Developer has another building being constructed

Ginger D. Richardson
The Arizona Republic
Mar. 16, 2007 12:00 AM
A developer who has already made his mark in downtown Phoenix with one condominium tower is now proposing a 32-story residential project in the heart of the city.

The $100 million development, called Omega, would be at Second Avenue and Adams Street, behind the Orpheum Lofts, and would be the third urban housing high-rise in Copper Square.

It is the brainchild of Chicago native turned Phoenix resident David Wallach, who is taking an active role in the redevelopment of Phoenix’s core.

Wallach, principal of W Developments LLC, was the first to take a chance on downtown’s urban living appeal when he announced plans to build the 165-unit Summit at Copper Square condominium tower in 2004. Today, the project, next to Chase Field, is 85 percent sold, and its first residents won’t move in until this summer.

Wallach also is one of a consortium of local businessmen who recently announced plans to create a blocks-long entertainment district along Jackson Street, on downtown Phoenix’s southern edge.

That explains why Wallach is bullish on the need for residential housing in the heart of the city, despite lingering concerns about the health of Phoenix’s real estate market.

“The premise that the housing market is soft in downtown is not the right place to start,” Wallach said Tuesday. “The right product in the right neighborhood has a really good chance of succeeding.”

Wallach said he hopes to break ground on Omega later this year and said the tower could open in 2009. It features one-, two- and three-bedroom units, starting at about $400-plus a square foot. That would put the smallest, 750-square-foot residences in the $300,000 price range.

Penthouse dwellings are as large as 2,400 square feet, meaning that they would likely be offered at close to $1 million.

Each of the 214 units will contain amenities such as marble baths, granite countertops and all-wood cabinetry. The tower itself will boast a 12th-floor pool, a rooftop party and meeting rooms, workout facilities, six floors of parking and ground floor retail.

Wallach hopes to fill that space with a restaurant.

But he believes one of the project’s biggest selling points will be its location. The tower is across the street from the Orpheum Theatre and close to Phoenix City Hall. It is also within walking distance to many of downtown’s biggest draws, including Dodge Theatre, US Airways Center and Chase Field.

“It’s all location, location, location,” Wallach said. “The sightlines from every part of the building are spectacular.”

Tuesday, February 13, 2007

MESA, Ariz. — As the new year began, the local resale housing market continued to slip with 4,520 sales recorded in January. This is down from the 4,620 sales of December 2006 and the 5,260 recordings of a year ago.

This is the lowest monthly level for January since 4,220 sales were reported in 2003, which was the year that the hyper-market began in the local area. Relying on January data as an indicator of the coming year is not wise, according to Jay Q. Butler, director of Realty Studies at Arizona State University’s Polytechnic campus.

“January sales are traditionally below the recordings of December, which are based on the push to get people into their homes for the holidays,� said Butler. “Because recordings are based on decisions made months before, January tends to be the depository of limited desire to look for and buy a home following the holiday season and a poor indicator of the coming year, which is better set by the traditionally strong month of March.�

If 2007 is to follow the traditional pattern, listings should be increasing with a corresponding improvement in buyer activity. However, the levels should be well below those of the last few years, because the current market lacks the market frenzy to own and/or invest at almost any price and reasoning.

“As long as the international economy and political situation remains stable, the general expectation is that 2007 resale housing market should be a good year, but no where near the records,� said Butler.

Much like the sales activity, the median home price has been very stable at $260,000, an improvement from December’s $255,900 and last year’s $257,000. Although this is the first year-to-year improvement since August 2006, several areas are continuing to show declining price activity. For January 2007, 15 percent of all recorded sales were for homes priced from $125,000 to $199,999, 43 percent for $200,000 to $299,999 and 39 percent for homes priced more than $300,000.

Last year, the distribution was 20 percent of all recorded sales were for homes priced from $125,000 to $199,999, 40 percent for $200,000 to $299,999 and 36 percent for homes priced more than $300,000. The increase in the higher price levels demonstrates how the move-up market tends to become more obvious in a slowing market. Since the greater Phoenix area is so large, the median price can range significantly from $665,000 ($657,000 in December) in North Scottsdale to $148,000 ($150,000 in December) in the Sky Harbor area of the city of Phoenix.

Current home prices and interest rates are very comparable to a year ago, with the monthly payment of $1,300 unchanged. Even though mortgage interest rates have been declining for the last few months, limited home appreciation and household income continues to raise concern about the ability of some homeowners to maintain their homes. This may be especially evident for those that have used some of the more creative financing instruments, such as option payment plans and initially low interest rate adjustable mortgages.

During the last few years, the townhouse/condominium market has had increased popularity for owner-occupancy, especially for young and minority households, and investors. This housing sector also has remained very stable with 850 sales for January 2007, while it stood at 880 sales for December 2006, but well below last year’s 1,225 sales. The median home price has been very stable at $175,000, while it was $165,000 for a year ago.

The median square footage for a single-family home recorded sold in January 2007 was 1,700 square feet, which is larger then the 1,620 square feet for a year ago. The larger size further demonstrates the role of the move-up sector in the local housing market. In the townhouse/condominium sector, the median square footage was 1,110 square feet which is bigger than 1,090 square feet reported a year ago.

* In contrast to January 2006, recorded sales in the city of Phoenix decreased from 1,610 sales to 1,305 sales, while the median sales price increased to $225,000 from $205,000 for a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $148,000 in the Sky Harbor area to $353,500 ($315,000 in December) in the Union Hills area. The townhouse/condominium sector decreased from 430 to 300 sales, while the median price increased from $139,525 to $150,500.

* The Scottsdale resale home market declined from 400 to 360 recorded sales, with the median sales price decreasing from last year’s $600,000 to $550,000. The median resale home price is $665,000 ($657,000 in December) in North Scottsdale and $308,000 ($350,000 in December) in South Scottsdale. The townhouse/condominium sector in Scottsdale also decreased from 200 to 190 sales and the median sales price decreased from $275,700 to $272,500.

* The Mesa resale housing market declined from 615 to 475 sales, and the median price fell from $240,000 to $235,000 ($241,000 in December). The townhouse/condominium sector also fell from 200 to 110 sales, while the median home price increased from $149,000 to $165,000.

* Glendale decreased from 410 in January 2006 to 335 sales, but the median sales price improved slightly, from $238,500 to $239,450 ($244,900 in December). The townhouse/condominium sector was stable at 50 sales, while the median sales price increased from $130,000 to $139,150.

* For the city of Peoria, the resale market increased from 195 sales to 225 sales, while the median price moved from $247,250 to $260,000 ($258,450 in December). The townhouse/condominium sector remained at 25 sales and the median price went from $152,500 to $161,000.

* In comparison to a year ago, the Sun City resale market fell from 100 to 80 sales, with the median sales price decreasing to $190,000 from $212,000. As resale activity in Sun City West stayed at 40 sales, the median sales price decreased from $243,500 to $238,725. The townhouse/condominium market in Sun City declined from 60 to 45 recorded sales, while the median home price decreased from $140,000 to $133,500. In Sun City West, activity remained at 15 sales and the median sales price decreased from $203,450 to $151,000.

* The resale market in Gilbert decreased from 310 to 280 sales, and the median sales price decreased from $337,250 to $319,000 ($328,000 in December). The townhouse/condominium market fell from 15 to 10 sales as the median sales price decreased from $212,500 to $195,750.

* For the city of Chandler, the resale market stayed at 330 recorded sales, while the median sales price also was stable at $305,000 ($282,900 in December). The townhouse/condominium market declined from 45 to 30 sales, and the median sales price improved slightly from $177,750 to $178,000.

* The resale market in Tempe decreased from 140 to 100 sales, with the median sales price increasing from $269,900 to $282,950 ($272,750 in December). The townhouse/condominium sector slowed from 110 to 30 sales and the median sales price increased from $181,000 to $201,000.

* The highest median sales price was in Paradise Valley at $1,425,000 with a median square foot house of 3,010 square feet.

* In the West Valley, the following communities represent 9 percent of the resale market.

o Avondale fell from 150 to 90 sales with the median price moving from $258,000 to $243,950 ($245,000 in December).

o El Mirage decreased from 70 to 65 sales, while the median home price went from $224,000 to $202,000 ($209,750 in December 2006).

o Goodyear declined from 100 to 70 sales, while the median price decreased from $275,000 to $260,000 ($257,000 in December 2006).

o Surprise increased from 165 sales ($249,000) to 205 sales ($247,235), while it was $232,500 in December.

Jan. 14, 2007 12:00 AM

All types of exotic mortgages are allowing people to buy more house than ever. Ads are touting payments of less than $1,000 on a $500,000 loan. Fliers in the mail promise interest rates below 3 percent.

But for some, the offers are too good to be true and, for others, they are just too hard to understand.

A new booklet explains the many adjustable-rate mortgages, from interest-only to option-payment loans.

The Federal Reserve Board recently partnered with the Office of Thrift Supervision to revise the Consumer Handbook on Adjustable-Rate Mortgages, or the CHARM booklet.

Mortgage loan officer Amy Swaney of Scottsdale-based Premier Financial Services alerted me to the book and called it one of the best explainers on adjustable-rate mortgages she has seen so far.

“A lot of the new adjustable-rate mortgages aren’t right for everybody, but they do work for many people who understand and plan for them,” said Swaney, who is also the immediate past president of the Arizona Mortgage Lenders Association.

The new adjustable-rate booklet explains a lot. For example, one chapter is titled “Negative amortization – when you owe more money than you borrowed.”

Many people get these loans because of the low payments and don’t realize they can end up upside-down with their mortgage if they don’t manage them.

Go to www.federalre serve.gov/pubs/arms/arms_ english.htm and look for the adjustable rate mortgage booklet.

Lowball forecast right

Developer Francis Najafi’s prediction for metropolitan Phoenix’s housing market last year caused some consternation in the real estate market. But he was right.

Last January, at the Urban Land Institute’s market forecast for the Valley, Najafi predicted housing permits would fall to around 40,000. The Valley’s housing market was coming off a year of 63,000 permits, so Najafi’s prediction was controversial.

But he was right. A final tally is due out later this month from market analyst RL Brown, but through November, 40,185 single-family home permits had been issued across metro Phoenix.

Najafi’s prescience was noted at last week’s Urban Land conference, when Greg Vogel of the Land Advisors Organization offered him a $50 Starbucks card for his winning prediction.

Valley’s Upper East Side

As parts of Phoenix and Tucson merge into a megapolitan area, they are getting new nicknames.

Robert Lang, urban researcher from the Metropolitan Institute at Virginia Tech, presented some early findings from the study on the Sun Corridor, the new name for the Phoenix/Tucson megapolitan, at the Urban Land conference.

The affluent north Scottsdale area is being called the Upper East Valley. The area is for Phoenix what the Upper East Side is for New York, according to the research.

December 29, 2006

By Misty Williams
Tribune

The Valley’s new home market continued to sag in November, as building permits and sales slumped. Builders took out 1,985 permits for homes last month, down 55 percent from the same period a year before, according to the latest Phoenix Housing Market Letter released Thursday by real estate analyst RL Brown. Some 40,125 new home permits were issued in 2006 through November, a 31 percent decrease from last year.

“The market basically is still reacting to the surge of speculative buying that we saw in 2005 and the fi rst part of 2006,” Brown said.

That resulted in a wave of building contract cancellations when investors grew nervous, he said.

Hundreds of lots of land have been graded in subdivisions throughout the Valley, but few homes are actually being framed, Brown said.

Permit activity won’t start to revive until builders can rid themselves of standing inventory, and when that might happen is anyone’s guess, he said.

“It’s impossible to get a real count,” he said. “It’s a moving target. It changes every day.”

Some 4,139 new home sales were recorded last month, down 18 percent from November 2005.

The Herald – Everett, Wash.

Published: Sunday, December 10, 2006
By Steve Tytler
Herald columnist

Question: I have been seeing stories in the news about the housing bubble around the country, with some areas seeing a drop in prices now that the big boom is over. Do you think that will happen here in the Seattle area too?

D.K., Lynnwood

Answer: Predicting the future is always very risky, so please understand that I don’t have an infallible crystal ball.

Last year at this time, I went out on a limb and said that I felt that the local housing market was peaking. I thought that home prices would max out during the spring home-buying season and then level off. Home prices actually continued to increase through late summer, but the housing market has definitely cooled off in the last three months, as I had expected.

This week, the Northwest Multiple Listing Service released home sale stats for November and you can see that a trend is emerging. There were 35 percent more homes for sale last month than there were in November 2005. At the same time, there were 11 percent fewer homes sold in November compared with November 2005.

What does that mean? Inventory is up and sales are down. Real estate is a classic supply-and-demand market, so if the supply of homes for sales increases and demand remains fairly constant, that will cause home prices to stagnate and possibly even drop.

This has been the typical pattern in the Puget Sound real estate market for the last 40 years. We usually have a sharp increase in home prices for a couple of years, followed by a few years of flat prices.

So I suspect that next spring when most sellers put their homes on the market, we will see a big increase in the inventory of homes of sale. And unless there is a large pool of prospective buyers out there, we will probably see the home market swing toward a buyer’s market where there are more homes for sale than buyers. That’s good news for home buyers who have been frustrated by skyrocketing home prices over the past few years, but not such good news for homeowners who need to sell soon.

As I said above, prices will likely flatten out and possibly decline slightly, but traditionally we don’t have the kind of home price “crash” that happens in boom-and-bust housing markets such as San Diego, Las Vegas and Phoenix.

There is another factor that could lead to a large increase in the inventory of homes for sale in the next couple of years and that is the number of investors that jumped into the market during the housing boom. It has been reported that one out of every four homes purchased during the past few years was sold to an investor. Those are nationwide statistics, so I don’t know what the percentage is here in the Puget Sound region, but it’s safe to say that many people got caught up the in the “house flipping” phenomenon. Investors found that they could buy a house and fix it up, or even leave it as is, and then sell it six to 12 months later at a huge profit.

Well, those days are over. And many investors are holding onto houses that will cost them hundreds of dollars per month because they could not be rented for enough money to cover the monthly mortgage payments. Investors were willing to eat those monthly losses because they expected to make a profit of $50,000 to $100,000 in less than a year. Once those investors see that the runaway home appreciation train has come to a screeching halt they will start to bail out of those money-losing houses. That will cause a spike in the number of homes for sale, which will in turn cause home prices to decline, which will prompt more investors to put their houses on the market, and so on.

At this point, I have no idea what impact the flipper investors will have on the overall housing market, but it could be quite significant over the next couple of years if my prediction of a flat housing market holds. Only time will tell.

Sacramento Business Journal – November 16, 2006by Jeff Clabaugh
Freddie Mac says the biggest slowdown in the housing market might be over, and falling mortgage rates should help stimulate the market.

The mortgage giant’s weekly rate report shows 30-year fixed-rate mortgages fell to an average 6.24 percent this week, below year-ago levels.

One-year adjustable-rate mortgages fell to 5.53 percent, though adjustable-rate mortgages remain higher than year ago levels.

“We’ve probably seen the worst of the housing slump, although it may not have entirely bottomed out yet,” said Freddie Mac chief economist Frank Nothaft. “Lower mortgage rates should help stimulate activity in the housing market.”

Lenders, real estate agents and potential buyers will be watching for a report on October housing prices this month. The Office of Federal Housing Enterprise Oversight pegs confirming loan limits each year on fluctuations in annual housing prices from October to October.

If the median housing price fell in October, the conforming rate will be frozen for 2007 at the current $417,000.

Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) are restricted to purchasing mortgages at or below conforming limits. This year’s data won’t be published until Nov. 28.

Last year, the October median home price was up 16 percent.

Charlotte Business Journal – 11:05 AM EST Tuesday

A Columbia, S.C., real estate development company is planning a $20 million office condominium project in Lake Wylie, S.C.

The Lake Wylie Business Centre will be built near the intersection of S.C. Highway 49 and S.C. Highway 274. The site is 15 miles south of Charlotte.

The Jackson Corp. will build the exterior shell and provide a list of local subcontractors to handle interior finishing for buyers.

Each of the one-story buildings will measure 7,000 square feet, with individual units ranging from 700 to 7,000 square feet.

The development will total 91,000 square feet.

“We are delighted to have this attractive new development in our community,” says Susan Bromfield, director of the Lake Wylie Chamber of Commerce. “It is a great location, and the architecture will make it a great fit for our town.”

The Jackson Corp. has developed numerous residential and business projects across the Southeast for more than 30 years, including Plantation Pointe on South Carolina’s Lake Murray.

PHOENIX Downtown Phoenix is set to get more hotel rooms, office space, condos and a grocery store.
That’s if the Phoenix City Council approves a 900 (m) million dollar project on Wednesday.

Phoenix Mayor Phil Gordon says the project _ known as CityScape _ would be a turning point in making downtown Phoenix a sustainable, 24-7 environment.

Scottsdale-based RED Development thought of CityScape.

Their plans call for the project to sprawl across three city blocks, just south of Washington Street, and include Patriots Square Park.

250,000 square feet would be set aside for dining, shopping and other entertainment. Among the possible occupants of that space _ P-F Chang’s China Bistro and A-J’s Fine Foods.

Construction could begin in the spring and the project could be finished in 2009 if the council gives it the okay.

The condominium market’s loss is the apartment market’s gain, according to surveys of multifamily housing developers by the National Association of Home Builders.

Builder confidence in the condo market dropped dramatically in the second quarter of this year, while confidence in the apartment market hit record highs.

NAHB Chief Economist David Seiders says there is “clearly an oversupply” of unsold condo units, while vacancy rates for apartment buildings are dropping and rents are increasing.

“It looks pretty solid for the rental market for the foreseeable future,” says Leonard Wood, director of Wood Partners, a Marietta, Ga.-based multifamily housing developer.

The conversion of apartments to condominiums when the condo market was hot helped increase the demand for new apartments, he notes.

Now some projects that had been planned as condos are being switched to apartments. But these are “marginal projects” in poor locations, says Bruce Menin, president of Crescent Heights, a New York City-based developer of high-rise condominiums.

“Special projects on special streets in American cities are not going to get replicated,” he says, and will still do well.

But some projects may get harder to do as condo prices soften, he says. This means local governments should moderate their demands for low-income units in new condo projects, he says. That’s “a good public policy goal,” he says, but requirements that are too onerous could keep projects from getting off the ground. This ultimately would reduce housing supply, and make housing more expensive in tight markets, even for moderate-income residents, he says.

Wood says local governments should “be more careful” about adding costs to multifamily housing projects through impact fees and building codes.

New Mexico Business Weekly – July 27, 2006

Pulte Homes Inc., which owns the Phoenix-based Del Webb brand, reported a 20 percent decline in second-quarter profits.

Net income fell to $243 million, or 94 cents per share, from $304 million, or $1.15 per share, a year earlier.

The home builder said higher average home prices failed to offset a nearly 30 percent drop in new home orders.

Michigan-based Pulte (NYSE:PHM) said its average sales price per home rose 8 percent to $335,000. However, the company closed on fewer than 9,900 homes in the quarter, down 3 percent year-over-year.

Quarterly revenue rose a modest 3 percent to $3.36 billion.

“Our second-quarter results reflect the changing dynamics being experienced in the home building industry,” said Richard J. Dugas Jr., president and chief executive. “The supply of homes for sale continues to increase, while greater buyer uncertainty about purchasing a home at this time is being further impacted by their inability to sell existing homes.”

Meanwhile, the U.S. Commerce Department said June new home sales fell 3 percent, led by an 11 percent decline in sales in the Northeast. The West was the only region in the country to report an increase in new home sales last month, up 8 percent.

The Del Webb division of the company, known for its signature Sun City, Ariz. retirement communities, develops active adult and master-planned retirement communities across the U.S. and is in the process of developing such a community in central New Mexico. It started scouting for land here for one of its retirement communities in 2005 and has reportedly narrowed the field to two sites. Pulte Homes, which bought out the former Sivage Thomas Homes in Albuquerque in 2003, also has multiple residential subdivisions in the state.

Diane Arthur of the Phoenix Business Journal, an affiliate publication, and the New Mexico Business Weekly, compiled this report.