Let’s take a section of the market that’s popular with second home buyers and investors.  The low end.  I know, that’s not how real estate agents are supposed to talk.  We’re supposed to say things like “affordable” or “entry level”.  I call’em how I see’em.  I’m specifically speaking about the single family home market under $100,000.  When you take short sales out of the equation, as of this morning, there were exactly 145 actively listed homes in the greater Phoenix area.  In case you didn’t know, when I write about the greater Phoenix real estate market, I mean Phoenix, Scottsdale, Mesa, Tempe, Chandler, Gilbert, Peoria, Glendale, Avondale, Tolleson, Goodyear, El Mirage and Surprise.  145!  Are you kidding me?  The proof is below…

I know it’s not a great picture, but it makes the point.  What does all of this mean?  Have we seen the bottom of the market?  The next few months will be very telling.  January through May is the busiest season here in the Phoenix real estate market.  This is the time of year when people from Maine to Washington want to get out of the cold and sit by the pool, maybe play a little golf.  The Phoenix Open officially starts tomorrow, and MLB spring training starts in a few short weeks.  Who’s going to blame our winter visitors for falling in love with our wonderful home?  Who wouldn’t like a second home on a golf course in sunny Arizona?  If the current trend continues, we may be staring at a housing shortage in the next few months.

I’m NOT saying we’re headed for another real estate boom in Phoenix.  I don’t make predictions.  I like to study trends, and I like to point out facts.  The FACT is that if the current TREND continues, homes in Phoenix under $100,000 could become a thing of the past.  Like how I tied that all together?  So, get off the couch, pick up the phone, and call me today!  I’ll make sure you’re not late for the party!  Just don’t call tomorrow.  I’ll be at the Phoenix Open.  Until next time…

That’s, obviously, not the only reason.  Real estate prices in North Dakota are peaking right now with oil companies buying up everything in sight.  While pricing in the Valley of the Sun continues to scrape the bottom.  In a recent USA Today article they had this to say:

The weather and bargain prices are drawing many more North Dakotans now because small towns are overrun with oilfield workers sleeping in cars, motels or “man camps,” compounds of modular, temporary housing for predominantly male oil workers.

What I say is, welcome!  Get out of the cold for a while and come down here to bask in the sunshine.  With median home prices down 55% from their peak, there is no better time to buy that second home in Arizona.  Bring that oil money, buy an affordable home, play some golf and have a blast!  All you need to do to take advantage of this great opportunity is call Patrick Jorgensen today.  I’ll help you find that perfect vacation home.  By the way…  That’s my backyard in January…

When you are looking for that perfect vacation home, you need to find a person and a company you can trust.  The key though, is the person.  The company is important, don’t get me wrong, but the person has to be the right fit.  You need someone who can not only listen to your needs, but learn from them and anticipate what you need next.  Look for someone who not only knows the market , but knows the area.  You may think they are the same thing, but they are not.  Any real estate agent out there can read market reports and give you their opinion on the market, but someone who knows the area you are looking in can tell you the best place to buy local produce, get a latte, get your oil changed, hire a landscaper, get great food, or go bowling.  What I’m saying is find a professional!  Get someone who, if they didn’t grow up in the area you are looking in, at least did the research to know these things!

You are looking for a second home.  You’re not just looking for a house.  You want a home away from home.  Find the right person to help you get it!  Take your time.  Interview agents.  They are looking for a job.  If they are too good to sit through a phone, or face to face interview, are they worth your time?  Make sure you have the right person to handle your second home purchase and you will not go wrong.  A good agent will stick with you through thick and thin through the rest of your life.  Make sure the person you select is the one for you.  Good luck, welcome to the valley, and god bless.  My resume is below:)

Grew up in Scottsdale, graduated from Saguaro high school.  Well… for the rest, references are available on request.

Several of the high-rise towers and other luxury-condo projects are filling up with buyers.

- Almost 90 percent of the 146 condominiums at One Lexington, a converted 1974 bank building on Phoenix’s Central Avenue, have sold.  Only 14 of the condos were sold before the project’s previous developer filed for bankruptcy in 2009.

- In central Scottsdale, more than 20 condos out of 50 planned have sold at the once-stalled Sage project along the city’s waterfront.  The Safari development, which is on the grounds of the once famous Safari resort, is also filling up.

- The brick minimansions known as Chateau on Central in Phoenix, once boarded up and stalled in foreclosure, are now open and selling.

Metro Phoenix urban-housing expert and broker Keith Mishkin estimates more than 120 new high-end condos in newer developments have sold so far this year, almost twice as many as last year.

“I wouldn’t say the new-condo market has bounced back, but it has definitely started to stabilize,” he said. “And it’s not just investors buying now. People who want the urban lifestyle and Baby Boomers are now the biggest groups of high-rise condo buyers.”

And why not?  These are not the condos of old.  They have everything a winter visitor would need: fitness rooms, cafes, valets, doormen, proximity to transportation, dining and shopping, golf courses and best of all LOW MAINTENANCE!  Who wants to pend their winter in the Valley of the Sun taking care of a yard?

Late last year, Phoenix architect Mike Hauer bought a one-bedroom condo on the 14th floor of One Lexington tower in midtown Phoenix.

“The price was right, and the location is great,” said Hauer, who paid about $180,000 for his condo and doesn’t have to pay homeowner-association fees for a year as part of the developer’s incentives to draw buyers. “I had friends over for Fourth of July, and we could watch the fireworks from my balcony. There aren’t a lot of Phoenix homes with views like mine.”  Hauer paid less than half of what his condo was originally priced at when Equus was developing the project in 2008.

Equus filed for bankruptcy, and its lender took over the project. In February 2010, after scouring the Phoenix market for the best high-rise condo deals, British Columbia-based Macdonald Development Corp. bought the tower from the lender for an undisclosed sum.  GO BC!

So far, Macdonald reports it has sold $30 million in condos at One Lexington. The tower was valued at $19 million in 2009.

“Some people thought we were nuts for buying One Lexington,” said Rob Hubbard of Macdonald Development. “But we came into the market at the right time. It cost the last developer $340 a square foot to build it. We obviously didn’t pay that much. Now, we are able to sell the condos for $225 a square foot and make a profit. Our buyers are seeing almost instant appreciation.”  Can you believe that?  Instant appreciation!

The same thing that crashed the single family market crashed the condo market in Phoenix.  Too much inventory and not enough buyers.  Things have definitely changed in 2011.  This market now has too little inventory and too many buyers.

According to Arizona housing analyst RL Brown, as many as 10,000 apartments were converted to condos in 2005-07, further adding to the supply of  housing  rarely, if ever, seen in the Valley.  As of today, 9/17/2011, there are only 19,319 properties listed as active in the Arizona Regional Multiple Listing Service.  That’s less than a 3 month supply!

Chicago based ST Residential bought the Scottsdale Safari condo project out of foreclosure in 2010.  This year, condos at that project near Scottsdale Fashion Square have been selling for $400,000 and higher.  The project is across the street from Scottsdale Fashion Square which is one of the largest malls in the western US.  It’s also walking distance from historic downtown Scottsdale.

So let’s take a look at what we might be able to expect from the future of this market.  I wish my crystal ball wasn’t on the fritz…

When Summit Properties started building a condo project in central Scottsdale in 2007, the least expensive unit was offered at $695,000 and the penthouse at $1.3 million.  But, there were few buyers, and Summit lost the project to its construction lender iStar, which finished building it and lowered prices.

Jan Jumet and his wife, who live in Pennsylvania but have been visiting Scottsdale during the winter for several years, recently purchased a condo in the project now named Sage.

“We have wanted a second home in Scottsdale for a long time, but we were waiting for the bargains,” Jumet said.  The bargains are here!  Condos are now selling at Sage for $370,000 to $530,000.

Chateau on Central, the luxury brownstone homes, could be the next comeback project for metro Phoenix’s urban housing market. The project, like several other stalled condo projects including Centerpoint, was financed by the now-defunct Mortgages Ltd., which left many private investors with big losses when it abruptly shut down in 2008 after the death of founder Scott Coles. Originally, the five-story minimansions with copper turrets, elevators and rooftop terraces were supposed to sell for $2.8 million to $4.5 million.  But, after they sat half-built and empty for more than a year, Wisconsin-based MSI West Investments paid $7 million for the 21 homes.  The buyer finished the project and is now marketing the homes for $1.1 million.

Real-estate analysts say there is a market for high-rise condos and lofts in metro Phoenix.  The problem a few years ago, was too many developers and investors jumped into the market at once.

This winter, when you are looking for a second home in the Valley of the Sun, consider a condo.  You might be surprised at how much you can get.

Way back in the 1700′s (cue historical music) the Spanish missionaries were planting wine in Arizona and New Mexico.  Those friars knew how to party.  And, that’s the history lesson!  Wine grapes were not really grown in significant quantities in Arizona from that time until the early 1970′s.  At that time people started planting vineyards, for the express purpose of growing wine, in Sonoita, AZ on the southeastern border of the state.  What started as a small cottage industry has blossomed in the past 20 years into a bona fide business.

What most people don’t know about Arizona is that certain popular grape varieties grow very well in this state, among them are Cabernet Sauvignon, Syrah, Merlot, Chardonnay, Sauvignon Blanc and Sangiovese.  The main reason is the climate where these grapes are grown.  Most of the wine-producing areas of Arizona range from 4,200 to 5,600 feet in elevation.  And, because of our warm days and cool nights at those elevations, the grapes love it!

Arizona wines have been enjoyed by many people in many places around the world including the White House (twice) and James Beard House.  Maynard James Keenan (from the band Tool) created his own label Caduceus while enjoying a glass of wine on his patio in northern Arizona.

There are so many things to do while enjoying your winter home in Arizona.  This will just add to the list, and give you something to tell your friends about when you are done enjoying the warm weather.  For more great information on the wineries in Arizona there are two sites I would recommend.  Arizonawine.org is the Arizona Wine Growers Association website.  The other would be Arizona Vines and Wines.  They both have information about tours, tastings, orders and history.

This winter, get out there and enjoy the other side of Arizona!

On the surface, the numbers from July 2011 can look a little disheartening after the record June we had.  But, when you look at the year over year numbers they perk up a bit.  Total single family home sales in July were 7,242 (June 9,547) according to the Arizona Regional Multiple Listing Service (ARMLesS).  That’s a 24% decrease!  Scaaaarrryyyy!  Not really folks.  July is a historically slow month for home sales in the Phoenix area.  The good news is the year over year numbers.  July 2010 sales were 6,006.  So, the YOY volume is up significantly!  Hate to rain on the joy parade, but the median home price (SFR) dropped from $119,000 in June to $116,500 in July.  Wait…  That’s still a good thing if you want to purchase a home!

The reality is, if you are looking to buy a home, all signs point to the market at or nearing the bottom.  Could prices continue to go lower?  I don’t know because I lost my crystal ball in a poker game in 2002.  But, if you look at the numbers, all indicators are pointing to higher prices in Phoenix in the foreseeable future.  I love that word, it covers almost everything.  Look… inventory continues to drop, rents are going up, and job growth is starting to look healthy again.  Now, I’m not an economic expert (I sell houses for a living), but when supply decreases and demand increases, don’t prices generally rise?

Now, more than ever, is the time to buy that second home.  Give me a call, I’m happy to help!

Now, perhaps more than ever, is the best time to buy that second home in sunny Arizona!  Prices are at 20th century levels and mortgage rates are at historic lows.  According to Zillow, the median home price in the Phoenix area was $98,900 in June of this year.  With a 10% down payment you can have a mortgage payment on your vacation home of less than $600!   Where else in the country can you enjoy 8 months of wonderful weather, no natural disasters, 4 major sports franchises, hundreds of golf courses, a low cost of living, the lowest gas prices in the country and easy access to a major international airport for less than $600 a month?  Are you beginning to notice why this is the best market to own your second home in?

So pack up the sunscreen.  Put on your shorts and flip-flops.  Grab your golf clubs.  Find a professional who knows the market (shameless plug).  And get down here a little early this year.  This looks like it’s going to be a banner year.  Wait… can you hear it?  It’s coming… It’s the most wonderful time of the year!

Mortgage interest: If you use the place as a true second home, rather than renting it out as a business property, interest on the mortgage is deductible just as interest on the mortgage on your first home is.  You can write off 100% of the interest you pay on up to $1.1 million of debt secured by your first and second homes and used to acquire or improve the properties.

Property taxes:  You can deduct property taxes on your second home, too.  In fact, unlike the mortgage interest rule, you can deduct property taxes paid on any number of homes you own.

Renting:  This is where it gets a little more complicated…  Lots of second-home buyers rent their property part of the year to get others to help pay the bills.  Very different tax rules apply depending on the breakdown between personal and rental use.  If you rent the place out for 14 or fewer days during the year, you can pocket the cash tax-free.  Even if you’re charging $10,000 a week, the IRS doesn’t want to hear about it.  That’s the first time the IRS hasn’t wanted to know about something.   The house is considered a personal residence, so you deduct mortgage interest and property taxes just as you do for your principal home.  If you rent your vacation home out for more than 14 days, you must report all rental income.  You also get to deduct rental expenses, and that gets complicated because you need to allocate costs between the time the property is used for personal purposes and the time it is rented.

There are many different scenarios, depending on how much you use vs. rent your vacation home, that I could take up all of your day.  And I would fall asleep.  Again, for more detailed explanations Contact Us and we’ll introduce you to one of our preferred business partners.

Tax-free profit: Although the rule that allows home owners to take up to $500,000 of profit tax-free applies only to your principal residence, there is a way to extend the break to your second home: make it your principal residence before you sell.  That’s not as weird as it might sound.  Nor is it as lucrative as it used to be.  To stay with the “overview” theme of this post, I will simplify…

In 2008 congress, in their infinite wisdom, made it harder.  To make a long story short…

Let’s say you have owned a vacation home for 10 years and make it your main residence in 2011.  You then decide to sell the house in 2013.  Since the two years after 2008 the place was your second home (2011 and 2012) is 17% of the 12 years you owned the home, only 17% of the gain is taxed.  The rest qualifies for the exclusion of up to $500,000.

There are many other ins and outs to owning a second home.  Find a professional firm and stick with them.

First:  Figure out which state you want to be in.  I know this may sound basic, but if I were to purchase in the UK I wouldn’t know Manchester from Liverpool.  If I were to purchase in Canada, I wouldn’t know the difference between Calgary and Banff (actually I do know that one).  

Second:  Find a PROFESSIONAL real estate agent who knows the area you want to be in.  They should have knowledge about all aspects of the market and sub-markets in the area you are looking in.  They should also have the transaction experience to be able to represent you capably no matter what comes up.  This is a huge part of the experience!  Five years ago, everybody and their dog’s cousin had a real estate license, and you would not believe the transactional issues that arose.  Find somebody good, and then make sure they do their job!

Third:  Figure out your budget.  If you are paying cash, find your comfort level and stick to it.  If you’re planning on financing your purchase, talk to a lender who is familiar with lending to foreign nationals (if you were successful on part two, your real estate agent should be able to help).  Have them figure out what you qualify for, and make sure your real estate agent knows.  Once you have completed steps one through three successfully, you are ready for the FUN PART!

Fourth:  Look for your home!  By now, your agent will know what you are looking for, where you are looking, and what you want to spend.  Let them work for you!  As agents we have access to every available home on the market, and some of us have access to ones that aren’t on the market yet.  If you have found a good agent, that you are comfortable with, let them do their job.  They are an invaluable resource for you, especially if you are out of the country.  There are a ton af great websites out there, like Trulia and Zillow, where you can look at homes online.  They are not as accurate as a good professional working for you.  Now, I will tell you that any agent that gets frustrated by you sending them houses that you have found online isn’t worth your time.  Keep them on their toes!

Fifth:  Now that you have found the house you are looking for it’s tie to submit an offer!  This is where transaction experience really counts.   Your agent will figure out a fair price for you to pay based on their knowledge of the market and comparable sales in the area.  They will talk to you about earnest money (good faith deposit) among other things.  Then, they will submit the offer to the seller.  At this point there are any number of things that can happen depending on the type of transaction (for more in depth discussion Contact Us).

Sixth:  Once the offer is accepted by the seller escrow is opened.  In Arizona this starts the inspection period.  This is usually 10 days, but can be negotiated.  During this period you, as the buyer, can conduct any number of inspections on the property to satisfy yourself that it is in the shape you want it to be in.  Again, for more details on the different inspections that you can have performed Contact Us.  During this time your earnest money is refundable.

Seventh:  Wow!  We’re almost to the home stretch.  Once the inspection period is over, it’s hurry up and wait time.  At this point, the title company will be conducting title searches to make sure that the house has clear title.  If you are paying cash, this is all you have to wait for to close.  If you are financing your purchase, this is also where your mortgage company will be finishing the processing of your loan.

Eighth:  The home stretch!  Once your loan is processed and the title search is completed, you are ready to close!  In Arizona our closings occur at the title company.  There are states that still use attorneys (man that would be a cake job).  If you are financing, the lender will send your loan documents to the title company for you to sign.  If you are paying cash it takes about one tenth of the time to sign.  Once the documents are signed, the title company will inform the lender, and the lender will fund the loan.  Once the loan is funded, the title company will record at the county recorder’s office (usually electronically).

Ninth:  Pick up your keys!  I like step nine.

Unfortunately, there are any number of things that can complicate this process.  And, as I said at the beginning, this is just an overview.  It is also an overview of the process in Arizona.  Every state will have a slightly different process.  That is why I can’t stress enough the fact that you need professional representation.  Again, for a more in depth conversation Contact US.

However, builders and analysts said there were several other hurdles to be negotiated before the homebuilding industry could experience anything resembling a recovery.  But, executives at locally active builders, including Shea Homes, Taylor Morrison and Robson Communities said they have scaled back costs and are prepared financially to endure the remainder of the foreclosure era.  The builders said they did not expect to see a meaningful increase in sales for at least another year.  Still, they pointed to a number of positive trends that could turn out to be the seeds of a future uptick in new-home sales.

Those trends include the growing number of Baby Boomers reaching retirement age, increased foot traffic at new-home sales offices in the Phoenix area and a mild price recovery under way in the existing-home market.  The second home, or vacation home, market is expected to help drive new home sales as well.  As the Boomers continue to retire, and look for homes in warm weather states, they will be a big part of any new home recovery.

Maricopa County home foreclosures decreased significantly in the second quarter, shrinking from 15,831 transactions in the second quarter of 2010 to 10,875 transactions, according to Mesa-based real-estate market research firm Ion Data.  Likewise, notices of coming foreclosure decreased from 19,664 notices in the second quarter of 2010 to 13,311 notices, Ion Data analyst Zach Bowers said.

There were 4,000 new-home permits issued in Maricopa County in the first quarter, down about 10 percent from 4,546 permits during the same period a year earlier, according to the most recent data available from the realty-studies program at Arizona State University’s W.P. Carey School of Business.  Home-construction activity remained slow in the second quarter, commensurate with the lower sales volume that builders have experienced, said Pierrette Tierney, vice president of sales and marketing for Scottsdale-based homebuilder Taylor Morrison.

“Permits are down, but it’s necessary to balance out the supply and demand scale,” Tierney said.

Still, Tierney and other builders said sales per subdivision were tracking almost identically with 2010 figures, and that the year-over-year drop in sales is due primarily to the closing out of several subdivisions in 2010.  The consistency of sales per subdivision belies a significant boost in foot traffic inside home-sales offices and model homes, which Belfiore described as both a blessing and a curse.  The good news, he said, was that the average number of potential buying parties per subdivision per week reached its highest level in three years during the second quarter.

Ed Robson, founder and chairman of Sun Lakes-based Robson Communities, said financing had not been a problem for buyers approaching retirement age, the demographic on which Robson focuses most heavily.  The company’s sales have remained steady this year compared with 2010 and are up 16 percent from 2008.  Robson said Baby Boomers’ lack of confidence in the country’s economic future had been the primary factor preventing home sales in the age-restricted market.  But it seems that confidence is starting to return.

Another problem Robson Communities has run into lately is a shortage of skilled labor, he said.  Robson said community rebuilding efforts in regions torn apart by floods or tornadoes have lured away many of the state’s best contractors, some of whom were struggling in Arizona due to a lack of steady work.  That has started to change.  Construction employment in Arizona increased by 1,900 workers during the past year, according to an analysis conducted by the Associated General Contractors of America.  Much of that increase came in the last month with 1,800 positions being added, or an increase of 1.6 percent in the construction workforce.

Robson said there was reason for homebuilders in the “active-adult lifestyle” market to be optimistic.  Their target audience, adults age 45 to 64, has swelled to more than 81 million, compared with just over 31 million in 2000.  Ken Peterson, Arizona vice president of sales and marketing for Walnut, Calif.-based Shea Homes, said recent home sales inside the company’s Trilogy active-adult communities had outpaced sales in Shea’s family oriented neighborhoods.

Builders and analysts said the key to surviving the next year or two was not some magic bullet but a constant effort to be more efficient, resourceful and responsive to market changes.   Eventually, they believe, things will get better.

Robson, whose Sun Lakes development is one of the largest active-adult communities in the state, said there always will be people who want to buy a home and settle down in Arizona.

“We’ve got the sun and the weather,” he said. “Where else are people going to go?”

My sentiments exactly!  Contact Us today to help with your 2nd home purchase.