Belt-tightening is not solely about finding bargains on food, clothes and other everyday consumer products. You also should be watching expenses on financial products and services. Shown below are some cost benchmarks for common financial purchases. If you're spending more than the norm, it might be time to shop around.
ITEM: Auto insurance
AVERAGE COSTS: It's hard to pinpoint average premiums because they vary by company, driver characteristics, vehicle and more. A recent study by insure.com pegged the average Arizona premium at $1,153 a year, below the U.S. average of $1,429.
OTHER CONSIDERATIONS: The Arizona Department of Insurance provides premium quotes for different insurers and scenarios. This premium comparison and complaint-ratio report can be found on the agency's website, www.id.state.az.us/consumerauto home.html.
* * *
ITEM: Mutual funds
AVERAGE COSTS: Stock funds on average charge 1 percent a year or $10 for every $1,000 investment; bond funds average about 0.75 percent. These figures are summed up in a standard measure called the expense ratio.
OTHER CONSIDERATIONS: The most penny-pinching funds charge less than 0.2 percent. Exchange-traded funds, or ETFs, tend to be especially low-cost. Some mutual funds also levy sales charges, or "loads," in addition to ongoing expenses.
* * *
ITEM: Checking accounts
AVERAGE COSTS: Free checking accounts are common, with nearly half of banks offering them, MoneyRates.com reports. Accounts with no maintenance fees are more widespread at credit unions, where four in five offer them, Bankrate.com says.
OTHER CONSIDERATIONS: Beware of other costs. For example, a Bankrate.com study pegged the average bounced-check fee at $29.58. If you use an ATM outside your bank's network, plan on paying about $2.22 on average.
* * *
ITEM: Debit rewards
AVERAGE COSTS: Debit cards let you earn points on transactions that can be redeemed for rewards. Bankrate.com found most banks don't charge fees for these programs. On the rest, fees average $25 a year.
OTHER CONSIDERATIONS: In its survey of 40 rewards programs, Bankrate.com also found three in four debit cards don't limit the amount of points you can earn. Some even grant extra rewards if you deal with favored merchants.
* * *
ITEM: Home insurance
AVERAGE COSTS: Arizona homeowners pay below-average premiums, thanks in part to few natural disasters here. The National Association of Insurance Commissioners' latest tally put Arizona premiums at $634 on average compared with $822 nationally.
OTHER CONSIDERATIONS: As with auto premiums, the Arizona Department of Insurance tracks sample insurance costs for homeowners. This consumer guide and premium comparison for homeowners insurance can be found at www.id.state.az .us/homerate.html.
* * *
ITEM: Tax-return preparation
AVERAGE COSTS: Tax help can range from nothing to hundreds of dollars. A survey by the National Society of Accountants pegged the average fee charged by professional return preparers at $229 for a Form 1040, Schedule A and state return.
OTHER CONSIDERATIONS: Taxpayers with simpler returns can expect to pay less. The same NSA survey put the average fee at $129 for Form 1040s with a state return and no itemized deductions. There's also the Free File program for moderate-income people at www.irs.gov.
* * *
ITEM: Credit cards
AVERAGE COSTS: Interest rates have been rising, with advertised rates now averaging 13.7 percent, reports LowCards.com. That's up from 12.1 percent a year ago. Most cards now charge variable interest.
OTHER CONSIDERATIONS: While it might pay to switch credit cards, be careful if your credit isn't good because you might have trouble qualifying. Also, check on terms and conditions before you leap, as the rules have been changing.
by Russ Wiles Arizona Republic August 9, 2010
Take stock of your situation and save
Sunday, August 15, 2010
Pulte OKs settlement in Arizona loan probe
One of Arizona's largest homebuilders, Pulte Home Corp., has agreed to pay $1.18 million to settle a state investigation into how it marketed mortgages to homebuyers.
The state Attorney General's Office claimed the builder had misled potential buyers and sometimes inappropriately kept their deposits, among other practices. Part of the settlement will reimburse consumers who lost money.
The announcement marks the first time a state prosecutor has penalized a homebuilder over lending practices and could be part of a larger crackdown on the way mortgages were marketed and drawn up during 2004-07, metro Phoenix's housing boom.
The Arizona attorney general's yearlong investigation into Pulte began after the office received complaints from consumers who said they had been misled about buying homes or applying for mortgages during that time.
According to the complaint filed in Maricopa County Superior Court, the Attorney General's Office said Pulte salespeople led potential buyers to wrongly believe they qualified for certain mortgages with lower interest rates and monthly payments. The attorney general also alleged Pulte failed to refund some deposits after potential buyers found they couldn't qualify for mortgages they had been promised.
The complaints said the homebuilder provided different disclosure information in its Spanish marketing materials than its English materials.
Pulte is settling without admitting wrongdoing or liability. In addition to the monetary settlement, Pulte agreed to reforms in how it offers and promotes mortgages.
The agreement must now be approved in Maricopa County Superior Court.
"Certainly, homeowners need to educate themselves about all of their options when buying a home," Attorney General Terry Goddard said. "But homebuilders and lenders have a legal obligation to provide their customers with complete and accurate information. I commend Pulte's commitment to amend its practices and bring more transparency into buying and financing."
The settlement money will be allocated five ways:
• $500,000 to the attorney general's consumer-fraud fund, which pays for consumer-education programs.
• $200,000 to an escrow account that will reimburse homebuyers who lost deposits with Pulte through practices covered by the complaint. There were no figures available on how many people might be eligible for these funds.
• $81,000 to 10 Arizona consumers who already filed complaints over deposits they lost to Pulte.
• $100,000 for Spanish consumer-education materials.
• $300,000 to cover the attorney general's costs to investigate the complaints against Pulte.
"Pulte respects the concerns of the Arizona attorney general and commends the office for its ongoing efforts to protect consumers throughout the homebuying process," John Chadwick, president of Pulte's Southwest Group, said in an announcement from the state prosecutor about the settlement.
"We hold ourselves to the highest standards in customer services and have always operated in good faith with our customers and the state. We look forward to maintaining our role as an important contributor to Arizona's job and housing market, as we have for the past 50 years."
Pulte spokeswoman Jacque Petroulakis said complaints described in the settlement represent less than 1 percent of all the Arizona mortgages the company originated from 2004 to 2007.
In response to the Arizona investigation into its mortgage practices, Pulte earlier this year filed a lawsuit against Goddard. The builder said a law firm Goddard hired to help handle the case also did business with a labor union that had targeted Pulte.
Pulte's lawsuit will be dropped as part of this settlement, said Nancy Bonnell, Arizona assistant attorney general.
She said the Pulte settlement was part of an overall investigation into lending practices in Arizona, but she couldn't comment on whether any other builders are involved.
The settlement that will be filed in Superior Court states Pulte will:
• Ensure its Arizona sales representatives do not represent or imply that they are able to "pre-qualify" Arizona consumers for home loans.
• Disclose orally and in writing that communications between a prospective buyer and sales staff regarding how expensive a home the consumer can afford to buy do not constitute an offer of financing.
• Clearly disclose that Pulte offers buyers incentives, including free building upgrades or money toward closing costs, in exchange for their use of the homebuilder's mortgage division.
• Ensure that the representations made in its English-language and Spanish-language marketing materials are equivalent.
Arizona consumers who believe they have wrongly lost deposits to Pulte can file for a refund request with the state Attorney General's Office: .azag.gov or 602-542-5763.
by Catherine Reagor The Arizona Republic Aug. 10, 2010 12:00 AM
Pulte OKs settlement in Arizona loan probe
The state Attorney General's Office claimed the builder had misled potential buyers and sometimes inappropriately kept their deposits, among other practices. Part of the settlement will reimburse consumers who lost money.
The announcement marks the first time a state prosecutor has penalized a homebuilder over lending practices and could be part of a larger crackdown on the way mortgages were marketed and drawn up during 2004-07, metro Phoenix's housing boom.
The Arizona attorney general's yearlong investigation into Pulte began after the office received complaints from consumers who said they had been misled about buying homes or applying for mortgages during that time.
According to the complaint filed in Maricopa County Superior Court, the Attorney General's Office said Pulte salespeople led potential buyers to wrongly believe they qualified for certain mortgages with lower interest rates and monthly payments. The attorney general also alleged Pulte failed to refund some deposits after potential buyers found they couldn't qualify for mortgages they had been promised.
The complaints said the homebuilder provided different disclosure information in its Spanish marketing materials than its English materials.
Pulte is settling without admitting wrongdoing or liability. In addition to the monetary settlement, Pulte agreed to reforms in how it offers and promotes mortgages.
The agreement must now be approved in Maricopa County Superior Court.
"Certainly, homeowners need to educate themselves about all of their options when buying a home," Attorney General Terry Goddard said. "But homebuilders and lenders have a legal obligation to provide their customers with complete and accurate information. I commend Pulte's commitment to amend its practices and bring more transparency into buying and financing."
The settlement money will be allocated five ways:
• $500,000 to the attorney general's consumer-fraud fund, which pays for consumer-education programs.
• $200,000 to an escrow account that will reimburse homebuyers who lost deposits with Pulte through practices covered by the complaint. There were no figures available on how many people might be eligible for these funds.
• $81,000 to 10 Arizona consumers who already filed complaints over deposits they lost to Pulte.
• $100,000 for Spanish consumer-education materials.
• $300,000 to cover the attorney general's costs to investigate the complaints against Pulte.
"Pulte respects the concerns of the Arizona attorney general and commends the office for its ongoing efforts to protect consumers throughout the homebuying process," John Chadwick, president of Pulte's Southwest Group, said in an announcement from the state prosecutor about the settlement.
"We hold ourselves to the highest standards in customer services and have always operated in good faith with our customers and the state. We look forward to maintaining our role as an important contributor to Arizona's job and housing market, as we have for the past 50 years."
Pulte spokeswoman Jacque Petroulakis said complaints described in the settlement represent less than 1 percent of all the Arizona mortgages the company originated from 2004 to 2007.
In response to the Arizona investigation into its mortgage practices, Pulte earlier this year filed a lawsuit against Goddard. The builder said a law firm Goddard hired to help handle the case also did business with a labor union that had targeted Pulte.
Pulte's lawsuit will be dropped as part of this settlement, said Nancy Bonnell, Arizona assistant attorney general.
She said the Pulte settlement was part of an overall investigation into lending practices in Arizona, but she couldn't comment on whether any other builders are involved.
The settlement that will be filed in Superior Court states Pulte will:
• Ensure its Arizona sales representatives do not represent or imply that they are able to "pre-qualify" Arizona consumers for home loans.
• Disclose orally and in writing that communications between a prospective buyer and sales staff regarding how expensive a home the consumer can afford to buy do not constitute an offer of financing.
• Clearly disclose that Pulte offers buyers incentives, including free building upgrades or money toward closing costs, in exchange for their use of the homebuilder's mortgage division.
• Ensure that the representations made in its English-language and Spanish-language marketing materials are equivalent.
Arizona consumers who believe they have wrongly lost deposits to Pulte can file for a refund request with the state Attorney General's Office: .azag.gov or 602-542-5763.
by Catherine Reagor The Arizona Republic Aug. 10, 2010 12:00 AM
Pulte OKs settlement in Arizona loan probe
Homebuilding forecast muted despite tax credit
The federal homebuyer tax credit helped new-home sales in metropolitan Phoenix, but it was only a temporary boost.
Real-estate analysts RL Brown and Greg Burger have updated their forecast for homebuilding in the region during 2010. Despite increases in new-home sales during the months before the tax credit's June 30 deadline, the publishers of the "Phoenix Housing Market Letter" aren't changing their earlier forecast for area homebuilding. The pair still expect 8,500 single-family permits for new homes in metro Phoenix this year.
That level of new-home permits would make it the slowest year for housing construction in the Phoenix area for decades. Last year, there were 12,500 housing permits issued in metro Phoenix.
Through the first half of this year, 4,118 homebuilding permits were issued in the area. That includes the increase in new-home sales from the tax credit. Permits dropped to 583 in June, the lowest monthly level so far this year.
Burger said resales must fall greatly in metro Phoenix for homebuilding to really climb.
"There's not much more room for builders to bring new-home prices down to compete with the foreclosures being resold by lenders," he said.
The median price of a new home is now $195,736, compared with $214,000 at the beginning of the year.
To survive Phoenix's housing crash, builders have cut costs and home prices to compete with foreclosures. If resales' prices continue to fall because of foreclosures, it will make it even tougher for the new-home market to compete. New-home lot prices have already begun to climb in some areas, where buyer demand is strongest. Prices in parts of Gilbert and Chandler have tripled in the past few years.
Brown and Burger expect the new-home market to improve. Their forecast is for a 45 to 50 percent increase in homebuilding in 2011. By 2012, they see homebuilding permits exceeding 20,000.
by Catherine Reagor The Arizona Republic Aug. 11, 2010 12:00 AM
Homebuilding forecast muted despite tax credit
Real-estate analysts RL Brown and Greg Burger have updated their forecast for homebuilding in the region during 2010. Despite increases in new-home sales during the months before the tax credit's June 30 deadline, the publishers of the "Phoenix Housing Market Letter" aren't changing their earlier forecast for area homebuilding. The pair still expect 8,500 single-family permits for new homes in metro Phoenix this year.
That level of new-home permits would make it the slowest year for housing construction in the Phoenix area for decades. Last year, there were 12,500 housing permits issued in metro Phoenix.
Through the first half of this year, 4,118 homebuilding permits were issued in the area. That includes the increase in new-home sales from the tax credit. Permits dropped to 583 in June, the lowest monthly level so far this year.
Burger said resales must fall greatly in metro Phoenix for homebuilding to really climb.
"There's not much more room for builders to bring new-home prices down to compete with the foreclosures being resold by lenders," he said.
The median price of a new home is now $195,736, compared with $214,000 at the beginning of the year.
To survive Phoenix's housing crash, builders have cut costs and home prices to compete with foreclosures. If resales' prices continue to fall because of foreclosures, it will make it even tougher for the new-home market to compete. New-home lot prices have already begun to climb in some areas, where buyer demand is strongest. Prices in parts of Gilbert and Chandler have tripled in the past few years.
Brown and Burger expect the new-home market to improve. Their forecast is for a 45 to 50 percent increase in homebuilding in 2011. By 2012, they see homebuilding permits exceeding 20,000.
by Catherine Reagor The Arizona Republic Aug. 11, 2010 12:00 AM
Homebuilding forecast muted despite tax credit
Tax issues could alter investing
Investing is challenging enough with all the usual risks and dangers.
Add in the uncertainty over income taxes, and things get even dicier.
Yet that's where investors find themselves as Washington continues to debate tax policy.
The Bush-era laws that ushered in lower tax rates on income, dividends and capital gains are set to expire at the end of 2010.
The White House wants to extend the tax breaks for all but the wealthiest 2 percent or so of Americans, but not all Democrat lawmakers are on board. Some side with Republicans in favoring stable, if not lower, tax rates. Throw in the gridlock and distractions of an election year, and it's hard to make solid predictions.
"I'm expecting the tax cuts are going to expire for everybody," said Mark Rosenfeld, a certified public accountant and personal financial specialist in Scottsdale. "That's the way the law is written."
Assuming this issue isn't resolved soon, here are some investment tax issues to ponder:
• Locking in profits.
Top tax rates on long-term capital gains are on tap to rise from 15 percent to 20 percent next year. That could make it wise to lock in profits at today's rates by selling soon.
"I'd consider taking my gains (this year)," Rosenfeld said.
Jason Lattin, an investment principal at Lowry Hill in Scottsdale agreed, although he cautions that tax considerations should be secondary to the investment reasons for holding, or unloading, assets.
• Skirting dividends.
Taxes on dividends, now capped at 15 percent, could rise as high as 39.6 percent for high earners.
This could make it smart to shift high-yield stocks and funds into sheltered accounts or avoid dividends entirely.
But while demand could drop a bit for dividend-paying stocks, Lattin doesn't foresee a big shift. Many of these firms are stable, he said, and their payouts appeal to an aging investor base.
Jack Ablin, chief investment officer at Harris Private Bank in Chicago, predicted dividend stocks could prove even more popular in a low-growth economy and if market turmoil persists.
"One of the most certain attributes of equity investing is dividends," he wrote recently. "Notwithstanding the prospect of higher tax rates on dividend income, dividend yields will likely become a greater share of market return."
• Using sheltered plans.
Various retirement accounts such as IRAs and 401(k)-style plans will still be around even if the Bush-era breaks lapse. As such, it might pay to shift more new investment dollars into these areas.
Rosenfeld especially favors Roth IRAs, from which withdrawals can be taken tax-free in retirement. He's less enthusiastic about traditional IRAs and 401(k)-style plans, since they defer taxes only.
But he suggests investing in 401(k) plans at least to qualify for employer matching funds.
• Seeking tax efficiency.
Various other investments strive to minimize the tax bite. Tax-managed mutual funds, for example, do this by reducing taxable payouts to shareholders, harvesting losses for use in offsetting capital gains, avoiding tax-triggering trades and skirting taxable bonds and dividend-paying stocks. Unlike IRAs and 401(k) plans, the funds can be bought by anyone, without income- or job-based eligibility. Also, unlike retirement accounts, profits on these funds can qualify as long-term capital gains, at preferential rates.
• Staying conservative.
If tax rates rise, municipal bonds and muni-bond funds could gain attention. Their yields generally are tax-free, giving them an edge over corporate and government bonds.
"In this environment, muni bonds are becoming increasingly attractive," Lattin said.
Darren Wright of Wright Wealth Management in Phoenix offered another suggestion: whole life insurance. These policies feature such benefits as tax-deferred growth and proceeds at death that skirt income taxes. Wright considers whole life most suitable for conservative, long-term investors who need insurance. Other insurance products, including variable annuities, also offer tax advantages.
• Converting IRAs.
If you're really worried about taxes, it might pay to convert some or all of your traditional IRAs into tax-free Roths. You'll likely need to pay taxes on most if not all the assets you transfer, and it's smart to use non-IRA money to do so. But if you convert in 2010 only, you may spread the bill over the next two tax years, 2011 and 2012.
Converting comes with drawbacks - namely, the need to pay taxes up front, perhaps decades earlier than they would be due. But Rosenfeld sees merit for many people, partly because the bill can be spread out or paid at the low rates in effect now.
Plus, you can change your mind. Uncle Sam will let you to cancel or "recharacterize" a conversion. You have until Oct. 15, 2011, to void a conversion done this year.
You may split a regular IRA into several Roths and undo just some conversions. For example, you could let stand conversions on accounts that appreciate while canceling those where values shrink.
"You can cherry-pick the accounts you want to recharacterize," Rosenfeld said.
by Russ Wiles The Arizona Republic Aug. 8, 2010 12:00 AM
Tax issues could alter investing
Add in the uncertainty over income taxes, and things get even dicier.
Yet that's where investors find themselves as Washington continues to debate tax policy.
The Bush-era laws that ushered in lower tax rates on income, dividends and capital gains are set to expire at the end of 2010.
The White House wants to extend the tax breaks for all but the wealthiest 2 percent or so of Americans, but not all Democrat lawmakers are on board. Some side with Republicans in favoring stable, if not lower, tax rates. Throw in the gridlock and distractions of an election year, and it's hard to make solid predictions.
"I'm expecting the tax cuts are going to expire for everybody," said Mark Rosenfeld, a certified public accountant and personal financial specialist in Scottsdale. "That's the way the law is written."
Assuming this issue isn't resolved soon, here are some investment tax issues to ponder:
• Locking in profits.
Top tax rates on long-term capital gains are on tap to rise from 15 percent to 20 percent next year. That could make it wise to lock in profits at today's rates by selling soon.
"I'd consider taking my gains (this year)," Rosenfeld said.
Jason Lattin, an investment principal at Lowry Hill in Scottsdale agreed, although he cautions that tax considerations should be secondary to the investment reasons for holding, or unloading, assets.
• Skirting dividends.
Taxes on dividends, now capped at 15 percent, could rise as high as 39.6 percent for high earners.
This could make it smart to shift high-yield stocks and funds into sheltered accounts or avoid dividends entirely.
But while demand could drop a bit for dividend-paying stocks, Lattin doesn't foresee a big shift. Many of these firms are stable, he said, and their payouts appeal to an aging investor base.
Jack Ablin, chief investment officer at Harris Private Bank in Chicago, predicted dividend stocks could prove even more popular in a low-growth economy and if market turmoil persists.
"One of the most certain attributes of equity investing is dividends," he wrote recently. "Notwithstanding the prospect of higher tax rates on dividend income, dividend yields will likely become a greater share of market return."
• Using sheltered plans.
Various retirement accounts such as IRAs and 401(k)-style plans will still be around even if the Bush-era breaks lapse. As such, it might pay to shift more new investment dollars into these areas.
Rosenfeld especially favors Roth IRAs, from which withdrawals can be taken tax-free in retirement. He's less enthusiastic about traditional IRAs and 401(k)-style plans, since they defer taxes only.
But he suggests investing in 401(k) plans at least to qualify for employer matching funds.
• Seeking tax efficiency.
Various other investments strive to minimize the tax bite. Tax-managed mutual funds, for example, do this by reducing taxable payouts to shareholders, harvesting losses for use in offsetting capital gains, avoiding tax-triggering trades and skirting taxable bonds and dividend-paying stocks. Unlike IRAs and 401(k) plans, the funds can be bought by anyone, without income- or job-based eligibility. Also, unlike retirement accounts, profits on these funds can qualify as long-term capital gains, at preferential rates.
• Staying conservative.
If tax rates rise, municipal bonds and muni-bond funds could gain attention. Their yields generally are tax-free, giving them an edge over corporate and government bonds.
"In this environment, muni bonds are becoming increasingly attractive," Lattin said.
Darren Wright of Wright Wealth Management in Phoenix offered another suggestion: whole life insurance. These policies feature such benefits as tax-deferred growth and proceeds at death that skirt income taxes. Wright considers whole life most suitable for conservative, long-term investors who need insurance. Other insurance products, including variable annuities, also offer tax advantages.
• Converting IRAs.
If you're really worried about taxes, it might pay to convert some or all of your traditional IRAs into tax-free Roths. You'll likely need to pay taxes on most if not all the assets you transfer, and it's smart to use non-IRA money to do so. But if you convert in 2010 only, you may spread the bill over the next two tax years, 2011 and 2012.
Converting comes with drawbacks - namely, the need to pay taxes up front, perhaps decades earlier than they would be due. But Rosenfeld sees merit for many people, partly because the bill can be spread out or paid at the low rates in effect now.
Plus, you can change your mind. Uncle Sam will let you to cancel or "recharacterize" a conversion. You have until Oct. 15, 2011, to void a conversion done this year.
You may split a regular IRA into several Roths and undo just some conversions. For example, you could let stand conversions on accounts that appreciate while canceling those where values shrink.
"You can cherry-pick the accounts you want to recharacterize," Rosenfeld said.
by Russ Wiles The Arizona Republic Aug. 8, 2010 12:00 AM
Tax issues could alter investing
Golf course owners in rough situation
Tom Tingle/The Arizona Republic Keller Williams real-estate agents Darrell Lund (from left), Kendra Singer, Crystal Nicely, Amy Nelson and Ryan Melville all specialize in selling golf-related properties.Arizona golf-course owners have endured month after month of reduced patronage, forcing some into bankruptcy or foreclosure. Others have scaled down operational costs, slashed membership fees or opened private fairways to public play.
Since mid-2008, at least 15 standalone and residential golf properties in the state have entered into foreclosure or bankruptcy. Market analysts said many more are sure to follow, particularly those with outstanding commercial real-estate loans.
So far, the Arizona golf industry has not reported any permanent course closures, but many private clubs have changed hands during the past year.
Nearly all golf-club owners have been forced to re-examine their business models and make adjustments, experts said. That process often leads to deeply discounted membership fees, the addition of daily-fee play for non-members, and the postponement of planned improvement projects such as a course redesign or new clubhouse facility.
Not surprisingly, such changes often do not sit well with members who bought in at or before the golf industry's economic peak. Many paid two or three times the current rate for their memberships, enticed by promises of royal treatment in an exclusive setting.
Meanwhile, houses built along the fairways in Arizona's many golf-course communities have been no less vulnerable to foreclosure than other homes, and several real-estate agents have capitalized on their availability by niche-marketing them to seasonal buyers.
In the rough
Pessimism about the private-golf industry's future prospects is palpable among operators and investors in the sport.
Some course owners have been trying to sell their way out of what has become a money-losing business for 25 percent of private-play course operators, according to a recent U.S. survey by the Florida-based National Golf Foundation.
Across the U.S., about 100 courses have shut down during the past two years, compared with less than 40 closures during the previous decade, according to data collected by golf-industry associations.
Recent sale prices for golf courses have fallen as low as 10 cents on the original developers' dollar.
The reason, local golf real-estate expert Roger Garrett said, is that courses are being judged today solely on their ability - or lack thereof - to turn a profit.
"When they're losing money, replacement cost doesn't really mean anything," said Roger Garrett, a broker at Phoenix-based Insight Land & Investments who specializes in golf properties.
Garrett said today's buyer can acquire for $1 million to $1.5 million a golf course that cost $15 million to develop. Some courses have sold for even less.
For example, he said, California-based golf-course owner and developer Wilson Gee recently purchased Club West Golf Course in Phoenix from Pinnacle West Corp. subsidiary Suncor Development Co. for $500,000.
Garrett said the only serious buyers in today's market are those who have devised a strategy to run the businesses more efficiently while attracting a wider range of regular players.
Gee, who also owns the Ahwatukee Country Club, in Ahwatukee Foothills, the Lakes at Ahwatukee and the Duke Golf Club, in the city of Maricopa, is hoping to boost business by giving each club's members access to all four facilities.
Still, even course owners with solid recession-survival plans have had trouble keeping the faith.
Gee informed residents of the Lakes in 2009 that he was considering the possibility of shutting down the golf course and building condominiums on the property. He later decided that a condo project didn't make sense in the current real-estate market.
Battle against time
The number of Arizona's roughly 340 golf courses exhibiting overt signs of financial trouble has been increasing steadily, and the past six months of mild economic recovery haven't helped.
"If anything's changed, it's probably changed for the worse," Garrett said.
Month after month of debt repayment and lackluster revenue have pushed many course owners closer to the finish line, he added, despite nominal improvements in the Arizona economy since January.
"People can only continue to write checks for so long," he said.
Golf-course owners are getting hit from all sides: Tourism is down, fewer locals are playing, water and labor costs are up, and excess competition has forced course owners to lower membership fees and greens fees.
Adding to those challenges is a decision by some lenders to place golf courses on their "toxic-asset list," he said, which means they won't consider lending money for a golf property under any circumstances.
Three lenders that once provided the bulk of financing for golf courses - GE Capital, Textron Financial Corp. and Capmark Financial Group Inc. - have all closed their doors to buyers.
Another Phoenix-area golf club that has been fighting to stay in business recently is the Arizona Golf Resort in Mesa.
The resort, five miles north of Phoenix-Mesa Gateway Airport, was scheduled for a foreclosure sale in late June, but so far the sale has been postponed, owner Izhak Benshabat said.
Benshabat has been trying to renegotiate a $19.2 million loan from LNR Partners, based in Miami.
Angry members
For many Arizona golfers, the net result of such troubles has been positive: Most courses have lowered their fees, and several members-only clubs have opened their doors to daily-fee play.
But for some existing private-club members, the changes represent broken promises.
Among the frustrated members is Don Davis, who joined Sedona's posh Club at Seven Canyons in 2003 for $105,000.
Davis, a seasonal Arizona resident from Milwaukee, said the club's owner, Scottsdale developer Dave Cavan, has failed to make good on promises such as building a permanent clubhouse to replace the more modest "temporary" facility.
Cavan spokeswoman Cheryl Walsh said critics such as Davis are being unrealistic, given that Seven Canyons and its primary lender both are in Chapter 11 bankruptcy proceedings.
She added that the course is still well-maintained under its new, outsourced management and that Cavan remains committed to revitalizing the business.
"His goal is to not do what so many others have done, which is to walk away," Walsh said.
Davis is one of two Seven Canyons members who have been trying to organize other players against Cavan.
He said that when the celebrated Sedona club opened in late 2002, Cavan told prospective members that a portion of their entry fees would be set aside for a multimillion-dollar clubhouse.
"He was supposed to have put money in escrow to build that clubhouse," Davis said. "There's no money in escrow, and he won't say where the money is."
Course owner Sedona Development Partners filed for Chapter 11 reorganization May 27 in U.S. Bankruptcy Court, listing its remaining 150 members as unsecured creditors.
Cavan reassured members at the time that the bankruptcy did not threaten Seven Canyons' future operations.
"Seven Canyons is one of the premier golf communities in the world, and we have every intention to operate and develop this beautiful and unique property," he said in a company news release announcing the bankruptcy.
Walsh said much of the company's financial trouble stems from a time-share resort community that surrounds the golf course.
Despite selling all 12 one-month fractional shares in 230 of the community's 300 casitas, the inconsistency of timeshare-based members has made it difficult to support a full-time service staff, she said.
Two development partners originally involved in the project have since bowed out, Walsh added, leaving Cavan's company to fend for itself.
"They weren't planning to be the sole developer of it," she said.
But the biggest problem, Walsh said, has been the demise of Seven Canyons lender Specialty Financial, a real-estate investment trust that also filed for bankruptcy protection in May.
"The lender on this particular property went into bankruptcy, so the loan was basically recalled," she said.
Like many prominent Arizona real-estate developers, Cavan has more than one project in bankruptcy today.
Cavan Management Services, owner of the upscale Raintree Corporate Center office complex in Scottsdale, also filed for reorganization in June, when its lender sued.
The lawsuit was filed in Maricopa County Superior Court by Merrill Lynch Mortgage trustee U.S. Bank, which is seeking about $71 million in unpaid debt, interest and fees. The case has since been remanded to U.S. Bankruptcy Court.
Walsh said the real-estate market has wreaked havoc on all developers, adding that Cavan "feels terrible" about the situation and that he and his staff intend to make it right.
"Their goal is to maintain their projects and not to walk away from everything," she said.
Bargain opportunities
Garrett said Arizona developers overbuilt golf communities during the real-estate boom because they could charge far more for a residential lot situated along a golf course.
Now, many of those homes have been foreclosed on or sold via short sale, in which the mortgage-holding homeowner sells the property for less than the outstanding loan balance.
Ryan Melville, an agent with Keller Williams Realty, is among a number of Arizona real-estate professionals who have capitalized on the recent availability of low-priced homes in golf-themed developments.
"Arizona has more golf communities than California," Melville said. "I can show you homes for the low $100s on a golf course."
Melville and partner Darrell Lund, based in Tempe, said golf-property distress sales have created a cottage industry in the Phoenix area that caters mostly to Canadians and Midwesterners.
Melville and Lund built a website in 2008, azgolfhouses.com, which they said has led to a number of sight-unseen home purchases.
"Most of our golf buyers are out-of-state buyers who are paying cash," Melville said.
Lund and Melville, both of Keller Williams Realty, were not the only Phoenix-area real-estate agents to come up with the idea of marketing golf-course homes on the Web.
Other local Realtors operate similar sites, the names of which include azgolfhomes.com, azgolf properties.com and luxury golfpropertiesaz.com.
Lund said the number of golf homes coming on the market in poor condition has decreased, which could indicate that foreclosures are decreasing.
Still, he said there are more than enough golf-course homes available to anyone who really wants one.
"If I had the money right now, I don't know if I would build another golf course community," Lund Said.
A decadelong downswing
The Florida-based National Golf Foundation has been studying public-play golf courses and private, members-only clubs over the past decade. Two recent studies, for which research concluded in 2008, show a number of discouraging trends.
Members-only clubs
• There were 4,415 private clubs in the U.S. in 2008, supported by about 2.1 million golfers.
• On average, private-club membership was down 13 percent from each club's respective peak year, and the number of rounds played was down 17 percent.
• More than 10 percent of private clubs reported being at risk of financial failure.
• About 25 percent of private clubs said they were operating at a financial loss.
• From 1999 to 2008, 39 private golf clubs closed, and 387 converted to public-play facilities. In the same period, 343 new clubs opened, and 288 converted from public to private.
Public-play courses
• There were 11,581 public courses in the U.S. in 2008 - 2,449 municipally owned and 9,132 privately owned.
• On average, public-course operators reported rounds played down more than 20 percent from each facility's respective peak year.
• More than 13 percent of public courses reported being at risk of financial failure.
• About 60 percent said they were forced to cut back on maintenance, and 90 percent said they had to postpone capital improvements or repairs.
• From 2005 to 2008, an average of 125 public-play courses closed each year. Experts expect the trend to continue.
Source: National Golf Foundation
by J. Craig Anderson The Arizona Republic Aug. 8, 2010 12:00 AM
Golf course owners in rough situation
Arizona real estate: East Valley housing more affordable
Mark Henle/The Arizona Republic Carlos Marcus (bottom) and Gustavo Capiano frame a Meritage Home under construction in Gilbert. New homes are going up again in the southeast Valley.Amid the worst home-building slump in more than two decades, location has once again become the most important factor for metropolitan Phoenix's new-home buyers.
After being pushed to the extreme edges of the region during the housing boom, young buyers are finding that prices have come down far enough to make homes in popular suburbs affordable.
The lower prices are driving sales of new homes in the more-desirable areas of the East Valley, and those sales may signal the beginning of the next cycle in the home-building industry, which has traditionally fueled much of Arizona's economy.
Nearly half of the 6,000 new houses sold in the region so far this year are in the southeast communities of Mesa, Chandler and Gilbert. First-timers, who no longer have to go out to the Valley's farthest flung developments to afford a new house, are the biggest group of buyers in those areas.
Because fewer homebuyers are heading out to the region's fringes, homebuilders trying to make money in the downturn and compete with foreclosures have had to find land in closer-in communities and cut costs and prices to be able to sell houses.
The strategy shift has helped several of Phoenix's homebuilders survive the real-estate collapse and keep the area's once huge new-housing industry alive. It also has opened the door for younger buyers to afford new houses in southeast Valley neighborhoods near freeways, shopping centers and better schools that only three or four years ago were out of their financial reach.
"People can now buy new homes in Chandler and Gilbert for half of what they cost during the boom or even pre-boom," said Jay Butler, director of realty studies at Arizona State University. "Most of the homeowners who paid the higher prices years ago aren't leaving, either."
Residents who bought in these East Valley suburbs before the downturn are likely upset at the drop in home values. But they still like their neighborhoods, and with fewer foreclosures, their more-established communities remain attractive places to live - another benefit drawing new buyers.
Homebuilding-cycle stalls
New homes in most parts of Mesa, Chandler and Gilbert were too expensive for first-time buyers until last year. Those communities grew rapidly during the 1990s with new residential developments, freeways, malls and commercial hubs that drew employers. Families flocked to these suburbs for their schools with higher test scores. Home values in the southeast steadily climbed, and new houses grew bigger and more expensive.
Under the region's "drive until you qualify for a mortgage" formula, most first-time homebuyers then had to head farther out in the southeast Valley to Queen Creek, the city of Maricopa and other parts of Pinal County or to the West Valley communities of Goodyear, Avondale, Surprise and Buckeye to find new homes they could afford. And often they ended up several miles from a grocery store or school.
A home-buying cycle evolved in metro Phoenix that revolved around first-time buyers starting with a new house in the far southeast or southwest that they would hold onto for three to five years and then sell for a profit to buy a home closer in, often in the southeast. As a result of rising land and home prices in Tempe, Mesa, Chandler and Gilbert, the region's west side overtook the east side for home building.
But the cycle stalled with the start of the real-estate crash of 2007, as did home building in all parts of Phoenix.
At the peak of the housing boom in 2006, new-home prices in parts of Mesa, Chandler, Gilbert and Tempe had climbed above $400,000. Now, prices are less than half of that in many of those neighborhoods, except in Tempe, where little available land for home building keeps most new-home prices higher.
Suddenly, affordable
Although home prices in these southeast suburbs haven't dropped as much as in other parts of metro Phoenix, they are still low enough to attract first-time homebuyers.
A combination of low prices, not having to worry about selling another home, and qualifying for historically low interest rates is spurring many first-time buyers.
Many in this small but growing group of buyers also are discovering that their mortgage payment is less, or not much more, than their current rent.
Nicole Pryde and her fiance, Dan Johnson, recently bought a new Chandler home.
"We didn't think we could afford to buy in Chandler and would have to go much farther out to Queen Creek," said Pryde, who was renting in Scottsdale.
Johnson, who teaches in Chandler, proposed to her in April on the lot they picked for their $270,000 house, built by Meritage Homes.
"We looked at foreclosure homes, but they all needed so much work," she said. "We realized we could afford to buy new and get the home we really wanted for the family we want. We are minutes from the freeway, a shopping center with a Super Target and great schools."
The couple moved into their new home at the end of June. Several other young, first-time buyers are their new neighbors.
Many of the new homes going up in the southeast Valley are in subdivisions started four or five years ago but weren't finished because of the downturn. They typically have some houses, parks and maybe a school, but they also have several empty blocks.
Tiffany Sullivan is buying a new home in Gilbert. The mother of two recently relocated to Phoenix from central California, and her first concern was finding a house near schools with good athletic programs and after-school activities.
"I thought we would have to rent to be near the schools I want them to go to," said Sullivan, who recently divorced and is concerned about living in a safe area near other families with young children. "When my real-estate agent drove me into our new neighborhood, I saw the children in the park and then the prices for the houses. Both surprised me."
Sullivan is paying less than $200,000 for a new, three-bedroom house. It's her first home. She's looking for a job at the Chandler Fashion Center mall, which is about 10 miles from home.
Jim Belfiore, a Phoenix housing analyst, believes homes in Mesa, Chandler and Gilbert are also popular among buyers because of those communities' "high concentration of suburban employment."
"Unlike the West Valley, where employment is spread out over a relatively large geographic area, the bulk of East Valley employment is concentrated in employment hubs," he said. "Chandler's Ocotillo has Intel and several other technology firms. That's a big draw for homebuyers."
Coming around again?
New-home lot prices already have started to climb again in the popular southeast Valley communities. Arizona land brokers say lot prices almost have tripled during the past two years in parts of Chandler and Gilbert. Home sites are selling for more than $80,000 in some areas of Chandler, prices similar to what builders paid in the pre-boom years of 2003-04.
Rising lot prices eventually will translate into higher home prices for these communities, which could signal the start of a repeat of metro Phoenix's home-buying cycle of the mid-1990s, when first-time buyers were priced out of the southeast Valley.
Housing experts say the land purchases and rising new-home sales in close-in developments could be an early sign that the region's home-building industry, which downsized and regrouped after the real-estate crash of 2007-09, is entering the first stage of its next growth cycle.
"The federal homebuyer tax credit definitely helped Phoenix's new-home market," said Arizona real-estate analyst RL Brown. "We'll see how much of a boost in the coming months if homes sales fall off again. Many in housing have their fingers crossed that recent increases in sales are a sign the market will slowly improve and not collapse again."
The homebuyer tax credit originally expired on June 30. It has been extended until the end of September for buyers who had signed contracts by April 30 but needed more time to close the deal.
During the first half of this year, homebuilders spent $90 million buying up land in metro Phoenix, much of it in the southeast Valley. It's the most builders have invested in land in the region in any year since the peak of the housing boom in 2006.
Now that lot prices are heading up again in Chandler, Mesa and Gilbert, homebuilders also have begun to buy less-expensive land in other parts of metro Phoenix.
Areas along the Interstate 17 corridor north to Cave Creek and in Avondale and Goodyear in the southwest Valley are attracting builders' interest, and during the past few months, new-home sales have begun to climb again in the southwest.
Home-lot prices in these areas are climbing as well, but lots are still typically selling for below $40,000.
Housing analysts and builders are cautiously watching to see how new-home sales fare in these areas outside the southeast Valley to gauge where buyers are willing to go and what they are willing to pay for new homes.
"We are only buying land closer in now. Buyers are willing to pay small premiums for new homes but only in certain locations," said Chairman Steve Hilton of Scottsdale-based Meritage Homes, one of the 20 biggest homebuilders nationally. "We aren't buying lots in any far outer peripheries of Phoenix now."
On the edges of the Valley, land in places such as Buckeye west of the White Tank Mountains and the Pinal County communities of Coolidge and Eloy still isn't drawing much homebuilder or buyer attention.
"The homebuilding market is still down but shows some signs of stabilizing in certain areas of the Valley like Chandler and Gilbert," Brown said. "Homebuyers who have jobs and feel secure are finding great deals on homes in communities closer in. We'll see how long it takes for the trend to extend to communities farther out."
by Catherine Reagor The Arizona Republic Aug. 8, 2010 12:00 AM
Arizona real estate: East Valley housing more affordable
Los Arcos Crossing lender to market 14 acres to developers
The lender for Los Arcos Crossing in south Scottsdale took ownership of the failed shopping center this week and plans to market it to developers within a month.
ML Manager LLC got the property after no bids were made at a trustee sale Thursday, said Mark Winkleman, chief operating officer of the Peoria firm. The company will interview real estate brokers next week and select one to start marketing the 14-acre parcel in September, he said.
The potential sale of the property on the southwestern corner of Miller and McDowell roads, in the heart of the McDowell Road corridor, comes as Scottsdale is pushing for redevelopment of the area. The once-thriving strip has lost auto dealers, grocery stores and other retailers as residents and growth moved northward.
The city is inviting developers' proposals for 3.7 vacant acres between Los Arcos Crossing and SkySong, the ASU Scottsdale Innovation Center. At least three developers have said they are interested in assembling most, if not all, of the nearby property to create a larger project.
"The city realizes there is likely more value in (parcels) being combined," economic vitality specialist Mark Hunsberger told more than a dozen attendees at a pre-proposal conference last week.
Kevin Ransil of Ransil Development Group, who attended the conference, said his Scottsdale company would be interested in the whole parcel, though apartments could be a viable first phase on the city parcel.
"The trick is what are the other uses." he said. "Whoever obtains the larger piece dictates."
Brian Kocour of Cassidy Turley BRE Commercial said the city parcel could be used for a green hotel. Development could then spread outward, he said, with restaurants, retail and connections to the Indian Bend Wash greenbelt to the east.
Another company envisioning a larger project is Global Entertainment Corp. of Tempe, which has proposed building an event center that would host community events and commercial performances.
Phoenix developer PDG America acquired most of Los Arcos Crossing in 2007 with plans to develop it as Scottsdale CentroVida, a $150 million mix of townhouses, apartments, restaurants and neighborhood shops. The deal was financed by Mortgages Ltd., a high-flying Phoenix investment firm that collapsed in bankruptcy after its chief executive committed suicide in 2008.
ML Manager was formed by investors as the successor to Mortgages Ltd.
PDG, which stopped making its payments on Los Arcos Crossing in 2008, took no action to stop this week's trustee sale, Winkleman said.
ML Manager hasn't set a price for Los Arcos Crossing. The broker would help the company decide that issue and show the property to prospective buyers, Winkleman said.
Proposals for the city parcel are due Oct. 1. A public open house is planned, and the City Council could review staff recommendations in November.
ML Manager's property has an empty Bashas' grocery store, a second building that once housed a gym and shops, a closed gas station and the pad where an auto-parts store still operates. Separately owned facilities in the area include a carwash, a tire store, an office/commercial complex and Los Arcos United Methodist Church.
by Jane Larson The Arizona Republic Aug. 6, 2010 12:05 PM
Los Arcos Crossing lender to market 14 acres to developers
ML Manager LLC got the property after no bids were made at a trustee sale Thursday, said Mark Winkleman, chief operating officer of the Peoria firm. The company will interview real estate brokers next week and select one to start marketing the 14-acre parcel in September, he said.
The potential sale of the property on the southwestern corner of Miller and McDowell roads, in the heart of the McDowell Road corridor, comes as Scottsdale is pushing for redevelopment of the area. The once-thriving strip has lost auto dealers, grocery stores and other retailers as residents and growth moved northward.
The city is inviting developers' proposals for 3.7 vacant acres between Los Arcos Crossing and SkySong, the ASU Scottsdale Innovation Center. At least three developers have said they are interested in assembling most, if not all, of the nearby property to create a larger project.
"The city realizes there is likely more value in (parcels) being combined," economic vitality specialist Mark Hunsberger told more than a dozen attendees at a pre-proposal conference last week.
Kevin Ransil of Ransil Development Group, who attended the conference, said his Scottsdale company would be interested in the whole parcel, though apartments could be a viable first phase on the city parcel.
"The trick is what are the other uses." he said. "Whoever obtains the larger piece dictates."
Brian Kocour of Cassidy Turley BRE Commercial said the city parcel could be used for a green hotel. Development could then spread outward, he said, with restaurants, retail and connections to the Indian Bend Wash greenbelt to the east.
Another company envisioning a larger project is Global Entertainment Corp. of Tempe, which has proposed building an event center that would host community events and commercial performances.
Phoenix developer PDG America acquired most of Los Arcos Crossing in 2007 with plans to develop it as Scottsdale CentroVida, a $150 million mix of townhouses, apartments, restaurants and neighborhood shops. The deal was financed by Mortgages Ltd., a high-flying Phoenix investment firm that collapsed in bankruptcy after its chief executive committed suicide in 2008.
ML Manager was formed by investors as the successor to Mortgages Ltd.
PDG, which stopped making its payments on Los Arcos Crossing in 2008, took no action to stop this week's trustee sale, Winkleman said.
ML Manager hasn't set a price for Los Arcos Crossing. The broker would help the company decide that issue and show the property to prospective buyers, Winkleman said.
Proposals for the city parcel are due Oct. 1. A public open house is planned, and the City Council could review staff recommendations in November.
ML Manager's property has an empty Bashas' grocery store, a second building that once housed a gym and shops, a closed gas station and the pad where an auto-parts store still operates. Separately owned facilities in the area include a carwash, a tire store, an office/commercial complex and Los Arcos United Methodist Church.
by Jane Larson The Arizona Republic Aug. 6, 2010 12:05 PM
Los Arcos Crossing lender to market 14 acres to developers
Subscribe to:
Posts (Atom)
 |
Posts
