part of the reason there are fewer foreclosures in the pipeline is because of the increase in sales at foreclosure auctions," said Ruff. "Foreclosures aren't good for the housing market, so the faster we get through them, the faster the market recovers."

by Catherine Reagor The Arizona Republic May. 22, 2011 12:00 AM

Phoenix-area housing auctions fast and furious

Smart homes in Phoenix area run by iPads, iPhones

David Wallace/The Arizona Republic Home builder Rod Cullum demonstrates setting an alarm with an iPad at the front door of the luxury new home development The Village at Paradise Reserve in Paradise Valley.

Instead, you may fire up an app on your smartphone, log in, press a button and hear the front door click open.

Homebuilder Rod Cullum is almost there. With his new luxury homes, the Village at Paradise Reserve in Paradise Valley, buyers still get a key to their front door, but they also get an iPad in their welcome basket.

How the iPad controls new luxury homes

Using that Apple iPad or an iPhone, homeowners can perform functions from viewing their security cameras to closing their window shades and turning on (or off) every light in the house. They can also let a visitor through the main gate or check to see whether a garage door was left open.

"You can be anywhere in the world and control your house from that iPad," Cullum said, adding that he chose an Apple-based Savant home-automation system. "I could be in my place in Utah and see if someone is swimming in my (Phoenix) pool. I could be in London . . . ."

Cullum, whose Paradise Reserve homes start at about $1.5 million, isn't the only homebuilder embracing smart-home features. Even homes starting at prices under $200,000 are starting to offer Web-based automated perks.

At Meritage Green homes throughout the Valley, homebuyers can use a smartphone application to adjust their thermostat and can see their energy production, usage and hot-water temperature through an app tied to their Echo solar systems.

And at Shea Homes' Trilogy at Vistancia in Peoria and Encanterra Country Club in Queen Creek, new homebuyers can unlock at least one door remotely, turn on a light and adjust their thermostat using a Schlage Link smartphone app.

Hal Looney, president of Shea Homes active-lifestyle communities in Arizona, recently demonstrated how a homeowner, while at work or away, can let someone in their home with a touch of the smartphone screen. People with second homes or vacation homes especially appreciate such automated features, Looney said.

Although new homebuilders look at home automation as a good value-added perk, homeowners don't have to buy new construction to get some of these features.

In the age of smartphone and computer-tablet applications, automated systems are getting increasingly affordable.

On the lower-tech end of the spectrum, homeowners can buy for less than $50 light switches with motion sensors that turn on automatically when someone enters a room and shut off when the room is empty. Faucets that turn on and off just by lightly touching the spout or handles are now sold at home-improvement stores.

Homeowners can buy automated irrigation systems that monitor local weather-service information and adjust irrigation levels to prevent overwatering. Several area homebuilders, including Shea Homes, include the automated WeatherTRAK irrigation systems to save water in communities.

And through a local home-automation specialist or, homeowners can buy systems that help them control lighting, appliances and anything that can talk to a Web-enabled system through their smartphone.

The ability to control the main functions of a home from one Web-enabled device can make running a household a little easier. Think the Jetsons or Bill Gates' smart mansion, said to be nicknamed Xanadu 2.0. No home-automation system can cook dinner - yet, but it can turn on the spa on your way home from work and have your favorite song playing as you walk through the door.

"One of the things I think automation adds is just peace of mind," said Cullum, who has offered automated features in his custom homes for years. He likes the simplicity of the Apple-based Savant system, which was installed by Cyber Sound in Scottsdale.

"You don't have to keep track of so many things."

Adds Cullum: "They haven't figured out how to make it to do laundry yet. That would be James Bond cool."

Home automation

Want an automated home? Home-automation gadgets and systems linked to smartphone and computer-tablet applications are getting increasingly affordable. Here's a sampling of automated home features.

- Light up a room. Occupancy sensor switches, $20 to $40 at home-improvement stores, automatically turn on the light when someone walks into a room and turn it off when the room is empty. An energy-saving move, many homebuilders now install occupancy sensor switches in walk-in closets and bathrooms where people often forget to turn off lights.

- Unlock a door. Schlage Link is a system that lets homeowners control Schlage door locks, Trane thermostats, Schlage security cameras and plug-in lights or appliances via its smartphone application. Some local Lennar and Shea Homes houses include the Schlage Link system for new homebuyers. A Schlage wireless-keypad deadbolt starter kit, which lets homeowners unlock a door remotely, costs $299.99 plus an $8.99 monthly fee. A Trane thermostat, security cameras and plug-ins that allow lights and appliances to be controlled remotely can be added for an additional fee. For details, visit

- Adjust a thermostat. Locally, homebuilders Meritage, Cullum Homes, Trend Homes and Joseph Carl use the Echo solar system by EchoFirst. The system produces both energy and hot water and is tied to a smartphone application that lets homeowners adjust their thermostat and see how much energy they're producing and using in real time. For details, visit

- Stop overwatering. Several local homebuilders, including Shea Homes, include the WeatherTRAK automated irrigation system as a standard feature in some communities. It uses local weather information to adjust amount of water needed to maintain one's landscaping. For details, visit

- Turn on a faucet hands-free. Shea Homes homebuyers can order an optional hands-free Delta kitchen faucet that turns on and off by lightly touching the handles or spout - even with an elbow. Homeowners can buy a Delta Pilar Touch pull-down faucet in stainless steel at Lowe's stores or at for $312.79.

- Manage lights and appliances., which specializes in home-automation gadgets and systems, sells a whole-house Insteon control kit. It controls lighting and appliances via an iPhone (not included) for $1,101.45. For details, visit

- Control a household. The Savant Automation, Control and Entertainment System, sold locally by Cyber Sound in Scottsdale, ties together a home's whole-house music system; intercom and video; security; lighting control; heating and cooling systems; security cameras; pool and spa controls; garage door and gate control to an iPhone, iPad or iPod control panel. The system lets a homeowner control all these functions remotely. Jon Summer, president of Cyber Sound, said installing the system starts at about $15,000 but can cost $100,000 or more, depending on the size of one's home. For details, visit

by Kara G. Morrison The Arizona Republic May. 19, 2011 01:26 PM

Smart homes in Phoenix area run by iPads, iPhones

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