Scottsdale Arizona Real Estate Blog

by Catherine Reagor – May. 27, 2009 12:00 AM
The Arizona Republic

Metropolitan Phoenix’s foreclosure home-buying frenzy has caught the attention of other parts of the country.

Some national housing analysts are labeling the Valley’s recent upswing in home sales another speculator- driven boom.

But while investors finding bargains on foreclosure homes did help restart the area’s housing market in January and February, speculators aren’t dominating the scene as they did during the boom of 2004-06.

In April, about 19 percent of all Valley homes were purchased by investors, according to real-estate analyst Mike Orr.

He works with the Arizona Regional Multiple Listing Service and the Information Market to analyze real-estate data daily for the Cromford Report.

During the boom, investor purchases accounted for 35 percent to 40 percent of metro Phoenix’s record home sales.

Now, first-timers are the Valley’s fastest growing group of home buyers. One housing-market watcher believes first-time buyers soon will account for half of the area’s home sales.

The federal housing plan’s $8,000 incentive for first-time buyers and the state, city and county Neighborhood Stabilization programs to help people buy foreclosure homes as their primary residences is helping shift the market away from investors.

Home sales are at record levels in many Valley communities, and prices are inching up.

The Valley’s median home price is at $116,500, up from a low of $115,000 at the end of April. That’s a 1.3 percent increase, which may seem paltry compared with the drop in Valley home prices during the past few years. But a year of those monthly gains could become a 15.6 percent annual increase in home prices.

The median price-per-square-foot of metro Phoenix home sales in May climbed to $84.86, up 2.4 percent from the low it hit in April. Pending sales prices are following the same upward trend.

“There’s a buying frenzy for Valley homes priced below $150,000,” Orr said. “Many homes in that prices range are getting multiple offers.”

Investors buying Valley homes now are different than the speculators of the boom. A few years ago, most investors put very little down so it was easier for them to walk away and let homes go into foreclosure.

Now most investors are paying cash. Investors who get financing are required to put down hefty down payments, which they aren’t as likely to walk away from.

This is a different housing market, with more conservative investors and mortgages than the Valley experienced during the boom years.

by Craig Harris – May. 19, 2009 12:00 AM
The Arizona Republic

Scottsdale-based Kona Grill Inc. said Monday it had received an unsolicited offer from its second-largest shareholder, Mill Road Capital, to purchase the company for $27.9 million and take it private.

The offer calls for Greenwich, Conn.-based Mill Road, which currently has a 9.8 percent stake in the sushi-restaurant company, to pay $4.60 per share, double the stock’s closing Friday.

The news rallied Kona’s stock price to $4.34, but it eventually closed at $3.93 on the Nasdaq Stock Market.

The offer comes after Mill Road earlier had accused the company of secretly restructuring notes and favoring insiders.

Kona Grill said its board would review the proposal and respond in the “best interest” of shareholders.

The offer comes after Marcus Jundt, the company’s chairman, president and chief executive officer, resigned Friday.

Some shareholders had withheld votes for him at the 2009 annual meeting.

Mark Bartholomay, the company’s chief operating officer, is serving as interim president and CEO.

www.theholmgroupaz.com

by Catherine Reagor – May. 17, 2009 12:00 AM
The Arizona Republic

Many Arizona real-estate executives and analysts follow Scottsdale-based DMB Inc. to see where the market is headed.

The developer’s moves have become leading indicators for trends in developing communities and mixed-used projects.

DMB, which controls more than 100,000 acres of land in Arizona, California, Utah and Hawaii, is now shifting its strategy to focus on the real-estate market’s eventual recovery, the company said.

As part of a restructuring, Drew Brown, one of the company’s founders, will remain as chairman focusing on new strategies and investment. But Eneas Kane, general counsel and chief operating officer, will replace Brown as DMB’s chief executive officer.

DMB says it is refocusing on its “entrepreneurial roots,” which date back to the last downturn, when it purchased several prominent Valley properties for market-low prices. DMB also will consolidate some operations as part of the restructuring, the company said.

The other two founders of DMB, Bennett Dorrance and Mark Sklar, remain managing directors.

Brown said Kane has the “qualities necessary to address the fundamental shift in the real-estate industry and to position DMB for opportunity.”

“DMB was founded more than 25 years ago during an economic downturn much like we are experiencing today,” Kane said.

He said the company’s changes will help it “seize the great opportunities ahead.”

Opportunities

DMB’s innovations have driven changes in metro Phoenix for years.

The real-estate firm’s DC Ranch project in north Scottsdale changed the Valley’s master-planned community mold. DMB’s Verrado development in Buckeye cemented that West Valley town’s growth. In Mesa, the real-estate firm plans to redevelop the 5-square-mile GM proving-ground site into what planners are calling a prime example of “21st-century desert urbanism.”

DMB partners with landowners to develop large communities. The strategy allows the real-estate firm to take more time planning and spend more money on infrastructure, while not being forced to rush the completion of a community because it’s not carrying the cost of the land.

Brown said DMB will also look at buying assets from financial institutions. The real-estate firm has a lot to choose from, because lenders have foreclosed on everything from big parcels of land to office towers and shopping centers during the past year.

In the late 1980s, DMB did well by purchasing properties from the Resolution Trust Corp., the federal agency formed to liquidate the assets of failed lenders then.

The real-estate firm purchased the former Western Savings tower in Mesa for $20 million and sold it a few years later for $33 million.

DMB purchased one of the Valley’s biggest home builders, UDC, out of bankruptcy in 1995 and later sold it to Shea Homes.

Brown said the DMB has no plans to sell any of its current assets and has long-term development plans for its large projects.

Current portfolio

Recently, DMB purchased lots back from home builders in Verrado because it wanted to ensure more new homes weren’t built in the community until there were buyers for them.

Last year, 200 homes were built and sold in Verrado. The community, which opened in 2004, has 2,000 residents and is less than half-built.

“There were 500 families who moved into Verrado last year,” Kane said. “That’s an incredible accomplishment considering the market.”

DMB’s 120-acre One Scottsdale mixed-use project is planned and ready to go up at Scottsdale Road and Loop 101. DMB is partnering with shopping-center developer Westcor on One Scottsdale and has decided to wait for the market to recover before restarting it.

In March, Mesa voters approved tax incentives for two large resorts and a conference center on DMB’s Mesa Proving Grounds project. Gaylord Entertainment Co. of Nashville plans to build an upscale hotel and convention center.

DMB has several large projects under way in California, as well as developments in Hawaii and Utah.

www.theholmgroupaz.com

by Catherine Reagor – May. 13, 2009 12:00 AM
The Arizona Republic

Valley home sales climbed again in April, and home prices showed signs of leveling off.

Both could be indicators that metropolitan Phoenix’s housing market has hit bottom.

Last month, 6,640 existing homes changed hands, up from the 5,940 recorded in March, according to data from the realty-studies department at Arizona State University.

Home sales have nearly doubled from April 2008, mainly because of the many foreclosure homes reselling across the Valley now.

The median price of a Valley resale did fall to $125,000 in April, from $127,000 in March. But although median existing-home prices have been steadily falling his year, the $2,000 drop between April and March is the smallest decline so far.

The Valley’s median resale price was $133,000 in February and $136,000 in January.

Existing-home sales in the Valley have been climbing steadily since fall.

Jay Butler, director of realty studies at ASU’s Polytechnic campus, said April traditionally starts the home-buying season in the Valley.

“During this time, sales and median prices tend to increase as the buyers move to lock in a purchase before the start of school and the holiday times,” he said. “Some improvement in the local housing market would not be unexpected.”

Valley foreclosures fell in both March and April, more indicators that the housing market is beginning to show signs of improvement.

The number of foreclosure homes on the market also is shrinking, which is helping prices.

Key to the housing market’s recovery is keeping foreclosures from shooting up again. Pre-foreclosures hit a new high in March and were down only slightly in April.

More home-loan modifications, called for under the federal housing plan, will help slow foreclosures.

More short sales, instead of foreclosures, also will help the market.

“There is increasing hope that the housing troubles are beginning to ebb and the bottom, along with recovery, is in sight,” Butler said.

“However, many problems continue to exist that could hinder the timing of any recovery.”