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
NATIONAL PERSPECTIVE

“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
RESIDENTIAL

“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
RESIDENTIAL RENTALS

“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
INDUSTRIAL

“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
COMMERCIAL LEASING

“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
LAND

“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.

Real estate market statistics are an important tool for REALTORS® as we work with our clients. Timely statistics presented in a meaningful way can help communicate the history of the market, current trends and the reality of what buyers and sellers are facing today.

We have many useful statistics generally available to us, most from our MLS, such as:

• Median Price
• Homes (Units) Sold
• Dollar Volume Sold
• Listing Count
• Months of Inventory
• Days on Market

Another source I use for statistics is the House Price Index (HPI) from the Federal Housing Finance Agency (www.FHFA.gov).

The HPI indicates the rate of appreciation or depreciation for single-family homes, compared with one year ago, and is updated each quarter. From FHFA.gov:

The HPI is a broad measure of the movement of single-family house prices.  The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties. This information is obtained by reviewing repeat mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac since January 1975.

The HPI serves as a timely, accurate indicator of house price trends at various geographic levels.  Because of the breadth of the sample, it provides more information than is available in other house price indexes. It also provides housing economists with an improved analytical tool that is useful for estimating changes in the rates of mortgage defaults, prepayments and housing affordability in specific geographic areas.

Here is detailed information on how the HPI is calculated and a good FAQ on the HPI. FHFA also provides a calculator to use the HPI to determine the change in value on a home, based on where it is located, when it was bought and for how much.

FHFA updates the House Price Index each quarter for the entire United States–9 regions across the country, all 50 states and over 300 Metropolitan Statistics Area (MSAs). There are 6 MSAs in Arizona:

• Phoenix, Mesa and Glendale
• Tucson
• Prescott
• Lake Havasu City/Kingman
• Flagstaff
• Yuma

I have taken the HPI data for the 6 Arizona MSAs and generated charts of the data. All 6 charts are available on www.ArizonaHPI.com. I also created charts for Arizona and the U.S.

They are unbranded charts, and you may use them however you would like.

Below is an example of the HPI chart for the Prescott MSA. Each bar represents the HPI for that quarter. Its value represents the appreciation or depreciation compared with one year ago. So a Q1 2011 value of -9.8 means that the House Price Index, or basically the value of a single-family home in the Prescott MSA, has gone down 9.8% from one year ago.

The values in the chart show whether the House Price Index has gone up or gone down from one year ago. Values above the line represent a time period where there is appreciation in the market. Values below the line indicated periods where home prices have depreciated from one year ago. The trends in the chart (the upward and downward movement) show whether we are heading in a positive direction or negative.

We as REALTORS® are often asked when will we see appreciation again in our market. I wish we had a crystal ball. But when we get close to that time, the HPI should be approaching zero, and when it does happen, the HPI will be a positive value.

And that is something we can all look forward to.

Visit www.ArizonaHPI.com for complete House Price Index charts for all 6 Metropolitan Service Areas in Arizona.

Kathy, Ricardo Bueno (@Ribeezie) of Diverse Solutions and ARMLS mime

Most things in life can be a headline to a writer.

The whole article is another story…

Thursday, April 8th, a fellow ARMLS member and I attended the ARMLS TECHNOPALOOZA in Mesa, AZ. Yvonne Richard and I drive down from Sedona often for classes and refer to these treks as “road trips”…a time to gossip, catch up on real estate, talk golf (need to play more) and share stories. Girls will be girls!

On the way down to Mesa, Yvonne made the statement that “every transaction has its story.” True. Could make a great post…h-m-m.

On the way back to Sedona, it was “What were you thinking?!”

We were so energized by TECHNOPALOOZA that we laughed almost all the way home. Much of the time we chuckled at the comments we heard during the sessions.

Exhibit Hall at TECHNOPALOOZA

Got stories? Let me hear some of them. Please share. Short stories…

From an educator’s perspective, we hear many things that give us pause. Just a few recent ones…

What were you thinking?

From an agency C/E class:

The discussion had been on the difference between dual agency in Arizona and designated agency in other states.

“Questions?”

Student in the front row: “When are we going to cover the other kind of dual agency?”

[Ed. Note: Student had a PhD.]

From a technology class:

The discussion and demonstration showed learners how to use their tablet PCs to get signatures and initials on the loaded purchase contract by using the stylus and having the buyer write their signature and initials directly on the tablet face. Demo done.

“Questions?”

Student near the front: “Is that signature legal?”

[Ed. Note: Ever signed for a UPS package delivered to your home?]

From a disclosure class:

The discussion centered on whether or not a seller needed to disclose the results from a recent home inspection report whereby significant latent defects were discovered.

“What do you think?”

Learner in the rear: “That information is confidential and one of the fiduciary duties you owe your seller.”

[Ed. Note: Back to the drawing board…]

From a prelicensure class:

The learner had taken the quiz at the end of the session, and we were reviewing the answers. A question on stigmatized properties asked if the seller had to disclose the fact that the house next door had been used as a “drop house” for illegal aliens.

Student comment: “I suppose if the seller’s house had been the ‘drop house,’ the answer would be ‘no!’”

[Ed. Note: And your answer would be?]

That’s all for now, people…

Kathy Howe

Image courtesy of Flickr user kretyen

I read an article the other day on Inman with predictions for 2011. It’s a bunch of different agents from all over the country predicting what will happen with the market in the next year. You should totally go read it. Unless you don’t want to awake in the middle of the night screaming and drenched in sweat sobbing over and over again, ‘The market will NEVER stabilize. The horror, the horror!’ Then you might want to avoid it.

Actually, don’t even bother reading it. I will summarize it for you:

Susie Sunshine, from Rainbow Realty in Kansas, predicts the market will gradually get better this coming year. She thinks prices will go up a little bit and interest rates will stay low. Buyers will start to see that this is a great time to invest in real estate again. This is the year for the normalization of the market. She’s been saying this the last three years. She’s also heavily medicated on mood-stabilizing drugs.

Debbie Downer, with Cutthroat Condos in Nevada, says the market is headed for a double dip. She says if you made it through 2010, you will absolutely totally fail in 2011. She says the banks will foreclose on everything that’s even a month behind on payment and then sell the properties even further below market value, swirling prices down the toilet. Sure, there will be lots of bank listings, but you’re not an REO agent. And yes, some investors will buy properties, but you don’t have any investor clients. She predicts you’ll go totally bankrupt in 2011. She’s hoping to scare all of the other agents out of the market so that she can scoop up their business in 2011. Debbie’s a ‘Mean Girl.’

John Smith, an Everyman Properties agent from Michigan, is too busy rocking and weeping in the corner to respond to the survey. He lost his own home to foreclosure this year. He didn’t close a single deal from March through September. He has PTSD from hearing hard-luck stories from clients who can’t pay their mortgages. He is deaf in one ear from beating his own phone against his head after a particularly frustrating call with a short sale negotiator from Bank of America. He doesn’t know what’s going to happen in the next year, but he does know that he can’t get a job doing anything else. He’s been in real estate for 15 years and has no other marketable skills. And even if he did, there aren’t any jobs out there anyway. Please just hand him a beer or five and walk away quietly.

Basically, what I took away from the article (besides the desire to binge drink) was that no one knows anything. 90% of these people will end up being wrong, and the 10% who are anywhere close to right will be so out of luck.

Thus, I present to you my predictions for 2011:

• Short sale negotiators will be incompetent dillweeds wearing red tape like a prom dress.
• Buyers will want to purchase properties 20% under list price without questioning how it correlates to market value.
• Sellers will want $30K more than their neighbor sold his house for a week ago because they have the ‘tasteful granite’ and upgraded to a window seat option in the master when they built the house 30 years ago.
• Lenders will promise docs have been emailed to title and then 5 minutes later admit the file is still in underwriting.
• Title people will not set up the signing until they receive the docs even if you beg and bribe them.
• You will encounter at least one dead creature while showing property.
• There will be one house you will run out of covering your mouth and nose because you just can’t take the stench any longer.
• You will show at least one home that makes you wistfully wonder if you could afford to buy it if you just moved some money around and called that one lender who can work miracles.
• You will help at least one family buy a home you feel like is the very perfect thing for them now. The night after it closes, you will sleep like a baby.
• You will help at least one seller successfully short sell his house so that he can begin to rebuild his finances and move on to a brighter future.
• You will never, NEVER, be bored.

Ebby

On a sunny, hot day in June 1991, I walked to the office of my apartment complex and heard a meow. Looking down, there was a kitten sitting under a bush staring up at me. I’d never been a fan of cats, but living alone for the first time, I’d semi-adopted a stray so that I’d have a little company. I asked the office who she belonged to and they said, “you.” She’d been abandoned just that morning, and they had hoped someone would step in.

I was Ebby’s huckleberry. She was wonderful. She waited in the window for me to come home, came out of the window when I woke up to give me a kiss good morning. We had our issues, such as the 3:00am yarn rolling, but those were minor hiccups.

Here’s the thing, though… When I carried her into my apartment, I really had no idea how long cats could live. No one told me that I would have her through three presidential administrations, seven different apartments and houses, two marriages or the birth of my first child. In fact, she and I were together longer than my first wife and I — from dating to divorce.

Marriage is a commitment, but owning a cat, that’s Commitment with a capital “C”, my friends.

All of that ended when she passed away of renal failure three years ago. My second cat, who I adopted a year after Ebby, passed away of the same illness a year later. Seventeen years between the two; both were 16 years old when I had to have them put to sleep.

Just like I was woefully uninformed about the life span of felines when I let Ebby into my life, I was equally unaware of the eternal aspect of the real estate blog when I created my first on RealTown. (After six months, I moved onto WordPress where I’ve been for the last four full years.)

Every day I wake up and the blog is waiting for me, expectant as a pet waiting for food, waiting for me to add another blog post to the archives.

After nearly 2,000 posts, though, I’m all but written out. The logic of explaining to buyers how to purchase real estate finally has escaped me, if only because I don’t want them to purchase on their own using what I explained. I want them to work with me.

Experts have emerged like weeds after our winter rains, telling anyone who will listen exactly how to write blog posts, how to get the most SEO bang for the buck with packed keywords, how to take advantage of unique concepts such as “365 Things to Do in xxx” – a year’s supply of blog fodder based on what can be done in your city. Somewhere, I’m sure there’s an agent mulling “365 Things to Do in Ajo,” which will be the sign the concept has not just jumped the shark but tagged the shark and made a documentary for Shark Week about the thing.

Truth be told, I don’t get a ton of business off my blog. Compared side to side, my static neighborhood sites generate more contact per visit than the blog ever has. Maybe I’m not writing enough about the community rummage sale. Who knows? Whatever the cause, the reality is if I’d known at the beginning the level of commitment needed to make a blog work, I probably never would have started.

The same could be said about my nearly two decades with Ebby and Griff. (And probably my kids, but that’s another story.)

Then again, my life wouldn’t have been the same without them (cats, kids, wives and beagles inclusive). And my career wouldn’t have been the same without the blog, not because of the business generated but because of the connections inside and outside real estate.

Maybe you’re debating whether to start a blog and wondering if it’s worth the effort. I’m here to say it is, as long as you’re aware of one basic reality… you’re in this for the long haul, possibly longer than you ever imagined.

Image courtesy of Flickr user alancleaver_2000

Being a real estate agent is totally screwing with my social life, again. It’s not enough that I unfailingly have to show houses at noon on Mother’s Day when I should, by all standards of decency, be three mimosas in (that’s simple motherhood math: I have three children, so it’s totally socially acceptable to have three mimosas or bloody marys, whichever I prefer, before noon on Mother’s Day) or at 4:00pm on Superbowl Sunday when I should be munching myself into a pre-awesome-commercials nacho cheese coma. No, I also have developed a weird inability to decipher the social norms of appropriate arrival times.

As an agent, I’m hyper-aware of the time on the clock at all moments of the day. I think of the day (and well, let’s be honest, my life) as a giant scheduling puzzle. Every day I look at my calendar and my to-do list, and I fit the pieces together. I have a listing appointment at 9:00am in Maricopa and then 3 houses to show at 11:30am in Chandler. At 5:30pm, I have a final walk-through to do in Gilbert. In and around these, I have a 50-minute commute to Maricopa and then another 25 back in to Chandler and from there 30 back to my house. I have to have the children to the bus stop and dropped at school at 7:18 am and 7:32 am and then picked back up at 2:30 pm and 2:40 pm. Then I have another 30-minute drive to Gilbert and 30 minutes back. During any free time existing between fixed-time appointments, I must turn in a new listing contract and upload photos, plan my blog for the next day, return client emails and phone calls, request feedback on shown listings, make sure children do homework and prepare dinner. In order to make this all happen, at every minute of the day I’m checking the clock and recalibrating my timeframe.

Each activity has its own uncontrolled variables. Some days the bus is late. (Some days, it just doesn’t come. Not that I’m bitter about that. It totally wasn’t me who slashed the octogenarian bus driver lady’s tires on her personal vehicle Monday afternoon and you can’t prove a thing.) And then I’m late to drop off child number two, making the 9:00am appointment in Maricopa tricky to pull off. If it looks like I’m going to be more than five minutes late, I’m on the phone, calling to warn that client I’m running a touch late. We all know the fastest way to lose a client is to make them feel like they’re not your most important client. How does your lateness make them feel? Like proper hygiene to a 12-year-old boy: unimportant. It also makes them feel like telling you to take your commission agreement, fold it five times and cut little triangles out of the edges so that it looks like a pretty snowflake. Because it’s as good as a snowflake in the desert. I know I’ve learned this lesson the hard way more than a time or two. I’d much rather lose a client because she Googled me, read my writing and thinks I’m a little snarky for her taste than for tardiness. At least snarkiness is something I have no control over. (I was born this way. It’s in my DNA.) There’s no excuse for tardiness.

So over the years, I’ve developed an almost sixth sense about time. I can feel in my split-ends when I’m sliding from the comfortably on-schedule zone into the red zone of potential lateness. I start to get sweaty in that extra-smelly, cold, nervous way. (Shut up! I’m not the only one with smelly nervous sweat, I know. It’s a medical condition. Stop making fun of me.) My foot gets heavy on the gas pedal, and my eyes uncontrollably twitch toward the clock every three seconds. When it’s an especially important meeting (a first-time showing or a high-dollar buyer), I inevitably have to pee as soon as I edge into the red zone. Excessive earliness makes me almost as tense. When traffic is unusually light or my previous appointments ran short, I often park three streets away from where I’m meeting a client and squeeze my eyes shut in the hopes they won’t drive by and see me waiting out the clock on our appointment time. That would probably be embarrassing.

This physical need to be smack dab on time (I like to be opening my car and placing my left foot on the pavement when the clock in my car blinks over to the agreed-upon meeting time) has become so ingrained over the last five years I’ve been in real estate, it has begun to make me forget that in real life, sometimes the goal is not to show up the very minute an event is slated to begin. Parties, for example, generally aren’t meant to be attended within 30 seconds of the time printed on the invite. I’ve shown up to more than one in the last couple of years only to find the hostess removing food from the oven with curlers in her hair, shocked my promptness. I showed up at 1:58pm to a 2:00pm bridal shower a few weeks ago only to find not a single car parked anywhere near the house I was aiming for. I hid in a nearby Old Navy until 2:10pm, and there were three other people in attendance. It goes the other way too. You have to be 20 minutes early to movies, apparently. Being at the door at 7:50pm for the 7:50 movie assures you a seat in the front row or no ticket at all. Who knew? The same principle applies to weddings. If it starts at 5:00pm and you’re not in attendance by 4:45pm, you run the risk of walking the bride down the aisle. (Which is super humiliating and I do not recommend it. I think that one bride was just extra crabby because I looked prettier than she did, but it was still a poor showing on my part.)

You know, the more I think about it, though, I really think the problem is not with me. I think my promptness makes a lot more sense than all of these fake, built-in times. We Realtors strive to arrive when we say we will (sure, we’re known for being late, but that’s really not our fault). Party planners and wedding invitation makers should take a cue from us and just tell us all what time they really want us to walk in the door. I should be 20 minutes late for maximum fashionableness? Why don’t you just include an arrival time chart on the invite so I know:

6:55-7:05 pm = Losers and Creeps (or REALTORS®)

7:06-7:15 pm = Lame at Best

7:16-8:15 pm = Acceptably Chic

8:16-10 pm = Too Cool to Care If They Miss Anything Fun

That would really make my life easier. Please? Join me, fellow agents, in this cause. It’s not just me, right?

Image courtesy of Flickr user kvanhorn

A – Appraisals aren’t the black-and-white system of valuation I thought they were before I got into real estate. And they can kill a deal faster than you can indignantly shout, “But that comp backs to a major road!”

B – Basements are like four-leaf clovers here in Arizona: almost impossible to find, and even when you do, not as great and exciting as you thought it was going to be.

C – Commission checks with small numbers are sometimes more satisfying than the illusive five-digit ones. Collecting a check for that short sale you spent a year crow-barring through the system can make the measly $1500 you take home feel a bit inflated.

D – DocuSign has saved my life. If I had to actually sit down with one particular client every time in the last 18 months he wanted to write an offer on a short sale he was going to eventually cancel on (23 offers, people!), I would have FUDed him a year ago. Luckily, we DocuSigned all but the first one, and now we’re finally closing on a property.

E – Empathy goes a really long way when things start to get rocky. Most people just want to feel like someone understands what they are going through and that their emotions are legitimate. A little bit of empathy can usually calm the most irate client.

F – Flats are vital. High heels are for hookers and real estate agents in the movies, not actual agents who have to troop through the rocks on the side of each and every house they show to get the lockbox open. Nicely sculpted calves are not worth landing on my butt in the spider-webby weeds around the hosebib.

G – Granola bars in the glove box. These have saved me from swooning face first into a murky green pool many a long showing day.

H – Health insurance was a luxury I should have appreciated more when I was working the corporate 9 to 5.

I – Insanity generally runs along a genetic line. So if you’ve encountered it in someone, expect to find it in her brother when he’s referred to you.

J – Juggling is not a circus act. It’s a survival technique.

K – Kindness begets kindness. That pushy lady on the PTA could be your next client if you play your cards right. Probably best not to slash her tires after the meeting because she shut down your proposal for a cotton candy booth at the fall festival.

L – Land-leases are totally asinine. Stay far, far away from them.

M – Money can fix a lot of things about a property, but far from everything. Money can’t make a house not back to a busy road, make a backyard big enough to put in a pool or raise low ceilings in a two-story house.

N – Never calculate your paycheck before the house has closed. Doing so will only cause the deal to fail in new and spectacular ways. Chickens are best left uncounted.

O – Open houses account for not even 5% of what I actually do–contrary to my impression of what real estate agents do before I became one.

P – Price is king. You can’t get away from it. Any properly priced property will eventually sell. It’s determining the proper price that’s the tough part.

Q – Quality wins against quantity in any circumstance: houses, clients, square footage. (Well, except for wine. But that goes unsaid, right?)

R – Restroom breaks in vacant houses are a bad idea. It’s best to wait for the next occupied house where you can be sure to find running water and toilet paper. (Yes, I’ve learned this one the hard way. Shut up.)

S – Sewage smell. No, nothing died in here; the water hasn’t been run because it’s vacant, so the sewage traps dried out and you now smell the sewer. Doesn’t it make you grateful for the convenience of modern plumbing?

T – Termites. They’re the only thing that can kill a deal faster than a bad appraisal. And unfortunately, no property is immune to the creepy little tunnel-building creatures.

U – Unicorns are more common than buyers who you’ve met on the internet who are coming into town for one day and will actually buy a house like they are promising. You will give them a free tour of the valley from Surprise to Queen Creek and never hear from them again.

V – Vacations breed deals. Schedule a vacation, and you will be immediately inundated with work that cannot wait. It can’t be a fake vacation, though; that doesn’t work. It has to be one you put a huge deposit down on and can’t cancel.

W – Wine cures all ills. (I was going to use W for water in copious amounts during showings, but who are we kidding? Wine is more important to my sanity.)

X – Xanax. What wine can’t cure, it will. (Negotiating real estate is not for the faint of heart.)

Y – Yard size is totally relative. A buyer in from Wyoming is bound to be horrified. One in from New York will be thrilled.

Z – Zillow sucks the big toe of a jolly green giant. And yet the general public will always believe what the computer-generated algorithm thinks a house is worth over the agent they hired. This will remain one of the great mysteries of real estate.