Category Archives: Blog

Phoenix County had Nation’s Highest Population Growth in 2016

Highest Population Growth in 2016

Maricopa Country — the central county within regional Phoenix, Arizona — topped the nation’s list for the highest population growth in 2016.  According to the U.S. Census Bureau, more than 81,000 people moved here in 2016 – that’s 222 people per day!

Phoenix supplanted Harris County in Houston, Texas as the top spot. A major feat, as Harris County had experienced eight years of growth due to an oil industry boom.

Phoenix, Arizona Population Growth has been Mounting

When compared to the rest of the country, Phoenix is the 13th-largest metropolitan area. Maricopa County, in particular, is home to more than 4 million people and is the fourth most populous county in the country.

The city is no stranger to making the top of lists. And it has been for some time now. In 2007, Forbes magazine ranked four of Maricopa County’s municipalities in the top ten fastest-growing in the nation. That was 10 years ago. So, it’s not entirely surprising to see it take the top spot a decade later.

The Phoenix Job Market & Economic Factors

Phoenix is known for its sprawling city, but the downtown area is growing just as fast. There’s new high-rise and building construction. And there’s Phoenix light rail, which opened nearly a decade ago and has provided much-needed connectivity between the downtown corridor, Tempe, Mesa, and other communities. It has also created $9 billion of investment along the lines.

And that brings jobs.

In an Arizona Republic Op-Ed about the 2016 population growth, Steve Chucri, Maricopa County Supervisor for District 2, also noted that “regional pro-growth policies” led to nearly 8,000 jobs in 2016 and “help explain why some of our biggest employers are doubling down on their investments in our fine county.”

  • Top Technology Marketplace

And the technology industry is certainly doubling down in the Valley. Phoenix technology jobs have grown 188 percent year over year, according to Money magazine. This landed our region as #3 on the publication’s list of the 20 hottest cities for technology jobs. Other major publications have also taken note. Forbes, Fortune and the New York Times have all recently featured the Valley as a technology powerhouse.

Phoenix Mayor Greg Stanton’s State of the City speech echoed these sentiments, noting the number of tech companies has nearly quadrupled in the last five years alone. Once-vacant structures in Phoenix’s Warehouse District now house more than 60 tech start-ups. Intel, Raytheon and Lucid are hiring thousands. Boeing just announced its moving hundreds of jobs to Arizona. The list goes on and on.

  • World-class Healthcare

A retiree hotspot, it makes sense that Phoenix would have some of the best healthcare facilities in the world. And new ones are being added all the time. Since 2012, the Phoenix Biomedical Campus has added a world-class cancer center and two other research buildings. There’s also what’s now known as the Arizona Biomedical Corridor near Desert Ridge. In partnership with the city and Mayo Clinic, Arizona State University is developing its $75-million Health Solutions Innovation Center. It is slated to begin construction next year and will be in the same vicinity as Mayo’s 7-story hospital. These projects have created thousands of healthcare jobs, bringing new doctors, researchers and students to the region.

The Phoenix Lifestyle: Sun, Scenery & So Much More

In addition to a strong job market and local economy, people are certainly moving for the Phoenix lifestyle. It has proven to be an attractive lifestyle for people of all ages and interests.

Tons of sunshine. There’s over 200 days of sunshine. Even in winter months, you will find the sun streaming into your window.

Incredible landscapes. The scenery here is unlike anywhere else. There’s Sonoran Desert that stretches as far as the eye can see. Bright orange-and-pink sunsets. Famous mountain peaks.

Affordable living. Phoenix’s low cost of living makes your dollar go further. There’s great pay. In the tech industry, early career median pay is $58,400 and mid-career median pay comes in close to $100,000, according to Money magazine.  And housing is accessible. The median rent is around $1,300 and median home prices are just over $200,000.

Outdoor activities. Hiking, biking, golfing, mountain climbing. You name it, Phoenix has it. You can even drive an hour or two out of the city and find ski slopes. While the metro Phoenix area is spread out, the city is focused on making individual communities bike- and pedestrian-friendly. Arcadia is a great example of this.

Major events. It goes without saying: There is a lot to do here. Just in the last two years, Phoenix has hosted the Super Bowl, the College Football National Championship, and the Final Four. This has brought millions to the city, sparking economic growth and renewed interest in the Valley of the Sun. This isn’t even including other annual sporting events, like the PGA Tour Waste Management Open and MLB Spring Training, which are also big draws.

Nation’s Highest Population Growth in 2016 & Future Opportunity

It’s impossible to sum up all of the Phoenix attractions. But the population growth speaks for itself: It is one of the best places to live in the country. It is also a great place — not to mention, a great time — to be a homeowner or real estate investor in Phoenix, Arizona. The growth is not slowing down anytime soon. And as the Valley’s population continues to grow, so, too, does its opportunity.

2017 Luxury Home Features & Trends With Best Returns

2017 Luxury Home Features & Trends

Home trends are always changing. Some return in new ways decades later. And some disappear as quickly as they came.

Either way, it’s always important to keep a thumb on the pulse of current home trends: amenities, design, technology, and more. It’s a way to identify the best properties — spaces that will truly hold their value — and safeguard investments long-term. This is true for homeowners, buyers and sellers across the board, but is even more important in the luxury home market. With discerning tastes and higher expectations, luxury homeowners often set the stage for what’s next in real estate.

Here are the luxury home features & trends with the best returns in 2017.

5 Luxury Spaces & Value-Add Trends

  1. Kitchens: Commercial Appliances

Kitchens Commercial Appliances

The kitchen is one of the most important spaces in any home. It holds family, friends and a whole lot of value. The modern luxury homebuyer is seeking a space reminiscent of a high-end restaurant. And that means appliances fit for a bustling commercial kitchen, including a professional-grade range. In high-end homes, you’ll often see grand ranges as functional kitchen showpieces. Sometimes reaching six feet in length, these high-end appliances come in eye-catching colors and various configurations – fitting any luxury space or homeowner’s personal style. La Cornue’s Grand Palais 180 and Viking’s Tuscany Ranges are two popular examples from Europe.

  1. Master Closets: Massive Islands

Master Closets Massive Islands

A staple in any luxury kitchen, islands are having a major moment in the master closet. It’s part functionality, part centerpiece. The master closet is a luxurious showroom, and fashion is now the ultimate in high-end décor. The island is a perfect opportunity to showcase statement jewelry, designer purses and so much more. It has organizational functionality. It creates a convenient and efficient dressing room. Often as big as the master bedroom itself, master closets have become yet another space to relax and spend time. Massive islands are a must; while fireplaces, lounge chairs and flat-screen TVs are also finding a place in these luxurious spaces.

  1. Great Rooms: Wall of Windows

Great Rooms Wall of Windows

The mark of any well-designed Great Room is a feeling of openness. It brings down walls between rooms and, in turn, between people. And now with the “Wall of Windows” trend, it creates a sense of openness to the outdoors. Floor-to-ceiling windows are an opportunity to bring in tons of natural light and frame awe-inspiring landscapes. They often feature moving glass wall systems to seamlessly — and literally — open the space up to the outdoors. Such features are especially valuable in places where indoor-outdoor living is a part of the culture, like in Arcadia, Arizona.

  1. Garages: Space for 5 Cars or More

Garages Space for 5 Cars or More

A luxury home wouldn’t be complete without a garage fit for the finest sports car collection. The expectation is a five-car garage at minimum. It is used to display the automobiles as art, and the garage should be set up as such. In Arizona, car collections are a particularly big deal. January brings celebrities and international car collectors to the desert for the opportunity to bid on the rarest and most extraordinary automobiles in the world. Gooding & Company, for instance, just auctioned a $3.3 million 1925 Bugatti in 2017. There’s no doubt that a gallery-style garage is a must for car enthusiasts to showcase these one-of-a-kind million-dollar collections.

  1. Wine Rooms: Glass-Enclosed & on Main Floor

Wine Rooms Glass-Enclosed & on Main Floor

Another important collection? Wine. No longer relegated to the basement, luxury homeowners desire accessibility and the ability to showcase personally curated collections. In chilled glass-enclosed rooms, wine collections become a focal point and another statement piece. These impressive wine rooms are custom-made — every one is different — but the current trend is to place them prominently on the main floor of the home.

2017 Home Trends for Every Room

  • Design: Mixed Metals

Matchy-matchy design is out. It’s all about mixing color and texture, which is why mixed metals is one of the biggest trends today. It bridges industrial and minimalist design styles. And with so many ways to embrace metals, it’s a trend with staying power. From faucets to cabinetry hardware, you’ll see juxtaposing metallic and matte finishes. Classic combinations include antique brass and oil-rubbed bronze, brass and chrome, and silver and polished nickel.

  • Technology: Smart Homes

Fifty-four percent of buyers would buy a smart home over a traditional one, and 65 percent would pay extra to add smart-home features. Needless to say, smart homes are here to stay and an important consideration for the luxury real estate market. Internet of Things (IoT) additions include: home automation, voice-activated entertainment and next-level security systems. It could mean anything from a refrigerator that alerts homeowners when food is about to expire to air-conditioning that cools the house before an impending arrival. Homeowners expect to be just as connected to their luxury residences when on another continent as they are when inside the home – all from the touch of a smartphone.

Today’s luxury home features and trends will continue to evolve as they always have, but there is one thing owners and buyers will always desire: The ability to make a solid, strategic investment. And having a clear understanding of current trends and expectations is always a good first step.

Physician Loans Make It Easy for Doctors to Secure a Mortgage

physician loans

Becoming a doctor is no easy feat. There’s significant time commitments, studying, student loans, and so much more. It is one of the most prestigious career paths and has high-earning potential, which is why it can be frustrating when a doctor’s unique path doesn’t fit the “conventional mortgage loan” mold — namely due to student loan debt.

It’s also why some lenders have created a specific mortgage product for doctors called “physician loans.” Physician mortgage programs offer all kinds of opportunities and benefits, but above all, they make it easier for doctors to buy a home.

Physician Loan Qualifications

Borrowers should expect to gather the traditional documentation — like bank statements and employment/income information — as part of the lending process. That said, physician loans are considered a niche jumbo loan product and there are unique eligibility requirements. It’s important for borrowers to:

  • Hold a select medical degree 
    • Licensed Medical Physicians (MDs)
    • Doctors of Osteopathy (DOs)
    • Doctors of Dental Medicine (DMD and DDS)
    • Residents within these programs
  • Be 5 years or less into residency or a medical role. Prospective buyers will be asked to provide medical school history.
  • Have a job secured. From pay stubs to W2s, lenders will want to see proof of employment and income.
  • Feature a preferable debt-to-income ratio. These loan products are typically less critical of student loan debt. For Fairway Independent Mortgage Corporation, the debt-to-income ratio cannot exceed 41 percent.
  • Possess a high credit score. Fairway, for example, looks for a credit score of 700 or above.

Two Big Benefits

There are many advantages to physician loans. For one, there’s a very low down payment required. For Fairway, it could be as little as 3 percent down for loans up to $650,000 and 5 percent for up to $850,000. In addition, gift funds are allowed as part of down payment.

Another important benefit to highlight: There’s no Private Mortgage Insurance (PMI). A conventional loan requires borrowers to put 20 percent down in order to sidestep PMI. This is not the case for physician loans.

“For a doctor not to have mortgage insurance — with only putting down 3-5 percent — that can be very helpful,” says Jeramy Williams, Senior Loan Officer at Fairway. Not only does this save physicians money in the long run and reduce barrier to entry, it lightens the monthly financial burden.

Other Physician Loan Considerations

  •  Every lender is different 

Not every lender offers physician loans, so borrowers may need to do a bit of research. In addition, physician loan products differ from lender to lender, including maximum loan amounts, down payment requirements and more.

  • There’s also different mortgage options 

Like more traditional home loans, borrowers can choose from a fixed or adjustable-rate mortgage (ARM). Fairway, for instance, offers a 10-year or 15-year fixed option, providing borrowers more security at a slightly higher interest rate than an ARM. There’s also the opportunity to select a 5-year or 7-year ARM, which means a bit more risk and lower interest rates. The best physician loan option will vary based on individual borrower situations and needs.

3 Key Questions 

Some healthcare professionals may be choosing between a conventional loan or a physician home loan. Here are three ways to help narrow it down.

What is the size of the down payment?

If the medical professional only has between 3-5 percent to put down on a home, there are major benefits to securing a physician loan. On the other hand, if a borrower has a larger down payment, a conventional loan or other product offering might be more favorable.

“At the end of the day, you don’t pay a rate; you pay a payment,” says Williams. “It doesn’t help anyone if you secure a super low rate, but there’s mortgage insurance and other things that make your monthly payment $100 higher because it’s structured differently.”

He recommends “working backwards” to determine the overall payment picture. Make sure to consider all loan options and undergo a total cost analysis to work out every possible scenario, ultimately finding the one that works best

How big is a borrower’s student loan?

Conventional mortgages now consider either 1.) fully amortized student loan payments as part of the debt-ratio equation or, 2.) 1 percent of the outstanding balance on the student loan if the payment is not reflected. For example, $200,000 in student loan debt could mean $2,000 per month in student loan payment obligations.

“That can make or break some deals,” says Williams.

On the other hand, the physician mortgage program allows for student loans that are in forbearance or deferred for at least 12 months to be excluded from the liabilities.

How long does the borrower expect to stay in the home?
If only for a few years, the best option might be a physician loan in the form of a 5-year ARM.

“It could put [the borrower] in a position where they don’t have monthly mortgage insurance, and they’re making plenty of money where they can repay the loan and build their net worth as they go,” adds Williams.

It may not be easy to become a physician, but it can be easy for physicians to become homeowners. Physician mortgage programs are a unique offering that every physician-turned-borrower should know. As with any loan product and real estate transaction, there’s no one-size-fits-all situation, and it’s always best to work with experienced lenders and real estate agents who understand your unique needs.

AZ Real Estate Building Momentum and Rising in 2017

Sustainability in green homes is one of the ways that the Phoenix real estate market is going to continue to thrive.

Homebuilders are on the job site and getting pretty busy. With limited properties and favorable market conditions, the AZ real estate industry saw the rate of homebuilding rise 10.5 percent higher in January 2017 over the same time last year. Also encouraging are the permits for future construction, which increased nearly 5 percent and reached their highest rate (1.29 million units) since 2015.

Not surprisingly, homebuilder confidence levels are at their highest point in more than a decade.

This theme has even spread to the stock market where homebuilder stocks — like luxury homebuilder Toll Brothers and Scottsdale-based Taylor Morrison Homes — recently proved to have a strong week.

Where does this confidence come from?

  • Overall home sales are up. Home sales for existing structures are at the highest level in ten years, according to January’s seasonally adjusted numbers of 5.69 million from the National Association of
  • Market speed has increased. With strong buyer demand trends, February was the fastest month Redfin, an online real estate resource, has seen in their data in seven years. Houses went under contract within 60 days — shaving off more than a week than those sold in 2016. In addition, an estimated 15 percent of Redfin listings sold within two weeks. This is an increase of nearly 12 percent from last year.
  • Supply is down, which makes new construction important and more attractive. In addition to consistent year-over-year inventory declines, the market saw supply fall even more dramatically over the holidays and within the first quarter of 2017. In fact, February was the third consecutive month where inventory fell by “double digits.” New listings were down 6 percent and overall homes for sale dipped 13 percent.
  • New building projects are needed to fill the demand, and new home sales are steadily increasing. The industry saw the sale of more than a half million newly constructed homes in January. That’s 3.7 percent ahead of December numbers and 5.5 percent over January 2016 estimates.
  • Luxury new home sales are up slightly. While the majority of new homes fit in the $200,000-$399,999 range, the luxury market is still making strides. Luxury real estate typically has smaller, highly specific audience, and movement usually isn’t quite as pronounced at this price point. That said, nearly 4 percent of new homes were priced above the $750,000 mark in October, which was 3 percent higher than those in September. And in Arizona, specifically, the luxury real estate market picked up substantially in the second half of 2016.

New Home Construction & AZ Real Estate

The demand for new construction is also visible in Arizona. Nearly 18,000 new homes were built last year and estimates show another 21,000 will be constructed in 2017. While not the “boom” levels of the mid-2000s — where there were more than 60,000 new homes built — growth is certainly happening in the sector. When it comes to buying vs building a house, local real estate experts predict 16 percent more new-home demand in 2017 and “significant appreciation.”

Not to mention, the combination of buyer demand, low inventory and being one of the hottest real estate markets in the country signals that the homebuilding trend here will continue strong in 2017. It also signals an increase in home prices. Valley home prices are expected to raise nearly 6 percent in 2017 and the new-home market is expected to follow suit.

There’s also movement when it comes to new custom homes and high-end real estate. The Estates at Nordon Manor, for instance, is a project taking root in the heart of Arcadia Proper. The new development is inspired by an 18th century-style farmhouse built in the 1970s, and it is without a doubt one of the most unique and exciting projects we’re been a part of in the Valley. It’s also a reflection that new- and custom-home sales in Phoenix will not just be about meeting current demand, but modern homebuyer expectations.

In all, new construction is sure to shape the real estate market in 2017 and the local Valley landscape as we know it. New-home demand is placing opportunity – and hammers – back in the hands of homebuilders. And homebuyers? The influx of new properties will certainly offer more choice in a limited marketplace and the opportunity to close on the home of their dreams.

Sustainability in green homes is one of the ways that the Phoenix real estate market is going to continue to thrive.

Green Homes Sustain Worth

It is funny how we view the world from a consumer’s point of view in 2016 from when I purchased my first home in 1972. Today the general public is savvier, educated and basically they thirst for the knowledge which leads to empowerment.   When I got into the industry Realtor.com was just coming on the scene, and this release of information to the general public was a foreign concept. The reality is that the consumer is dealing with data being pulled from MLS on various sites like Zillow.com, Trulia.com and Realtor.com. I don’t even remember knowing what 2X4 or 2X6 construction was when purchasing my first 10 homes, but today as a Realtor we would educate a client to purchase 2X6 as we know that the energy efficiency of the home will be more optimal. We are more engaged as a society on everything in life, but especially the entire process of purchasing a home. In the market place for many years going “green” has grown in strength and when you read below you will understand why the consumer is pondering all of this information prior to purchasing or involving themselves in a remodel of their pre-existing home.

The Shift to Green Homes

The building industry has found itself in a great shift: many homeowners are now embracing the “green lifestyle” with more efficient appliances, building material, and even landscaping plants. There are good reasons why this trend has been influential; greater energy savings, reduced maintenance costs, and a healthier home are three key advantages to green homes.

Today, we are seeing a trend in the amount of money homeowners are investing on “green utilities” such as photovoltaic power, insulation with a high R-rating, and televisions, dishwashers, or washing machines that consume less power. Substituting old appliances out with more energy efficient ones are a great way to immediately save more money, and natural resources.   Though these can be a bit pricier than normal appliances, it is only about 5% more with today’s advances in technology, allowing “green homes” to be more of a reality than before.

A “Healthier Home” And Its Leverage

With this enhanced awareness of green homes has also come the direct association of a “healthier home”. In a study done with 232 homebuilders and remodelers across the country, 83% believed that a homebuyer will pay more for a home if it is “healthier”. This idea of a “healthy home” is one where a home’s environment doesn’t contain any substances that could be harmful to families living on or around the property.

Green homes have been an obsession among many home owners as well as builders and the expectations are that more new green technologies will be developed in the future. This concept shouldn’t be applied to only new building projects, and should also extend to aspects like home renovations. This way it will be easier to introduce new building materials, which are more sustainable, and also have the capacity to reduce the emission of greenhouse gases.

Adoption of these green building technologies also have to take the perfect timing as some of their successes can only be tested through some series of trial and error and finally embarking on suitable changes which would lead to environmental sustainability, energy savings and a cost-reductions on buildings.

 

Arizona Living – Should You Diversify Your Portfolio?

I was on the phone with a good friend and client today, we were discussing what portion of your portfolio should be held in real estate.  When discussing Arizona Living with my clients, a question that is often asked, “should I diversify my portfolio in the stock market and dip my toe into real estate?”  There are pros and cons to both options, but at the end of the day you have to make your own choices.  I will say this about real estate, it may go up and it may go down, but through any turn, the property is still yours and it didn’t just evaporate into thin air.

In my world, the haunting reality with real estate is, liquidity needs to become something to define for yourself, especially if you cannot stand the heat in the kitchen when you see the market in a downward trend.  However, the rental market in the Phoenix has shown that it can give you a good return on investment.  Even if the housing market goes south, the rental market will always be there to counter act the downturn in property values if they were to take a hit; allowing for you to wait it out until the market gains steam moving upwards again.

Arizona Living – Rental Options

With real estate you have the ability to improve on your investment, receive cash-flow, and have a passive income on the property.  With the stock market there is more volatility and when it is gone, it truly is gone.  With real estate you have the dirt that as far as I know, He’s not making any more of it.  You have an asset that you see, can touch and improve and guess what, it is yours.  Also, as a good course of action you can hire a management company creating a relationship where you manage the manager.  We have a division within our group called MMG Luxury Property Management, if you need further information for this avenue, reach out to Kelly Martin for information on rates and specifics as to how we serve our clients.

Please see the charts below that I have taken from “The Comford Report” to give you ammunition that you will need when considering whether you would like to invest in real estate.  Please call if you would like to discuss your options at 480-688-2747.

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Living in Phoenix – Why Live Anywhere Else?

You kind of have to wonder how a West Texas girl is living in Phoenix.  My husband and I raised our family in a small town in West Texas and to us its population of approximately 100K seemed extremely large.  Our roots were entrenched in the Oil Industry as my husband was an oil trader for a small refinery in west Texas.   It was around 1990 when my husband was offered a job in the Phoenix market and wanted to see what my temperament would be to leave our root system of career, family and friends and start a new life in Phoenix.   Phoenix certainly has gotten far too negative press for its heat; as it experiences approximately 6+ months of the year of a true paradise.  Living in Phoenix gets high marks from my vantage, but you don’t have to believe me, just look at the stats of people that move to the Valley of the Sun.

The thing that makes Phoenix attractive is not only the climate, but the endless mountain views.  With an annual rainfall of 7 inches, you can see why so many are attracted to living in the Sonoran Desert as there is no snow, rain, bugs, tornadoes, earthquakes, humidity. . .need I say more?   What we do have is 345 days of sunshine every year.  So I’ll confess there are a few months that we have higher than normal temperatures if you measure Phoenix against other areas of the United States, but not to fret as we are about a 1 ½ to 2 hour drive to 7000 feet above sea level offering national forests and pine trees.  Living in Phoenix has to be the best thing since sliced bread.

Current Phoenix Real Estate Market

Since entering into the world of Real Estate over twenty-four years ago, I have seen a housing market tick up steadily, surge with unbelievable growth, inflate, then pop, and bottom out.  We are a Deed of Trust State so when the distressed market brought the entire nation to its knees, Phoenix was one of the first markets to rebound as judicial foreclosure is not done in Arizona.  As you can see from the chart below our real estate market is headed upwards.  What a great time to purchase a home in Phoenix.   We have a healthy vibrant economy with growth happening at a record pace.   See the chart below taken from the Cromford Report which is very revealing of the past and current market trends.

July Blog

June 27 – With the frenzied atmosphere in resale this year there are great expectations for the final number of closings in June, typically one of the highest closing months of the year.  We are not quite at the end of the month, but let’s see how June is faring thus far.  First, it’s always important to know how many working days are in the month to do a fair comparison.  This June will have 22 working days, which is the highest number of working days possible for the month.  That’s one indicator that the month as a whole will have a higher volume of closings compared to the others.  It’s also why we should look at the daily rate of sales instead of the total volume in order to make a fair comparison.

So far this June is 10.6% higher than last year and 8.0% higher than the long term average of daily sales for June.  Not bad, but not spectacular at this point.  In the prior 6 years, the only Junes we’re beating out are 2012 and 2014.  The good news is that the vast majority of sales are normal, which is positive for prices.  We will have to see how the last 2 working days make a difference.

Arizona VS California Luxury Real Estate

 

The consumer in general around the country view Arizona as a desert with no water.  I think there is a heightened awareness regarding water right now in the United States as California itself tackles the question “What do we do now (scream, scream), we’re running out of water? ”  So here I am writing about water, have referenced lush California with its shortages, how on earth would this desert city of Phoenix not be at risk?  I recently heard Sarah Porter with ASU Kyl Center for Water Policy at Morrison Institute declare that Arizona was indeed the best water managed place not just as a state but in the world.  I can remember living in Texas and experiencing the droughts and then to follow would be the water rationing, but I have lived in Arizona  for 24-years, and NEVER have I had to live under the guidelines of rationing.  Now where do you think you want to live California or Arizona?  If you choose California I’ll remember you fondly when I donate to the American Red Cross to help with the water crisis.

Dire Situation Coming for California Luxury Real Estate

When weighing the pros and cons in comparing Arizona VS California, the pros can be glaring.  Let’s start with the obvious, tantalizing beaches, ocean views and one cannot forget the weather.  The cons can be emotional, physical, and flat worrisome.   Now sit back and plat a vision of this in your mind:  taxes (don’t even get me started), traffic that is never ending, a cost of living. . .okay grab your hats because this is going to be painful.  If you live in Arizona and make $100,000 it will take an income of $141,797.28 a 41.80% difference, to maintain the same lifestyle in California!  Is it worth 41.80% difference to have beaches and ocean views?  I left out weather as probably the biggest misconception regarding Arizona is that few know that from approximately October through May we have wonderful moderate weather.    We have limited rain (approximately 7 inches a year, sunshine, sunshine, and more sunshine. . .no bugs. . .no sharks. . .and halleluiah no time change).  Arizona is the most overlooked state and delivers every day of the week.  I always said I should be the poster child for Arizona, so enough of my cheers and adulation for this wonderful state Arizona.

Let’s look at just one community in California for our purposes today.  The residents of San Lorenzo, CA a working-class Alameda County suburb along Interstate 880, use a mere 51 gallons of water per person a day.  In Diablo, an affluent community just over the hills in Contra Costa County is known for its country club and Luxury Real Estate, residents use nearly seven times more water – 345 gallons per person per day.

The massive difference highlights an issue that has become critical in California as the drought has worsened:  Wealthy areas are using dramatically more water than lower-income areas.  Starting July 1, EBMUD (East Bay Municipal Utilities District) will begin charging an “Excessive use penalty” on homes using more than 984 gallons a day, or four times the district average.  Although that affects less than 1 percent of the customer base, the penalty is $2 per unit of water, which critics say is too lenient.  This concern has come forefront and is now an issue for people who are vested in Luxury Real Estate in California.  So now the $10,000 question, “Based on this information “Why on earth would someone invest in the California market, when you can entrust your income to a state that is affordable (remember cost of living 41.80% higher in California), beautiful (remember the Grand Canyon), is a one hour plane ride from the beach, and ultimately a state that has placed a high priority on water management?

 Arizona Luxury Real Estate is the Smarter Investment

Arizona understood early on that water management would be paramount and that we could not rely on rainfall alone. We had to have water from other sources and to be able to store water so that we don’t face the same issues as California is experiencing.  The Roosevelt Dam was the first Reclamation project.  It was followed by six other reservoirs on the Salt-Verde system, managed by SRP (Salt River Project).  Central Arizona Project took decades to come to fruition.  It is the reason for central Arizona’s population and economic growth since the 1980s. The Groundwater Management Act, which happened in conjunction with CAP (Central Arizona Project), imposed critically important disciplines on Arizona, helping to slow unsustainable groundwater withdrawals and incentivizing municipalities to reduce the amount of groundwater they relied on.

Water 1

This surprises most Arizonans and stuns all of America!  A shift from comparatively higher water usage reducing agriculture involvement to municipal and industrial growth is part of the reason for the slight decrease in demand from 1957 to 2013. This shift reflects the development of a more resilient economy, which includes high-tech, manufacturing and tourism, among other things, as well as agriculture.

Almost 70% of Arizona’s population lives in the CAP (Central Arizona Project) service area. The relatively flat demand for water in the face of dramatic population growth is due to the fact that homes and businesses use water more efficiently.

Water 2

As you can see by the graphs we have included (ASU Kyl Center for Water Policy at Morrison Institute), Arizona is prepared, droughts will not be a burden for Arizona’s residents.  Arizona’s economy is booming, the housing market is strong and our beautiful state can withstand many tough years of little to no rainfall.

Water 3

Why You Should Invest in the AZ Real Estate VS Stock Market

Written by Mackey Martin

Market Index

I looked at my son today and asked him a question, “Who is the hottest baseball player in the game right now?”  His answer was short and sweet, “That’s easy, Bryce Harper.”  I spent many of my summers cheering on my two sons who were chasing their dream of becoming professional baseball players, and let’s face it, what little boy doesn’t at one point or another have this dream?  It was different at my house, as two of my kids actually lived out their dream of playing Professional Baseball. They both left the game and unfortunately never made the Major Leagues, but this led them to come join me in Real Estate.  I don’t seem to have the same passion for the game like I use to, but still have great memories of bases loaded, three balls and two strikes and participating in great nail biters, remember “It’s not over till the fat lady sings”  and that is case in point how the real estate market works.  We cycle in and out of bull and bear markets and right now we are in a bull market; as you can see from the “Market Index” above, its running at a solid pace.  It doesn’t matter how you slice or dice it, Arizona makes sense as we are still a very affordable state.   Arizona has many other reasons for being hot other than the weather. . .trust me I remember today why I own a second home in Northern AZ.  When we moved to Arizona in 1991 my husband was an Oil Trader, and I always found him looking at the Weather Channel.  Finally one day I asked, “Why are you so tied to watching this channel” and he responded that living in a state that literally had no weather inclement forced him to look for information nationwide that would help him in trading product.  We were always sunny and it gave him a false view of the weather.  I look at the recent news headlines that Central Texas and parts of Oklahoma are literally floating from the rains that have plagued these states recently, and in Phoenix, AZ we generally get an average rainfall of seven inches a year.  When compared to our neighbor to the west, California, one can imagine why so many people leave that state to come to Arizona for our weather, affordable housing, the Sonoran desert, stimulating mountain views, a small town feel in a big place and let’s not forget the burden of taxes that the Californian shoulder.  Now that is an experience I can live without, how about you?  Let’s just finish by saying how do you rank a state that has the majestic Grand Canyon?

So many times my clients ask me why I feel the AZ Real Estate is a better investment than the stock market.  I have studied and been involved in both throughout my adult life.  My husband was a Financial Advisor and then there was me that “always” wanted to own dirt, thus becoming a Real Estate Agent (go figure that opposites attract).  Let me explain why I have a strong preference for Real Estate over stocks.

Reasons Why AZ Real Estate is better than Stocks

  • Owning a Home Gives You More Control – Look at real estate this way, every piece of property you own gives you a chance to be a CEO. You are able to market the property, raise or lower rent, make any necessary improvements and cut costs as you see fit.  Being an investor in a public or private company means that you will be a minority investor, who has no say in what will be the correct path for the company.  You are required to trust people you have never met.  Overall you still have to deal with the economic cycle, but owning a home allows you more room to adjust when making crucial decisions.  There is not one person who cares about your home more than you do.
  • More Palpable – Real Estate is something you can feel, see and utilize. When everything comes crashing down, you will always have your home.  Real Estate provides you with shelter, and theoretically one could presume sustenance like food and water that is tangible in helping one survive the worst Stock Market crashes.  Also, if inflation happens, buyer beware, land is where you want to be positioned.
  • Tax’s – You are able to deduct interest on up to $1.1 Million in mortgage indebtedness on your primary home; you can also sell your primary home for tax free profits up to $250,000 for singles and $500,000 for married couples if you live in the home for the last two of a five year period. If you are in the 28% or higher tax bracket, it will only help you to own property.  All expenses associated with managing your rental properties are also deductible towards your income.  Limits do apply however, so think of $166,000 a year total as the magic number.
  • Less Volatile – Your home value is constantly cycling, and yes at times you are aware of how the meter is moving be it up or down just due to local or nation news; however there is no daily ticker update like the stock market. You’ve got to live somewhere so decide are you going to pay someone else’s house payments, or are you going to own your own castle to enjoy and create memories.  During the crash of 2009, I held on to my main home in Arcadia (an area in Phoenix/Scottsdale with dominance to larger irrigated lots) which is about as centrally located as a homeowner can get.  It sits just south of one of our more famous mountain ranges, Camelback Mountain.  From the position of my home running east and west along the Camelback Corridor, you will hit every hot button for the consumer from the Biltmore at 24th and Camelback moving east to Camelback Mountain, and then two or three minutes into Scottsdale and the most desired shopping mall in the state, Scottsdale Fashion Square.  I raised four kids in this house, heard the snap of the ball from our batting cage, picked citrus from our 15 plus trees, and experienced a son’s wedding in the backyard under our over sized mesquite tree that my husband planted.  What is the cardinal rule in real estate, location, location, location? I own location and when the market started its rebound, my property recovered quickly and with great strength.  Since the AZ Real Estate Market is primed for success, don’t be a buyer sitting on the sidelines, you’re going to put your money somewhere so why not Real Estate.
  • Analyze and Quantify – If you can calculate realistic expenses and rental income that’s all you really need when it comes down to valuing a piece of property. If you can borrow at 4% or less and rent out for a 6% yield, you’ve likely found yourself a solid real estate investment.  There’s not only the cash flow component but the underlying equity element that helps investors build their wealth.  Stocks require you to trust what the company reports.  There are many ways for companies to massage their numbers and make things look better than they really are.  You as the consumer have access to all kinds of real estate sites like Zillow, Trulia, Realtor.com that assist one in understanding value.  We operate a family practice, the Mackey Martin Group and pride ourselves in being able to help you position your portfolio for success through your fixed asset investments, be it a primary, second, or investment property.    You hire all kinds of professionals around yourself, and your real estate agent can be that integral part of helping you establish how you invest.
  • More Insulated – Real Estate is local. If you’ve made a good decision to buy in an economically strong region (i.e. Phoenix), you will be more insulated from the national or global economy.  A natural disaster in China is not going to affect the rent you charge.

“Historically the largest real home price decrease is on the order of 5% in any given year,” says Jonathan McCarthy, senior economist at the Federal Reserve Bank of New York.  “Whereas you talk about a real stock-price decline, you could probably see 20% or even more.”

In closing I thought you might like to see the Great Phoenix – ARMLS (Arizona Regional Multiple Listing Service) Residential Resale chart.  I think one would say dramatic!!

Information taken from “The Cromford Report”

Monthly Average Sales Price