June 2015 - Phoenix Real Estate Update

To our valued clients: Happy Fourth of July!  Stay cool!


I hope you enjoy this monthly newsletter. Remember whether you are buying a new or resale home it is important to have a realtor to represent your interests. If you know of anyone who is thinking about buying or selling please let me know.  You can search the MLS from my website at www.greathouseaz.com.


Do you want instant updates on the Phoenix Real Estate market? Follow me on Twitter


Do you have a rental property and need a property manager?  Please call or email Karen Van Vugt at 602-316-7028 or ftr9558@cox.net


Sincerely,

Pat Hune

Broker

greathouseaz@gmail.com

1st Southwest Realty

www.greathouseaz.com

Search the real MLS from my website!

Cell 480-703-1976

Fax 480-304-9099

Equal Housing Opportunity



Market Overview  

Sales Are Up While Inventory Continues to Decrease - Home sales increased 11.7% year over year but barely dropped .6% from April to May of 2015.   New inventory dropped 5.3% year over year and 7.9% month over month as compared to May 2014. Total inventory continued its downward trend with 15.1% decrease from a year ago and a 5% decrease from a month ago.  The months supply of inventory continues to be low at 2.96 months supply as of May 2015.  The average days on market is 81 which is only 2 days less than a year ago and 3 days less than a month ago. Very few new homes were built during the downturn contributing to the inventory shortage.  Realtors and analysts speculate there may be condo conversions in the future to satisfy the entry level buyer demand.


Home Sale Prices Creeping Up - Overall pricing for single family homes has been very stable for much of the last year, but is starting to gain upward momentum again. The average list price increased 1.5% while the median list price increased 4.9% from a year ago.  Median sales prices went up almost 10% from a year ago with a 9.9% increase.  The average sales price was up 8.6% from a year ago.  The experts predict an increase in the median sales price from $211.0 to $213.0 while the average sales price will drop slightly from $268.7 to $267.8.  


What It All Means -  It is a basic economic principal that a decrease in supply combined with an increase in demand will push home prices higher.  The median sales price in Phoenix is now 83% of the $255,000 peak reached in June of 2006.  While no one expects the prices to go back to the level hit at the peak the increase in value is welcomed by homeowners especially if they are thinking about selling or refinancing.  Part of the supply issue is there are still homeowners underwater that cannot or will not sell as a short sale.  Investors who scooped up homes at bargain basement prices are happy with the income and increase in value and are not interested in selling.  If these investors do sell they sell the homes in a package to another large investor.  These houses never hit the MLS and since they are tenant occupied they are not available to the owner occupant buyer.  


Another Wave of Foreclosures? - There are some who believe there will be an increase in foreclosures because the underwater homeowner will give up and let their house go back to the bank.  The driving factor will be the second mortgages or home equity lines of credit (HELOCs) taken out during the 2003-2007 period.  According to Fitch Ratings (credit ratings and research firm) the number of HELOCs outstanding jumped 42% in 2004.  Most of these loans have similar timeframes: they are interest-only loans for the first 10 years followed by a 10-year repayment period with interest payments and principal repayment. Since we have entered the realm where most of these loans are moving to the second half of their lifespan, Fitch said it expected some borrowers to feel stress.  Those with low home equity or poor credit scores  will not be able to refinance to more favorable terms.  Nonetheless, only 2.72% of the $484 billion of home equity line balances outstanding at the end of the first quarter of 2015 were 90 days past due, barely different from 2014.


Articles

1)  STAT Newsletter, PPI and Rent Check Link 

2)  Rental Market  

3)  Multifamily and Commercial  Real Estate Trends

4)  Common Mistakes Landlords Make 

5)  Real Estate Briefs

     a)  The Newport:  Tempe’s first single-family housing development since 2010

     b)  Millennials Diving into Home-Buying Pool at Last!

     c)  Valley’s City Cores Benefit From Big Increase In Condo Sales and Prices 

6)  Tales from the Real Estate Trenches 

      Buying High End Appliances may make repairs difficult  

 

****************************************


1) STAT Newsletter Link - STAT is produced monthly  by the Arizona Regional Multiple Listing Service - the database realtors use to list homes for sale and that have sold.   ARMLS® COPYRIGHT 2015


June Stat


STAT Newsletter and Real Estate Market Highlights

Commentary by Mike Orr, WP Carey School of Business at Arizona State University


"Boomerang" buyers are bounding back into metro Phoenix's housing market.  Home sales rose 3 percent in April from March and 9 percent from April 2014, according to the latest report from Arizona State University's W. P. Carey School of Business. April was the third straight month for rising home sales in the Valley.  "Boomerang buyers — those who have repaired their credit after foreclosure or short sale several years ago — are fueling the recovery," said Mike Orr, director of the Center for Real Estate Theory and Practice at W.P. Carey. "Demand was weak throughout 2014 and until the end of January. It suddenly recovered in February, and April's numbers confirm this was no anomaly.”


The count of homes currently listed as active for sale continues to decline for the fourth month in a row. May saw a steep decline, with the active listing count dropping 18%. As is typical, this declining inventory is due to the homes currently listed for sale turning to “pending” or “sold”, without enough new homes being listed “active for sale” to replenish the inventory of what is being sold.


7,438 homes sold in May, with a total volume of $2.1 billion. This is the highest dollar volume of home sales in a single month in over two years.  The uptick in home sales wasn't enough to boost home prices again as the Valley's median dipped 1 percent to $215,000 between March and April.  However, if the supply of homes for sale continues to fall and demand continues to climb, prices could begin rising again soon. Home listings dropped 2.8 percent in April from March and are about 20 percent lower than in May of 2014.  It's not clear yet if metro Phoenix's home sales will continue to climb this summer.  "The third quarter usually goes flat as buyers wait for the heat to pass," Orr said. "We will be waiting to see if we experience the usual lull, or whether the momentum from the spring buying season can be maintained.


The forward-looking indicator, pending sales, which tracks the number of homes currently under contract that have not yet sold, has also increased for the fifth month in a row. There are currently 10,677 homes that are pending sale, more than the valley has seen at one time in over 24 months. Typically, homes are pending for 30 to 45 days before being sold. With sales counts typically in the range of 6000-to-9000 units per month, the large number of homes currently pending could lead us into the largest number of homes sold in a single month since 2012.


Only 8,349 resale homes were listed for sale in May, the least amount of new listings in a single month since February of this year. Dwindling active for sale inventory and increased pending and sold inventory typically lead to higher prices, as more buyers compete for fewer available homes.


2)  Rental Market Check - Rent Check is an ARMLS's  publication tracking single family home rentals.  Click on the link for the statistics.


June Rent Stats


3) Multifamily and Commercial  Real Estate Trends


Current Phoenix market trends data indicates a decrease of +8.4% in the median asking price per unit for Multifamily properties compared to the prior 3 months, with an increase of +17.0% compared to last year's prices. County-wide, asking prices for Multifamily properties are 6.0% higher at $58,130 per unit compared to the current median price of $58,130 per unit for Multifamily properties in Phoenix, AZ.


Loopnet Commercial Trends


******************************


4)  Common Mistakes Landlords Make

Various Real Estate Sources, June 2015


Editor’s Note - Once a year or so I blow the dust off this article and update it with the new and exciting ways landlords can take a perfectly good, income generating property and completely screw it up.  I am also including the new and creative ways tenants have to make owning rental property a nightmare. 


1) Buying the wrong property or buying at the wrong time - The most expensive and common mistake, especially for out of state or first time investors, is buying a property in a difficult rental area or buying the wrong property. It is very important to find a realtor who understands the rental market and can provide an analysis to help the determine if the property makes sense.   If your realtor does not manage properties find a professional property manager familiar with the area and ask them before you buy.  Key factors are location, size, number of bedrooms and bathrooms, rental rates, vacancy rates, HOA dues, age, amenities, schools, condition of the property, deferred maintenance, ongoing maintenance such as landscaping and price.  Most buyers ignore vacancy rates.  One bedroom apartments are hard to rent.  Four bedroom houses are typically easier to rent especially to Section 8 tenants. (Section 8 is a government rental assistance program to help low income tenants get into housing appropriate for their needs.  The properties must pass inspection.  The rents are paid directly from the government to the landlord.)  Cheaper properties are not necessarily better.  If a property is hard to rent then the price should be lower.  It might be worth paying more for a property if the vacancy rates are low.  Buyers should always have a home inspection performed by a licensed inspector to identify future maintenance issues.  The golden rule is still location, location, location.


2) No written lease, rental application or credit and background check - Crazy as it sounds a lot of landlords don’t have written leases. A written lease clearly outlines the tenant obligations and deposits.  If there is no written lease then the landlord cannot charge late fees and it makes it more difficult to go through the eviction process, collect for damages and unpaid rent. All tenants should fill out a rental application including employment history, social security numbers and prior landlords.  The landlord should do a credit and criminal background check, contact prior landlords and verify employment.  Though this does not guarantee a great tenant it is a good start.


3) Hiring the wrong or firing a good property management company - An incompetent management company  can cost you thousands. Many owners shop for the lowest management fees.  Months later these owners complain their management company does not respond to calls or emails, they have not received rents for months, money was sent for repairs but the work has not been completed or the property manager is charging more for repairs than other companies. The bottom-line is a property manager has to clear 8% of collected rents to make money.  Companies charging lower fees make up the difference by adding a percentage on the repairs, charging the tenants administrative fees upfront or a percentage in addition to the monthly rent. Charging the tenants additional fees makes your property less attractive than those with lower fees.  Make sure your property manager is a licensed realtor as you will have limited recourse if they are not licensed.  


Some owners suffer from “property manager amnesia”.  The owner changed property managers and the tenant was already in place.   The prior property manager did not collect a deposit, check the prior rental and credit history or talk to the prior landlord to see if he or she is a good tenant.   When the tenant moves the new property manager, who inherited this mess, gets blamed because there was no deposit and the tenant left the property in poor condition. With no deposit the tenant has no incentive to take care of the property.  Owners tend to forget the original property manager was the source of the problem.  


4) Not maintaining the property - It is important to keep a tenant in place as turnover is costly in both repairs and lost rent. The key is making sure repairs are taken care of in a timely manner.  This will help keep the tenant happy and eliminate potential costly repairs.  What is a small leak today could be a flood tomorrow.  Vacancies are costly and poorly maintained properties will result in lower rents, take longer to find a tenant and can result in costly fines from the city.  


5) Installing the wrong flooring - Carpet is a terrible choice for flooring and it is expensive to replace.  Tenants can destroy carpet in a matter of weeks especially if they have pets.  Installing a commercial grade vinyl, porcelain tile, a concrete finish or staining the concrete will significantly reduce the unit turnover costs.  It may be more money initially but will save a lot of money over the life of the rental.  


6) Taking too long and spending too much to make a property rent ready  - There are two key factors in maximizing the return on rental properties: 1) Taking too long to make a property rent ready; and 2) Paying too much for repairs.  It is very important to have a good handyman and other contractors who are reliable and charge a reasonable price.  Using the cheapest labor you can find may cost you big in the future.  Hiring a contractor that takes three months to get a property rent ready is unacceptable.  Be careful when changing property managers as the contractors may be so busy with those properties they do not have time to work on any other properties.  In addition the contractors often have loyalty to the property manager and will not do work for the owner if the property manager changes.


7) Not paying for a pool service - Houses with pools are very attractive to renters.  But pools can get damaged if they are not properly maintained.  It is far better to pay $80 a month for a weekly pool service than to spend thousands replastering the pool.


8) Expecting the tenant to maintain the property or make it rent ready - It is unrealistic to expect a tenant to maintain a property or to get a property back in good condition needing very little repairs when they move out.  If this happens consider it a gift.  Realistically an owner should expect to spend $1000 to $2000 on an 2 bedroom apartment and $2000 to $3000 on a house to get it rent ready.  The cost varies depending on the age, size, number of years it has been a rental and how long the tenants have lived in the property. 


9) Getting too emotionally involved with the property - This tends to happen when the owner was living in the house and then rented it instead of selling.  These owners may have bought at the top of the market.  In order to sell they would have had to do a short sale or potentially lose a lot of money so renting for a few years is a way to cover the expenses while waiting for the housing market to improve.  Unfortunately these owners either forget the true condition of the house when they moved or expect the house to look better than it did when the owners moved out.  These owners often change management companies in a knee jerk reaction when they see the property after it has been a rental for a few years.  As a result the owner fires a perfectly good management company and hires a different company.  Was this the right decision?  It depends on the performance of the new property manager.  If the prior manager rented the property in an average of 60 days and the new manager took 149 days then probably not.  If the rent was $2000 a month the owner lost $5,900.  Ouch!  (Note the issue was not the rental rate as it was the same.  The issue may have been that the new property manager charged the tenant an administrative fee when the lease was signed and and additional fee each month.)


10) Focusing on renting the property quickly rather than waiting to rent to a good tenant - There is an old saying good things come to those who wait.  Which would you rather have - a tenant who pays rent on time, gives notice and leaves the property in good condition or one that you have to beat the rent out of every month, moves without notice and leaves the property in poor condition?  It is a big red flag when a tenant says they need to move in a few days as it probably means they are not paying rent to their current landlord and are about to be evicted.  A tenant who is considerate of their prior landlord by giving them 30 days notice is much more likely to be a good tenant than one who wants to move in tomorrow.  Depending on the location it is reasonable to expect 60 to 90 days for the house to be occupied once it is rent ready. 


11) Setting the rental price too high - Vacancies will kill the cash flow on a property.  Landlords who ask unrealistic rents are costing themselves thousands of dollars.  It is far better to rent a property quickly than to wait months for another $100.  Remember a month’s lost rent is gone forever.


12) Accepting partial payments or prepaid rent - Many landlords accept partial payments without a written agreement from the tenant. The tenant has to sign a non-waiver stating the tenant understands failure to pay will result in an eviction. If the landlord already has a Writ and accepts a partial payment without a signed waiver then the landlord will have to start all over with the eviction process and incur all the service, court and attorney fees again.  And the tenant is living there rent free during the process.  Tenants may offer to  prepay rent if they are having problems getting their applications accepted to due past evictions or poor credit.  Though the landlord can accept the prepaid rent it has to be held in trust for the tenant.  The tenant has a legal right to prepaid rent as it is not due yet.  If the tenant asks for the prepaid rent to be returned the landlord has to comply.  In general do not accept prepaid rent.


13) No Home Warranty or the wrong home warranty -  One of the most expensive items to replace is the HVAC unit.  In the summer, when Phoenix is two inches from the sun, broken air conditioners are common.   Most professional property managers recommend landlords purchase a home warranty and have the HVAC unit serviced at least one a year.  If the HVAC units are not serviced regularly the home warranty will not cover the claim. A new HVAC unit may cost $5,500 or more.  Tree roots can cause sewer line backups.  Be sure the home warranty covers this repair.  Home warranties also cover other repairs like the refrigerator, dishwasher, hot water heater, washer, dryer and plumbing stoppages.  One major repair will likely cover the yearly cost of the home warranty which ranges from $500 for single family up to $1,800 for a fourplex. Some home warranties are better for single family homes while others are better for multifamily.  Check with your management company for the best home warranty provider  for your property or read my last newsletter.


14) Not registering rental properties with the City and County - Most cities require landlords to pay sales tax on rents. Maricopa County assesses higher property taxes on rental properties than single family homes.  The fines are steep if you do not pay the sales tax and/or have not registered the property with the county.  Make sure your management company is collecting and paying the sales taxes and registered the property as a rental with the county. If the landlord has not registered the property the tenant can give a ten day notice and leave.  Out of state owners must have a local statutory agent. The purpose of an Arizona statutory agent  is to be the person or entity that can be served with a summons and complaints filed in a lawsuit or receive notices of violations like overgrown yards or abandoned vehicles.  In Arizona the statutory agent must be an adult individual who resides in the state and must have an Arizona street address not a post office box.  If the landlord has not registered the property the tenant can give a ten day notice and leave. (Yes repeated this to make sure landlords understand how expensive it can be if a property is not registered.)   If you change statutory agents and do not inform the city within 10 days you could be fined.


15) Not protecting personal assets by putting rentals into separate LLC’s - What happens if a tenant falls due to inadequate lighting or an uneven curb, fire destroys the structure and the tenant is injured or killed?  In our litigious society a lawsuit could result in the landlord losing their entire estate including the house they live in!


Example-Faulty electrical wiring results in a fire where one of the tenants is killed.  The family sues, the jury finds for the family and awards several million dollars-an amount far above the property insurance limit.  The family seizes the landlord’s 5 rental properties (worth $1,500,000), personal residence ($900,000) plus the bank accounts ($500,000).  If the landlord had formed a Limited Liability Company or LLC for each rental property the only asset at risk would be the building where the tenant lived.  Each property should have its own LLC. The cost per LLC varies from $700-1400.  You should consult with a real estate and an estate attorney to discuss the benefits and risks of placing your personal assets into an LLC,  revocable or other living trust.


16) Carrying the wrong Property Insurance - If you lived in the house as your personal residence and later change to a rental property be sure to contact your insurance carrier to change the property to reflect it as a rental property.  Typically the rates will go down as you are insuring the building and not the contents.  Due to the number of vacant properties being vandalized a lot of insurance companies will not cover if the property is vacant.  So the moment the tenant moves out you essentially have no coverage.  Ask your insurance company if they cover vacant properties 


17) Failure to read and Understand the Landlord Tenant Act - Make sure you are familiar with the landlord tenant act so you know your rights and the tenant’s rights.  If you are using a professional property manager they should already be familiar with the terms.  If you are self managing then it will be up to you to follow these rules as the penalties are severe. Be sure to find a good eviction attorney to help you legally evict the tenant.


18) No pool fence or other barrier - Renting a property without a pool barrier is asking for trouble. It is important for the safety of the tenants especially if there are children.  A  landlord cannot refuse to rent to someone with small children because there is no pool fence as it is violation of Fair Housing and can result in a hefty fine.  If you buy or own a property with an unfenced pool be prepared to install a pool fence or other barrier.


19) No periodic inspections - When the lease is signed the tenant should be made aware the property may be inspected on a monthly basis.  A professional property management company will have the repair companies report any issues like unauthorized occupants or pets, excessive wear and tear, maintenance issues or other damages.  They should also check the smoke and CO detectors and the HVAC filters while at the property.  Some tenants think if they don’t bother the landlord with repairs the rent will not increase. This can result in costly repairs down the line.


Avoiding these mistakes should help keep your vacancies and expenses low, rents high and protect your personal and investment assets.


**********************************

5) Real Estate Briefs


a) The Newport:  Tempe’s first single-family housing development since 2010

Eric Smith, East Valley Tribune, June 2015


Tempe is a bustling, busy urban center, filled with new businesses coming in such as State Farm as well as the college atmosphere provided by Arizona State University’s main campus. The one thing that seemed to be missing was new single-family housing. That, however, is changing. The Newport, a new single-family housing development, is quickly rising in Tempe. The Newport plans to deliver high-quality homes in Tempe for a relatively modest price — starting at $210 per square foot, which is less than the surrounding prices. “Having purchased the land during the economic downturn several years ago we were able to get a substantial discount on the land,” said Joe Risi of The Newport developer Risi Homes. “In doing so we’re able to pass along that discount to the initial homebuyers … the first-phase buyers are going to benefit from these below-market offerings.”


The Newport is built on a 2.3-acre site that will, when completed, be made up of 38 single-family homes that vary in size from 1,600 to 1,821 square feet. Risi said it is also the largest single-family development in Tempe in the last five years. With all of the amenities Tempe has to offer, The Newport continues to draw attention from potential homebuyers.  “The location is key,” Risi said. “We’re a mile from ASU and only several miles from Old Town Scottsdale so (it is a) key location.”  The homes are also all SRP gold-star certified, meaning they meet the highest standards for energy efficiency from SRP. Risi said that these homes on average can save homeowners up to $200 per month, depending on their energy usage.  


Homebuyers are also already very interested. Risi said there are currently 10 cash offers for homes at The Newport and he said they plan to be able to start showing the homes by the week of June 22.  “There’s nothing else like (The Newport),” said one Realtor. “There’s a lot of townhomes and a lot of condos going up and it’s really high-density living and we’re trying to do what we can to change that.”  



**********************************


b)  Millennials Diving into Home-Buying Pool at Last!

Catherine Reagor, The Republic, May 2015


Something, or actually a lot of someones, was missing from metro Phoenix's housing market last year.  A dearth of first-time buyers, mainly Millennials, was the main reason the Valley's housing recovery stalled.  But a growing number of these first-time buyers are no long avoiding commitment to a mortgage. As a result, bidding wars are erupting over affordable Valley houses, which has led to the 10-percent increase in home sales this year.  Many Phoenix-area real estate agents have seen their list of young clients looking to buy multiply during the past six months. That's great anecdotal evidence Millennials are no longer absent from the housing market.  But now the data proves it.  Federal Housing Authority-backed mortgages, used primarily by first-time buyers, nearly doubled in metro Phoenix during April compared to the same month last year.  Tom Ruff, real estate analyst with The Information Market owned by the Arizona Regional Multiple Listing Service, told me Millennials are just beginning to make their mark on the housing market.


He expects FHA loans and Millennial buying to keep climbing during the next few years. FHA loans accounted for 32 percent of all home sales in April of this year, according to Ruff's latest STAT report. That compares to 18 percent in April of 2014.  President Barack Obama's move to cut costs on FHA loans in half, announced during his Jan. 8 speech in Phoenix, has obviously helped entice more first-time buyers.  


Some housing analysts and market watchers didn't think his highly touted FHA announcement would give the housing market the boost it needed.  We were wrong.  


**********************************


c)  Valley’s City Cores Benefit From Increase In Condo Sales and Prices 

Catherine Reagor, The Republic, May 2015


For the first time, metro Phoenix is growing up more rapidly than out.  A record number of high-rise, townhouse and loft housing developments are shooting up in central Phoenix, Scottsdale and Tempe, and selling out quickly. Condominium sales are climbing faster than regular home sales in the Valley, a reversal of the region's growth pattern since the 1950s.


Two decades ago, Phoenix had more vacant infill land than any other city its size in the U.S. But over the past few years, builders have sparked bidding wars for vacant parcels and older buildings that can be turned into high-density, infill housing in the Valley.  Empty nesters and Millennials who don't need as much space, want to drive less and be near restaurants and entertainment hotspots are moving closer in and changing the direction of Phoenix's housing market.


A father and his daughter are living the trend.  "I worked in downtown Phoenix in the '70s and remember there were few restaurants, so after 5 p.m. people couldn't get out of the area fast enough," said Michael Hawksworth, who bought a condo in downtown Phoenix's Portland Place mid-rise early last year as an investment, but then sold his large, longtime north Phoenix house and moved to the condo a few months later. "Now, so much is happening down here."  His daughter, Lauren Hawksworth, followed her father downtown and is renting a condo about a mile from him.


The growing number of people wanting to live in the central Valley compared with the area's edge suburbs can be seen in home prices. Values in many closer-in Phoenix-area neighborhoods are climbing twice as quickly as in areas farther out, according to analysis of sales data in The Arizona Republic's annual Valley Home Values report.


"We are seeing the long-awaited but natural progression of the Valley's housing market from suburban to urban," said Tom Simplot, CEO of the Arizona Multihousing Association and a former Phoenix city councilman. "First came the renters to test the market, and now the homebuyers are coming."  He recently sold a condo in the high-rise One Lexington on Phoenix's Central Avenue and bought a fourplex condo project in the city's historic Willo District, where he will live in one and rent out the others.


Although condo prices are rising, many are relatively small in size and still much more affordable than a stand-alone home. The best way to track the difference in prices is cost per square foot, said Mike Orr, a real-estate analyst with Arizona State University's W.P. Carey School of Business.  The average price per square foot of a Phoenix-area condo reached $135.82 in February, up 12 percent from $122.90 in February 2013. The average price per foot for a single-family house in metro Phoenix climbed 3 percent during the past year, to $130.48 in February.


The Valley's rush to infill and high-rise condos began in Tempe, where many high-rise projects that were started during the housing crash were turned into apartments as demand from buyers plummeted. Central Scottsdale's high-density housing boom includes lofts, million-dollar condos where the upscale Borgata shopping center once stood, and hip, smaller developments geared toward Millennials.


The popularity of condos and other low-maintenance, high-density housing developments is spreading to downtowns in other suburban Valley communities. Glendale, Gilbert, Chandler, Mesa and Peoria are all seeing their own infill developments, many of which are being constructed by builders who are selling condos in some areas faster than single-family houses.


Condo median price up 15 percent

Demand from buyers has started a mini-boom in urban housing construction.  New condo projects include high-rises at Portland on the Park that overlook Phoenix's Margaret T. Hance Park; Scottsdale's Envy Residences with concrete and steel facades; and the Aerium lofts in downtown Scottsdale.  Other housing projects including condos, townhouses and small neighborhoods of single-family houses are filling in some of the last vacant parcels in popular historic neighborhoods and other sought-after central Valley areas.


"Demand is shifting away from single-family homes," Orr said. "Growing numbers of Baby Boomers, whose children have grown up and left, are downsizing. Many Millennials also seem to show a preference for smaller, easy-to-maintain homes in central locations."  The median price of a Valley condo climbed 15 percent during 2014, almost three times the price increase for stand-alone or single-family houses.


New-condo sales climbed more than 4 percent last year as new tract home sales fell 10 percent, according to Orr's data. More than 1,000 condos and townhouses are now under construction in metro Phoenix.  In the boom year of 2006, almost 8,000 high-rise condos, lofts and townhouses were planned — but, as the housing market crashed, fewer than half of those were actually built.


The current slower pace of condo development is more sustainable. Almost half of the urban housing projects launched at the peak of the housing boom failed during the crash. Some, including the downtown Phoenix high-rise 44 Monroe and the Centerpoint towers in downtown Tempe, were built but didn't attract enough homebuyers, so they became rentals.


"We are going to see a lot more condo and townhome projects this year and next," said Keith Mishkin, president of Cambridge Properties and one of the first real-estate brokers to begin specializing in urban condo sales. "Prices are climbing because people are willing to pay more for less space if it's surrounded by great amenities."


Things to do, places to go

The trend toward urban housing in metro Phoenix is driven by many factors, but one is key: There are now more things to do, and places to eat and shop, in the core areas of central Valley cities.  "I wanted to be somewhere surrounded by culture and community," said Lauren Hawksworth, 25, who is renting a condo in downtown Phoenix's Renaissance Place and working in north Scottsdale. "I am within walking distance of live music, baseball and basketball games, festivals, and a mellow night life. I never have an excuse to be bored."


Condo Dwellers Enjoy Downtown Phoenix Amenities

The Portland Place condos in downtown Phoenix offer the amenities and location many empty nesters and Millennials are looking for. In central Phoenix and Tempe, housing, restaurants and shopping hubs are sprouting up along the path of light rail. These areas are also drawing more jobs because employers want to be where workers want to be. Last year, State Farm executives said they picked Tempe Town Lake for their huge new regional operations center because of light rail and a busy Tempe downtown that they hope will help them draw employees.


In central Scottsdale, the redevelopment of the Arizona Canal area into the Waterfront project is spurring residential growth. A few weeks ago, Bill and Pat O'Dell moved into a new three-bedroom condo next to the Waterfront in a development called Sage. They sold their north Scottsdale home to buy closer in.  "We used to drive down here to old Scottsdale to go out to eat or meet friends three or four times a week," Bill O'Dell said. "Our kids are out on their own, so we thought, why not downsize and be able to walk to the places we like to go?"


Same price, less space

Carl Ross plans on selling his Chandler house and buying a condo in downtown Phoenix with half as much space.  Ross, a school psychologist who plans to retire in a few years, plans to use the proceeds from the sale of his 1,600-square-foot house to buy the condo in Portland on Park project, at First Avenue and Portland Street.  "I wasn't shocked by condo prices in the area," he said. "Based on my house's current value, it will likely be an equal trade after I sell big and buy smaller."


The median price of a Valley condo climbed almost 4 percent during February, to $139,000, according to ASU. The median price of a single-family house rose 2 percent, to $212,500.  "Many buyers are hoping to find bargains on condos, particularly in downtown Phoenix, but the deals are gone," said a central Phoenix real-estate agent.


The median price of home in central Phoenix's 85003 ZIP code, where Willo and the condo development Tapestry are located, rose last year to almost $350,000. The area's median condo price is $290,000.  The typical price for a condo in downtown Phoenix's 85004 ZIP code, where Lauren Hawksworth rents, is $330,000.  "I'm hoping to eventually be in a comfortable financial position and buy in within the area," she said. "I think it'd be a good investment ... I can't see the area doing anything but getting nicer."


Her father, management consultant Michael Hawksworth, is buying again in downtown Phoenix. He plans to move up to the penthouse in one of the new Portland on the Park buildings, under construction next to his current home.  "I might keep my current condo," he said. "My other daughter came to visit and called it a staycation to be down here. People are out walking, hanging out or drinking a glass of wine on their balconies. We never saw this many people out and about when we lived in Moon Valley.”


***************************


6)  Tales from the Real Estate Trenches - 

Pat Hune, Broker at 1st Southwest Realty


Buying High End Appliances may make repairs difficult -  Recently a client needed a repair for a Wolf gas stove top.  Anyone who watches HGTV or has shopped for appliances knows Wolf is one of the most expensive brands along with Jenn-Air, Thermador, Sub-Zero and Asko.  The issue was finding a repairperson.  Wolf and Sub-Zero only allow certain repair companies to order parts which limits the number of companies available.  This client had a home warranty and the  Wolf repair person was out of town for three weeks which was way too long to wait.  The home warranty agreed to allow a different repair company which was not easy to find.  This was a valuable lesson.  When buying appliances think about the ease and ability to have it repaired quickly in addition to the brand name.