I attended a great event yesterday put on by ARMLS and the Phoenix Business Journal called “Real Estate Forward: A Forum with the Facts.” Here are some of the highlights from my notes.
Ted C. Jones – Stewart Title Guaranty Company
“You can’t have a jobless recovery.”
2002 was the last time the market was “normal,” says Jones. It takes about 1.25-1.5 new jobs per new dwelling. Given that, we’ve got 3-4 years to go, maybe more. Other predictions: $5/gallon gas is coming in 3-4 years. Fannie and Freddie will exit jumbo loans in October. Interest rates are going up.
Mike Orr – The Cromford Report
“I’m often asked, Have we hit bottom? It’s like driving across Kansas and trying to find the lowest point.”
In 2005, no one believed that home prices would tumble, said Orr. Now people find it hard to believe that they’ll ever go up again. All of the data points are looking good right now–except prices. The market is not driven only by supply and demand but also by emotion. It can take a long time for the market to react to the influence of supply and demand. But the pressure is on prices to go up.
Scott Golba – Golba Group Residential Property Management
“50% of homes in the U.S. are rentals. In the Phoenix metro area, the number is 34%.”
A lot of today’s renters are former homeowners who lost their homes, says Golba. These are good tenants to have because they are doing everything they can to rebuild their credit and buy a home again in a few years.
Stein Koss – Lee & Associates
“The momentum is changing.”
People feel like we’ve been at the bottom long enough and are ready to make some deals, says Koss. Phoenix is still considered a secondary market, as compared to Dallas or Chicago, but Amazon, Home Depot and the Home Shopping Network have taken space recently. You really need to have a story to move inventory; it can’t just be a commodity.
Phil Breidenbach – Office Properties Solution Group
“We’ve gone through the five steps of grieving.”
We’re working hard, but a lot of the activity is busy work still rather than real action, says Breidenbach. A couple of areas are bright spots, including downtown Phoenix (which is heading towards a strong 5% vacancy rate) and the southeast Valley, with its knowledge-based economy.
Cam Stanton – CB Richard Ellis
COMMERCIAL (RETAIL) SALES
“Retail follows rooftops, so it has suffered along with residential.”
B, C and even A properties are in trouble with falling rents and occupancy issues, says Stanton. He’s focusing on doing business with lenders rather than investors–managing, leasing, appraising or selling. It will likely take 3-5 years to “flush the system.”
Nate Nathan – Nathan & Associates
“It starts with me.”
I called the bottom in March 2010, says Nathan during a very positive presentation about land sales. We should be out of lots by 2014-2015. “You have two to three years to buy land, and then it’s over.”
Thanks to the Phoenix Business Journal and Bob Bemis, Chris Heagerty and the rest of the ARMLS crew for putting together an insightful morning.