Scottsdale Arizona Real Estate Blog

Associated Press
Aug. 24, 2007 11:11 AM   

WASHINGTON – New-home sales turned up and factory orders soared in July, suggesting the economy was on stable footing before a credit crunch took a turn for the worse. The Commerce Department reported Friday that sales of new homes rose 2.8 percent to a seasonally adjusted annual rate of 870,000 units. The increase came after a 4 percent drop in June.

Another report from the department showed that orders placed with factories for big-ticket goods jumped 5.9 percent in July, the most in 10 months.  The latest batch of economic news was better than analysts had expected. They were forecasting home sales to fall and calling for a much smaller, 1 percent gain in factory orders.On Wall Street, the reports cheered investors who have been consumed by worry in recent weeks about the country’s financial health amid spreading credit troubles. The Dow Jones industrials were up around 70 points in afternoon trading.

The housing report showing the July sales boost comes as credit standards have been tightening on home mortgages. Credit problems took a turn for the worse in August, making it even harder for some buyers to get financing. That means home sales in the coming months will likely show renewed weakness, economists said.

“Sales in August will face significant headwinds from further tightening in credit conditions, reduced availability of mortgage credit as many lenders shuttered their doors and upward pressure on mortgage rates, especially for non-conforming jumbo loans” of more than $417,000, predicted Brian Bethune, economist at Global Insight.

By region, sales in the West shot up 22.4 percent in July and increased 0.6 percent in the South. Sales, however, tumbled 24.3 percent in the Northeast and were down 0.9 percent in the Midwest.

The improvement in overall sales didn’t change the big picture of the housing market, which has been suffering through a deep slump for more than a year. Sales are down 10.2 percent from last year, and the weakness is expected drag on into next year.

To lure buyers, some builders are offering incentives including help with closing costs or lining up financing, and working with lenders to lower interest rates on loans, said Bernard Markstein, senior economist at the National Association of Home Builders. Some builders also are throwing in free upgrades to sweeten deals for buyers.

Home prices were mixed. The median price of a new home was $239,500 in July, up 0.6 percent from last year. The median price is the point where half sold for more and half sold for less. The average home price, however, dropped to $300,800 in July, down 3.4 percent from same month last year.

In the manufacturing report, gains were widespread, indicating that capital spending — a key ingredient of a healthy economy — had gained momentum.

Orders increased for machinery, automobiles, metal products, airplanes and communications equipment. That blunted a drop in demand for computers, as well as electrical equipment and appliances.

A proxy for future business investment also was encouraging: Orders for non-defense capital spending excluding airplanes rose 2.2 percent in July, compared with a dip of 0.1 percent in June.

“The recent squeeze on business credit could damp investment plans in the months ahead. That said, the data will help allay fears that business spending was slowing even before credit got tighter,” said Sal Guatieri, economist at BMO Capital Markets Economics.

Fears that the painful housing slump and credit crunch could hurt the economy have gripped Wall Street investors in recent weeks, causing stocks to swing wildly.

Credit is the economy’s life blood. If it becomes too hard to get, spending and investment by people and businesses can stall, short-circuiting the economy.

“The downside risks to growth have increased appreciably,” Fed Chairman Ben Bernanke and his colleagues concluded on Aug. 17.

It was a much more sober assessment than they had offered just 10 days earlier when they met to examine economic conditions and interest rates. Against this backdrop, the central bank sliced the rate it charges banks for loans, a narrowly tailored move aimed at propping up sagging financial markets.

If problems persist, the Fed could opt for more aggressive action: reducing an important interest rate, called the federal funds rate, on or before Sept. 18, the Fed’s next regularly scheduled meeting. The Fed hasn’t cut this rate in four years. It is the Fed’s main tool for influencing overall economic activity.

The funds rate, the interest banks charge each other on overnight loans, has stayed at 5.25 percent for more than a year. A rate cut would bring lower interest rates for millions of people and businesses.   

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Jane Larson
The Arizona Republic
Aug. 24, 2007 04:00 PM  

SCOTTSDALE – Construction could start as early as September on the long-planned, sometimes-controversial, Indian Bend Road bridge project. The Scottsdale City Council is expected to award a $19.3 million contract to Hunter Contracting Co. of Gilbert at its meeting Monday.

The city also would pay Arizona Public Service $800,000 to put power lines underground and install streetlights.
The central Scottsdale road now dips through the Indian Bend Wash, and over the years some motorists have had to be rescued after they tried to cross during floods.The project would widen the road to four lanes, from two lanes, between Scottsdale and Hayden roads, and it would include a bridge over the wash that could withstand the worst floods expected over 100 years.

It also would add sidewalks, bike lanes and turn lanes and connect the Indian Bend multi-use path to the nearby McCormick-Stillman Railroad Park.

The work is set to be finished by December 2008.

The bridge design includes five horse gargoyles that would spout water during floods. The public art has drawn scorn from some neighbors, who said the money would be better spent on reducing the effects of increased traffic.

“We’ve kind of accepted the fact that no matter what we say, everything is set in concrete,” resident Dennis Suchocki said.

Residents now want to ensure that the road is not placed too close to homes, and that vibrations from construction and traffic don’t crack their swimming pools, he said.

Indian Bend Road between Hayden and Pima roads was widened to four lanes in 1999.

Scottsdale voters approved the current project in a 2000 bond election.

Neighbors’ requests for a view-saving tunnel instead of a bridge were rejected by city panels in 2005 as too expensive.

Earlier this month, two city commissions reluctantly approved switching $9.5 million in funding to the Indian Bend project from a similar one on Pinnacle Peak Road.

City staffers said rising concrete and steel costs made it impossible to do both projects.  

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Adam Schreck
Associated Press
Aug. 22, 2007 10:42 AM  NEW YORK – Four major banks said Wednesday they each borrowed $500 million from the Federal Reserve’s discount window, lending weight to its efforts to restore liquidity to tight markets.

Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp. and Wachovia Corp. each stressed they themselves have “substantial liquidity” and the ability to borrow money elsewhere.

In a joint statement, the latter three said they decided to borrow directly from the central bank to demonstrate “the potential value of the Fed’s primary credit facility” and encourage its use by other banks. It was not clear if other banks had also decided to borrow from the Fed.

On Friday, the Fed took the dramatic step of cutting its discount rate on loans to banks, to 5.75 percent from 6.25 percent, in an attempt to alleviate Wall Street’s credit crunch. It also made technical changes to make it easier for banks to get discount loans, including extending the credit period to up to 30 days.

Tapping the discount window had previously been seen as a last resort for banks in trouble, a perception the Fed sought to eliminate.

Citigroup was the first to announce its decision to borrow the money, “on behalf of its clients” at Citibank.

“Citi is pleased to inject liquidity into the financial system during times of market stress and to support creditworthy clients,” the company said. “Citibank stands ready to continue to access the discount window as client needs and market conditions warrant.”

It was followed minutes later by the three other banks.

“The companies believe it is important at this time to take a leadership role in demonstrating the potential value of the Fed’s primary credit facility and to encourage its use by other financial institutions,” their statement said. The three added that they hoped their actions would “promote broad acceptance of the use of the facility.”  

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Jane Larson
The Arizona Republic
Aug. 21, 2007 12:31 PM  SCOTTSDALE – Goldwater Bank has opened at the Scottsdale Waterfront, catering to entrepreneurs, developers and anyone else wanting personal service such as concierges or couriers from their bank.

The bank joins a wave of business-oriented community banks that have moved into the Scottsdale market. Western National Bank, UMB Bank, Heritage Bank and Biltmore Bank of Arizona have all added Scottsdale branches in recent months.

Goldwater Bank is targeting business owners and others who are helping the Valley grow, bank chairman Larry Sheffield said.

“We want to be the long-term banking relationship that grows with them,” he said. “We’re looking to be a trend-setting bank.”

As part of that strategy, the bank is focusing on what Sheffield called its five Cs: concierge, courier, customization, common sense and courtesy.

Goldwater Bank is one of the first in the nation to have a full-time concierge, he said. For clients who maintain balances of $25,000 or more in their accounts, the concierge will help them obtain event tickets, make restaurant reservations, even charter jets.

The bank also has its own courier on staff to pick up deposits and documents and deliver cash to customers. Tech-savvy clients can also use the bank’s check-scanning devices.

Customization refers to the way the bank will develop products individually for clients. Rates on loans and deposits will depend on a client’s priorities, Sheffield said.

Common sense will drive decisions, and courtesy includes personal greetings, a coffee bar and 12 plasma screens in the lounge area, he said.

A real estate developer in New Mexico, Sheffield said he moved to the Valley in 2001 and couldn’t find a bank that offered the same kind of personal relationship he’d experienced before. That need, combined with the high-end hotels and redevelopment of the Scottsdale Waterfront near his office at Scottsdale and Camelback roads, inspired Goldwater Bank.

“It was like a bunch of dominoes,” he said. “We said, ‘Boy, this is going to be the intersection, and we’re at the epicenter.’ “

The bank’s name comes from nearby Goldwater Boulevard, not the famous late senator, Sheffield said. Barry Goldwater Jr. visited organizers during the chartering process and has been asked to chair the bank’s advisory board, he said.

The bank received its federal charter, a process that took 1 ½ years, and opened its 7,200-square-foot office above P.F. Chang’s China Bistro at the Waterfront in late April. It has signed 300 customers since then, and aims for up to 2,000, Sheffield said.

It plans a grand opening for customers in late October.

Goldwater Bank already plans a second branch at Scottsdale Road and Loop 101, to open in spring 2009. Tucson, San Diego, Las Vegas and Beverly Hills have been suggested for future branches, Sheffield said.

Aug. 21, 2007 10:03 AM 

 An attorney, a magazine editor, a new member of the Phoenix Suns, a managing director of a financial services company and a husband and wife team of private mortgage bankers are among the buyers and sellers in this weeks done deals.

$8,250,000 Ken Berrydane of Culver City, Calif. purchased a 8,246 square-foot home with 600 square-foot pool originally built in 1979 at the exclusive Biltmore Estates in Phoenix. The home was sold by Jane Popple.

$4,300,000 Stuart M. Nierenberg bought a 6,029 square-foot home originally built in 2000 in Carefree. Stuart Nierenberg is a corporate lawyer licensed to practice in New York. In 2004, he was chief operating officer of GMA Forum, the association of food, beverage and consumer products companies and his wife, Carol Fensholt was editor and publisher of GMA Forum magazine, principal of Ltd. Editions Media Inc. and former executive editor and editorial/design director of Supermarket Business Magazine. The home was sold by Charles Larry Casey, as Trustee of the Charles Larry Casey Living Trust.

 $3,780,000 Grant Hill and his wife Tamia paid cash for a four bedroom, each with walk-in closets, six bathroom, 6,786 square-foot home custom designed and built by Jane and Don Hammer. The home west of Camelback Mountain Echo Canyon Recreation Area in Paradise Valley features an entertainer’s kitchen, with Wolfe, Sub Zero, Franke & Fisher Pakel appointments, is open to the family room, wet bar, breakfast room, and overlooks giant trees, lush greenery, gazebo and mosaic tile pool. Grant Hill was acquired by the Phoenix Suns in July from the Orlando Magic of the NBA. Hill is a seven-time NBA All-Star who has averaged 20.0 points, 6.9 rebounds and 5.3 assists per game. Only two other active players — LeBron James and Dwyane Wade — have averaged at least 20 points, 5 rebounds and 5 assists per game. The home was sold by Donald Ray Hammer and Jane Ann Hammer, as Trustees of the Hammer Trust.

$3,322,000 Arthur T. Doglione and his wife Donnalynne purchased a new home at the north end of the Ancala Golf Club in Scottsdale. Arthur Doglione is the senior managing director of U.S. Fiduciary, a financial services company he founded in Scottsdale in 2006. Prior to that he was a senior vice president in Merrill Lynch’s Private Client Group for about 12 years. The home was sold by Thomas V. Zummo and his wife Michelle, who own the Thomas and Michelle Zummo Co., a private mortgage bankers and loan correspondents company in Scottsdale.

$2,925,000 Richard J. Clayton and Donna M. Clayton, as Trustees of the Clayton Living Trust, paid cash for a 5,000 square-foot home with 700 square-foot pool originally built in 1993 northwest of the Paradise Valley Country Club in Paradise Valley.. The home was sold by Philip A. Nelson and Joella Lummis, as Trustees of the Philip A. Nelson Living Trust. Researched by John McLean and the Information Market. 

Catherine Reagor
The Arizona Republic
Aug. 20, 2007 12:00 AM

Home prices in metropolitan Phoenix slipped 2.7 percent in the past year, but the Valley has lost less ground in appreciation than other hot housing markets that led the nation in run-ups two years ago.

In 2005, metro Phoenix home prices jumped 55 percent, according to the National Association of Realtors. That was the biggest increase in the country. Other price leaders were Las Vegas and several Florida cities.

In the second quarter, prices in Las Vegas dipped 3.6 percent vs. a year earlier. In Florida, Daytona home prices slid 8.3 percent. In Palm Bay, the drop was 15 percent. Orlando fared better with a 2.4 percent drop.

The dip in local home prices is Valley-wide, with some parts of the area faring better than others.

Speculators flocked to Las Vegas, metro Phoenix and Florida cities because of their growth and inexpensive homes. Now, those who didn’t cash out are driving prices down by creating a glut of homes for sale or letting them fall into foreclosure.

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June Fletcher
The Wall Street Journal
Aug. 17, 2007 10:42 AM

  Most homeowners know that replacing the roof or upgrading siding can enhance a house’s curb appeal and boost its sales price. Now, as the housing market continues to weaken, some people are considering what the payback will be if they invest in things that appraisers routinely overlook: flowers, shrubs and trees. Real-estate agents say a nicely landscaped property can have a pronounced effect on the asking price of a home, depending on the region and the condition of the neighbors’ yards. Doreen Drew recently sold a house in Anthem, Ariz., that had sculpted hedges, a lush lawn and a backyard waterfall for $1.1 million, nearly twice the asking price of a similar home nearby with a plainer yard. Bill Good, a broker in Colorado Springs, Colo., says he just sold a house with newly planted mature bushes and fresh sod in the front yard for $1.225 million; previously it had languished on the market for more than a year at $1.175 million. In Palm Beach County, Fla., homes with colorful flowers and tall palms typically sell for 10 percent to 15 percent more than those without these features, according to agent Nancy Macaluso. That’s why she’ll often lug huge potted plants to the homes of clients whose greenery needs a boost. “It makes a difference,” she says.

Kathleen Wolf, a researcher at the University of Washington in Seattle, recently reviewed several regional studies that used appraisals or sales data to analyze the impact of trees on single-family home prices. She found that, overall, a lot with trees adds about 7 percent to a home’s price. Nearly 20 percent of buyers say they consider landscaping to be a “very important” factor in their decision to buy a house, according to a new study by the National Association of Realtors.  

How much is a tree worth? Still, it isn’t easy to establish the worth of a living thing. And home appraisers generally don’t take green amenities into account. Ronald Napier, a Stickney, Ill., appraiser, says there’s nothing on his assessment forms that addresses landscaping, and he rarely even mentions it in his comments unless a yard is completely torn up or plantings are unusually extensive. Elizabeth Sawyer, assessor for the town of South Portland, Maine, says her office never figures in landscaping when it values properties for tax purposes: “The worth may be impossible to prove.” Tom Barnhart, director of appraisals for Palm Beach County, Fla., uses a mass appraisal system to keep tabs on the more than 248,000 single-family properties in his area. His office assigns a certain dollar amount to the value of landscaping in individual neighborhoods – there are 650 in his county – and then applies that number to each house within the neighborhood. That means that homes whose owners have spent thousands on their landscaping are judged exactly the same as those with withering trees and skimpy shrubs. “We’re using a broad brush here,” Mr. Barnhart says.

Homeowners who need a professional opinion for insurance or tax purposes typically turn to an arborist or other landscape expert, as do insurance companies investigating claims. But even here, not all specialists are uniformly trained. And there’s no unanimity of opinion or law as to how to judge the value of a plant. Some people use size, trunk diameter and condition to determine the value of a planting, while others figure the cost to replace it with the same or similar nursery specimen. Although a guide for appraising plants has been established by the Council of Tree and Hard to assess the value of a yard Landscape Appraisers, a consortium of industry groups, “there are no official standards that are published as such,” says Russell Carlson, an arborist in Bear, Del.Even professionals with years of field experience are sometimes confused, according to Logan Nelson, an arborist in Dane County, Wis. She says a fellow arborist once told her that he calculated the worth of a diseased ash tree by figuring what he would charge to treat it for five years and then remove it when it died (which he thought was likely) – a method that isn’t mentioned in the council’s guidelines. Homeowners need to ask arborists what sort of experience they’ve had in appraising trees before hiring them, Ms. Nelson says.

Perplexing standards aren’t the only problem. Three-year-old Horticultural Asset Management of Raleigh, N.C., also known as HMI (the company’s motto is “Money Grows On Trees”), has found a niche assessing the worth of trees as they grow; it says sales have jumped 30 percent in the first six months of 2007 over the same period last year. For an average cost of $500, their appraisal of a yard notes the condition of each plant and what it will be worth in five years. Among their customers: Dan Sharp, an information-technology executive in Stamford, Conn., who’s shopping for insurance for the more than 100 trees and shrubs in his acre-and-a-half yard. He’s worried by forecasted spikes in hurricanes and nor’easters, which could wipe out the leafy canopy of ornamental cherries, Japanese maples and other foliage that he’s been nurturing for decades. “Right now, I’m unprotected,” he says. HMI recently assessed the plantings at $600,000.

Beefing up the landscaping Chris Pieper hired HMI to prepare a similar assessment, not for insurance purposes but as a marketing tool to highlight the $100,000 of dogwoods, gardenias and other ornamentals that he recently planted in his two-acre yard in Cary, N.C.; the property is on the market for $1.7 million. Mr. Pieper says he isn’t a “plant person” – he can’t even identify most of the greenery in his own yard. Still, he felt mature trees and bushes would give his 10-year-old home a more “settled” look and an edge in a slow market. He says of potential buyers, “I think it will sway them.”Builders and developers are trying to sway buyers with beefed-up landscaping, too. Taylor Woodrow, the American division of Taylor Wimpey headquartered in Solihull, England, has raised its per-lot spending on landscaping in new subdivisions by 5 percent to 10 percent since 2005, according to Tom Spence, a vice president for land development for the company’s Florida division. Mr. Spence says that he can’t always build around existing trees – in fact, in most of his projects he must remove all of them to satisfy building regulations. But whenever possible, he tries to move plantings to a nursery, keep them alive and then replant them once construction is complete.

Established but not too aged Real “aged” landscaping has its drawbacks, however. A little over a year ago, Gina Congrave, a retired investment banker, bought a brand-new, $2.13 million home in Westport, Conn., that was built on the site of a house that had been torn down. Although the builder had cleared most of the half-acre lot, he left six towering pine trees that helped the new home blend into the existing neighborhood. Ms.Congrave admired the trees for a few months – until a windstorm blew down several huge branches and one of them “swiped” her house. An arborist told her that her big trees had been held up by smaller ones when the lot was heavily wooded; now they were unsupported, and more vulnerable during storms. Afraid that the trees might topple onto and damage her roof, Ms. Congrave spent $6,000 to have them removed. “That’s a big chunk of change,” she says. Since then, she’s spent $80,000 to bring in more manageable 15- to 20-foot-tall arborvitae, hollies, pears and dogwoods to restore her yard’s established look. (She made sure to have them planted far away from the house.)

Poorly maintained lots can also be as big a turnoff to buyers as bare ones, says Joy Brillante, an Austin, Texas, real-estate agent, even reducing the perceived value of the property. And upkeep isn’t the only issue. Ms. Brillante recently represented a buyer who paid $249,000 for a home with a tangle of brush and trees. When the new owner trimmed them back, she discovered a lake view. If the seller had cleared out the yard, Ms. Brillante estimates that he might have gotten as much as $10,000 more for the house. “Nobody knew the view was there,” she says.

For some people, the value of trees can’t be measured in dollars and cents. Tab Bottoms, a businessman, and his wife, Leigh Bielenberg, a designer, have spent a total of $24,000 in legal fees and appraisal costs to protect a 200-year-old red oak, valued at $25,000, that towers over their yard in Atlanta. They’ve spent three years in an ultimately futile legal battle to get a developer to re-site the house he plans to build on the lot next door, so that construction won’t hurt the tree. So far, the builder’s bulldozers haven’t shown up, but if the tree does die, the couple plan to move. It’s old trees, rather than architecture, that make a property distinctive, says Mr. Bottoms. “Money can’t replace them.”  

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Peter Corbett
The Arizona Republic
Aug. 18, 2007 08:53 AM  The Arizona State Land Department has set a Nov. 8 auction date for a key parcel that Westcor wants for its Palisene shopping center northwest of Scottsdale Road and Loop 101.

An appraisal for the 112-acre site estimated its value at $32 million. But the winning bidder of a 99-year lease must also commit to spending $67 million for drainage, utility and road improvements.

That could limit interest in the property, particularly since the Arizona Legislature in the past session restricted city incentives for retail developers.

Phoenix gave a rival developer of CityNorth a $97 million tax rebate for a mixed-use project at 56th Street and Loop 101.

The Goldwater Institute is challenging that deal with the Thomas J. Klutznick Co. in Maricopa County Superior Court.

That could further complicate bidding for the 112 acres that Westcor wants for its Palisene development.

Westcor has been planning to develop the state trust land for more than a decade and has a right of first refusal during the bidding.

The Valley mall giant has proposed building a mixed-use project that would include shopping, restaurants, offices, condominiums and hotels on 72 acres.

The 112-acre site is one of the first pieces of state trust land northwest of Loop 101 and Scottsdale Road that the Land Department will auction. There are nearly 2,000 acres of trust land in the area that will eventually be developed.   

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