TED SIMONS: GOOD EVENING AND WELCOME TO ARIZONA HORIZON, I'M TED SIMONS A NEW REPORT BY REALTOR-DOT-COM SAYS THAT THE PHOENIX METRO AREA WILL BE THE TOP REAL ESTATE MARKET IN THE COUNTRY NEXT YEAR. HERE TO TALK ABOUT THE REPORT AND THE MARKET IN GENERAL IS TINA TAMBOER, A SENIOR REAL ESTATE ANALYST FOR THE CROMFORD REPORT, WHICH PROVIDES ANALYSIS OF THE LOCAL REAL ESTATE MARKET. IN GENERAL, WHERE IS THE VALLEY'S MARKETPLACE?
TINA TAMBOER: WE HAVE A LOT OF DEMAND AND AFFORDABLE REAL ESTATE AND THAT CREATES DEMAND. AND WE HAVE VERY GOOD JOB GROWTH HERE AND A LOT OF THOSE JOBS ARE COMING WITH HIGHER INCOMES SO THAT IS HELPING US QUITE A BIT.
TED SIMONS: WHEN REALTOR.COM COMES OUT WITH A REPORT SAYING THE PHOENIX MARKET COULD BE NUMBER ONE IN 2017 DO YOU AGREE?
TINA TAMBOER: THAT'S A VERY BOLD PROCLAMATION. I DON'T DO THE REST OF THE COUNTRY BUT I CAN SAY PHOENIX HAS BEEN RECOVERING AT A VERY GOOD RATE. WE HAVE BEEN THE FIRST OUT OF FORECLOSURE CRISIS. THERE ARE PLENTY OF STATES RUNNING THROUGH THEIR FORECLOSURE INVENTORY.
TED SIMONS: WHY DID WE GET OUT SO FAST?
TINA TAMBOER: WE WERE NOT A JUDICIAL FORECLOSURE STATE. THE JUDICIAL FORECLOSURE STATES TENDED TO LAG AND A LOT OF THOSE FORECLOSURES GOT CAUGHT UP IN THE COURT SYSTEMS. SO THAT KEEPS A LOT OF STRESS PROPERTY ON THE MARKET OR NOT EVEN ON THE MARKET BUT JUST THERE AS NOT BEING LIVED IN OR KEPT UP. SO THAT KEPT A LOT OF MARKETS BEHIND. BUT PHOENIX DOESN'T HAVE THE JUDICIAL LAG SO WE WERE OUT OF THE GATE QUICKLY AND AHEAD OF A LOT OF MARKETS.
TED SIMONS: TURNOVERS HAPPENED FASTER?
TINA TAMBOER: YES, AND A LOT OF MISTAKES WERE MADE BUT THE BANKS WERE ABLE TO TURN THEM FASTER THAN OTHER STATES.
TED SIMONS: AS FAR AS SALES, THEY ARE INCREASING BUT REALTOR.COM FORECASTS A 5.96 PERCENT INCREASE NEXT YEAR. REALISTIC?
TINA TAMBOER: PROBABLY NOT TOO BAD. WE HAVE A POPULATION GROWTH AND ARE GETTING RELOCATION INBOUND FROM CORPORATIONS CHOOSING TO EXPAND HERE ESPECIALLY IN THE TEMPE-CHANDLER AREA AND ALONG THE I-17 AND IN INDUSTRIAL SIDE ALONG I-10 ON THE WEST SIDE. IN TERMS OF JOB GROWTH WE HAVE COME DOWN FROM 7% UNEMPLOYMENT TO I THINK 4.5% JUST SINCE 2013.
TED SIMONS: THAT EQUATES TO INCREASING PRICES AND SALES. BUT WHAT ABOUT THE PRICES? REALTOR.COM IS SAYING 7.2 INCREASE IN PRICES.
TINA TAMBOER: IT IS GOING TO VARY IN PRICE RANGE. ON THE LOWER END WE HAVE THE LARGEST RESTRICTION OF SUPPLY. WHEN YOU GET OVER $250,000-$300,000 AND ESPECIALLY OVER $500,000 THERE IS PLENTY TO CHOSE FROM AND THAT REDUCES THE SELLER'S ADVANTAGE. THOSE APPRECIATION RATES ARE NOT NEARLY AS EXCITING AS THE LOWER END LIKE AROUND $175,000 MARK. SOMEWHERE BETWEEN $150,000-$175,000 YOU CAN GET 8% ANNUAL APPRECIATION.
TED SIMONS: WHEN WE TALKED LAST ABOUT, NUMBER ONE IN THE COUNTRY AND BIG SALES INCREASES AND BIG PRICE INCREASES AND EVERYTHING IS GOING GANG BUSTERS. IT DID GO GANG BUSTERS STRAIGHT DOWN THE YOU KNOW WHAT. ARE SPECULATORS OUT THERE AND ARE WE SEEING A POSSIBLE BUBBLE?
TINA TAMBOER: NO, FOR ONE, THE PEAK OF THE BUBBLE WAS 2006. WE WOULD HAVE APPRECIATE ANOTHER 30% OR MORE IN ORDER TO GET BACK TO 2006 PRICES, WHICH BY THE WAY WAS DECADE AGO. IT IS NOT LIKE WE HAVE SHOT UP THERE. SO, IT IS -- ANOTHER THING TOO IS BACK IN THE BUBBLE DAYS THE SALES BETWEEN INVESTORS WERE VACANT HOMES AND THEY HAD NO INTENTION OF LIVING OR RENTING THEM OUT. NOW THERE IS DEMAND FOR PEOPLE TO LIVE IN THE HOME AND THAT IS WHAT IS CREATING THE TRUE VALUE NOT WHAT THEY CALL ARTIFICIAL VALUES. ALSO, WHICH IS DIFFERENT FROM THE 2005 UPTICK IN PRICING, APPRAISALS ARE WAY MORE REGULATED, THEY MAKE A BIGGER DIFFERENCE AND BECAUSE THE APPRAISERS DON'T ANSWER TO RETAILERS, ONLY THE BANKS, THE PEOPLE LENDING MONEY, THEY ARE PROBABLY RESTRICTING A LOT. WE PROBABLY HAVE WAY MORE APPRECIATION IF IT WERE NOT FOR APPRAISALS KEEPING US. A LOT OF THE BUYERS DO NEED A LOAN NOW. APPRAISAL CONDITIONS ARE NOT BEING WAVED.
TED SIMONS: LET'S TALK ABOUT THOSE LOANS. REALTOR.COM IS APPROXIMATING 7.5% INTEREST RATE CLIMBS ON THE MORTGAGE. FIRST, DO YOU AGREE? AND IF THAT IS THE CASE, DOES THAT BUMP THE FIRST-TIME BUYERS AROUND A LITTLE BIT?
TINA TAMBOER: WE STOPPED TRYING TO PREDICT WHAT INTERESTS RATES WILL DO, WE LET OTHER PEOPLE BE WRONG ABOUT THAT. THEY CAN JUMP AROUND. GENERALLY, IF EVERYTHING ELSE STAYS THE SAME, IT CAN DECREASE THE DEMAND. BUT THE PROBLEM WITH SAYING THE INTEREST RATES WILL DO ANYTHING TO THE PRICE IS ASSUMING EVERYTHING ELSE THAT AFFECTS SUPPLY AND DEMAND WILL STAY THE SAME. WHAT AFFECTS THE MARKET AND DEMAND MORE THAN INTEREST RATES ARE WHETHER OR NOT THE LENDERS CAN LOOSEN UP IN THEIR LENDING PRACTICES ALONG WITH THE INCREASE IN RATES. SAY FOR INSTANCE, WE HAD A 3% RATE IN 2011 BUT NOBODY COULD QUALIFY SO IT DIDN'T BOOST OUR DEMAND. IF YOU BUMP IT UP TO 4.5% YOU WILL KNOCK A FEW PEOPLE OFF THE END WHO WILL BE PRICED OUT OF THE MARKET BUT IF THE LENDERS ARE ABLE TO OFFER THAT TO MORE PEOPLE YOUR OVERALL LEVEL OF BUYERS THAT ARE PRE-APPROVED GOES UP AND THAT SHIFTS THE MARKET SHARE WITHIN PRICE RANGE. SO INSTEAD OF BUYING A $260,000 HOME NOW THEY BUY A $240,000 HOME.
TED SIMONS: THE HOT END OF THE MARKET MOVES UP A LITTLE BIT BASICALLY?
TINA TAMBOER: YES. OFTEN TIMES WE SEE THE DEMAND OVERALL GOES UP. WHAT WILL AFFECT THAT IS WE HAVE DODD-FRANK RIGHT NOW AND THAT RESTRICTS A LOT OF THE LENDERS AND HOW MUCH RISK THEY CAN TAKE ON ESPECIALLY ON THE LOWER END. SO IF DODD-FRANK IS LOOSENED UP WITH THE NEW ADMINISTRATION WE MAY SEE LENDERS LOOSEN UP AND THAT WILL THAT WOULD INCREASE THE DEMAND.
TED SIMONS: AS LONG AS WE DON'T GET THE BUBBLE FORMING.
TINA TAMBOER: YES, AS LONG AS THEY DON'T GET TOO CRAZY.
TED SIMONS: TOWNHOUSES, CONDOS ANYTHING DIFFERENT?
TINA TAMBOER: TOWNHOUSE AND CONDOS ARE DOING WELL ESPECIALLY IN THE CENTER OF THE VALLEY. WHEN YOU START GETTING INTO THE DOWNTOWN AREA WITHIN THE FREEWAY SYSTEMS, CENTRAL, THOSE TOWNHOUSES ARE DOING WELL AND THAT IS BECAUSE SINGLE FAMILIES ARE EXPENSIVE AND YOUNGER BUYERS WHO WANT TO LIVE DOWNTOWN ARE HAVING TO CHOSE TOWNHOUSES AND MORE SUPPLY IS BEING BUILT ON THE TOWNHOUSE LEVEL.
TED SIMONS: SALES AND PRICES INCREASING FOR TOWNHOMES AND CONDOS?
TINA TAMBOER: THEY ARE DEFINITELY DOING VERY WELL. I WOULD SAY YES, EXCEPT ON THE UPPER END. THE LUXURY TOWNHOUSES AND CONDOS MAY SEE A LITTLE MORE SUPPLY THAN ON THE MORE AFFORDABLE ONES.
TED SIMONS: THAT IS THE SAME AS SINGLE FAMILY HOMES, CORRECT? LUXURY HOMES ARE NOT SELLING AS WELL.
TINA TAMBOER: THEY HAVE A MORE TO CHOSE FROM AND A LOT OF BUILDERS ARE FOCUSED ON THAT LEVEL AND NOT SO MUCH THE ENTRY LEVEL. THE FLIPPERS HAVE BEEN BUYING THE OLD HOMES AND MAKING THEM FEEL NEW.
TED SIMONS: ENCOURAGING NEWS FROM REALTOR.COM AND YOU ARE CORROBORATING IT SO IT SOUNDS GOOD. GOOD TO SEE YOU, THANKS FOR JOINING US.
TINA TAMBOER: THANK YOU VERY MUCH.
