Mortgage and Real Estate News Vol 0611 by Lillian Wong

Contents 1 2011 1.1

7 May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loans, deposits turn a profit for Western Alliance (2011-05-01 16:25) . . . . . . . . . . . . .

Home-loan-modification program remains stalled (2011-05-01 16:33) . . . . . . . . . . . . .

Phoenix residents might pay less property tax (2011-05-01 16:52) . . . . . . . . . . . . . . .

Fulton Homes mediation ordered (2011-05-01 16:57) . . . . . . . . . . . . . . . . . . . . . .

Fed chief shines - by saying nothing new (2011-05-01 16:59) . . . . . . . . . . . . . . . . . .

City land deal near SkySong would allow for apartments (2011-05-01 17:22) . . . . . . . . .

Scottsdale City Council approves revised Blue Sky project (2011-05-01 17:32) . . . . . . . .

Homebuilder Meritage falls back into red (2011-05-01 18:13) . . . . . . . . . . . . . . . . . .

Realty Execs set to file for Chapter 11 (2011-05-01 18:22) . . . . . . . . . . . . . . . . . . .

Luxury complex planned for Chandler development (2011-05-01 18:26) . . . . . . . . . . . .

D.R. Horton posts surprise 2nd-quarter profit | Phoenix News | Arizona News | azfamily.com | Business News (2011-05-01 18:31) . . . . . . . . . . . . . . . . . . . . . . . . . .

Chris Davis: Financial stocks are still a great value (2011-05-01 19:02) . . . . . . . . . . . .

25 most powerful businesspeople in Asia - The changing face of Asian business (2011-05-01 19:33) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Scottsdale expanding green-building efforts to commercial sector (2011-05-08 14:43) . . . .

Homebuilders hail law easing impact fees (2011-05-08 14:51) . . . . . . . . . . . . . . . . . .

Foreclosure activity eased in April (2011-05-08 15:06) . . . . . . . . . . . . . . . . . . . . .

Freddie Mac Posts First Quarterly Gain In 2 Years : NPR (2011-05-08 15:22) . . . . . . . .

Phoenix-area bankruptcies drop 8 percent (2011-05-08 15:31) . . . . . . . . . . . . . . . . .

Price fluctuation, foreclosure give snapshot of Scottsdale (2011-05-08 15:41) . . . . . . . . .

Greasewood Flat, land for sale in Scottsdale (2011-05-08 15:44) . . . . . . . . . . . . . . . .

6 laws limit HOAsâ&#x20AC;&#x2122; power (2011-05-08 16:47) . . . . . . . . . . . . . . . . . . . . . . . . . .

ASU economists predict brighter future for Arizona (2011-05-08 16:51) . . . . . . . . . . . .

Apartment vacancy rate dips below symbolic level (2011-05-08 16:53) . . . . . . . . . . . .

Fool.com: This Housing Market Is On Fire! (2011-05-11 12:01) . . . . . . . . . . . . . . . .

32 3

FDIC head Sheila Bair announces resignation (2011-05-14 12:11) . . . . . . . . . . . . . . .

Chandler resort lender cries fraud (2011-05-14 12:42) . . . . . . . . . . . . . . . . . . . . . .

Phoenix-area foreclosures down slightly in April (2011-05-14 12:51) . . . . . . . . . . . . . .

Census: Arizona homeownership rate shrinks to 13-year low (2011-05-14 12:58) . . . . . . .

Phoenix apartments to house low-income residents (2011-05-14 13:13) . . . . . . . . . . . .

Mortgages, foreclosures top agenda at BofA meeting (2011-05-14 13:23) . . . . . . . . . . .

Chandler City Council likely to approve property-tax hike (2011-05-14 13:32) . . . . . . . .

Scottsdale Quarter continues filling spaces at a steady pace (2011-05-14 13:58) . . . . . . .

Investment firm buys 4 Phoenix-area apartment communities (2011-05-14 14:03) . . . . . .

Your wallet is stolen - now what? (2011-05-14 14:18) . . . . . . . . . . . . . . . . . . . . . .

Sun City West independent-living program helps seniors sell their homes (2011-05-14 14:23)

Sell now or wait? Tips to ponder (2011-05-15 09:55) . . . . . . . . . . . . . . . . . . . . . .

Lawyer-turned-filmmaker documents foreclosure crisis (2011-05-15 10:10) . . . . . . . . . .

Arizona banks seeing a profit (2011-05-15 10:13) . . . . . . . . . . . . . . . . . . . . . . . .

Real-estate professionals embrace new digital tools to better serve clients (2011-05-15 10:27)

HUD projects waste millions (2011-05-15 10:33) . . . . . . . . . . . . . . . . . . . . . . . . .

37%+ of area housing sales are now cash (2011-05-15 10:43) . . . . . . . . . . . . . . . . . .

US builders see little to like in housing market (2011-05-17 09:19) . . . . . . . . . . . . . . .

Construction of new homes down 10.6% (2011-05-17 09:21) . . . . . . . . . . . . . . . . . .

Arizona Storyteller: Robson builds career providing Ariz. homes (2011-05-17 09:26) . . . .

IMF crisis opens the door to emerging nations (2011-05-17 10:07) . . . . . . . . . . . . . . .

US Real Estate: Realtors Face Off Against Mortgage Bankers CNBC Realty Check Blog CNBC (2011-05-17 10:40) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fool.com: This Housing Market Is On Fire! (2011-05-17 20:33) . . . . . . . . . . . . . . . .

The Extended Confessions Of An Economic Hit Man | zero hedge (2011-05-21 01:48) . . . .

The Rich Are About To Get Very, Very Rich: Study Finds Global Millionaire Wealth Set To More Than Double By 2020 | zero hedge (2011-05-21 01:53) . . . . . . . . . . . .

Metro Phoenix rental homes dominate housing market (2011-05-22 10:43) . . . . . . . . . .

Downtown Scottsdale set for â&#x20AC;&#x2122;metamorphosisâ&#x20AC;&#x2122; (2011-05-22 12:09) . . . . . . . . . . . . . . .

Metro Phoenix new-home market is on mend, experts say (2011-05-22 12:14) . . . . . . . .

CityScape developer takes on 2 more projects (2011-05-22 12:17) . . . . . . . . . . . . . . .

Fraud alleged in resort case (2011-05-22 12:49) . . . . . . . . . . . . . . . . . . . . . . . . .

Smart homes in Phoenix area run by iPads, iPhones (2011-05-22 12:59) . . . . . . . . . . .

Phoenix-area housing auctions fast and furious (2011-05-22 13:11) . . . . . . . . . . . . . .

Foreclosure-auction website AZ Bidder a hot property (2011-05-22 13:13) . . . . . . . . . .

Montelucia Resort and Spa has better outlook under new ownership (2011-05-28 23:31) . .

U.S. April new home sales up 7.3% - MarketWatch (2011-05-28 23:37) . . . . . . . . . . . .

12% of U.S.-backed banks were at risk in quarter (2011-05-28 23:43) . . . . . . . . . . . . .

2 REIT veterans begin new venture (2011-05-28 23:56) . . . . . . . . . . . . . . . . . . . . .

Investors optimistic about housing market, survey says (2011-05-29 00:11) . . . . . . . . . .

’It’s a niche market’ (2011-05-29 20:30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Slower growth felt worldwide (2011-05-29 20:32) . . . . . . . . . . . . . . . . . . . . . . . .

Phoenix-area ”shadow inventory” of homes doing well in market (2011-05-29 21:01) . . . . .

Expert: Recovery falls short of target (2011-05-29 21:19) . . . . . . . . . . . . . . . . . . . .

Tempe land sold for $3.24 million (2011-05-29 21:21) . . . . . . . . . . . . . . . . . . . . . .

Rocky Point vacation units hit by drop in buyers (2011-05-29 21:26) . . . . . . . . . . . . .

Be alert: Fees, taxes eat into fund returns (2011-05-29 21:29) . . . . . . . . . . . . . . . . .

Judges hear Elevation Chandler land dispute (2011-05-30 10:26) . . . . . . . . . . . . . . .

Mortgage Formulas (2011-05-31 14:03) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Spring-cleaning-for-your-credit-score-investopedia (2011-05-31 18:19) . . . . . . . . . . . . .

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Cities that weathered housing bust now suffering - Yahoo! Finance (2011-05-31 18:23) . . .

102

Chapter 1

2011 1.1

May

Loans, deposits turn a profit for Western Alliance (2011-05-01 16:25) Higher loan and deposit growth and diminishing loan problems helped Western Alliance Bancorporation turn profitable in its most recent quarter. The parent of Alliance Bank of Arizona earned $2.7 million, or 3 cents a share, for the period ending March 31, reversing a loss of $2.1 million, or 3 cents a share, from January to March 2010. Total interest income, a measure of revenue, rose to $72 million from $68.7 million. The results beat analyst estimates of flat quarterly earnings, Zacks Investment Research reported. Western Alliance stock gained 36 cents a share, to $8.20, on Tuesday. Robert Sarver, chairman and chief executive officer of Western Alliance, which relocated to Phoenix last year from Nevada, said each of the company’s three operating units was profitable for the first time in three years. ”We continue to make important strides on multiple fronts simultaneously as we achieve total loan growth while reducing higher-risk construction and land exposure and growing our deposits while reducing our funding costs,” he said. Pre-tax operating earnings of $25.3 million topped the $19.1 million reported for the first quarter of 2010. Net-interest income hit a record high, as total loans and deposits each rose more than 5 percent. The firm’s loan portfolio improved. Non-performing assets came to 3.3 percent of total assets, down from 4.2 percent one year earlier, and net charge-offs fell 41 percent. The latest quarterly earnings included a loss of 5 cents a share from the sale and valuation of repossessed assets. by Russ Wiles The Arizona Republic Apr. 27, 2011 12:00 AM [1]Loans, deposits turn a profit for Western Alliance

1. http://www.azcentral.com/arizonarepublic/business/articles/2011/04/27/20110427biz-westernalliance0427.html

Home-loan-modification program remains stalled (2011-05-01 16:33) The latest data on the federal home-loan-modification program are likely to draw more jeers than cheers. The plan known as HAMP makes many metro Phoenix homeowners angrier than their most recent property 7

valuations. As of February, 22,209 Phoenix-area homeowners have received permanent loan modifications through HAMP. Those are the total results of a program launched two years ago. Six months ago, 19,385 modifications to lower struggling homeowners’ payments had been completed through the government-backed program, according to the Treasury Department. Even then, it was clear that the plan to help people avoid foreclosure had stalled. HAMP’s poor results are blamed mainly on lenders unwilling to work with homeowners, with lenders instead choosing to foreclose and resell a home for less than half of what was owed on it. There are countless stories in Arizona of borrowers who tried for months to obtain a loan modification or paid for months on a temporary loan modification, only to end up losing their house to foreclosure. Lenders have pointed the finger at homeowners, who didn’t fill out loan-modification paperwork correctly, waited too long to ask for help or simply refused the loan-modification deal that was offered them. The federal government has tried to remain optimistic about the program, and at various times, even appeared to pressure lenders to work with more borrowers. When President Barack Obama announced the plan during a speech in Mesa in February 2009, many Arizona homeowners who were dealing with mortgages for more than their home was worth, as well as with drops in their incomes, were hopeful. I was there, and talked to many of those homeowners. I also had the opportunity that day to ask Treasury Secretary Timothy Geithner how the government would encourage or ensure lenders modified mortgages through the then-brand-new program. The phrase he used was the ”carrot-and-stick” approach. The carrot is government fees of up to $3,000 paid to lenders for every successful loan modification. It was alluded that the stick would be government pressure on banks that took Troubled Asset Relief Program funds. It’s now clear that neither approach worked as well as expected. Foreclosures in metro Phoenix hit an all-time record in 2009. Last year’s level was the second worst for the region, despite lender moratoriums. There are 4,427 active-trial loan modifications through HAMP under way in the area that have the potential to become permanent. There were more than 5,000 foreclosures in Phoenix last month. Confidence meter The Arizona Regional Multiple Listing Service has a new index to track the confidence of its members in the housing market and economy. The Consumer Confidence Index, started in December, reached its highest level in April: 71 percent. Home sales in March hit a 66-month high, according to ARMLS. by Catherine Reagor The Arizona Republic Apr. 27, 2011 12:00 AM [1]Home-loan-modification program remains stalled

1. http://www.azcentral.com/arizonarepublic/business/articles/2011/04/27/20110427biz-catherine0427.html

Phoenix residents might pay less property tax (2011-05-01 16:52) Many Phoenix residents probably will pay less in city property taxes as a result of dropping home values. The city has again proposed keeping the property tax rate at $1.82 per $100 of assessed value, but residents will pay less because property valuations in Maricopa County have fallen four years in a row. The average Phoenix resident will owe about $234 in city property taxes for the 2011-12 fiscal year, which begins July 1. That’s down 26 percent from the $316 estimated for the current year, according to the city’s Finance Department. The city expects to collect $61 million less in property taxes for fiscal 2011-12 compared with the current fiscal year as a result of the drop but will make up the difference using reserves. Phoenix’s property-tax rate has stayed at $1.82 since 1996. It is unclear whether the city can sustain that 8

rate if property values continue to decline, Finance Director Jeff Dewitt said. City property taxes are divided into two levies: the primary property tax pays for day-to-day operations and maintenance, while the secondary property tax is dedicated to paying off voter-approved bond debt used for capital projects and infrastructure. If the city doesn’t collect enough to pay off debt, the City Council will have to consider raising the secondary property-tax rate, shifting collections from the primary property tax to the secondary or dipping into the general-fund budget. City officials are expected to discuss property-tax plans for the 2012-13 fiscal year this fall. Even though some Phoenix residents and business owners may be paying less in property taxes, they may see their overall property-tax bill from the county go up, depending on whether taxes were increased for nearby schools, community colleges and other entities that also levy a tax. The property-tax levy was a controversial issue for the Phoenix City Council last May. The public decried tax increases amid the recession and just months after elected officials voted to implement a 2 percent city tax on food to generate about $50 million annually. The Phoenix City Council will consider adopting the $1.82 fixed property-tax rate as part of the city’s 201112 budget process on July 6. by Lynh Bui The Arizona Republic Apr. 28, 2011 12:00 AM [1]Phoenix residents might pay less property tax

http://www.azcentral.com/arizonarepublic/local/articles/2011/04/28/20110428city-of-phoenix-property-tax.

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Fulton Homes mediation ordered (2011-05-01 16:57) Almost 28 months after Fulton Homes Corp. filed for Chapter 11 reorganization, a bankruptcy judge has ordered the Tempe-based company and its creditors to undergo mediation through the 9th U.S. Circuit Court of Appeals. Fulton Homes and its primary creditors, a group of banks led by Bank of America, have been arguing for more than two years in U.S. Bankruptcy Court over the terms under which the builder would repay the balance of its debt of more than $160 million on an unsecured line of credit. Fulton Homes and its creditors have not been able to resolve a disagreement on the amount of debt owed. Fulton’s debt stems from a loan issued by the lenders during the Phoenix area’s housing boom for land purchases and speculative housing construction. As with all commercial real-estate loans, there were a number of conditions that had to be met to prevent the loan from going into default, including a certain ratio between the loan balance and the value of Fulton Homes’ real-estate assets. When real estate values plummeted in 2008, it quickly put Fulton Homes into default, court records show, even though the company had not missed any of its loan payments. Fulton Homes opted to file for bankruptcy protection in January 2009. The mediation will give the parties another chance to resolve their differences. The participants will present their recommendations to a neutral mediator, who will work with both sides to set terms for the repayment of debts, according to Phoenix attorney Don Gaffney, who represents the lender group. According to the 9th Circuit’s website, all its mediators are experienced attorneys with eight to 20 years of experience settling disputes. A mediator selected randomly by the court will review the Bankruptcy Court record of the case and then conduct phone conferences with attorneys on both sides. As of Wednesday afternoon, no dates had been set for the conferences. The appellate court’s website explains that mediators generally set their schedules based on the size and 9

complexity of the case involved. A total of 843 documents were filed by attorneys and the court in the Fulton Homes bankruptcy case, according to the court record. by J. Craig Anderson The Arizona Republic Apr. 28, 2011 12:00 AM [1]Fulton Homes mediation ordered

1. http://www.azcentral.com/arizonarepublic/business/articles/2011/04/28/20110428biz-fultonhomes0428.html

Fed chief shines - by saying nothing new (2011-05-01 16:59) WASHINGTON - The script was repetitive. The lines were delivered without emotion. There wasn’t even a twist. The reviews for Federal Reserve chief Ben Bernanke’s unusual news conference Wednesday would have sunk a Hollywood blockbuster. As the head of the famously vague central bank, though, he nailed it. ”I would give the chairman high grades for his performance today,” said Dana Saporta, an economist at Credit Suisse. ”I was a little relieved.” In an hourlong give-and-take with reporters - the first news conference by a Fed chief in almost 20 years - a relaxed Bernanke delivered little new information and said nothing to spook investors who were hanging on every word. ”We paid attention,” said David Ader, head of government bond strategy at CRT Capital. ”But he didn’t say anything we hadn’t heard already.” Financial news channels pasted second-by-second charts of financial markets on the screen next to Bernanke’s face as he spoke. Not much drama there, either: The Dow Jones industrial average rose gently as the Fed chief spoke. It ended the day up 96 points, at 12,691. For Fed-watchers, there were a couple of morsels. Bernanke decoded his frequent pledge to keep interest rates near zero for ”an extended period.” He indicated rates would stay at the record lows for at least the next two Fed meetings, or about three months. He also seemed to rule out further major efforts to help the economy. Shortly before Bernanke started talking, the central bank announced that its $600 billion plan to hold down interest rates by buying government bonds would end as scheduled in June. He suggested the Fed would be reluctant to start a new program. ”The trade-offs are getting less attractive at this point,” he said. ”Inflation has gotten higher.” In the run-up to the first of what the Fed says will be quarterly news conferences, Wall Street held its breath, and the financial media speculated endlessly about how the Fed chairman might respond to unfiltered questions from the media. Cameras whirred as Bernanke, wearing a conservative gray suit and a red tie, walked to a dark-brown wooden desk, where he sat fielding questions like the college professor he used to be. Bernanke said the news conference was a step toward his goal of making the Fed more open and accountable to the American public. He has given television interviews, spoken to reporters about his South Carolina upbringing and allowed cameras inside the Fed. In 2008, some Americans directed anger toward the central bank after the financial crisis. The Fed bailed out crippled insurer American International Group and opened itself for emergency lending to investment houses, not just commercial banks. Critics, including some lawmakers, ripped the Fed for being secretive. The institution is often misunderstood: It isn’t bankrolled by the taxpayers but by what it earns from its huge portfolio of Treasury and mortgage securities. Bernanke stuck close to the statement the Fed issued earlier in the day, saying it would keep short-term rates 10

near zero and end the bond-buying program. ”The Fed likely judges this first press conference a success,” said Michael Feroli, an economist at JPMorgan Chase. ”Nobody was able to trip up Bernanke, who generally came across as poised and balanced. Market participants may not have learned a lot about where Fed policy is heading, but today’s event was more about the Fed communicating to a broader audience than the market.” Fed chairmen had held news conferences only twice before. Paul Volcker had one in 1979, shortly after he was appointed by President Jimmy Carter, and Alan Greenspan held an impromptu session with reporters in 1992. The Fed has long acted in secrecy. For decades, the central bank didn’t bother to explain what it was doing or why. It chose instead to let investors pore over scraps of information like Kremlinologists trying to discern the inner workings of the Soviet Politburo. But the Fed has slowly opened up. In 1975, Fed chairmen began testifying before Congress twice a year. In 1994, the Fed’s policymaking committee started issuing statements after its meetings, disclosing the target for its benchmark federal-funds rate. Eight years later, Fed statements began to include a roll-call tally of how committee members voted on interest-rate policy. That allowed investors and the public to gauge the extent of dissent at Fed meetings. Bernanke has taken openness to levels unthinkable under his predecessor, Greenspan, who tended to make opaque comments that Wall Street parsed word for word, as though he were an oracle. The Fed chief sketched a picture of an economy growing steadily but still weighed down by prolonged unemployment, now at 8.8 percent. He noted that about 45 percent of the unemployed have been without a job for six months or longer. The news conference allows Bernanke to pre-empt critics at some of the regional Federal Reserve banks who say the Fed isn’t being vigilant enough against inflation, said Sarah Binder, a political scientist at George Washington University who studies the Fed. ”This really puts Bernanke’s stamp on the policy of the Fed,” she said. ”It has the potential to neuter the dissenting view.” by Paul Wiseman and Jeannine Aversa Associated Press Apr. 28, 2011 12:00 AM [1]Fed chief shines - by saying nothing new

1. http://www.azcentral.com/arizonarepublic/business/articles/2011/04/28/20110428biz-bernanke0428.html

City land deal near SkySong would allow for apartments (2011-05-01 17:22) Scottsdale will consider a small-parcel land deal east of SkySong that would allow Mark-Taylor Inc. to develop apartments on a city-owned site. The Scottsdale City Council voted unanimously Tuesday to negotiate with the Scottsdale-based apartment developer on an exchange of adjacent sites along 74th Street south of McDowell Road. Scottsdale sought development proposals last year for a 3.7-acre city-owned site just south of the closed Los Arcos Crossing shopping center on 74th Street. That property would be offered to Mark-Taylor. Mark-Taylor would offer the city 2.5 acres on the southeastern corner of 74th Street and McDowell. The company has a sale agreement pending with ML Manager LLC to buy the 14.29-acre Los Arcos Crossing property for $6.4 million, according to ML Manager’s portfolio newsletter. The 2.5 acres is part of that site. ”The city thought it would be to our advantage to acquire land with frontage on (McDowell) that could be sold later for retail development,” said Christine Sheehy, who handles special projects in the city’s Community and Economic Development Department. An August 2010 appraisal of the city land placed the value between $800,000 and $900,000. Removing deed restrictions relating to parking and property setbacks would allow the higher value of $900,000 or about 11

$5.55 per square foot, Sheehy said. The Los Arcos Crossing property is under contract at about $10.28 per square foot. That would translate to roughly $1.12 million for the 2.5-acre site, although a corner lot could have a higher value. Chris Brozina, Mark-Taylor associate vice president of development, declined comment on its development plans. The 25-year-old company has developed about 14,000 apartments. However, Sheehy said Mark-Taylor’s plans would involve a three-story, resort-style apartment complex with its primary entrance on McDowell just west of Miller Road. SkySong, the ASU Innovation Center, is planning 325 apartments in a four-story building built around an existing parking garage. ”We are working on the details of the financing for the apartments and are planning to be under construction this summer,” said Don Couvillion, vice president of real estate for the Arizona State University Foundation. Attorney Paul Gilbert, representing SkySong, raised objections to a conceptual site plan for the site and how it would link to SkySong. Scottsdale activist John Washington said earlier Tuesday that he has no faith in the city’s ability to ”make good decisions or negotiate effectively regarding real-estate transactions.” He is suing Scottsdale over a deal approved in March to sell a four-building complex downtown to Scottsdale Healthcare for $1.5 million. ”The easiest and simplest option . . . is to retain the (city) property until the real-estate market improves, and dispose of it via competitive bid,” Washington said of the 74th Street land. Last fall, two development plans were submitted to the city for its 3.7-acre site. That included a proposal from Tempe-based Global Entertainment Corp. to build a $50 million events center with a 5,500-seat arena. North American Development Group, based in Ontario, Canada, proposed a $25 million shopping center of 200,000 square feet. Both were contingent on acquiring the adjacent Los Arcos Crossing property. After Mark-Taylor put the 14.29 acres under contract the city tried to negotiate with the interested developers to see if different uses could be combined. That failed and the city turned to a possible land deal with MarkTaylor. To complete the deal, Scottsdale will order appraisals of the two parcels, prepare a development agreement and process a rezoning request to allow the apartments. by Peter Corbett The Arizona Republic Apr. 27, 2011 10:17 AM [1]City land deal near SkySong would allow for apartments

http://www.azcentral.com/business/realestate/articles/2011/04/27/

20110427scottsdale-land-swap-near-skysong-would-allow-apartments.html

Scottsdale City Council approves revised Blue Sky project (2011-05-01 17:32)

Artist’s rendering of latest iteration of Blue Sky apartment complex on Scottsdale Road north of Camelback Road. After several months of delays and objections, Scottsdale gave approval this week to a proposal that will add more than 700 luxury apartments to the city’s downtown area across from the Scottsdale Fashion Square mall. Gray Development Group won Scottsdale City Council approval Tuesday for its Blue Sky apartment complex proposal on a 5-2 vote. The council endorsed amended development standards and a site plan to allow Gray to develop the threebuilding complex northeast of Scottsdale and Camelback roads, with a maximum building height of 128 feet, more than 20 feet lower than the tallest buildings that now exist in the area. Vice Mayor Bob Littlefield and Councilman Ron McCullagh cast the only no votes. ”This is just the same old story, over and over,” Littlefield said. ”It’s tall, dense apartment buildings, there’s nothing new about it. This isn’t going to make the residents of Scottsdale any better off.” The proposal was facing a legal protest from Triyar Properties, which owns the retail center on the northeastern corner of Scottsdale and Camelback, just south of the Blue Sky property. That would have forced a supermajority vote of 6-1 for council approval. However, negotiations between Gray and Triyar resulted in the protest being lifted just before the start of the council meeting. ”Everything we did was to lower heights and create more interesting architecture, but the site plan didn’t change and the floor-area ratio didn’t change,” said Brian Kearney, Gray’s chief operating officer. Littlefield also was critical of the constant changes to the proposal, which continued until just before the meeting, and said the council was being rushed into approving it without knowing all of the specifics involved. ”It’s just a bad project and even if you love it, the process is bad,” he said. Councilwoman Suzanne Klapp said downtown businesses have suffered the past few years because not enough people live in the area. ”We have a good project that should be approved by this council,” she said. McCullagh said the primary issue is the scale of the project relative to the site on which it would be built. He also said the council hasn’t been given the documentation necessary to accurately gauge the scale of the project. ”Given what we have, I won’t support it,” he said. Gray submitted two different site plans for the complex, and asked the council to approve one of them, which includes amended development standards on 4.3 acres. 13

The site plan calls for two buildings along the eastern side of Scottsdale Road north of Camelback Road and another near the Arizona Canal. It envisions 749 apartments, and a maximum building height of 128 feet. It also includes 43,000 square feet of street-level retail space, a 27,000-square-foot recreation center and 1,350 underground parking spaces. The complex will house Gray’s corporate headquarters and Bruce Gray, its chairman, will live there, Kearney said. Councilwoman Lisa Borowsky presented several conditions before she voted for the project: - Gray provides at least 20 percent of funding for improvements to pedestrian connectivity between the eastern and western sides of Scottsdale Road as determined by a study also being funded by the developer. - Gray obtains permits to begin construction within 24 months. - The council has final approval of Gray’s design plan. - Sidewalk improvements made by Gray match existing sidewalk patterns in the area. - Council approval of amended development standards is tied to this specific site plan. The council amended its motion to include all of Borowsky’s stipulations, and voted for approval. Gray, who was at the meeting, agreed to all of the stipulations, but said obtaining the funds necessary to start construction within 24 months might be a struggle. The company obtained an equity partner that committed $170 million to the project several months ago, Gray said. The long delay may make it difficult to convince this partner to follow through on that investment, he said. ”If I had my way, we’d be moving dirt in a week,” he said. Numerous residents testified before the council either in support of or in opposition to Gray’s proposal. Ace Bailey, president of Ultimate Art & Cultural Tours, said the issue is about what’s best for Scottsdale as a whole, and that the city can either be ”positive and progressive, or stagnate and die.” ”Downtown Scottsdale really does need to grow up,” she said. Liz Dawn, who lives behind the Blue Sky site, said she and other homeowners in her neighborhood are ”vehemently” opposed to the project and asked council members not to ”compromise” their integrity. ”Homeowners directly behind the site . . . will be decimated by this monstrous project,” she said. by Edward Gately The Arizona Republic Apr. 27, 2011 12:34 PM [1]Scottsdale City Council approves revised Blue Sky project

http://www.azcentral.com/community/scottsdale/articles/2011/04/27/

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Homebuilder Meritage falls back into red (2011-05-01 18:13) After completing its first profitable year since the housing slump began, Meritage Homes Corp. has slipped back into the red. The Scottsdale-based company, Arizona’s only home-grown and publicly traded homebuilder, reported Thursday a net loss of $6.7 million in the first quarter. Steven Hilton, Meritage Homes chairman and chief executive, said the major difference from a year earlier, when the company reported net earnings of $2.7 million, was the absence of a federal tax credit for homebuyers like the one that expired in April 2010. The company’s first-quarter gross revenue from home closings was $177.5 million, compared with $200.6 million in the first quarter of 2010, a decline of 12 percent. ”The market has obviously softened since the federal homebuyer tax credit expired in April last year, as reflected in total U.S. home sales as well as our own sales and closings,” Hilton said in the company’s quarterly earnings report. Elimination of the additional tax incentive had a number of effects, he said. 14

It reduced the volume of new-home orders, making it necessary for Meritage Homes to offer more buyer incentives, thus lowering the profit margin on each house. A reduction in volume also increases the construction cost of each home by making it more difficult to leverage economies of scale, Hilton said. Homebuilders track and report three key sales statistics: orders, cancellation rate and closings. Orders represent the number of new-build contracts signed by prospective homebuyers. A certain percentage of them result in cancellations, while the majority of orders lead to closings, the actually completed sales. Meritage Homes reported 840 net orders in the first quarter, a cancellation rate of 17 percent and 678 closings. In the same quarter of 2010, it had 1,064 orders, a cancellation rate of 18 percent and 808 closings. The gross profit margin on home closings was 17.1 percent in the first quarter, compared with 18.9 percent a year earlier, the earnings report said. Hilton pointed to several positive developments in the first quarter, some involving buying trends and others related to company initiatives. One positive trend that Hilton noted was a gradual increase in sales contracts signed since the tax credit expired. The company’s sales volume has increased every quarter since the end of April 2010, which seems to indicate that demand for new homes is on the rise. Economists say that when a significant buyer incentive is offered with a set expiration date, such as last year’s income-tax credit of up to $8,000 for new homebuyers, it has a tendency to wipe out pent-up demand. In other words, many consumers rush to buy before an incentive disappears and few are motivated to buy just after an incentive is taken away. Positive developments within the company in the first quarter included expansion into the Raleigh-Durham area of North Carolina, which Hilton said is a relatively robust new-home market. Meritage Homes continued to position itself as a leader in the design and construction of energy-efficient homes, he said. New initiatives in the first quarter included the introduction of an energy-neutral, ”net-zero” production home, which produces as much energy as it uses. by J. Craig Anderson The Arizona Republic Apr. 29, 2011 12:00 AM [1]Homebuilder Meritage falls back into red

1. http://www.azcentral.com/arizonarepublic/business/articles/2011/04/29/20110429biz-meritage04291.html

Realty Execs set to file for Chapter 11 (2011-05-01 18:22) In a reversal from statements a week earlier, Realty Executives Inc. confirmed Friday that it intended to file for bankruptcy protection ”within the next 48 hours.” Employees and agents for Realty Executives were told Thursday about the plan to file for Chapter 11 reorganization in U.S. Bankruptcy Court. The announcement to staff and contractors came just eight days after Rich Rector, Realty Executives owner and executive chairman, had issued a staffwide memo reassuring personnel that the firm was financially stable. Realty Executives is based in Scottsdale. Rector said in the April 20 memo that the company had struggled to make its lease payments on branch offices. Realty Executives spokeswoman Andrea Kalmanovitz provided The Arizona Republic a copy of the memo on April 21. One reason for the memo was to allay agents’ concerns over being locked out of their offices after the company 15

had missed payments on some of its commercial leases. Rector said in the memo that the company was trying to resolve the lease problem by working with property owners to negotiate lower payments. ”We have a plan in place and are working to complete this process with our various landlords,” he said. He concluded by saying, ”We have a history to be proud of and an exciting future ahead. Realty Executives is here to stay in Arizona and worldwide.” The memo did not mention bankruptcy. Realty Executives has 1,230 licensed agents in Arizona, ranking No. 4 in the state. It also is among Arizona’s largest real-estate firms in terms of local sales volume. The company currently is facing two potentially costly lawsuits. One was filed in late March by the owner of its Pinnacle Peak office, Montana-based Saypo Cattle Co., which claims that the company vacated the facility without notice in the middle of the night and that it had not made a lease payment since November. The Saypo complaint, filed March 31, seeks about $143,000 in past-due lease payments, as well as damages for breaching the Pinnacle Peak lease contract, which the lawsuit says was not set to expire until May 2014. It also accuses the company of fraud, arguing that Realty Executives staff vacated the building just a few weeks after negotiating a lower lease rate. The other lawsuit is a counterclaim filed by former Realty Executives President John Foltz, who alleges in his Maricopa County Superior Court complaint that Rector and other top officials invented a story that Foltz had committed a variety of crimes and unethical practices after he refused to take a pay cut. The company has accused Foltz of a number of violations of his former employment contract, including theft and mismanagement. Foltz has denied the allegations. His counterclaim seeks damages for defamation of character, in addition to months’ worth of unpaid compensation. Foltz’s lawyer, Phoenix attorney Daniel Kloberdanz, said on April 21 that he had received calls from Phoenix consulting firm MCA Financial Group informing him that Realty Executives had hired the firm and was considering Chapter 11 bankruptcy. Asked on April 21 about the possibility of bankruptcy, spokeswoman Kalmanovitz responded via e-mail: ”Rich did hire MCA Financial . . . but not to pursue restructuring. MCA has a great reputation in town for their ability to streamline operations within a business and came highly recommended to Rich. He has been using them as a consultant to support him with such things as lease negotiations.” She said Friday that the bankruptcy decision had been made within the past week. by J. Craig Anderson The Arizona Republic Apr. 30, 2011 12:00 AM [1]Realty Execs set to file for Chapter 11

http://www.azcentral.com/arizonarepublic/business/articles/2011/04/30/20110430biz-realtyexecutives0430.

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Luxury complex planned for Chandler development (2011-05-01 18:26) A 322-unit luxury-apartment community is planned for 18 acres near the southwestern corner of Arizona Avenue and Queen Creek Road in Chandler. The site was bought for $3.5 million, or about $194,000 per acre, by Investment Property Associates. The buyer and P.B. Bell Cos. of Scottsdale plan to work together to develop a garden-style community to be called Campanello. The units will be in two- and three-story buildings containing a mix of one-, two- and three-bedroom apartments ranging in size from about 727 to 1,258 square feet covered by 9-foot ceilings. Amenities will include detached garages, covered parking, two pools, three spas, a putting green, a clubhouse with a theater room, an exercise facility and picnic areas with grills. 16

The complex will be part of Chandler Center, a mixed-use development of more than 50 acres that will include offices, retail shops and a hotel. Investment Property Associates was represented by Cindy Cooke and Brad Cooke of the Phoenix office of Colliers International. The seller was Dobson Bell I Limited Partnership of Chandler. by Luci Scott The Arizona Republic Apr. 30, 2011 12:00 AM [1]Luxury complex planned for Chandler development

1. http://www.azcentral.com/arizonarepublic/business/articles/2011/04/30/20110430biz-cr-apartments0430.html

D.R. Horton posts surprise 2nd-quarter profit | Phoenix News | Arizona News | azfamily.com | Business News (2011-05-01 18:31) FORT WORTH, Texas (AP) D.R. Horton Inc.’s fiscal second-quarter profit more than doubled mostly because of a large tax benefit, but the homebuilder reported lower revenue, fewer closings and a decline in orders. Homebuilders are a bellwether for the housing market and the economy. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, by some estimates. D.R. Horton reported Friday its net income rose to $27.8 million, or 9 cents per share, for the period ended March 31, up from $11.4 million, or 4 cents per share, a year ago. The results included a $59.2 million tax benefit offset in part by charges for inventory and land option cost writeoffs. Analysts surveyed by FactSet expected a loss of 5 cents per share excluding unusual items. Revenue fell 18 percent to $733.1 million from $896.8 million, missing Wall Street’s estimate of $758.4 million. D.R. Horton’s stock gained 25 cents, or 2 percent, to $12.35 in pre-market trading. Closings fell to 3,516 homes from 4,260 homes, while net sales orders dropped to 4,943 homes from 6,438 homes. The quarter’s cancellation rate was 25 percent. While closings and orders were soft, D.R. Horton said that it boosted inventory by 1,400 homes during the quarter to support increased demand for new homes during the popular spring selling season. ”We continue to focus on providing affordable homes for the first-time buyer while having product available for move-up buyers,” Chairman Donald R. Horton said in a statement. Builders got a spring sales lift last year thanks largely to federal tax credits that helped spur sales. But once the government incentive expired at the end of April, home sales cratered for much of the year. This year, homebuilders don’t have the government incentives as a sweetener to coax would-be homebuyers, many of whom remain deterred by high unemployment, strict lending standards and concerns that home values could drop further. D.R. Horton anticipates that its closings and pre-tax profit will be higher during the second half of the fiscal year. The company also declared a quarterly dividend of 3.75 cents per share. The dividend will be paid on May 24 to shareholders of record on May 12. D.R. Horton, based in Fort Worth, Texas, has operations in 72 markets in 26 states. It sells homes with prices ranging from $90,000 to more than $700,000. The company also provides mortgage financing and title services through subsidiaries. by Associated Press April 29, 2011 [1]D.R. Horton posts surprise 2nd-quarter profit | Phoenix News | Arizona News | azfamily.com | Business News 17

1. http://www.azfamily.com/news/business/120951179.html

Chris Davis: Financial stocks are still a great value (2011-05-01 19:02) FORTUNE – As the son and grandson of investing legends, both named Shelby Davis, Chris Davis is to the mutual fund born. He took a few detours – at various times considering the priesthood and the CIA – but years ago found his way into the family business. At 45, he’s been chairman of Davis Advisors for 13 years and is committed to the tenets laid out by his forebears: He seeks bargain-priced shares of established companies (often financials) and holds them ... and holds them. Davis manages, with Ken Feinberg, the $34 billion Davis New York Venture fund ([1]NYVTX). It has posted 8.3 % annualized gains since 1995 (when Davis took the helm) to beat the S &P’s ([2]SPX) 7.3 %, according to Morningstar. He acknowledges he has struggled over the past five years, trailing the index by a percentage point per year. As he puts it, ”we’re taking it in the teeth.” But Davis has earned some patience. He explained why he’s still buying financials – and why he believes he’s well-positioned for a comeback. The Fed recently allowed many banks to increase dividends and buy back shares after a second round of stress tests. Is the worst over? Obviously the headlines are bad, and there’s a lot of regulatory uncertainty. What are the characteristics of financial companies that make them attractive to a long-term investor? No. 1 is they’re not obsolete-able. Making a spread on money is about the oldest business there is. We like that financials tend to trade at very low valuations. Let’s use Wells Fargo ([3]WFC, [4]Fortune 500) as an example. Wells has outperformed the market over the last one-, three-, five-, and 10-year periods. And it trades at eight times earnings. Yet Wells and the other survivors are obviously way better off than they were before the crisis. You have big stakes in Wells, American Express, and BNY Mellon. This is a phrase my grandfather used: Financial stocks are the opportunity to buy growth companies in disguise. If a company has the name ”financial” in it, it’s the F-word. People immediately put a lower multiple on it. So to the extent that people view American Express ([5]AXP, [6]Fortune 500) as a financial company and they view Visa ([7]V, [8]Fortune 500) as a processing brand, Visa trades at a much higher multiple even though a huge percentage of American Express’s earnings comes from exactly the same business as Visa’s. And American Express is likely to adapt and lead the way when people move to whatever comes after a credit card. Besides financials, the next biggest chunk of your fund is in energy stocks – many of them natural gas. For 40 years oil prices tended to trade at a 7-to-1 ratio to [9]natural gas. Now it’s at 25 to 1 because so much natural gas has been found. What we like about gas is it’s cleaner, it produces less carbon, and we have huge domestic reserves. The new technology, horizontal drilling and fracking, is a huge opportunity. Now there are risks, right? But there are risks of having oil assets in Venezuela and Libya too. I think that Occidental Petroleum ([10]OXY, [11]Fortune 500), EOG Resources ([12]EOG, [13]Fortune 500), Devon Energy ([14]DVN, [15]Fortune 500), and Canadian Natural Resources ([16]CNQ) are four of the bestmanaged companies in energy. Management really, really matters in a commodity company. It doesn’t matter if you get the commodity right – if you get the commodity right, all the stocks are going to go up. But eventually the commodity prices level out. So Exxon’s ([17]XOM, [18]Fortune 500) distinguishing feature is capital discipline. The same is true with Devon, EOG, OXY, and CNQ. They all have been very good at growing reserves per share. Very few companies are good at that; they all grow reserves, but they do it by issuing lots of shares and doing acquisitions. 18

With the problems facing the U.S., why should the next decade be better for stocks than the last? It’s almost certain that the next 10 years will be better than the last 10. That’s not saying much. But if you went back to the Depression and looked at rolling 10-year periods, you’d see in every 10 years where stocks produced annual returns under 5 %, the subsequent 10 years produced satisfactory returns. The worst was 6.8 %, the best was 18 %, and the average was 13 %. Now, every period is different, and models that look backward are dangerous. But in the last 10 years the earnings of the S &P are up about 50 % and stock prices are down. So the earnings yield has gone up, and that’s what tends to make the next 10 years better. Not necessarily spectacular, but better. I understand the S &P 500’s valuation looks reasonable because it’s trading around 14 times forward earnings. But I keep hearing people like Professor Robert Shiller saying it’s way over fair value. So do stocks really look good from here? The valuation of the average company looks about right. The S &P average looks reasonably valued and very attractive [19]compared to bonds. So what’s so great about that? Within that index, there is the valuation of the types of companies that we talked about – the opportunity to buy way-above average businesses at an average or below average price. You borrow a phrase from Jim Grant in your annual report, saying bonds offer ”return-free risk.” My grandfather called them ”certificates of confiscation” because for most of his career people lost a lot of money on them as a result of inflation. I think that a lot of businesses – like Nestlé or Kraft ([20]KFT, [21]Fortune 500) or Procter & Gamble ([22]PG, [23]Fortune 500) – have an element of inflation protection because they can raise prices. You own shares of all three? Yes. So if their costs go up, they can raise prices. I also say Coca-Cola ([24]KO, [25]Fortune 500). I don’t know this for a fact, but I would assume Coca-Cola still makes money in Zimbabwe. If you’d had Zimbabwe bonds, you’d have been wiped out. You’ve described your investment in AIG as one of your biggest mistakes and one that reduced your fund returns during the crisis by 6 %. You sold all your shares. Now that the stock is down around 98 % from its peak, do you find value in AIG? One of the most important single considerations in investing in a complex financial institution is that the CEO has to serve as chief risk officer and to understand the nature of the risks being taken. It is very hard for somebody who came into AIG ([26]AIG, [27]Fortune 500) two or three years ago to really have a deep handle on procedure, the reserves, nature and risks to take. And it’s a very complex company. A lot of insurers are down so we spend a lot of time looking at AIG, but our fundamental concern is with the quality of the ongoing insurance business, and we are having a very hard time getting our arms around that which we wouldn’t have had trouble with 10 years ago. You cut back your position on J.P. Morgan substantially recently. So what’s changed at J.P. Morgan? We are huge admirers of that entire management team. You know people talk about Jamie Dimon, and Jamie Dimon is one of the best managers I’ve ever met. We’ve had some redemptions so we had to raise money. And in my view, J.P. Morgan ([28]JPM, [29]Fortune 500) had a relatively fuller value than some of the other financials we owned. The second reason [we sold shares] was the unanimity opinion about the quality of the company. Our feeling was that there is always the risk of the change in perception when everybody thinks it’s great. 19

The third thing is that J.P. Morgan’s balance sheet is way more complicated than the nature of what makes up Wells Fargo’s balance sheet, or what makes up American Express’s balance sheet. Okay, so what are you absolutely avoiding now? That is a big question. I don’t know. I study the way ETFs have exploded, where there are a lot of people that are making a lot of money on ETFs. To me index funds for long-term investors are going to add real value. ETFs where you trade them intraday, or you can rotate sectors – I think these are very dangerous. Even though that doesn’t directly affect the investments that we look at. [EMBED] by Scott Cendrowski Fortune April 20, 2011 [30]Chris Davis: Financial stocks are still a great value

1. http://money.cnn.com/quote/quote.html?symb=NYVTX&source=story_quote_link 2. http://money.cnn.com/quote/quote.html?symb=SPX&source=story_quote_link 3. http://money.cnn.com/quote/quote.html?symb=WFC&source=story_quote_link 4. http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/2578.html?source=story_f500_link 5. http://money.cnn.com/quote/quote.html?symb=AXP&source=story_quote_link 6. http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/2493.html?source=story_f500_link 7. http://money.cnn.com/quote/quote.html?symb=V&source=story_quote_link 8. http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/11464.html?source=story_f500_link 9. http://money.cnn.com/2011/03/29/markets/natural_gas_investing/index.htm?iid=EL 10. http://money.cnn.com/quote/quote.html?symb=OXY&source=story_quote_link 11. http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/309.html?source=story_f500_link 12. http://money.cnn.com/quote/quote.html?symb=EOG&source=story_quote_link 13. http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/10907.html?source=story_f500_link 14. http://money.cnn.com/quote/quote.html?symb=DVN&source=story_quote_link 15. http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/10923.html?source=story_f500_link 16. http://money.cnn.com/quote/quote.html?symb=CNQ&source=story_quote_link 17. http://money.cnn.com/quote/quote.html?symb=XOM&source=story_quote_link 18. http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/387.html?source=story_f500_link 19. http://finance.fortune.cnn.com/2011/04/10/pimcos-gross-betting-against-u-s-debt/?iid=EL 20. http://money.cnn.com/quote/quote.html?symb=KFT&source=story_quote_link 21. http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/293.html?source=story_f500_link 22. http://money.cnn.com/quote/quote.html?symb=PG&source=story_quote_link 23. http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/334.html?source=story_f500_link 24. http://money.cnn.com/quote/quote.html?symb=KO&source=story_quote_link 25. http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/100.html?source=story_f500_link 26. http://money.cnn.com/quote/quote.html?symb=AIG&source=story_quote_link 27. http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/2469.html?source=story_f500_link 28. http://money.cnn.com/quote/quote.html?symb=JPM&source=story_quote_link 29. http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/2608.html?source=story_f500_link 30. http://money.cnn.com/2011/04/19/pf/funds/chris_davis_bargain_stocks.fortune/index.htm

25 most powerful businesspeople in Asia - The changing face of Asian business (2011-05-01 19:33)

Fortune’s first global 500 list of the world’s largest corporations, published in 1995, was dominated by American and Japanese companies, and if we had tried back then to produce a list of Asia’s top business executives, it surely would have featured the CEOs of concerns such as Sony, Mitsubishi, and Toyota. Our inaugural ranking of Asia’s most powerful people in business reflects a major power shift in the region, from Japan to China, India, and beyond. Yes, Toyota CEO Akio Toyoda sits atop our list, but only two executives in Japan – entrepreneur Masayoshi Son of Softbank and Takanobu Ito of Honda – make the cut. To size up Asia’s business leaders, we looked at the revenues, profits, and growth of the region’s most dynamic companies, and evaluated the roles their top executives played in the corporations’ success. We also placed a strong emphasis on globalization. And so Ratan Tata, who turned his family’s Indian iron and steel concern into a multinational company with employees in 80 countries, earns the [1]No. 2 spot on our list. (For more on his auto group, see ”[2]Tata: Building an auto empire in India.”) China’s private-company leaders, including Huawei’s Ren Zhengfei ([3]No. 5) and Foxconn’s Terry Gou ([4]No. 6), have long been internationalists, but increasingly the leaders of state-owned enterprises are pushing their companies out into the world – and in many cases the world is coming to them, seeking investments or business alliances. Asian business is far from a meritocracy. Cronyism and cozy relationships with government are rampant; Tata, Toyoda, and Samsung’s Kun-Hee Lee are descendants of their companies’ founders; and executive suites remain overwhelmingly male. But change may be coming here too. Chanda Kochhar, [5]No. 17 on our list, rose from management trainee to CEO of India’s ICICI – making her the first woman to run India’s largest private bank. [6](continued...) by Stephanie N. Mehta Fortune April 19, 2011 [7]25 most powerful businesspeople in Asia - The changing face of Asian business

1. http://money.cnn.com/galleries/2011/news/international/1104/gallery.asia_most_powerful.fortune/3.html 2. http://money.cnn.com/2011/04/15/news/international/tata_auto_empire_india.fortune/index.htm 3. http://money.cnn.com/galleries/2011/news/international/1104/gallery.asia_most_powerful.fortune/6.html 4. http://money.cnn.com/galleries/2011/news/international/1104/gallery.asia_most_powerful.fortune/7.html 5. http://money.cnn.com/galleries/2011/news/international/1104/gallery.asia_most_powerful.fortune/18.html 6. http://money.cnn.com/galleries/2011/news/international/1104/gallery.asia_most_powerful.fortune/index.html 7. http://money.cnn.com/galleries/2011/news/international/1104/gallery.asia_most_powerful.fortune/index.html

Scottsdale expanding green-building efforts to commercial sector (2011-05-08 14:43) Imagine a city in which commercial developers embrace green building as enthusiastically as the single-family residential sector does. That’s the goal of an effort to make Scottsdale’s commercial green-building program more inviting to developers of commercial and multifamily projects in Scottsdale. The updated program should be ready to go in June. The program encourages a ”whole systems” approach through design and construction techniques to minimize environmental impact and reduce energy consumption. Since the inception of its residential program in 1998, the city has issued more than 1,250 green permits. However, only about 40 have been issued in the commercial and multifamily program, which was established in 2001. To help boost that number, the city is offering an alternative way for buildings to become green-certified by adopting the International Green Construction Code. ”What we wanted to find was a method that would allow people to do more green building without having to use the LEED system, that would be a more streamlined and less expensive system but would still give them a green certificate of occupancy, which the real-estate market is recognizing as value right now,” said Tim Conner, manager of the city’s Office of Environmental Initiatives. LEED stands for Leadership in Energy and Environmental Design. It is an internationally recognized greenbuilding certification system developed by the U.S. Green Building Council. The city has long been recognized as a leader in municipal green building, and many of its buildings are certified LEED Gold or Platinum. Cost difference on decline The cost difference between green and conventional building is decreasing, said Jimmy Leung, chairman of the city’s Environmental Quality Advisory Board. ”There is this perception undoubtedly that green is more expensive, but I think that is really going down because we’re on a learning curve,” he said. ”Fire Station No. 2 (downtown) is a perfect example. They stayed in their budget . . . but they exceeded their green level because of wise choices.” One of the city’s newest fire stations, Station 8, which is being built at Cactus Road and 96th Street, also is employing green-building principles. Scottsdale already features some high-profile commercial developments that are green, such as the Optima Camelview Village condominium complex at Scottsdale Road and Rancho Vista Drive. Optima, the developer, spent more on its green roof system than if it had gone with a conventional roof, but the ”environmental and aesthetic benefits far outweigh the additional costs,” said David Hovey Sr., Optima’s president and owner. The city is in the process of adopting the International Green Construction Code as its requirement for a commercial green certificate of occupancy, Conner said. ”We already use an international construction code, and now we’re adopting a component for our voluntary green-construction program,” he said. The city’s program is an alternative to LEED, which requires third-party certification that normally takes six months to a year after a project is completed, Conner said. With the city program, developers can obtain a green certificate of occupancy immediately after completion, he said. Unlike the LEED program, the international code can be tailored to fit Scottsdale’s natural environment, Leung said. ”A lot of the stuff that comes from the U.S. Green Building Council is good ideas for green building but not necessarily the best ones for Arizona and the desert environment,” he said. ”There are things that are unique to our environment that we need to encourage, such as water conservation and passive solar.” 22

In passive-solar building design, windows, walls and floors are made to collect, store and distribute solar energy in the form of heat in the winter and reject solar heat in the summer. Anthony Floyd, senior green-building consultant with the city, said the city’s current green rating checklist is dated. ”The international code promotes uniformity and consistency from city to city,” he said. Interest growing A growing number of builders and developers are interested in incorporating green construction in their projects, said Halleh Landon, vice president of Energy Systems Design, a Scottsdale engineering consulting firm. ”Not only are owners more aware that there are small changes that can be made to be more energy-efficient and mindful of the environment, they want to take advantage of rebates, credits and save on an annual basis,” she said. Building green doesn’t necessarily mean you have to spend tons of money on fancy equipment or fixtures, Halleh said. ”It can be as simple as preserving the surroundings, saving water by using low-flow plumbing fixtures and planting indigenous plants,” she said. ”(Also) purchasing materials that are produced or manufactured nearby (to) reduce the carbon footprint and support local businesses.” The General Dynamics C4 Systems campus in south Scottsdale has initiated numerous green-conversion projects. One of its recent projects involved replacing nearly 9 acres of turf with xeriscape, or landscaping to reduce the use of water. ”The results were decreased water consumption by approximately 12 million gallons of water and reduced associated maintenance costs,” said Patrick Okamura, facilities manager at the campus. Other green projects at General Dynamics include construction practices that divert building debris from local landfills and reusing materials wherever possible. by Edward Gately The Arizona Republic Apr. 21, 2011 05:01 PM [1]Scottsdale expanding green-building efforts to commercial sector

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Homebuilders hail law easing impact fees (2011-05-08 14:51) Cities and towns across Arizona will have a harder time requiring developers to pay for everything from infrastructure to services under legislation signed by Gov. Jan Brewer. The legislation, Senate Bill 1525, puts a temporary end to a six-year fight between Arizona cities and homebuilders. ”This is a substantive change to the impact-fee statutes,” said Spencer Kamps, chief lobbyist for the Home Builders Association of Central Arizona. ”They (statutes) haven’t been updated in the 20 years since they were adopted, and we grow differently, we build differently and cities plan differently. We’ve made that argument for a number of years.” The homebuilders and cities and towns agreed on the sweeping legislation that requires cities to change the way they collect impact fees and what they can pay for with that money. It creates public-notice and hearing procedures to replace current systems by Aug. 1, 2014, or a municipality will be unable to continue collecting fees. The law also created a list of uses for which impact fees can be charged. A moratorium on new impact-fee changes until the 2015 legislative session gives both sides time to cool off and allows time for the new statute to fully take effect. ”At the end of the day, being able to at least negotiate a cease-fire, that’s something,” said Avondale City 23

Attorney Andrew McGuire, a negotiator in the hard-fought compromise. ”That’s an accomplishment.” Kamps said a compromise was a significant accomplishment. ”We’ve never been opposed to impact fees,” he said. ”We’ve been opposed to new growth paying for more than its fair share.” Impact fees, typically added to the price of a new home, are imposed on developers to help pay for infrastructure and public services needed to meet the demands of growth. McGuire said the new law was better than what homebuilders introduced in the Legislature, but ”by no means would I call it good.” He said the bill required cities and towns to pay millions of dollars for new studies in a short time span, and in some instances, residents would be paying higher user fees because impact fees pay for fewer things. For example, residents may have to pay for sanitation trucks, which will no longer be covered by impact fees. ”If you’re not allowed to charge the development fee to the new home coming in to pay for the new truck, then the cost has to be spread somewhere,” McGuire said. Kamps said sanitation trucks should be paid for with user fees. Brent Stoddard, director of intergovernmental programs for Glendale, said only time will show the full effects of the law. He said there was no question that existing residents would pick up more of the costs of new development. He said the homebuilders sensed an opportunity under the strong Republican-majority Legislature to bring a massive patchwork bill to destroy impact fees. Some welcome the new law. Mesa Mayor Scott Smith said the compromise was good because it ended the fights at the Legislature, and it gives cities an opportunity to put fee systems in place and give them time to work. ”It brings clarity and consistency, and it still has growth paying for itself, and that’s the most important thing,” Smith said. ”The original bill made such drastic changes to the system that, basically, it would have made impact fees virtually worthless.” The legislation determines what a growth-related cost is, Smith said. Ken Strobeck, executive director of the League of Arizona Cities and Towns, said cities would have to redo impact-fee programs with a narrower list of eligible projects. ”It (SB 1525) just makes a very substantial number of changes to the program, but it actually allows cities and towns to preserve their impact-fee programs,” Strobeck said. McGuire said that without the intervention of the governor, a compromise may not have been reached. ”I think the governor’s interest in this issue was extremely important,” McGuire said. MORE ON THIS TOPIC Key provisions of impact-fee bill - Allows continued assessment and collection of current impact-fee schedules to pay debt service on existing bonds for projects already underway, even if the fees would no longer be allowed after the effective date of the bill, which is Jan. 1, 2012. - Maintains the phrase ”necessary public services.” A new definition, however, narrows the uses of impact fees to address homebuilder concerns about improper use of fees for general government purposes and certain facilities, such as parks over 30 acres or libraries over 10,000 square feet. - Limits development fees to the proportional share of the cost of new infrastructure that is attributable to new development, and prohibits increasing the level of service that is provided to existing residents. - Clarifies that offsets against impact fees need only be provided for taxes that are applied to capital costs of infrastructure. - Clarifies that credits against impact fees are only due when a developer pays for, or is required to provide, infrastructure in an infrastructure-improvements plan for which development fees were assessed. - Creates new public notice and hearing procedures for assessing, adopting, and amending development fees. Existing fee studies and plans must be replaced using the new system no later than Aug. 1, 2014, or a municipality will be unable to continue collecting fees. - Requires infrastructure-improvements plans to: identify all capital projects that are the subject of 24

development-impact fees; disclose existing facilities, required upgrades and other costs of existing facilities not associated with new development; identify offsets; and include a professionally-prepared fee study to establish the development fees necessary. - Requires a refund to current property owners of certain impact fees if the infrastructure that is the subject of a development fee is not built within 10 years or the time identified in the infrastructure-improvements plan, or 15 years for water and wastewater projects. - Requires creation of either an advisory committee to provide input on adoption and administration of impact fees or a biennial audit of a municipality’s impact-fee program. - Ends existing development-fee freeze on December 31. Source: League of Arizona Cities and Towns by David Madrid The Arizona Republic May. 3, 2011 12:00 AM [1]Homebuilders hail law easing impact fees

1. http://www.azcentral.com/arizonarepublic/local/articles/2011/05/03/20110503arizona-impact-fees-brewer.html

Foreclosure activity eased in April (2011-05-08 15:06) My plan had been not to lead this column with news about foreclosures this week, instead focusing on a more positive indicator or trend in metro Phoenix’s real-estate market. But the foreclosure numbers from April quickly changed my mind. Pre-foreclosures fell to 4,200 last month, their lowest level since December 2007, according to real-estate-research firm Information Market. In Arizona, pre-foreclosures are notice-of-trustee-sale filings that signal that a lender has started the legal process of taking a home back from a borrower. In April, foreclosures dropped to 4,500, which is 500 fewer than in March. Foreclosures are legally known as trustee sales. And the number of active residential notices, or pending foreclosures in metro Phoenix, dropped to 30,790. A year ago, this key market indicator was 30 percent higher. A few more months of drops in foreclosure activity like April’s, and it finally could be safe to say the region’s housing market is starting to recover. - Loan-modification investigation: The Arizona attorney general is asking for a court-ordered injunction to stop two people accused of deceptive loan-modification practices. The two men, Robert Daniel Hayes and Camerin Charles Hawthorne, offer loan services under the company names Mediation Services and Metropolis Loans, according to the attorney general. The complaint alleges the men solicited loan-modification customers over the phone and charged them upfront fees of $2,500. A new Arizona law makes it illegal for loan-modification firms to charge fees before trying to modify a mortgage. The complaint also alleges Mediation Services told customers it was affiliated with CitiMortgage, and they had been preapproved for loan modification. Attorney General Tom Horne has asked a Maricopa County Superior Court to prohibit the men from continuing the practices. A hearing for the complaint has been set for May 20. by Catherine Reagor The Arizona Republic May. 3, 2011 07:20 PM [1]Foreclosure activity eased in April

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Freddie Mac Posts First Quarterly Gain In 2 Years : NPR (2011-05-08 15:22) Freddie Mac reported earning $676 million in the January-March quarter, the first time the bailed-out mortgage giant has posted a quarterly gain in nearly two years. The government-controlled company requested no additional federal aid after receiving $13 billion over the past four quarters. CEO Charles Haldeman attributed the net income to cost savings but did not elaborate. The government rescued McLean, Va.-based Freddie Mac and sibling company Fannie Mae from the brink of failure in September 2008. The government estimates the bailouts will cost taxpayers as much as $259 billion. But even with the net income gained, Freddie Mac posted a 29-cent per share loss attributable to common stockholders. That’s because the loss takes into account $1.6 million in dividend payments to the government. That compares with a loss of $1.7 billion, or 53 cents a share, in the October-December quarter. Analysts were quick to caution that the company’s one-time gain was scant when compared with years of losses. The last time Freddie Mac posted a quarterly gain was the April-June quarter of 2009. They said they don’t expect Freddie to report sustained earnings this year. ”This is not necessarily a climb to ongoing profit,” said Jim Vogel, a debt strategist with FTN Financial Capital Markets. ”They still have a long way to go.” Fannie and Freddie own or guarantee about half of all mortgages in the U.S., or nearly 31 million home loans worth more than $5 trillion. Along with other federal agencies, they backed almost 90 percent of new mortgages over the past year. Fannie and Freddie buy home loans from banks and other lenders, package them into bonds with a guarantee against default and sell them to investors around the world. by Associated Press May 4, 2011 [1]Freddie Mac Posts First Quarterly Gain In 2 Years : NPR

1. http://www.npr.org/2011/05/04/135996960/freddie-mac-posts-first-quarterly-gain-in-2-years

Phoenix-area bankruptcies drop 8 percent (2011-05-08 15:31) Metro Phoenix bankruptcies eased for a third straight month, with the filing total in April dropping 8 percent from a year earlier. The 2,748 filings last month also were down modestly from March 2011, reported the U.S. Bankruptcy Court in Arizona. The 3,063 Valley bankruptcies in March 2010 now appears to mark the high point of the recent recessionary cycle. Yet bankruptcy attorneys around the Valley say they remain plenty busy. Walter E. ”Pete” Moak of the Moak Law Firm in Chandler said he continued to see many consumers stressed by mounting credit-card debts. And compared with a year ago, underwater homeowners today have come to the conclusion that their dwellings have depreciated so much that it’s not worth filing for bankruptcy protection in an attempt to retain their properties, he said. Regarding the three-month decrease in filings, Moak said it might mean more debtors are having trouble scraping up the money to hire an attorney. ”It’s not an indication their need to file has become less,” he said. Chapter 7 filings, which allow debtors a fresh financial start after non-exempt assets are used to pay creditors, accounted for more than four in five filings last month in metro Phoenix. Chapter 13 debt-reorganization plans made up nearly all the rest. 26

The statewide total of 3,589 filings in April was down nearly 10 percent from one year earlier. An improving bankruptcy trend also has become apparent on a national scale, where April filings fell 7 percent from a year earlier and 7 percent from March 2011, reported the American Bankruptcy Institute, relying on data from the National Bankruptcy Research Center. The ABI’s executive director, Samuel Gerdano, predicts a mild filing decline for the year. ”As consumer debt levels fall and families continue to shore up their finances, bankruptcy filings will continue to drop as well,” Gerdano said in a statement. by Russ Wiles The Arizona Republic May. 5, 2011 02:40 PM [1]Phoenix-area bankruptcies drop 8 percent

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Price fluctuation, foreclosure give snapshot of Scottsdale (2011-05-08 15:41) It looks like any other beige, stucco-and-tile house in Scottsdale and there is nothing remarkable about this four-bedroom, two-bath home on North 100th Place northwest of Frank Lloyd Wright Boulevard. But its price fluctuation over the past few years and an October foreclosure tell a snapshot story about the local real estate market. Pre-foreclosure filings declined in the Valley in April from the previous month and real estate agents are seeing a lot of activity in the 85260 ZIP code southeast of Loop 101 and Frank Lloyd Wright Boulevard. Foreclosures accounted for just less than one-third of the 155 home sales in 85260 through April, according to Arizona Regional Multiple Listing Service data. ”The inventory of bank-owned property in that area is declining and they’re going at a good price if it’s move-in ready,” said real estate agent Ed Graziano of Go Sold Realty. An 1,800-square-foot bank-owned home near 92nd Street and Frank Lloyd Wright Boulevard sold recently in nine days for $268,000, 5.5 percent above the list price, he said. The single-story 2,023-square-foot, bank-owned home on 100th Place that Graziano was showing last week was listed at $305,900 or $151 per square foot, down from $315,900 six weeks earlier. Home built in 1994 Built by UDC Homes in 1994, the home in the Canyon Crest community is not exactly move-in ready unless the buyer doesn’t mind mustard-and-ketchup-colored walls and some neglected landscaping. But it does have wooden floors, granite counter tops and stainless-steel appliances. Candice Burch of ReMax Prosperity Realty said earlier this week that she was negotiating an offer for the home at slightly below list price. It sold for $400,000 in 2004 and its market value might have peaked at close to $500,000 in 2006. This is in my neighborhood so I’ve kept tabs on the area’s home values. I know of at least one Canyon Crest home of this model that sold for more than $500,000 at the market peak. This one, which backs up to 100th Street and has some traffic noise in the backyard, sold originally for $169,925 in May 1994. It has a three-car garage but no swimming pool. Healthy price jump The home sold eight years later for $225,000, a healthy 32 percent increase in value. Then its price jumped 78 percent to $400,000 in December 2004. The previous owner died in February 2010 and HSBC Mortgage Corp. of Depew, N.Y. bought the home at a trustee sale in October for $293,386. The unpaid debt was $337,969. The sale price was less than 1 percent above the median sale price for Scottsdale foreclosures last October. It should be interesting to see where the market value of this property ends up. 27

by Peter Corbett The Arizona Republic May. 6, 2011 08:19 AM [1]Price fluctuation, foreclosure give snapshot of Scottsdale

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Greasewood Flat, land for sale in Scottsdale (2011-05-08 15:44) Scottsdale’s Greasewood Flat, fenced in by suburban development, is on the market with Reata Pass steakhouse and 42 acres for $21 million. The rustic outdoor saloon east of Pinnacle Peak has been a popular watering hole with bikers, cowboys, locals and visitors for more than 35 years. Greasewood’s founder, George ”Doc” Cavalliere, who died in September 2009 at age 92, set up a trust to manage his assets. M &I Trust Co. hired Bruce Campbell of CB Richard Ellis to market the property southeast of Alma School Parkway and Pinnacle Vista Drive. ”We’re trying to preserve the history of the property, to carry on the tradition of the Cavalliere family,” Campbell said. Cavalliere, the oldest native-born Scottsdale resident before his death, managed the family blacksmith shop for a half-century. His home was adjacent to Greasewood and Reata Pass, a 50-year-old restaurant with remnants of a stagecoach stop on the Fort McDowell wagon route. The 42-acre site is zoned for commercial use and is being offered as a mixed-use site, Campbell said. It includes 6.89 acres for Greasewood Flat, 4.6 acres for Reata Pass and 6.8 acres along Pinnacle Vista Drive that includes three residential properties. A sliver of land west of Alma School contains a rustic real-estate office and water tower. Dusty Greasewood and Reata Pass have been boxed in by upscale neighbors such as the Four Seasons Resort Scottsdale and gated residential developments over the past 30 years. The original business license lists Greasewood as being 27 miles north of Scottsdale, said Paul Mutschler, founder of the Greasewood Flat Volunteer Fire Department, a non-firefighting group that does charity work and meets at Doc’s saloon. Mutschler, who worked 20 years for Cavalliere, said Doc did not depend on revenue from Greasewood and Reata Pass or care to cash in on its land value. Trust beneficiaries But that might not be the case for the trust beneficiaries, three of Cavalliere’s grandsons, he said. ”I understand that, but I think it’s horrible,” Mutschler said of Greasewood’s threatened demise. ”I believe it’s an Arizona icon.” Tom Kettler, M &I Trust Co. vice president of real estate, said the property has been on the market for about six months. ”We’ve had interest from many different parties, and we’re exploring several of those,” he said. As a trustee, Kettler said, he could not ”divulge any of the details of the documents that we work from” regarding the Cavalliere property. by Peter Corbett The Arizona Republic May. 6, 2011 03:15 PM [1]Greasewood Flat, land for sale in Scottsdale

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6 laws limit HOAs’ power (2011-05-08 16:47)

Arizona homeowners associations are losing a few more of their powers. They can no longer ban political and real-estate signs, flagpoles or parking on public streets, according to six bills signed into law by Gov. Jan Brewer. And association boards can’t restrict political activity in public areas, force residents to buy ”approved” signs, ban the ”tea party’s” Gadsden flags or charge more than $400 in HOA ”transfer” fees on a home sale. But two of those bills put at least one of the new freedoms in question because they contain conflicting limits on how soon before an election HOAs must permit campaign signs on lawns. House Bill 2609 says HOAs can’t prohibit the signs 71 days before an election, but Senate Bill 1326 cites 45 days. The conflict wasn’t caught before the bills became law, and it requires another vote by lawmakers in another session to fix, said Ken Behringer, general counsel for the Legislature. ”Somewhere, the ball was dropped,” he said. Some managers are wondering which time limit they should enforce when the laws take effect in July, said Angela Potts, president-elect of the Central Arizona chapter of the Community Associations Institute. ”What do we do? Which one applies? We’re waiting for some direction,” she said. Behringer said that’s uncertain because no state agency regulates HOAs, and the conflict may not be resolved until next session. Tom Farley, CEO of the Arizona Association of Realtors, said his group has battled with HOAs for years over for-sale and for-rent signs and hopes this year’s bills close loopholes in earlier laws. Some associations have limited or banned real-estate signs. Others required home sellers to pay hundreds of dollars for association-produced placards, he said. Many HOAs refused to allow any rental signs, creating financial hardships for investors in the growing rental market. ”They were negatively impacting property rights and property values with abusive practices,” Farley said. The forced sign purchases and fines for violations were compounded by associations’ power to file liens on properties for non-payment that could hold up a sale, he said. After previous bills signed into law prohibited HOAs from banning all real-estate signs, Farley said some started requiring sellers to buy preapproved HOA-installed signs that didn’t meet state Department of Real Estate standards or weren’t noticeable enough to attract buyers. That practice is now prohibited. ”I hope we’ve finally sent enough messages on behalf of homeowners that playing with the value of someone’s home isn’t something an HOA should be doing,” he said. For Rep. Steve Urie, R-Gilbert, it’s more about freedom than property values. ”Some of these HOAs needed a lesson on the First Amendment. They act like since they’re an HOA they can do anything they want,” he said. Urie sponsored one of the bills, but a key provision that would have limited HOA attorneys’ fees was removed. He expects a comprehensive HOA bill similar to the Arizona Residential Landlord and Tenant Act will come before the Legislature in the near future that will set clear limits on all aspects of the relationship between HOAs and residents. by Edythe Jensen The Arizona Republic May. 8, 2011 12:00 AM [1]6 laws limit HOAs’ power

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ASU economists predict brighter future for Arizona (2011-05-08 16:51) As the nation goes, so goes Arizona. The state’s rebound from the depths of recession is fundamentally bound to the recovery of the U.S. economy as a whole, according to Arizona State University economists. And so far this year, companies are on a hiring spree, adding more than 200,000 U.S. jobs for each of the past three months. And when more people are employed, and the stock market is bullish, people spend more. As a result, company earnings grow, leading to more hiring and then more spending. In Arizona, the national outlook is reflected in monthly economic reports. Retail sales are rising. Jobs are growing, though barely. Foreclosures and bankruptcies continue to fall. And falling housing prices finally may have started to stabilize. A midyear economic forecast from a trio of Arizona State University economists cautioned that growth will be slow this year through 2012. Their views included pessimistic reminders that Arizona’s housing market is still in bad shape, credit is no longer easy to obtain, and national and state deficits have reached serious levels. But they also shared optimistic views that retiring Baby Boomers will free up jobs for younger people. Plus, rising stock prices are making people feel more wealthy, putting them in the mood to shop. Speaking to reporters and business leaders at an Economic Club of Phoenix event last week, Lee McPheters stressed that Arizona’s economic recovery depends largely on a national recovery and that there is nothing he can envision that would stimulate a recovery in Arizona without nationwide improvement. ”If the national recovery sort of fizzles out, we are going to have more bad economic news here in Arizona,” he said. But even with state population and job growth below historical averages, he predicted Arizona would gain 112,000 new homes, about 300,000 new jobs and 665,000 new residents between this year and 2015 - with most of that gain after 2012. ”Arizona will recover as the nation recovers, and this is going to be one of the strongest economies in the country. It is just going to take much longer than it has in the past,” he said. McPheters is director of the JPMorgan Chase Economic Outlook Center at ASU’s W.P. Carey School of Business and also editor of the ”Arizona Blue Chip Economic Forecast” and the ”Western Blue Chip Economic Forecast” newsletters. Other W.P. Carey speakers were Robert Mittelstaedt, dean and professor of management, and Dennis Hoffman, who follows retail sales closely to advise the state on future tax revenue. They touched on two essential areas of economic health: job growth and consumer spending. Job growth McPheters predicts Arizona will add about 23,800 jobs this year, about a 1 percent increase. That is a little more optimistic than the 17,300 jobs forecast last week by the Arizona Department of Commerce. The number of new jobs will grow to 48,000 next year and continue to grow each year after that, McPheters said. But Arizona isn’t expected to regain the more than 300,000 jobs it has lost over the past 3 1/2 years for another four years. For decades Arizona was the state with the second-fastest job growth, behind Nevada. Last year Arizona fell to 49th place, just ahead of Nevada. ”Michigan, which has lost jobs just about every year in the decade, is now a top-10 (job) growth state,” he said. Arizona added about 5,000 jobs in the first quarter, McPheters said. He worries, though, that the number of initial claims for unemployment insurance continues to rise and fall. When people are laid off, those who are eligible can file for unemployment insurance. Increases in those claims suggest more people are losing jobs. In the week ending April 30, the national advance figure for seasonally adjusted initial claims was 474,000, an increase of 43,000 over the past week, the U.S. Department of Labor said. The four-week moving average, which is designed to smooth out weekly fluctuations, was 431,250, an increase of 22,250 from the previous week. 30

”I think it certainly bears watching. It is not good news. It is going in the wrong direction, as it has off and on over the past year,” McPheters said. Mittelstaedt’s worry is that jobs not only will continue to be outsourced but automated. The nation already is experiencing especially high unemployment for men without high-school degrees who at one time could more easily get jobs in factories. Now, those jobs require more high-tech skills. The U.S. Labor Department says the unemployment rate for men ages 25 to 54 who have not finished high school is 35 percent. ”A lot of the low-skilled jobs eliminated were in the auto industry. You didn’t need a lot of skills or education to get in. That’s part of the reason I believe unemployment will stay high for some time,” Mittelstaedt said. On a more positive note, Hoffman said that with the first of the Baby Boomers turning 65 this year, they will be retiring in ever-increasing numbers. That will create opportunities for younger people to advance, which, in turn, should open up entry-level jobs. An appetite to buy Hoffman said he is more optimistic than his colleagues about Arizona’s economy because he sees good evidence that consumers are shopping again, especially for vehicles, furniture and home improvements, and may not get too concerned about gas costing $4 a gallon. Compared with the previous year, taxable retail sales in Arizona rose 10 percent in January and 8 percent in February. ”What I am seeing is an appetite for retail transactions that we simply have not seen for three years,” Hoffman said. He believes that home improvements are picking up because contractors are busier and furniture sales have risen. So far, he is not overly concerned about rising gas prices because ever since the nation’s last encounter with $4 gas, more consumers have been buying fuel-efficient vehicles. Hoffman said that even though home equity has not been rising, that increasing stock values and healthier 401(k) retirement plans are helping consumers feel more like spending on big-ticket items. ”This is a state remarkably dependent on capital gains,” he said. From 2003 to 2005, rapid home appreciation helped capital gains grow fivefold, to $15 billion. ”But it is very apparent that capital-gains income in this state is not solely dependent upon real estate but it is also driven by equities. We saw that in the late 1990s for the first time,” Hoffman said. by Betty Beard The Arizona Republic May. 8, 2011 12:00 AM [1]ASU economists predict brighter future for Arizona

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Apartment vacancy rate dips below symbolic level (2011-05-08 16:53) Owners and operators of Phoenix-area apartment communities reached a significant milestone - at least psychologically - in the first quarter, when the overall vacancy rate dropped below 10 percent for the first time in four years, according to a local real-estate broker who specializes in multifamily housing. Pete TeKampe, vice president of investments at Marcus & Millichap in Phoenix, said the Valley’s firstquarter vacancy rate of 9.9 percent marks the first time local apartment communities have been more than 90 percent occupied since the first quarter of 2007, when the vacancy rate was 9.6 percent. That statistic does not include single-family homes for rent, which are practically impossible to track, he said. In the months that followed, the vacancy rate started to climb rapidly as a flurry of new apartment products 31

began to outstrip the growth in demand for rentals. Layoffs, increased fuel prices, crackdowns on illegal immigrants and other factors then exacerbated the rising vacancy rate, TeKamp said, which reached a peak of 15.7 percent in the second quarter of 2009. ”That’s the highest that we’ve ever experienced as an industry,” he said. By the first quarter of 2010, the vacancy rate had begun to swing downward, spurred by thousands of singlefamily-home foreclosures and the almost total absence of apartment construction. While there were 1,031 rental units added to the Phoenix-area market in the first quarter, the majority of them were from failed condo projects that had been purchased and reopened as apartments, TeKamp said. By comparison, more than 9,000 new apartment units came online in the first quarter of 2008, he said. The vacancy rate in the first quarter of 2010 was 13.5 percent, and things have continued to improve each quarter. TeKamp said the significance of 9.9 percent was more symbolic than practical, and he cautioned apartment owner-operators not to get too carried away with thinking it must be time to raise the rent. by J. Craig AndersonThe Arizona Republic May. 8, 2011 12:00 AM [1]Apartment vacancy rate dips below symbolic level

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Fool.com: This Housing Market Is On Fire! (2011-05-11 12:01) Investors and analysts have tried to call the bottom in the housing market for years. Instead of trying to guess when home prices might stop falling, some investors have turned elsewhere to look for gains – and they’re finding them in the red-hot market for residential rental properties. Going with the flow Just five years ago, the key to success in real estate investing was simple: Buy just about any residential property, wait anywhere from a month to a year, and then sell it at a huge profit. After all, since the turn of the millennium, similar investors had made boatloads of money flipping houses, and investors were seduced by the idea that even during past real estate busts, overall housing prices hadn’t actually fallen in price substantially. Of course, we all know the aftermath of the housing bust, as that long-held real estate wisdom fell prey to harsh reality. Millions of homeowners have lost their homes, and millions more are underwater on their mortgages. Shareholders of companies related at all to housing, from homebuilders and banks to Fannie Mae and Freddie Mac, have suffered greatly. It’s tempting to think that after such a huge drop in prices, the housing market must offer great values. But rather than trying to decide whether single-family homes are a great value or merely a value trap, look instead at these figures: Apartment rents have risen 6 % since 2006 and are expected to rise another 3 % this year. Vacancy rates for apartments have fallen from 8 % just a year ago to 6.2 % today. Millions of displaced former homeowners have no choice but to rent. At the same time, low interest rates have made it easier for prospective real estate investors to buy rental properties and have reduced carrying costs. Combined with higher rents, that adds to the profit potential of rental properties. How to cash in Plenty of real estate investors make a small business of their rental properties. But you shouldn’t look at rentals as free money. Investors earn a lot of their profits through hard work, going through the often 32

difficult process of finding creditworthy tenants, dealing with repair requests and other problems that demand immediate attention, and juggling the ongoing maintenance needs that any property owner has to handle. And while you can pay a property management company to take care of some of those jobs, doing so adds to your overhead, reducing your potential returns. If you don’t want to deal with individual properties, you can find easier ways to invest. The obvious first place to look is at real estate investment trusts that focus on apartments and other rental real estate. Let’s look at a few of the biggest options in this space: Some REITs have national scope. Equity Residential (NYSE: EQR ) , for instance, has properties in 24 states. Apartment Investment & Management (NYSE: AIV ) and UDR (NYSE: UDR ) have a similarly wide area of operation. Other REITs have a more geographically focused approach. BRE Properties (NYSE: BRE ) rents almost 24,000 units on the West Coast and in Arizona and Colorado. Home Properties (NYSE: HME ) operates 125 communities on the East Coast. Some rental REITs have a more specialized focus. You can find plenty of REITs that include senior housing, such as health-care REIT Ventas (NYSE: VTR ) . On the other hand, American Campus Communities (NYSE: ACC ) targets the other end of the age spectrum, building and operating student housing facilities as well as providing management services for colleges and universities that own their own dormitories. When you look at the returns of these stocks over the past two years, you won’t see the losses that homebuilders have sported. Rather, their shares are reflecting the favorable fundamentals of the rental industry. Yet as REITs, these companies provide significant dividends to investors – returns that any real estate investor can appreciate. Wave of the future? Some have argued that the American dream of homeownership is dead. Rather than mourning that fact, though, you might do better for yourself by investing in the countertrend of rental housing. With conditions favoring renting, it’s possible that you’ll find more gains either in rental REITs or from rental properties you find on your own. REITs are just one way that investors can profit from dividends. Find out the Fool’s recommendations on 13 high-yielding stocks for your portfolio; instant access to the names of these stocks is free if you click here. [1]Fool.com: This Housing Market Is On Fire!

1. http://www.fool.com/how-to-invest/personal-finance/home/2011/05/09/this-housing-market-is-on-fire.aspx

Katie (2011-05-17 17:17:03) REITs are a great way to invest in real estate. Residential REITs can be good investments, but I prefer commercial REITs. Something like a [1]Cole REIT is a good commercial REIT because they have a diversified portfolio of retail, office and industrial real estate. 1.

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FDIC head Sheila Bair announces resignation (2011-05-14 12:11) WASHINGTON - Sheila Bair is stepping down as chairman of the Federal Deposit Insurance Corp. this summer, ending a five-year term in which she helped craft the government’s response to the 2008 financial crisis. Bair will leave her post as one of the top banking regulators on July 8, the FDIC said Monday. She was among the first officials to raise concerns about the explosion of high-risk lending to borrowers with 33

bad credit. Under her tenure, the agency closed the most banks since the savings and loan crisis. That included Washington Mutual, the nation’s largest bank failure. The FDIC is charged with maintaining public confidence in the banking system. The agency guarantees bank deposits up to $250,000. Vice Chairman Martin Gruenberg is considered a likely candidate to succeed her. He will become the acting chairman if the Obama administration doesn’t appoint a replacement before Bair leaves. Bair, 57, was appointed by President George W. Bush in 2006. Within a year, she moved to shut down Santa Monica, Calif.-based Fremont Investment & Loan. The bank had been a major player in the troubled home-mortgage business, doling out high-interest loans to people with poor credit records or low incomes. It was the first of 365 banks closed during her time leading the agency. Bair also advocated for consumers and small banks during the financial crisis, when most other regulators focused primarily on helping the biggest Wall Street firms. After the housing bubble burst, she argued unsuccessfully for the government to force banks to reduce monthly payments for troubled homeowners facing foreclosure. Some, including Sen. Charles Schumer, D-N.Y., criticized Bair for moving too slowly to recognize problems with IndyMac Bank, a failed California savings and loan and one of the first large casualties of the housing bust. The agency took over IndyMac in 2008. But as part of the takeover, many borrowers’ payments were lowered to a set percentage of their monthly incomes. The loan modification became a model for the government’s later efforts to help those at risk of foreclosure. Bair often disagreed with members of the Bush and Obama administrations, as well as industry executives and other regulators. Most notably, she clashed with Treasury Secretary Timothy Geithner over a range of issues related to the Wall Street bailouts. For example, Bair wanted the government to force out Citigroup CEO Vikram Pandit after it extended billions in bailouts and guarantees to the financial services firm. Geithner disagreed. Pandit kept his job. Her reputation for taking on large banks was cemented during last year’s debate over the financial regulatory overhaul. Bair pushed for a policy to wind down the biggest financial companies whose failure threatened the broader financial system. She fought successfully to have the FDIC run that process. Another provision forces big banks to pay a larger share of the fees that the agency charges to insure deposits. In the past, banks paid based on the amount of deposits they held. Now, the fees are calculated based the loans a bank holds on its books. Larger banks tend to have more loans relative to their deposits. ”We had our moments of cooperation and moments of frustration with Bair,” said Scott Talbott, a lobbyist with the Financial Services Roundtable, which represents the nation’s largest financial companies. But he said she provided ”strong leadership during a tumultuous time.” Bair, a native Kansan and longtime financial regulator, worked as a civil rights attorney in the 1970s and was a top aide to former Sen. Bob Dole, R-Kan. She launched an unsuccessful run for Congress in 1990, losing in the primary by less than 800 votes. Dole, who encouraged Bair to return to Kansas and run for office, said in a statement that she did an ”outstanding job at the FDIC in very difficult times.” The FDIC says Bair will chair a final board meeting during the first week of July. by Daniel Wagner and Derek Kravitz Associated Press May. 9, 2011 04:37 PM [1]FDIC head Sheila Bair announces resignation

1. http://www.azcentral.com/business/articles/2011/05/09/20110509fdic-head-announces-resignation.html

Chandler resort lender cries fraud (2011-05-14 12:42) Lender Guaranty Bank and Trust Co. accused the owner of the Crowne Plaza San Marcos Golf Resort of taking hundreds of thousands of dollars desperately needed by the Chandler resort and distributing it to the property’s general partner in the year before its bankruptcy petition was filed. Alleging fraud, mismanagement and conflicts of interest, the bank filed papers asking the court to dismiss the owner’s petition for a Chapter 11 bankruptcy reorganization, and to convert it to Chapter 7 liquidation or appoint a trustee under Chapter 11 ”for cause.” The resort’s owner, Denver-based San Marcos Capital Partners, filed for bankruptcy protection in March. The general partner is San Marcos Resort Investors LLC. A receiver, Rhode Island-based Smiling Hospitality, is overseeing the property. John Fries, an attorney for the bank, told Judge George Nielsen in U.S. Bankruptcy Court on Tuesday that $416,000 was transferred from the resort to the general partner in the year before the resort’s bankruptcy filing. ”It was when the resort was in desperate need of funds,” Fries said. ”The property was out of cash and in danger of closing. They couldn’t make payroll. The bank gave them $1.35 million based on misrepresentation.” Sean O’Brien of Phoenix, an attorney for the resort’s owner, said after the hearing, ”We categorically dispute those allegations.” The claims were filed right before Tuesday’s hearing, he said, and neither he nor his client had had a chance to read them. In 2004, San Marcos Capital Partners bought the resort with a loan from Guaranty Bank and Trust, which has been modified four times, according to the lender. The resort’s owner has been in default since at least May 16, 2010, and the current balance of the loan exceeds $24 million, according to court papers. In filings and in court, the lender questioned the management of the property and its use of the loan money. In May 2007, San Marcos Capital Partners received $8 million in financing from the bank and distributed it to the partners but put very little into maintaining, repairing or renovating the resort. Parts of it have fallen into disrepair; its 47 casitas have been closed for years, court filings said. In the fourth modification of the loan, the bank extended the maturity date to May 16, 2010. There was an agreement that there would be no additional distribution of dividends or cash to any partner. Those making the agreement were San Marcos Capital Partners; its general partner; managers of the general partnership, Jeff Witt, Joseph Witt and Robert Bigelow; and the resort’s general manager, Frank Heavlin. The entire makeup of the general partnership was not immediately clear. The bank, unaware that the general partner had received funds from the resort, infused $1.35 million into the resort in the nine months before the bankruptcy filing, the bank said. For example, the bank said, in September, San Marcos Capital Partners told the bank that it needed money to meet payroll, and on Sept. 30, the bank wired $117,409.13 for payroll. ”What debtor failed to tell the bank was that two days earlier, on Sept. 28, debtor transferred $180,000 to its general partner. Frank Heavlin, the resort’s general manager, initiated the transfers to the general partner,” according to a court filing. Another court hearing was set for June 6. The judge will hear further arguments on various motions, including the petition to dismiss the Chapter 11 request and whether the receiver will continue to control the resort. by Luci Scott The Arizona Republic May. 11, 2011 12:00 AM [1]Chandler resort lender cries fraud

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Phoenix-area foreclosures down slightly in April (2011-05-14 12:51) In April, for the second month in a row, the foreclosure rate among Phoenix-area homes decreased slightly from the previous month, according to an Arizona State University study issued Tuesday. Although the drop could signal the beginning of a positive trend, ASU realty studies director Jay Butler said foreclosures remained far too dominant in the market for anyone involved to start cheering. In January and February, 43 percent of home-resale transactions in the Phoenix-area market were foreclosures, the report said. The incidence of foreclosure declined to nearly 38 percent of transactions in March and again to about 36 percent in April. Butler said those numbers were moving in the right direction, but he cautioned against making too much of the back-to-back decreases. He and other analysts are concerned that foreclosures could spike again in the coming months unless the local economy and job market start to experience a more pronounced recovery. ”The actual number of monthly foreclosures in the Phoenix area is still very high,” he said. ”It’s like flying through a hurricane, and we may just be in the eye right now. There’s probably more of the storm to go through, and we could see another wave of foreclosures.” In April, the Phoenix area had 3,745 foreclosures. That’s down from 4,145 in March but more than the 3,490 foreclosures in April 2010. Butler said it was unlikely that analysts would get a clear sense of which way the housing market was headed before October or November. ”Some homeowners have a lot of frustration built up, having used many of their resources like 401(k)s and other savings accounts to keep their homes; it’s unclear how much longer they can hold on,” Butler said. To make matters more uncertain, he said, the mortgage-lending industry is currently debating the merits of stricter borrower-eligibility guidelines, analysts are warning about the potential for rising interest rates, and the Federal Housing Administration is in discussion about lowering the allowable limit for FHA-guaranteed loans. ”It will take time for all of this to play out,” Butler said. The median price for home resales in the Phoenix area in April was $125,000, the same as in March but down considerably from the April 2010 median of $144,000. Butler said the median-sale price was likely to increase in the coming months as the Phoenix area moves into its traditional buying season, which usually winds down around August. by J. Craig Anderson The Arizona Republic May. 11, 2011 12:00 AM [1]Phoenix-area foreclosures down slightly in April

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Census: Arizona homeownership rate shrinks to 13-year low (2011-05-14 12:58) Arizona’s homeownership rate dropped to its lowest level in more than a decade, according to newly released census data, even when based on figures that don’t factor in the record number of vacant homes in the state. With the decline in homeownership, more than one-third of all homes in parts of metro Phoenix are rentals. Results from the 2010 census, which were to be officially released today, show 66 percent of all homes occupied in Arizona are owned by the people living in them, down from previous highs well above 70 percent. The last time the ownership rate was that low was in 1997. But the measurement accounts only for occupied homes. 36

Calculate owner-occupied homes as a portion of all homes - including vacant ones - and the actual homeownership rate would be far lower. The number of vacant homes in the Valley - those that are not second homes or vacation properties - has climbed by nearly 200,000 since the last census in 2000. Those empty homes aren’t included in the usual homeownership rate. Since the end of 2007, more than 150,000 metro Phoenix homes have been foreclosed on, so the drop in the state’s number of homeowners and rise in vacant homes was expected. But the actual shift couldn’t be calculated before the census results. ”It’s clear now that a 70 percent homeownership rate for Arizona isn’t sustainable,” said Michael Trailor, director of the Arizona Housing Department. ”When the rate was that high, too many homeowners weren’t ready or financially equipped to keep their houses.” He said the state’s homeownership rate is likely to decline more, and the rental market will continue to grow because many people can’t obtain mortgages to buy now or just don’t want to own a house because they aren’t ready for a long-term commitment. Renters Most of the foreclosure homes have been purchased by investors, and many are now rentals. Many Arizona homeowners who lost houses to foreclosure are now renters. Some moved into rentals in the same neighborhood where they once owned and are now paying half as much a month to live there. With a 66 percent homeownership rate, the remaining 34 percent of occupied homes are rentals. That rate again doesn’t include vacant homes. Of the state’s vacant residences, not including vacation homes, nearly half are categorized as rentals, according to the census. Some cities, particularly suburbs at the edges of metro Phoenix, have nearly as many rental households as owner-occupied households. More than half, 51.8 percent, of the homes occupied in Tolleson are rentals. Avondale’s rental-housing rate is about 39 percent. Eloy, in Pinal County, also was at 39 percent. About 42 percent of the lived-in houses in the city of Phoenix are rentals. Chandler’s rate is 34 percent. Tempe actually has the highest rate of rental homes, 55 percent, most likely because of high demand for student rentals around Arizona State University. In some cities with higher-end homes, rental rates remain lower. In Scottsdale, about 31 percent of the homes occupied are rentals. In Carefree, another city with high-end homes, only 13 percent of the homes with residents are rentals. Figuring the rate The census’ homeownership rate is used by most federal, state and local government agencies for planning and budgeting. The homeownership rate has long been calculated by dividing the number of homes lived in by the owner, or owner-occupied, by the total number of occupied houses. Vacant homes are excluded from the total. Arizona’s homeownership rate was 74.7 percent in 2000, according to the last decennial census. The state’s rate remained above 70 percent until the housing crash started in 2007. The rate has steadily been falling since then, and the number of vacant homes climbing. What has remained more steady in the past decade is the number of vacant second and vacation homes. About 184,000 of Arizona’s vacant homes are considered recreational or occasional-use properties, according to the census, compared with 142,000 in 2000. In 2000, there were about 146,000 vacant homes in Arizona, not including seasonal and vacation properties. The 2010 census tracked just over 279,000 vacant homes, not including second homes. ”It all goes back to population,” said Jim Rounds, an economist with Scottsdale-based Elliott D. Pollack & Co. ”We haven’t seen a noticeable increase in people moving here during the past few years, and we still have a lot of speculative homes built during the boom empty.” by Catherine Reagor, Ronald J. Hansen and Matt Dempsey The Arizona Republic May. 12, 2011 12:00 AM [1]Census: Arizona homeownership rate shrinks to 13-year low 37

1. http://www.azcentral.com/business/articles/2011/05/12/20110512arizona-housing-census.html

Phoenix apartments to house low-income residents (2011-05-14 13:13) A downtown Phoenix apartment complex on the brink of foreclosure will now be used to house up to 300 low-income and formerly homeless residents. The Maricopa County Board of Supervisors on Wednesday decided to use $1.5 million of federal stimulus money to purchase Campaige Place, a single-occupancy complex at Second Avenue and Jackson Street. The property opened in 2003 for low-income residents. But the owners could not make payments anymore, and the federal government put it up for auction. Human-services professionals consider supportive housing a cost-effective way to help stabilize people who are facing homelessness. Providing them with social services through community groups costs less than it would to pay for emergency services that the chronically homeless seek, they said. ”It’s going to be a big boon for people (facing homelessness) to help them get their lives together,” Supervisor Mary Rose Wilcox said. In about 18 months, low-income residents and the formerly homeless will be able to rent units in Campaige Place, downtown Phoenix’s only multifamily supportive housing, specialized housing that makes social services available to residents. ”It’s an ideal property in an ideal location,” said Ursula Strephans, community-development supervisor at the county’s Human Services Department. Residents have access to public transportation, and they can easily get to the Human Services Campus at 12th Avenue and Madison Street to receive more supportive services, she said. The county will use part of approximately $10 million it received from the U.S. Department of Housing and Urban Development in 2009 for its Neighborhood Stabilization Program. The county uses this money to work with community partners to buy homes in or near foreclosure, fix them up and put them up for sale or rent to low-income families. Arizona Housing Inc., a non-profit organization, will manage the property. The goal is to get people out of shelters and into housing communities such as Campaige Place so they can start supporting themselves again, said Mark Holleran, Central Arizona Shelter Services director. ”There’s a window of opportunity here,” Holleran said. by Michelle Ye Hee Lee The Arizona Republic May. 12, 2011 12:00 AM [1]Phoenix apartments to house low-income residents

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Mortgages, foreclosures top agenda at BofA meeting (2011-05-14 13:23) CHARLOTTE, N.C. - Foreclosures and home-mortgage modifications took center stage at Bank of America Corp.’s annual meeting Wednesday. Outside the headquarters of the nation’s largest bank, protesters held signs and gave testimonials about their own foreclosure experiences. At the meeting, which was held inside the bank’s new 32-story building located adjacent to its headquarters, shareholders confronted CEO Brian Moynihan about mortgage woes in their communities. 38

The Rev. Clyde Ellis, a pastor from Virginia, said Bank of America should take responsibility for its role in the foreclosure crisis. Ellis invited Moynihan to visit Prince William County in Virginia to see the damage that foreclosures have caused. ”Come to Prince William County and I will show you disaster,” Ellis said. Losses and litigation related to foreclosures and poorly written mortgages have haunted Bank of America for several quarters. In its latest quarter, the bank’s income dropped 39 percent on higher costs related to mortgages and legal expenses. At the end of the first quarter, the bank had $2 billion of foreclosed properties on its book, and its customers were late by 90 days or more on $24 billion of its total loans, which included commercial and residential properties. Moynihan tried to separate the rest of the bank’s business from its mortgage woes. In his address to shareholders at the start of the meeting, he described the company as being made up of two stories, with the mortgage business on one side and all its other business units on the other. ”The power of the franchise is held back by the mortgage challenges we face,” he said. The bank’s stock is one of the worst performers of the S &P 500 index this year. Recently, the stock slid after the Federal Reserve rejected the bank’s capital plan and its request for a dividend increase. BofA was the only bank among the country’s four largest that didn’t pass a stress test from the Fed. The central bank examined the 19 largest banks in the U.S. to see if they were strong enough to withstand another economic downturn. BofA will submit a revised plan later this year. Moynihan said the bank will pay dividends once it resolves more of its mortgage issues and submits a plan that is acceptable to regulators. by Pallavi Gogoi Associated Press May. 11, 2011 06:17 PM [1]Mortgages, foreclosures top agenda at BofA meeting

1. http://www.azcentral.com/business/articles/2011/05/11/20110511bank-of-america-home-foreclosures.html

Chandler City Council likely to approve property-tax hike (2011-05-14 13:32) Low property values and a slow economic recovery make a secondary property-tax rate increase almost certain for Chandler. Whether it’s the 9 cents per $100 assessed valuation proposed by acting City Manager Rich Dlugas or a 6 cents increase suggested by others hangs on a City Council tax vote in June, but no one voiced objections to a rate hike during an all-day budget meeting Friday. Whichever the council picks, homeowners will pay less next year than they did this year because the amount is based on home values that have steadily declined during the economic downturn, Dlugas said. Without an increase, Chandler would not be able to pay bond debts or maintain parks and roadways, he said. Even with a higher rate, the city still has to put several park and road projects on hold for years or until home values increase. The only street improvements set for next year are four that are receiving considerable federal and state funding: 1-mile sections of Gilbert and Ocotillo roads and Chandler Boulevard intersections at Alma School and Price roads. Revenues from secondary property taxes pay bond debt that finances streets, park improvements and maintenance. Sales-tax revenues, which in Chandler have been slowly increasing over the past year, fund the city’s day-to-day operations, including salaries. Chandler’s municipal property-tax rates are lower than those in Phoenix, Glendale, Tempe and Peoria but higher than those in Gilbert, Scottsdale and Mesa. Tempe, Scottsdale and Mesa also are considering rate increases. The 9 cents increase would bring in about $4.6 million more than the 6 cents increase. The difference would provide more to spend on park and street maintenance and could advance construction of two promised 39

neighborhood parks, according to budget reports. Neither will pay for acquisition of land for future parks or promised construction at others. At Friday’s budget meeting some council members said they would consider a 6 cents increase if it is enough to pay the city’s $404 million bond debt and no more. When the 6-acre Mesquite Groves Aquatic Center opened in 2008, it was touted as the small first part of a 100-acre Mesquite Groves Park southwest of Val Vista Drive and Riggs Road next to Basha High School. The drawings showed lighted ballfields, a recreation center, amphitheater, skate and dog parks, horseshoe pits, artificial lakes, picnic ramadas and trails were supposed to go in soon. Now, the project is on indefinite hold and the colorful play pools and water slides are surrounded by massive dirt lots. Also postponed indefinitely are the Shawnee Park satellite recreation center, senior center expansion, additional development of Tumbleweed Park and expansion of the Snedigar Sportsplex. Property-tax declines aside, Chandler is in better shape than some other Valley cities, Management Services Director Dennis Strachota said, citing thirteen consecutive months of small increases to sales-tax revenue and a AAA bond rating from all three rating agencies. Previous staffing and vehicle reductions and energy efficiencies have saved $2.8 million, according to his report. That has the budget calling for no new cuts to staff or services and a possible 5 percent merit raise for employees. But like other cities, Chandler must adjust to state budget decisions that will take away $1.6 million in highway revenue fees and is creating uncertainty about future collection of construction impact fees. To make up for that uncertainty and the prospect that economic recovery may be slower than expected. Dlugas has added a new reserve fund to the budget for infrastructure maintenance ”should the city fall further behind in its upkeep of existing infrastructure as a result of further declines in property tax assessed values.” MORE ON THIS TOPIC How rate increases would affect Chandler tax bills " Median home value in 2010-11: $178,300. " Current combined city tax rate: $1.18 per $100 assessed valuation. " This year’s municipal property taxes on median-value home: $210.64. " Median home value in 2011-12: $153,200. " Next year’s city taxes on median home with 6 cents secondary rate increase: $190.18. " Next year’s city taxes on median home with 9 cents secondary rate increase: $194.77. Source: Chandler budget report. Chandler budget " Proposed total for 2011-12: $676.5 million. " Increase over this year: $5.5 million. " Set aside to pay debts: $58 million. " Designated for operating expenses: $303.3 million. Council budget meetings " Where: City Council chambers, 88 E. Chicago St. " Discussion of possible budget amendments: 7 p.m. May 23. " Tentative budget adoption: 7 p.m. May 26. " Public hearing on budget and property-tax levy: 7 p.m. June 9. by Edythe Jensen The Arizona Republic May. 11, 2011 10:24 AM [1]Chandler City Council likely to approve property-tax hike 40

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Scottsdale Quarter continues filling spaces at a steady pace (2011-05-14 13:58) As the economy slowly inches toward a recovery, the $270 million Scottsdale Quarter shopping center still is luring upscale retail and office tenants to a particularly struggling area in the Valley. However, Ohio-based developer Glimcher Realty Trust continues facing construction and leasing delays, financial restraints and now legal disputes between a handful of current and potential tenants at its most prized mixed-use project in the Scottsdale Airpark. Since opening its second phase last fall - following construction of the first phase at the height of the recession - Glimcher has brought in several high-end boutiques, restaurants and entertainment, such as Apple Inc., H &M, and most recently Pottery Barn, Gap and Nike. A handful of additional retail stores, which fell subject to construction delays, are scheduled to fill groundlevel spaces this month, increasing occupancy to about 70 percent. The 1.2-million-square-foot project is Glimcher’s first in Arizona, and the second- and third-level Class A office space above the retail is a unique feature compared with its other 26 developments around the country. By year’s end, office space should be 90 percent occupied by companies such as Starwood Hotels & Resorts Worldwide, which is moving its Arizona headquarters from Phoenix to the Quarter later this year. ”We’re really proud of the foundation we’ve been able to build in these economic times,” said Richard Hunt, the Quarter’s general manager. ”Would we have liked that we would be full and occupied a year ago? Absolutely.” Officials at Glimcher, a real-estate investment trust publically traded on the New York Stock Exchange, say the Quarter offset first-quarter losses in total revenue, which dropped to $66 million from last year’s $75.8 million during that period. But the 28-acre property, on the southeastern corner of Scottsdale Road and Greenway-Hayden Loop across from Kierland Commons, still has vacancies on the eastern and northern ends. Hunt said they focused first on spaces surrounding ”The Quad” area in the middle and South Street that runs parallel to Butherus Road, which is where hairstyling salon DryBar, a California franchise, opened last month. ”It’s the closest thing to more of an urban community versus just going into your same ol’ same ol’ mall,” said Amy Ross, operating partner of Dry Bar. ”There are a lot of unique things to the Quarter and I think that’s what’s drawing people to it.” The emptiness is most noticeable along North Street, which parallels Greenway-Hayden. Avalon Nails & Spa is the only open tenant and there are almost no advertisements for incoming stores - excluding ”coming soon” signs for apparel retailer Express at the western end of the street, where the highest concentration of stores has opened. Jennifer Nguyen, Avalon manager, said the shop opened in January knowing it would be alone until things picked up next year. But it hasn’t negatively impacted sales, she said. ”In this economy, to be in a center that is continuously being built is amazing,” she said, ”because they’re losing tenants everywhere else.” Legal tussles Although the Quarter is bustling compared with when it opened in March 2009, Glimcher has lost - and evicted - tenants in the process for reasons it mostly attributes to the recession. ”Tenants do come and go,” Hunt said. ”It’s part of our business, and our leasing team works diligently to bring tenants that are the perfect blend for the customers we serve.” Glimcher has filed lawsuits to evict at least four tenants for unpaid rent and unresolved construction liens placed by contractors on the property. Hunt said he was unable to comment on matters related to pending 41

litigation. According to records obtained by The Arizona Republic, Glimcher repossessed the space that Primebar now occupies after former tenant Martini Park of Phoenix LLC fell behind in starting construction. In mid-January, it evicted one of the Quarter’s first tenants, Scottsdale OG Inc., doing business as Oakville Grocery of Napa Valley, after a year in business for not paying rent and allowing liens of more than $500,000 on the property for unpaid construction work on the store, records show. Glimcher filed a second lawsuit against the California grocer in February seeking damages and debt of more than $8.78 million. Oakville, which is opening at CityScape in downtown Phoenix this month, declined to comment because of the lawsuits still pending. As of last month, Glimcher was trying to evict Narcisse Champagne & Tea Lounge, which opened in December, and clothing retailer Compartment: A, which was still under construction. After Narcisse’s general contractor, A.R. Mays Construction Inc., recently filed a lawsuit to recover back payments and interest of at least $547,000 for construction work, Glimcher followed with an eviction lawsuit last month. According to the complaint, Narcisse has failed to pay rent and gave A.R. Mays only $77,400 of more than $554,000 in tenant-improvement incentives, given by Glimcher for construction work only, and ”pocketed the remainder for itself.” Similar claims against the company were made in a third lawsuit recently filed against the company by an investor, who seeks to recover about $116,600 he allegedly invested because of misrepresentations of company finances made by owners and managing members Todd Rosenbaum and Tom Zummo. The pair said the Glimcher lawsuit was only in response to the lien A.R. Mays placed on the property. Both lawsuits with the landlord and contractor will be resolved by the end of this week, they said. ”The landlord has been behind us, regardless of what public records say,” Rosenbaum said. He said the dispute started with disagreements of some charges on A.R. Mays’ bills. He did not give further details on other claims of unpaid rent and misappropriated incentives. To the lawsuit with their investor, Rosenbaum said: ”It’s bogus.” Other disputes Glimcher’s eviction suit against Compartment: A, which was supposed to open next to Eddie V’s on South Street in March, made similar claims against its owner, Omni Q LLC. Kurt Blaydorn, Omni Q president, said he since has decided to focus solely on the company’s new CityScape store, called Designer District. ”Based on Glimcher violating the terms of our lease, I no longer found it suitable to continue the project with Glimcher,” said Blaydorn, who declined to comment further because of the pending lawsuits. Controversy with Scottsdale Jean Company, however, had a different tune. According to public records, the clothing store, at Northsight Boulevard and Raintree Drive, filed a lawsuit against Glimcher in November after the developer allegedly stalled to sign the final lease agreement before informing the business its space at Scottsdale Quarter would instead be leased to its ”competitor.” Steven Koeppel, owner of Scottsdale Jean, said the signage and advertisements Glimcher drew up in prior months led him to believe it was a done deal. The lawsuit was settled last month because he ended up not wanting the space anyway, mainly because of complaints about the Quarter’s parking and accessibility. ”Reaction from our customers has been overwhelmingly positive that we’re not going in there,” Koeppel said. ”We haven’t had a single customer regret we’re not going in there. They all say we’re much better off.” Happy merchants Despite complaints by some existing and would-be tenants, other tenants said they were excited to be a part of the burgeoning retail center. When Eddie V’s seafood restaurant relocated in February from DC Ranch in north Scottsdale, management keyed into the center’s younger, more nightlife-oriented vibe by adding a new menu and a fresher look. ”We have new menu items, new design elements and we’re able to really showcase a whole new look,” said Jim VanDercook, president and CEO of Eddie V’s Restaurant Group. ”It has a fresh new feel, and we’ve introduced a raw bar with sushi and sashimi, and a wine room that you walk through to get to the dining room.” 42

PrimeBar, an ”urban lodge”-style restaurant, appears to be thriving on weekends, filling three bars and a cavernous dance floor when it books bands and DJs. Scottsdale resident Adanna Esmonu, 21, enjoyed a martini at a packed PrimeBar on a recent Saturday night. ”I come here about two times a week for happy hour or to shop at Armani Exchange,” Esmonu said. ”I only live 10 minutes from here, and there’s a lot of options. It’s like the new Old Town here.” Scottsdale Quarter general manager Hunt acknowledged that a small fraction of his tenants have failed to develop a sufficiently large clientele. ”You’ll find in any center, you’ll always have fallout,” Hunt said. ”We just look at it as the next opportunity that’s out there.” by Kristena Hansen The Arizona Republic May. 12, 2011 05:27 PM [1]Scottsdale Quarter continues filling spaces at a steady pace

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Investment firm buys 4 Phoenix-area apartment communities (2011-05-14 14:03) A Washington-based investment firm with its sights set on distressed apartment-home assets in Arizona has purchased four apartment communities in Phoenix, paying a combined total of about $68 million, according to commercial brokers involved in the deals. Weidner Apartment Homes now owns 13 apartment complexes in the Phoenix and Tucson areas. The four new purchases included Indigo at the Park, 7725 W. McDowell Road; Barossa at the Park, 7777 W. McDowell Road; Arete, 2506 W. Dunlap Ave., and Biltmore Club, 4640 N. 24th St. The deals added about 1,160 additional units to the company’s Arizona portfolio, which now totals about 4,250 units. In early February, a limited-liability company formed by Weidner purchased the Peaks at Papago Park, 815 N. 52nd St., for $46 million in the largest multifamily-housing transaction so far this year. Weidner has been purchasing apartment properties in Phoenix and Tucson since early 2010, with plans to acquire 6,500 units in Arizona, said Kevin Colard, senior acquisitions manager. by J. Craig Anderson The Arizona Republic May. 12, 2011 04:04 PM [1]Investment firm buys 4 Phoenix-area apartment communities

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Your wallet is stolen - now what? (2011-05-14 14:18) An ounce of prevention is worth a ton of hassles when it comes to safeguarding sensitive personal information and cards. But sometimes you can’t prevent your wallet or purse from getting lost or stolen. If that happens, you can probably kiss off the cash you carried, but here are some tips for minimizing collateral damage. - Russ Wiles - What to do: Cancel credit and debit cards quickly - Why do it: On credit cards, you’re on the hook for up to $50 in unauthorized transactions, but there’s no similar limit with debit cards. You could be liable for $50 in charges if you report a missing debit card 43

within two days. That rises to $500 if you call after two but within 60 days. After that, you could lose all that’s stolen. Act promptly, and don’t carry around more than one or two cards. - What to do: Notify credit bureaus - Why do it: Place a fraud alert with Equifax (1-800-525-6285), Experian (1-888-397-3742) or TransUnion (1-800-680-7289). Notifying one firm automatically alerts the others. Alerts require lenders and other third parties to make reasonable efforts to verify your identity before allowing crooks, or you, to open accounts in your name. Alternatively, you might want a credit freeze, which thwarts most attempts to open credit in your name by blocking third-party access to your records. You can temporarily lift a freeze as needed for a modest fee. - What to do: Monitor credit reports - Why do it: Monitor your credit reports and check for unauthorized activity after a theft. You can get one free report yearly from each of the three credit bureaus at annualcreditreport.com. Pull your reports periodically even if you’re not a victim. - What to do: Stop stolen checks - Why do it: Request stop payments on all stolen checks. You might want to close your checking account and start over with a new account and account number. - What to do: Contact insurers - Why do it: Contact insurers with whom you have health, auto or other policies. Request new policy numbers to protect against unauthorized claims filed in your name, suggests credit.com. - What to do: Contact everyone else - Why do it: If you had other ID cards stolen - for libraries, video stores, gyms or whatever - contact those entities for replacement cards and new account numbers. Once new accounts are set up, change your passwords. - What to do: Contact authorities - Why do it: Consider filing a complaint with the Federal Trade Commission on the agency’s website (www.ftc.gov) or hotline (1-877-438-4338). Doing so helps authorities pinpoint common problems, and you can print a copy of your complaint to include with any report filed with local police. An FTC complaint with a police report can create an ”ID-theft report” that can be used to block fraudulent data from your credit reports, ensure that debts don’t reappear on your credit reports, prevent firms from continuing to try collecting debts resulting from ID theft and offer other protections. - What to do: Beware Social Security changes - Why do it: You might convince the Social Security Administration to issue you a new Social Security number if your card is lost or stolen, but the FTC recommends against it since this might not solve your theft problems and can create new hassles. Don’t let your Social Security card get stolen or lost in the first place - never carry it around. by Russ Wiles Arizona Republic May 13, 2011 [1]Your wallet is stolen - now what?

1. http://www.azcentral.com/arizonarepublic/business/articles/2011/05/13/20110513biz-StolenWallet-Online.html

Sun City West independent-living program helps seniors sell their homes (2011-05-14 14:23) Francis and Josephine Fote were not thrilled about leaving their Sun City West home for an independentliving condominium. But they knew it was time. They moved into Grandview Terrace, also in Sun City West, on Friday. Surrounded by moving chaos, they navigated around workers hooking up televisions and grandchildren unpacking boxes as they waited for their new furniture to arrive. 44

One thing they did not have to worry about was selling their house. Sun Health Life Care Communities, which manages Grandview Terrace and two other retirement communities, sold it for them. It was a program the company started last year, when administrators realized their prospective clients found themselves stuck in homes that were tough to sell because of the troubled housing market. Under the program terms, Sun Health takes over all aspects of the sale - from painting walls to hiring real estate agents - and guarantees the sale so the homeowners can buy into the retirement communities. ”They guaranteed that they would sell the house and we wouldn’t have to worry about it,” said Josephine Fote, 82. ”That appealed to us very much. That was a big concern, initially.” New options Sharon Grambow, chief operating officer for Sun Health Life Care Communities, said the company started feeling the brunt of the housing bust in 2008. The company’s three communities - Grandview Terrace, the Colonnade in Sun City Grand and La Loma Village in Litchfield Park - were getting visits from prospective buyers. But the residents were unable to buy into the communities because they could not sell their homes. So Sun Health Life Care Communities developed some options, Grambow said. Residents could sign a promissory note for the lump-sum entrance fee into a condominium. That was enough to defer payment until the house sold. About 90 percent of the buyers in a Sun Health community use proceeds from their house sale to finance the move, Grambow said. But even that was not quite enough. ”We found last year that people were shying away from signing the promissory note because they were stressed by the thought of having to sell their home,” Grambow said. So the company began offering the housing exchange in October. Together, Sun Health administrators and the residents determine the sale price of the home. If it is priced the same as the value of the condominium, it is a straight exchange. If the house sells for more money, the residents get the extra funds. If the house does not sell within a given time period, Sun Health buys it at the pre-approved price. The company sends in the cleaners and contractors and deals with open houses and listing agents. All the homeowners have to do is move out. ”If we’re not successful or we need to reduce the price, they don’t have risk,” Grambow said. ”If it’s more, that goes to the homeowner.” So far, the program has five families that have exchanged homes with Sun Health. Eight more are in the process. Company officials will monitor the program until the market recovers. Once residents are in an independent-care apartment, they have the option of moving into assisted-care if their health deteriorates. The contract also guarantees that Sun Health will care for the residents even if their finances run dry. Exchange of house cares Most of the residents in the Life Care communities are in their 70s and 80s, and typically are moving from their original retirement homes. Francis Fote, 83, is a retired physician who lived with his wife and children in Buffalo, N.Y., for most of his career. The couple retired to Sun City West 22 years ago and their grown children scattered to various states and countries. That worried daughter Mary Fote, a photographer and interior designer who lives in Toronto. She could see her parents were getting more fragile, but they did not want to leave Sun City West. After looking at all the communities that offered independent and assisted living, the Fotes decided that the housing exchange program would take care of all their concerns. ”When you’re dealing with elderly parents and family members are not local, the function of selling a property is a lot more onerous,” Mary Fote said. Grandview Terrace offers a dining room, laundry and cleaning services and even takes care of driving. 45

The family spent about six months going through a life’s worth of belongings. Mary hired contractors to paint and wallpaper and designed a modern décor that incorporates artwork her parents collected over decades of traveling. Francis still preferred the couple’s sun-filled house to the modern condominium, but he could see the need for more help. ”We’re getting too old for people to worry about,” he said. ”That’s what it’s all about.” by Lesley Wright The Arizona Republic May. 10, 2011 01:00 PM [1]Sun City West independent-living program helps seniors sell their homes

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Sell now or wait? Tips to ponder (2011-05-15 09:55) Less-than-buoyant reports on home values are causing anxious nights for some homeowners who can’t decide if they should sell now or wait a few years in hopes of a higher price. ”There are still lots of ’hold out’ sellers. They’re part of the shadow inventory of properties not yet on the market,” says Karl Case, a senior fellow at Harvard University’s Joint Center for Housing Studies, a think tank on real estate. Case is very familiar with U.S. real-estate valuation trends. In fact, he’s the co-creator of Standard & Poor’s Case-Shiller housing indices, widely quoted measures of property values. But despite continuing uncertainty about values in many areas, and an excess of unsold properties, he’s no pessimist about real estate going forward. ”The people buying homes now are incredibly bullish, which is a good sign,” says Case, also an economics professor emeritus at Wellesley College. Case says there are ”micro markets” throughout the country where prices have begun rising again due to strengthening demand. But there are also a number of neighborhoods with an oversupply of unsold homes and lots of foreclosures. These are areas where many homeowners are still waiting for a pickup in values before they try to liquidate. Are you uncertain if you’d be better off selling now or postponing for a few years? If so, Case says the right answer depends both on your personal circumstances and the trends in your local market. Here are a few pointers for would-be sellers who are conflicted on market timing. - Research the economic prospects of your local community. Case recommends that homeowners who are conflicted about when to sell spend some time researching their local economy before finalizing their decision. It’s no secret that areas of high unemployment typically have low demand for housing. Because of this close connection, he urges uncertain homeowners to gain some context on the local jobs picture before they time their sale. To learn more about your local job market, Case suggests you gather statistics from the website of the U.S. Bureau of Labor Statistics (www.bls.gov). If employment is weak in the area where you’d like to sell a property but you expect that trend to change in the near future, you may wish to postpone. But an improving jobs picture could be a signal to sell soon. - Scope out open houses and listing agents in your area. Statistics can tell you only so much. Anecdotal reports - derived from those actively involved in real-estate sales - are often more telling about the true strength of the market than are numbers. In advance of deciding whether to sell now or wait, Case recommends that would-be sellers visit weekend open houses to chat with real-estate agents about the current level of homebuyer activity and interest in 46

their neighborhood. ”If all you see are forlorn-looking agents with stacks of extra marketing brochures and few customers, that’s not a good sign,” he says. - Consider your personal situation before deciding to hold or sell. John Sullivan, a real-estate broker and past president of the National Association of Exclusive Buyer Agents (www.naeba.org), says many who are seriously considering a postponement of their sale intend to rent out their property in the interim. But Sullivan says that becoming a landlord can have significant financial implications. These can include tax consequences for owners who’ve been collecting rent for several years prior to selling. ”Ask your accountant about the capital-gains-tax implications of becoming a landlord and how they would affect you personally,” he says. Another financial factor to consider is whether you can reasonably expect to collect enough rent to maintain a positive cash flow each month to offset your regular mortgage payments and upkeep expenses. ”For maintenance alone, you need to allow another 10 percent over your regular house payment for a rental property,” Sullivan says. In addition, he says it’s wise to factor in a projected increase in property taxes, especially if you’re living in a jurisdiction that’s facing a budget deficit and where local taxes could rise to cover the gap. - Look on the bright side of the real-estate picture. Whether they’re planning to sell now or later, homeowners should remain optimistic about their prospects, Case says. This is especially true for those who plan to move up to a larger or more luxurious home in the near future. ”By selling now, you might get less for your house than you’d like. But you could also get a still-larger discount on the next home you own,” Case says. He believes that along with pent-up demand to sell among many current homeowners, there’s also pent-up demand among many would-be home purchasers who could rush into the market at any time. ”Because there’s a shadow market among buyers as well as sellers, it’s always possible your market could turn on a dime,” Case says. by Ellen James Martin Universal Syndicate - May. 13, 2011 01:53 PM [1]Sell now or wait? Tips to ponder

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Lawyer-turned-filmmaker documents foreclosure crisis (2011-05-15 10:10) That motorhome you passed on the freeway earlier this month might have been a good place to commiserate about your foreclosure. If it was the Winnebago driven by John Titus and the crew filming a new documentary, you could have definitely gotten a sympathetic ear about foreclosures and what he calls unsavory banking practices. Titus, a patent attorney who said he’s facing a possible foreclosure battle himself on his home in Chicago, passed through Phoenix May 3 on the road tour. The trek from Las Vegas to Chicago was designed to publicize what he describes as illegitimate foreclosure proceedings by big banks that lack the documentation to do it. The crew took some detours en route, such as gambling in Las Vegas. In an interview, Titus said he talked to distressed homeowners in Arizona and other states and plans to include some of their comments in the film. He hopes the movie, tentatively titled ”Bailout,” will be finished in time for viewing at film festivals early next year. 47

Titus said he located homeowners in Arizona and other states who were willing to talk about their foreclosure experiences after he placed ads on Craigslist. ”There’s a consistency to their stories,” Titus said. ”The stress inflicted on these people is sad. They’re disenfranchised ... and feel like failures.” Because so many banks lost or destroyed the original promissory notes that people signed, the banks lack the paperwork to pursue foreclosures properly, he said. Much of this paperwork apparently got discarded after the banks securitized or sold off packages of mortgages to third-party investors. Titus still lives in the Chicago home on which he stopped making payments months ago, after requesting a copy of his promissory note that he said the bank couldn’t produce. ”There will be a lawsuit when I get back,” he quipped. Meanwhile, he enjoyed the ride from Las Vegas through Arizona, New Mexico and Texas, then up into Missouri and Kentucky, before returning to Chicago. Titus and crew chronicled their trip on the film’s iconoclastic and off-color website, [1]www.bailout 2011.com. by Russ Wiles The Arizona Republic May. 15, 2011 12:00 AM [2]Lawyer-turned-filmmaker documents foreclosure crisis

1. http://www.bailout2011.com/ 2. http://www.azcentral.com/arizonarepublic/business/articles/2011/05/15/20110515biz-insider0515wiles.html

Arizona banks seeing a profit (2011-05-15 10:13) After considerable pain, downsizing and nearly $1 billion in cumulative losses, Arizona’s native banks finally might be turning the corner. The 37 banks still based in the state just wrapped up their best quarter since the financial crisis and recession began, breaking a string of 12 straight quarters during which the majority of institutions here lost money. On balance, the local industry is profitable again, albeit by a razor-thin margin that partly reflects the demise of some of the weakest players. Still, bankers are sensing a silver lining in the latest numbers, and they’re not complaining. ”It’s a good story, a change in the weather,” said Stephen Haggard, president and chief executive officer of Metro Phoenix Bank. ”The local economy is doing better, with definite improvement from six months or a year ago.” As local banks recover, that could make more lending dollars available to customers here, especially small businesses, while improving overall banking services and perhaps even reversing the three-year decline in employment at these firms. Healthy local banks also are in a better position to donate to non-profits and support the community in other ways. Metro Phoenix Bank posted a $624,000 first-quarter profit after basically breaking even one year earlier. The big news is that bad-loan difficulties are easing, at long last. ”Problem assets have been dramatically reduced,” said Scott Schaefer, president of Meridian Bank, which improved to a $2.9 million first-quarter profit from a loss of $11.1 million a year earlier. ”We took our lumps in 2009 and 2010,” he said, citing write-downs and other responses for dealing with problem loans. The banks headquartered in Arizona earned nearly $20 million combined from January through March, with 19 of the 37 turning a profit, based on a preliminary tally of financial reports supplied to the Federal Deposit Insurance Corp. The agency will release final statewide numbers later this month. Many local banks were and remain highly exposed to real-estate lending, since that industry was the state’s main growth catalyst for so many years. 48

The Arizona totals exclude figures for banks that operate here but are based elsewhere, such as the three largest companies with an Arizona presence - Wells Fargo, Chase and Bank of America. They also don’t include banks that have failed, merged or been acquired over the past few years. The majority of local banks have been running in the red for the past three years, hammered by real-estate setbacks and hemorrhaging the capital that regulators require for them to stay in business. At the nadir in late 2009, 84 percent of Arizona’s banks were unprofitable. Combined, Arizona’s local banks lost $950 million across 2008, 2009 and 2010. Since the end of 2007, the state has lost 20 banks through failure, merger or acquisition and shed more than 1,500 related jobs. Also, market share has become more concentrated in the hands of the big out-of-state entities that, critics say, are less motivated to lend locally. ”Local banks will reinvest the money in small businesses,” said Ernest Garfield, president of Independent Bank Developers of Scottsdale and a former Arizona state treasurer and Corporation Commission member. ”The big banks will drain it out of the state.” Bankers at large institutions contest that claim, but it’s clear that having more healthy entities increases the availability of local loan dollars. The improved recent numbers for local banks don’t mean all is well. Some of the weakest banks in Arizona and nationally continue to struggle. The FDIC’s list of ”problem” banks is still rising, with one in nine institutions nationally and an untold number in Arizona under close scrutiny. The agency doesn’t name banks on its list out of concern for inciting runs by depositors. The FDIC generally insures depositors up to $250,000 per bank. Small community banks that represent the backbone of Arizona’s industry have been hit harder than larger national banks, which have more diversified operations. The U.S. industry actually remained profitable throughout the slump and earned $87 billion in 2010 - almost back to pre-recession levels. Arizona banks, as noted, have been heavily dependent on real estate. Perhaps the main reason banks in Arizona and elsewhere are reporting better numbers is that loan problems and delinquencies are easing, so banks don’t have to increase their reserves to cover losses. When banks must boost reserves, that eats into profits and capital. Also, banks are earning higher spreads between what they generate on loans and pay on deposits, and they’re earning more in fee income, Haggard said. Schaefer sees opportunities for well-positioned banks but cautions that metro Phoenix’s economic recovery remains ”spotty.” Haggard is more optimistic. While real estate remains depressed, prices aren’t dropping as fast as before, he said. Also, borrowers in other industries generally are faring better. ”The financial reports we’re receiving from clients are showing stronger cash flow and top-line revenue numbers,” he said. Garfield feels now is a great time to start a bank in Arizona, reflecting the decreased competition, gradual improvement in the economy and other factors. ”Also, bankers have finally learned what gets them in trouble,” he said. Add it all up and there are reasons for optimism. Local banks focus their lending within Arizona and thus are a key cog in the economic-development machine. If they have finally turned the corner, that could be a good indicator for everyone in the state. by Russ Wiles The Arizona Republic May. 15, 2011 12:00 AM [1]Arizona banks seeing a profit

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Real-estate

professionals

embrace

new

digital

tools

better

serve

clients

(2011-05-15 10:27)

Historically, the real-estate industry has lagged behind the rest of the business world by a few years in the adoption of new digital tools. But the housing-market downturn appears to have spurred agents, brokers and others to develop and embrace new technology at an unprecedented rate. From Facebook to QR codes, to Twitter and multiple custom websites, many agents have come a long way from the days when they jumped in the car carrying printouts of home listings and the latest local street map. 5 key technologies for real-estate agents Bob Bemis, chief executive of the Arizona Regional Multiple Listing Service, said Arizona real-estate agents have adjusted quickly in terms of their attitudes toward adopting new technology. ”The explosive nature of technical development has been phenomenal,” said Bemis, who has helped promote that change by offering a variety of technology products to listing-service members. To some extent, it’s unclear where the changes will lead. The worst housing slump in generations came along just as smartphones, social media and other devices were starting to transform the way real-estate business was conducted. The flood of short sales and foreclosures, not to mention many recent changes in rules and procedure, have required agents to learn new processes and techniques with all the latest tools at their disposal. Even after the housing market returns to normal, those in the real-estate industry said technology was likely to continue changing their profession in unpredictable ways. The agent’s role in a home sale - that of buyer or seller representative - is no different, according to real-estate agents in the Phoenix area. But there has been a significant uptick in the knowledge and tools required to do the job effectively. Rampant change is partly a product of the economic downturn and financial distress many homeowners have endured and partly the result of new information technologies that, depending on how they are used, can be regarded as either a boon or a threat to the real-estate industry. Most agents and brokers seem to agree their industry is likely to undergo as many changes in the next four years as it has during the previous four. They said the impact of high-tech tools such as broadband wireless service, Internet data exchange, digital social networking, global-positioning systems and quick-response codes for smartphones had been overwhelmingly positive. Still, industry representatives said information technology also has the potential to diminish real-estate agents’ role in the housing economy via a process known as ”disintermediation,” which is a fancy way to say ”cutting out the middleman.” It’s the same process that has wreaked havoc on travel agents, discount stockbrokers and other professional intermediaries. ”At this point, the threats are not huge,” said Ron LaMee, senior vice president of information services for the Arizona Association of Realtors. ”It may carve out pieces of the traditional services that agents provide.” Agents of change Today’s real-estate agents operate in an environment in which sales transactions have gotten more complicated, mortgage-lending standards are tighter, the home-appraisal process stricter, and the federal government is constantly changing incentives and restrictions that can save or kill a deal. Many agents have incorporated technologies into their businesses that allow clients to perform some of the 50

more enjoyable work themselves, such as searching through online home listings, while their agent focuses on the heavy lifting. Every geographic area in the country has a listing service that maintains a Web-based database of homes available for purchase, along with various details about each property. Some of the information is suitable for public consumption, such as a home’s square footage, while other information is not, such as the lockbox combination to house keys for agents to use when showing a home to clients. One of the listing service’s major accomplishments in recent years has been developing a Web-based system that lets consumers access and search the public-approved portion of the database. Bemis has gone on to transform the Phoenix-area listing service into what he calls ”a tester and recommender of new technology” for agents. Bemis said most agents felt pressure to keep up with new technology, but that there could be as many as 50 to 100 applications with the same basic function available on the market. Generally, real-estate agents are looking for tools that enhance their self-promotion efforts, improve relationships with clients, gauge buyer interest in their listed properties and the track the progress of pending home purchases. Agents have adopted other technologies out of sheer necessity, such as electronic systems lenders have implemented to track the progress of short-sale transactions. Bemis said competition among agents is more intense than ever, and that any tool which provides a slight edge over the competition is too important to ignore. ”Those that want to survive have to evolve much, much more quickly,” he said. Apps for agents High-tech entrepreneurs John Perkins and Grant Gould have spent the past several years developing applications designed to perform certain tasks specifically for real-estate agents. Co-founders Gould and Perkins’ latest venture, Home Junction Inc., based in La Jolla, Calif., offers a proprietary software product called SpatialMatch that allows users to choose a neighborhood and then view an interactive map showing anything they want to see: schools, public parks, parking garages, bus stops, bagel shops, haberdashers, Whataburgers - anything. Agents subscribe to a service that lets them embed the SpatialMatch interface on their own websites using a technology known as Internet data exchange, or IDX. IDX lets visitors to the website use the embedded application without having to link to another site. Many real-estate agents use the same technology to let clients access the listing service’s database. Gould and Perkins give their agent clients the option of putting the SpatialMatch app behind a leadgeneration barrier, which forces visitors to enter their name and contact information. However, they said few agents use it. Agents have learned by experience that the hard sell and the Internet don’t mix. ”It’s not about lead-generation,” Gould said. ”It’s about managing the flow of information to the consumer.” Unfettered access to apps such as SpatialMatch keep visitors on the website and position the agent as a hyper-local expert, they said. A previous business Gould and Perkins developed, Real Estate Village, helped agents create custom websites and was sold in 2005 to Homes.com, which provides a variety of Internet-based services to real-estate agents. Perkins explained that tech tools in the real-estate business usually have one of two opposing goals: automation or disintermediation. Automation products aim to make the job easier for agents. Disintermediation products aim to make agents obsolete. Because they offer the application only to real-estate professionals, Perkins and Gould said they are in the automation space. In fact, their goal is to help agents and brokers compete against the leaders in disintermediation, do-ityourself home listings Web portals such as Realtor.com, Zillow and Trulia. ”We made a conscious decision to develop products that empower the Realtor,” Gould said. Too much tech? In today’s real-estate market, the use of certain high-tech products and services is mandatory, said Laurie 51

Duffy, a real-estate agent with John Hall & Associates Inc., based in Phoenix. The most critical among them is a quality website devoted specifically to that particular agent. All real-estate agents are independent contractors, she said, and they succeed or fail based on the strength of their personal branding effort. ”You really have to set yourself apart from other agents by putting your name out there,” she said. Other must-have technologies include text messaging, a Facebook page, a GPS device, and a laptop computer with wireless Internet service. One of the most promising technologies to hit the real-estate profession in recent months is the use of quickresponse codes, or QR codes, said Realty Executives agent Libby Cohen, of the Scottsdale-based Walt Danley Group. Cohen demonstrated recently how she uses QR codes, which look like squares partially filled in with black dots, on the front of her listed homes’ for-sale signs. Any passer-by with a compatible smartphone can scan the code with the phone’s camera, which instantly sends the phone’s Web browser to a page featuring information about the home and even a video tour. Cohen receives a notice whenever one of her QR codes is scanned, allowing her to track the number of visitors to each property. She said the system helps her maintain a good relationship with sellers. Duffy said there were some things she prefers to do the old-fashioned way, and that too much technology can be a bad thing. Whenever possible, Duffy said she chooses face-to-face conversation over a phone call, and a phone call over an e-mail message. While Duffy agreed that the role of real-estate agents was bound to continue evolving with new technology, she scoffed at the notion that a website ultimately could displace agents altogether. ”I don’t see how the Internet could ever take the place of an agent,” she said. ”People need guidance, and they need it from an actual person.” Agents of the future LaMee agreed that real-estate agents always would have a place in the housing market. A home purchase is far more complicated than buying plane tickets or shares of Motorola, he said, adding that real-estate agents are unusual in that they broker transactions between two consumers. Still, LaMee said it was likely that real-estate agents of the future would be fewer, more specialized, more productive and able to provide a no-frills version of their services for a reduced fee. Limited-service real-estate agencies, often charging a flat fee in place of the traditional 3 percent commission, already had begun to emerge toward the end of the housing boom, LaMee said, but the downturn seemed to have put the brakes on that trend. As much as real-estate agents hate them, complicated and potentially frustrating short-sale transactions now prevalent in the Phoenix-area housing market have made full-service agents vital again, especially to sellers. Many agents believe the reprieve from their devaluation is only temporary, however. A survey of agents and brokers conducted recently by Web-based real-estate news service Inman News revealed that many believe flat-fee services are most likely on the rise again. The online survey, whose respondents included more than 700 self-identified agents and brokers, and about 300 other real-estate professionals, was conducted between February 2009 and March 2011. Only about 12 percent of respondents said they currently offer services for a flat fee, but 36 percent said they expected flat-fee services to become more popular in the next five years. The devaluation problem appears more advanced when it comes to the services provided by sellers’ agents, who often do the lion’s share of work in a typical short sale. The survey found that while the bulk of buyers’ agents still claim to be receiving the standard 3 percent commission, more often than not sellers’ agents are getting less than that, about 2.5 percent. Not surprisingly, the number of licensed agents and brokers statewide has declined almost 22 percent since 2007, just after the Valley’s housing market peaked. Roughly 51,000 agents and brokers remain in the state, according to recent figures from the Arizona Depart52

ment of Real Estate, down from more than 65,000 in 2007. LaMee said that thinning of the ranks is bound to continue in the foreseeable future. Therefore, the next generation of high-tech tools for agents will have to address productivity concerns in an industry whose participants do more work and get paid less. by J. Craig Anderson The Arizona Republic May. 15, 2011 12:00 AM [1]Real-estate professionals embrace new digital tools to better serve clients

http://www.azcentral.com/arizonarepublic/business/articles/2011/05/15/

20110515real-estate-agents-embrace-digital-tools.html

HUD projects waste millions (2011-05-15 10:33) WASHINGTON - The federal government’s largest housing construction program for the poor has squandered hundreds of millions of dollars on stalled or abandoned projects and routinely failed to crack down on derelict developers or the local housing agencies that funded them. Nationwide, nearly 700 projects awarded $400 million have been idling for years, a Washington Post investigation found. Some have languished for a decade or longer even as much of the country struggles with record-high foreclosures and a dramatic loss of affordable housing. The U.S. Department of Housing and Urban Development, which oversees the nation’s housing fund, has largely looked the other way: It does not track the pace of construction and often fails to spot defunct deals, instead trusting local agencies to police projects. The result is a trail of failed developments in every corner of the country. Fields where apartment complexes were promised are empty and neglected. Houses that were supposed to be renovated are boarded up and crumbling, eyesores in decaying neighborhoods. In Inglewood, Calif., a sprawling, overgrown lot two blocks from city hall frustrates senior citizens who were promised a state-of-the-art housing complex more than four years ago. Although the city invested $2 million in HUD funds, the developer doesn’t have the financing to move forward. In Newark, N.J., two partially completed duplexes sit empty in a neighborhood blighted by boarded-up homes lost to foreclosure. The city paid nearly $400,000 to build the houses, but after a decade of delays, the developer folded and never finished. The money has not been repaid. In Orange, Tex., 35-year-old laborer Jay Breed lives next to a dumping ground littered with tires and other trash, where a non-profit developer was supposed to build 50 houses for the poor. Five years later, with $140,000 in HUD money gone, no homes have gone up. ”It’s a wasteland,” Breed said. The Post examined every major project currently funded under the HUD program, analyzing a database of 5,100 projects worth $3.2 billion, studying more than 600 satellite images and collecting information from 165 housing agencies nationwide. The yearlong investigation uncovered a dysfunctional system that delivers billions of dollars to local housing agencies with few rules, safeguards or even a reliable way to track projects. The lapses have led to widespread misspending and delays in a two-decade-old program meant to deliver decent housing to the working poor. The Post found breakdowns at every level: " Local housing agencies have doled out millions to troubled developers, including novice builders, fledgling nonprofits and groups accused of fraud or delivering shoddy work. " Checks were cut even when projects were still on the drawing boards, without land, financing or permits to move forward. In at least 55 cases, developers drew HUD money but left behind only barren lots. " Overall, nearly one in seven projects shows signs of significant delay. Time and again, housing agencies failed to cancel bad deals or alert HUD when projects foundered. 53

" HUD has known about the problems for years but still imposes few requirements on local housing agencies and relies on a data system that makes it difficult to determine which developments are stalled. " Even when HUD learns of a botched deal, federal law does not give the agency the authority to demand repayment. HUD can ask local authorities to voluntarily repay, but the agency was unable to say how much money has been returned. The national capital region has a particularly troubled track record. In suburban Prince George’s County, Md., the non-profit Kairos Development Corp. received $750,000 in 2005 to build dozens of homes. Six years later, Kairos has not built a single house. Dozens of housing agencies nationwide acknowledge botched deals and often blame the economy for leaving developers without financing to finish the work. But hundreds of stalled projects predate the troubled financial markets, with developers tapping HUD’s program for easy money and then escaping even rudimentary oversight from local and federal authorities. The agency’s inspector general for years has chronicled scores of delayed projects and millions in waste. ”We need to reduce the risk for HUD funding in development deals,” said Annemarie Maiorano, who manages HUD money for Wake County, N.C. ”There needs to be basic standards.” HUD officials said they have recently tried to determine why developments are delayed and have begun to cancel projects. In response to inquiries from the Post, the agency last month launched investigations into a series of defunct deals, finding questionable payments and excessive delays, and in recent weeks has sought the return of more than $4 million from housing agencies in the District of Columbia and Prince George’s County. ”We can do better and we will,” said Mercedes Marquez, HUD’s assistant secretary for community planning and development, who was nominated by President Barack Obama in 2009. ”HUD, the Congress and every taxpayer I know expects these funds to be put to work. ... I won’t hesitate to do what’s necessary.” The Post’s investigation is the first systemic look at the progress of construction in HUD’s affordable-housing fund, known as the HOME Investment Partnerships Program. The program launched with great promise two decades ago, when Congress vowed to fund the construction or renovation of thousands of apartments and houses for working-poor families. HUD’s money typically doesn’t cover all construction costs. The program is meant to provide partial funding for developers who are expected to draw additional financing from banks and other sources. But hundreds of current projects have faced years-long delays, with a similar pattern playing out in city after city. Behind many of the deals are developers who didn’t have land, permits, financial capacity or commitments for private financing. HUD has few underwriting standards: Housing agencies are required to ensure that developers have a proposed budget and construction schedule - but not proof that they have the money to start building. Other developers have had little housing experience or were dogged by foreclosures, cost overruns, liens and allegations of defective work. by Debbie Cenziper and Jonathan Mummolo Washington Post May. 15, 2011 12:00 AM [1]HUD projects waste millions

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37%+ of area housing sales are now cash (2011-05-15 10:43)

With home prices low and financing options slim, the number of buyers purchasing homes in Tucson with cash has been growing steadily. Through the end of April, more than 37 percent of this year’s home sales have been cash purchases, statistics from the Tucson Association of Realtors Multiple Listing Service show. In contrast, about 13 percent of units sold in 2007 were cash transactions. Since then, there have been steady year-over-year increases in cash sales. Some of the sales are to out-of-state or international buyers who have saved up for second homes or are looking to retire in the sun-drenched Southwest, local real estate agents say. With the credit market tight, these buyers sometimes just don’t want to deal with getting money from a bank. ”They’re people who are in retirement or near retirement and looking for some getaway properties,” said Tom Ebenhack of Long Realty. Those buyers are looking to spend $200,000 to $700,000, Ebenhack said. Sue Gutierrez, a broker with TucsonREO Realty, said she also has an increasing number of cash buyers. Younger homebuyers are still relying on traditional lending practices, but older buyers are sometimes investing their retirement accounts to make the cash purchase, she said. Gutierrez said the buyers she’s seen often come from outside Arizona, or even outside the United States, and 55

they’ll purchase homes ranging in price from $100,000 to $500,000. On the lower end of the housing market - where foreclosures have drilled prices to new lows - investors are snapping up properties and converting them into rentals. Homes priced lower than $100,000 tend to get picked up by buyers who have money to fix them up, Gutierrez said. ”They’re sitting on them and they’re renting them out,” she said. ”They’re holding onto them until the market gets better.” With prices as low as they are, investing in property has become an appealing option for those with plenty of cash in hand, said Luis Carranza, a real estate agent who has been investing in properties since the 1980s. ”People with a lot of money, instead of going to the stock market, they just go and buy houses for next to nothing,” Carranza said. These investors will spend $30,000 to $100,000 on a bank-owned house, pay another $10,000 to fix the property up, and then set a rental rate that allows them to turn a profit, he said. Sometimes investors will let the property sit vacant, but Carranza, who said he has purchased only a few of the properties in the past year, leases his. The prospect of flipping houses - buying a worn-out foreclosure, making repairs and selling it immediately has limited appeal because property values remain so low. To make money on their ventures, Carranza said, investors will likely have to wait at least a year before they start selling houses. Before the housing boom, few people were interested in bidding on foreclosed houses at auctions, but the proliferation of low-priced, bank-owned properties has ratcheted up the competition, he said. Josh Myers, another investor, said he used to develop large subdivisions and sell property to national home builders, but that changed when the housing market crashed. He now owns about 100 houses in Phoenix, California, New Mexico and Texas that he maintains as rentals. Myers doesn’t have properties in Tucson because he prefers to invest in markets where housing prices soared higher and crashed harder, but other buyers are active here, he said. Toward the end of last year, both Tucson and Phoenix saw an influx of investors from Canada, Myers said. Their interest has been driving up prices for bank-owned properties at auctions, he said. ”They’re buying everything they can get their hands on.” For that reason, Myers said he doesn’t anticipate prices on the financially distressed properties dropping that much lower. And if banks loosen up their lending practices, prices could stabilize more, he said. But even when trying to pick up low-priced homes and turn them into rentals, buying at the right time is still crucial. Falling home prices began to attract investor interest not long after the market’s peak. Some of those buyers, who thought they were buying at the bottom, saw values sink even lower and they weren’t able to lease their properties at competitive rates, said Hank Amos, chairman and CEO of Tucson Realty & Trust Co. Some of those properties have begun to cycle back toward foreclosure, he said. Carranza said he’s confident that investors buying now will see prices start to increase. It could take a year or more, but buyers who pick up financially distressed houses and hold onto them or rent them out will likely see a return on their investment, he said. prices still down The median sales price for homes in the Tucson area was 18 percent lower in April compared with a year earlier, two reports say. Coldwell Banker Residential Brokerage pegged the median at $126,000 in April. Long Realty says the median was $132,000. Both reports showed a slight uptick in the median sales price - the point at which half of homes sell for less and half for more - compared with March. by Dale Quinn Arizona Daily Star May 11, 2011 [1]37 %+ of area housing sales are now cash 56

1. http://azstarnet.com/business/local/article_3992befd-1acf-5a7e-a62b-1fb810d32d53.html

US builders see little to like in housing market (2011-05-17 09:19) WASHINGTON - U.S. homebuilders are concerned that the struggling housing market won’t recover this year and some feel it may be getting worse. Builders’ outlook for the industry in May was unchanged at 16, the National Association of Home Builders said Monday. It has been at that level for six of the past seven months. Any reading below 50 indicates negative sentiment about the market. The index hasn’t been above that level since April 2006. When asked about where they see sales of single-family home heading over the next six months, the builders offered their most pessimistic outlook since September. Last year the number of people who purchased previously owned homes fell to a 13-year low. Sales of new homes were even worse, hitting the lowest level on records dating back nearly a half-century. Builders are struggling to compete because foreclosures are forcing down prices for previously occupied homes. The median price of a new home was about 34 percent higher in March than the median price for a re-sale. That’s more than twice the markup in healthy housing markets. In response, builders are breaking ground on fewer homes. The seasonally adjusted annual pace in March was 549,000 new homes per year, less than half the 1.2 million units annually that economists consider healthy. The Commerce Department will release the April data on new-home construction Tuesday. ”You can get existing homes at a much cheaper price now, mainly due to foreclosures,” said Paul Dales, senior U.S. economist at Capital Economics. ”New homes really aren’t competitively priced.” Fewer new homes mean fewer jobs. Each new home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the builders’ trade group. The trade group cited a handful of factors weighing on the housing market. Some were familiar - tighter lending standards, high unemployment and an increase in the number of homes sold at foreclosure. But the builders’ group also noted that higher gas prices were creating ”consumer anxiety and reluctance to go forward with a home purchase,” said the group’s chairman, Reno, Nev., home builder Bob Nielsen. About 90 percent of the builders surveyed said potential buyers are also holding back on purchases because they are concerned they won’t be able to sell their current home at a favorable price. Economists expect home prices will continue to struggle this year before a modest recovery takes hold. The hardest-hit states, including Arizona, California, Florida and Nevada, are inundated with foreclosures and short sales, when a lender allows a borrower to sell their property for less than what is owed on the mortgage. Builders had been hopeful that a strong spring season, traditionally the best time for home construction, could help power a turnaround. But that has yet to happen. Regionally, the West saw a two-point gain and the South received a one-point gain in their index of construction activity, both to 16. The Midwest held steady at 14. The Northeast fell five points, to 15. The index gauging current conditions rose one point, to 16, while the recorded foot traffic of prospective buyers also rose by a point, to 14. But the outlook for the next six months fell two points, to 20. That was the lowest level in eight months. The survey is analyzed by the builders’ trade group and Wells Fargo. This month’s survey was based on the responses of 339 builders. by Derek Kravitz Associated Press - May. 16, 2011 08:11 AM [1]US builders see little to like in housing market

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Construction of new homes down 10.6% (2011-05-17 09:21) WASHINGTON - Construction of new homes plummeted in April, dragged down by a major drop in apartment building. Builders broke ground on 10.6 percent fewer new homes last month from the previous month. The seasonally adjusted rate fell to 523,000 homes per year, the Commerce Department said Tuesday. That’s less than half the 1.2 million homes per year that economists consider a sign of a healthy market. Single-family homes, which make up roughly 80 percent of home construction, fell about 5 percent in April. Apartment and condominium construction plunged more than 28 percent. Building permits, a gauge of future construction, fell 4 percent. The weak construction data provided further evidence that the housing industry is far from recovering, analysts said. Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the late Easter may have had some impact. He noted that the pace of construction rose in March before dropping in April. ”The underlying trends, as far as we can tell, are about flat, at a very low level,” Shepherdson said. Tighter lending standards and high unemployment are weighing on the housing sector, which is in the midst of one of its worst years in history. Builders are also struggling to compete with millions of foreclosures, which are forcing down prices for previously occupied homes. The median price of a new home was about 34 percent higher in March than the median price for a re-sale. That’s more than twice the markup in healthy housing markets. In some cities, prices are half of what they were before the housing market collapsed in 2006 and 2007. Many potential buyers who could qualify for loans are worried that prices will fall further. Others are hesitant to put their own homes on the market when prices are dropping. The weak housing market is weighing on the overall economic recovery. Each new home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the builders’ group. In past modern-day recessions, housing accounted for 15 to 20 percent of overall economic growth. In the first post-recession year, between 2009 and 2010, housing contributed just 4 percent to the economy. Home construction activity was uneven across the country. It fell 23 percent in the South and nearly 5 percent in the Northeast but rose almost 4 percent in the West and nearly 16 percent in the Midwest. On Monday the National Association of Home Builders said its survey of homebuilder sentiment was unchanged at 16. That’s the same level it has been for six of the past seven months. Any reading below 50 indicates negative sentiment about the market. The index hasn’t been above that level since April 2006. And when asked about where they see sales of single-family home heading over the next six months, the builders surveyed offered their most pessimistic outlook since September. by Associated Press May 17, 2011 [1]Construction of new homes down 10.6 %

1. http://www.azcentral.com/business/realestate/articles/2011/05/17/20110517biz-housingstarts0517.html

Arizona Storyteller: Robson builds career providing Ariz. homes (2011-05-17 09:26) Ed Robson began his career as an Arizona developer in the mid-1960s by enticing people to drive to Bullhead City and look at mobile-home lots for a free tank of gas and an inexpensive camera. 58

The marketing ploy worked. Robson and his partners sold hundreds of lots in the then-tiny town next to the Colorado River. They handed out 2,500 Kodak Instamatic cameras to people who made the drive. The group bought so many Kodaks that the camera company sent a salesman to Bullhead City to figure out what they were doing. Robson talked the Kodak salesman into buying a lot in the development. Robson learned about being a salesman from one of the best. He had just left Phoenix-based Del E. Webb Corp., where he learned to negotiate deals and plan for large developments from one of the top developers of the time. Del Webb, then-owner of the New York Yankees, would become synonymous with his Sun City retirement developments. A decade later, Robson opened Sun Lakes south of then-far-flung Chandler with two other former Webb executives. The project would directly compete with their former boss’ popular Sun City in the far-northwest Valley. Webb died in 1974, before sales at Sun Lakes soared. Still, he will always be an important influence for Robson. ”I can’t say Webb was like a mentor to me, but I learned a heck of a lot from him,” said Robson, who at 80 still works full time and makes the commute almost daily from his Biltmore-area Phoenix home to his office in Sun Lakes. ”He was a tough, smart businessman. I am not that smart, but I can be pretty tough.” Robson left Webb twice. The first time, Webb’s recommendation helped. Robson recounts the story: Gameshow host Art Linkletter was starting a real-estate enterprise. Webb told Linkletter the man who could sell land for him: Robson was ”the best salesman he ever met,” Webb said. Robson went to work for Linkletter. When the venture failed, Robson went back to Webb. During his second spell, he helped find a new stadium site for the Anaheim Angels baseball team of Southern California. The second time Robson left Webb, he ended up selling trailers in Bullhead City. Since college, Robson had wanted to be an entrepreneur running his own company. With the money from the mobile homes and lots sold to new Instamatic camera owners, Robson and his partners went on to redevelop a failed golf-course community outside Flagstaff. They opened Sun Lakes in 1972 after spending a year negotiating to buy most of the land from the Hanna family. The patriarch of the Hanna family had been an accountant for the Rockefeller family and made trips through Arizona on his way to California to monitor Standard Oil’s operations. Robson’s Sun Lakes didn’t begin as auspiciously as his predecessor’s development. The first weekend that Sun City opened in 1960, buyers purchased more than 270 homes. Robson and his partners started by selling mobile homes or ”double wides” in Sun Lakes because they were less expensive. They didn’t sell 270 homes in their entire first year. And things didn’t get any easier. In the mid-1970s, the nation’s energy crisis had reached the gas stations. Fuel prices soared, shortages led to long lines at the gas pump and the country fell into a recession. ”No one in Phoenix wanted to spend a tank of gas on a drive out to Chandler in the mid-1970s,” Robson remembers. ”My partners and I were about to sign the bankruptcy papers, but I still felt like there was a way to save Sun Lakes.” But no bank would give Robson a loan. Even a good friend who was president of an oil company couldn’t help him. Finally, he found financial help from an unexpected source. One of his former contractors said his ex-wife might be able to lend Robson money. She had cash on hand, and Robson talked her into a $100,000 loan. Robson bought out his partners for a paltry sum and the promise of a cut on future home sales. The money was enough to make payroll so he could keep selling homes. It was the start of Robson Communities Inc. More than 10,000 homes were built in the 3,500-acre community, with the last one selling in 2005. Robson is proud that he still knows many of the residents, including several who moved in during the 1970s and are now 90 or older. Robson credits his good luck for surviving the 1970s recession. A 2006 book that Robson wrote about his life is called ”Outrageous Good Fortune.” However, the many Arizona real-estate developers, brokers and 59

investors who know Robson credit his success to being a great salesman. Robson has built and sold more than 30,000 homes in his Arizona communities, including PebbleCreek in Goodyear and SaddleBrooke near Tucson. His only foray developing out-of-state is a retirement community north of Dallas. His latest project is a huge development called Robson Ranch near Casa Grande that will take decades to complete. Robson has weathered three real-estate downturns in Arizona and said the recent crash was by far the worst. He believes Arizona will rebound and continue to ”grow on its merits” as long as leaders address the state’s education and job problems. Robson came to Arizona in the mid-1960s. He was born in Massachusetts and went to college at Colorado College on a hockey scholarship. He met his wife, LaNelle, a Phoenix native, at college. The couple married and moved around while he was a helicopter pilot in the Marines. After he left the military, the couple had the choice of going to Massachusetts or Arizona. ”It was an easy choice: sunshine or snow,” Robson said. ”We moved to Arizona, and I started selling real estate.” The Robsons raised five children in Phoenix, and two sons joined the family business. LaNelle Robson died in a boating accident in 1985. Several years later, Ed Robson married Michelle King, who was a real-estate agent. A few years ago, Robson drove to Bullhead City with a land-broker friend to look at a vacant parcel for sale. While there, he drove around to look for the lots where he sold so many mobile homes almost 40 years ago. ”I looked and looked, but I couldn’t find it,” Robson said. ”Like Arizona, Bullhead City has grown a lot in the past four decades. I am glad I have been here for the ride.” by Catherine Reagor The Arizona Republic May. 16, 2011 12:00 AM [1]Arizona Storyteller: Robson builds career providing Ariz. homes

http://www.azcentral.com/arizonarepublic/news/articles/2011/05/16/

20110516arizona-storyteller-ed-robson-home-developer.html

IMF crisis opens the door to emerging nations (2011-05-17 10:07) WASHINGTON - The arrest of Dominique Strauss-Kahn has plunged the International Monetary Fund into a leadership dilemma just as it’s playing a key role in addressing Europe’s debt crisis and other global challenges. It also hastens a likely confrontation between Europe and increasingly rich developing countries that have been angling for the top spot at either the IMF or its sister organization, the World Bank. Since their inception just after World War II, the IMF has been led by a European, the World Bank by an American. Eswar Prasad, an expert in international economics at Cornell University, said the top jobs could become embroiled horse-trading, with the major countries trying to win positions for their top candidates. ”It will be a knock-down, dragged-out fight because there is a lot at stake,” Prasad said. Prasad said the United States would like to see a developing country official head the IMF. But Prasad noted that German Chancellor Angela Merkel has already said she wants to see the IMF post remain in European hands. Many analysts expect developing nations to push for their own candidates. Caroline Atkinson, a spokeswoman for the IMF, said it remains ”fully operational.” The IMF’s board met Monday and received a briefing from Acting Managing Director John Lipsky and the fund’s lawyer, Sean Hagan. Atkinson announced no further steps. Among those being mentioned as possible successors to Strauss-Kahn are Kemal Dervis, a former finance minister for Turkey who is now at the Brookings Institution, and Mohammad El-Erian, an Egyptian who heads the giant Pimco bond fund. El-Erian is a former IMF staffer. 60

Analysts note that Europe, whose debt crisis has consumed the IMF for more than a year, has a large bloc of voting shares in the IMF and won’t be willing to yield the top job without a fight. Some suggested that French Finance Minister Christine Lagarde is most likely Europe’s leading candidate. The 187-member IMF lends money to countries unable to pay their debts. The World Bank provides loans to poor nations for building roads, dams and other development projects. Strauss-Kahn’s arrest isn’t expected to impede the IMF’s day-to-day functioning. The executive board can still approve loan packages. And it’s expected to authorize rescue loans to Portugal as part of a larger package that European finance ministers negotiated Monday. ”There is a management team there, and a senior staff, and they will continue to make decisions and recommendations to the executive board,” said Edwin Truman, a senior fellow at the Peterson Institute for International Economics. Still, Strauss-Kahn’s arrest complicates delicate negotiations among European leaders and the IMF over whether and under what conditions to send more aid to Greece. Last year’s aid package hasn’t been enough to resolve Greece’s debt crisis. Speculation is rising that Greece may have to restructure its debts. ”An element of uncertainty has been injected at a time when the situation is extremely fragile,” said James Rickards, senior managing director at Tangent Capital Partners. Before his arrest, Strauss-Kahn was widely expected to step down within months and run for president of France. So the IMF’s executive board has likely already been considering replacements. A new managing director could be selected as early as June or July, Rickards said. A global financial summit will be held in November in Cannes, France, and the IMF will be under pressure to have a new permanent leader in place well before then. The IMF’s second-in-command, John Lipsky, who was named acting managing director, is viewed as more of a technocrat than Strauss-Kahn, with less political sway, particularly in Europe. And Lipsky has said he will step down in August, when his term ends. ”The combination leaves the IMF leaderless at the most critical time in its existence since the end of World War II,” Rickards said. Strauss-Kahn is regarded as one of the savviest leaders in the IMF’s 64-year history, with deep ties to European policymakers. He played a vital role in negotiating last year’s joint European Union-IMF bailout package for Greece and other struggling European countries. He’s also been viewed as an effective advocate for Europe’s interests before the IMF’s executive board, which represents its member countries. ”The ability of Strauss-Kahn to navigate those waters will not be easily replaced,” said Uri Dadush, a senior associate at the Carnegie Endowment for International Peace and former director of economic policy at the World Bank. Strauss-Kahn hasn’t yet officially stepped down. But few analysts expect him to remain. Morris Goldstein, a top economist at the IMF for 25 years and now at the Peterson Institute, said the French will likely argue that Lagarde would be a wise choice because the IMF will need someone closely involved in negotiations over aid packages for Greece, Ireland and Portugal. If chosen, Lagarde would be the first woman to lead the IMF. ”They could argue that at this delicate state of negotiations on the European debt programs, the IMF needs somebody who is familiar with the issues,” Goldstein said. He said that if the Europeans lose the IMF post, they might insist that the United States also give up its long-standing hold on the World Bank job when Robert Zoellick’s term as World Bank president ends June 30, 2012. Non-Europeans will likely argue that it’s time to open up the leadership to major developing countries whose economies are expanding far faster than the developed world. Some, like China, have boosted their contributions to the IMF in recent years. ”There is growing disquiet, particularly among emerging nations,” said Jan Randolph, an analyst at IHS Global Insight. ”China could use its influence to support an emerging-market candidate for the top IMF job.” 61

The United States, the largest donor to the IMF, is certain to weigh in. ”This will be a rather complicated game of musical chairs,” said Uri Dadush, a senior associate at the Carnegie Endowment for International Peace and former head of economic policy at the World Bank. by Christopher S. Rugaber and Martin Crutsinger Associated Press May. 17, 2011 12:00 AM [1]IMF crisis opens the door to emerging nations

1. http://www.azcentral.com/arizonarepublic/business/articles/2011/05/16/20110516biz-IMF-Future0517.html

US Real Estate: Realtors Face Off Against Mortgage Bankers Blog - CNBC (2011-05-17 10:40)

CNBC Realty Check

[1] Yesterday I had the great opportunity to moderate a symposium on mortgage liquidity with a pretty heavy panel of mortgage bankers and industry executives. I knew they would be guarded in their answers, as I asked about the new world of underwriting, the wind down of Fannie Mae and Freddie Mac, the tighter more expensive FHA, new federal regulation in the industry and a controversial new appraisal process. And they were guarded, until I opened up the floor to the Realtors, who hammered them hard on foreclosures, short sales, and mortgage credit for independent contractors like themselves. A Realtor from Wilmington, NC asked what are the plans for companies to put the shadow (foreclosed) inventory onto the market? Most agents believe banks are holding on to these properties to somehow game the market, but the bankers were firm in their rebuttal: Cara Heiden/Wells Fargo [WFC 28.59 0.73 (+2.62 %) ]: ”With respect to shadow inventory, we are not holding on to properties. On average we do hold the REO about 160-70 days, but once they’re listed they’re sold in 90 days and the reason that we hold them for a period of time prior to listing is so that we can get them in better shape for sale and uphold, to the extent that we can, market values. So we’re not holding other than for the purpose of getting that property to a level that does help maintain market values whenever possible.” Doug Jones/Bank of America [BAC 11.868 0.008 (+0.07 %) ]: ”We too don’t hold to have any market placement or timing. We need to clear inventory, so as soon as we go through that process, the property is marketed as an REO and we move it out.” ...but when the President of the National Association of Realtors, Ron Phipps, pushed the bankers on short sales, that is selling a property for less than the value of the mortgage, it got a bit trickier.... Cara Heiden: ”When we get the offer in and the paperwork is ready to go, our goal is 5-15 days ... ” [the crowd of over 1000 broke out into a huge wave of laughter at this because they don’t buy that for a second] ...subject to our investors and what we’re authorized to do. Ron Phipps: ”In the field our experience is we don’t get responses in a timely fashion.” 62

Cara Heiden: ”I’ll just say short sales are frustrating for you and they’re frustrating for us.” She went on to defend that they are adding staff, training staff, working to improve, etc. But there was no winning that one. A Realtor from Midland, TX asked why banks aren’t giving incentives to investors to buy up REO (bank owned foreclosures) properties. Mike Williams, the CEO of Fannie Mae, which currently holds over 153,000 REOs on its books, took the question: ”Our first priority is to make sure we preserve the value of the property for the company and secondly for the community.” Williams then said they give occupants the first option and then go to the public entities, like the cities. Once that’s done, he added, ”I can tell you that investors play a crucial role in our ability to market and sell our properties.” Williams noted that Fannie Mae will offer loans to investors for a maximum of ten investor properties, but couldn’t go much beyond that. A Realtor from Philadelphia, PA then told a story of one of her clients, a young couple who had bought condo in 2006 and then had a baby. They want to move out to the suburbs, but are underwater on their mortgage. They are employed and have excellent credit but are upset that a short sale would ruin their credit, making it impossible to get a mortgage for their next home. Dave Stevens, former FHA commissioner and now president of the Mortgage Bankers Association: ”The first concern on negative equity is people in distress. This is a tough example and I think there’s a lot of silence on this panel because at some point someone would have to pay the loss on that write down and the question is, who do you want to pay? do you want the taxpayers to pay it? Do you want the banks to pay it? Or is there something that would say if you pay it can the banks also get a share of any upside that occurs in any future appreciation because it isn’t a one way option when you make and investment decision.” I agree with him, and I couldn’t help but add my own rant on borrowers trying to game the housing crash. But things really got uncomfortable when a Realtor from Colorado, a single mother who is current on mortgages on her home and a few investment properties, but is struggling due to loss of income, begged the bankers to take her on; she claims she can’t get help because she’s self-employed, an independent contractor with a 1099. ”Come on guys, I am the perfect save right here,” she said to much applause. Doug Jones/Bank of America: ”The industry and investors require documentation, our balance sheet requires documentation. It’s a problem, I respect your situation, it’s very very challenging. I am not going to say today or tomorrow we have a solution where we can’t document income. We don’t have a solution for that.” by Diana Olick CNBC May 11, 2011 [2]US Real Estate: Realtors Face Off Against Mortgage Bankers CNBC Realty Check Blog - CNBC

http://media.cnbc.com/i/CNBC/Sections/News_And_Analysis/__Story_Inserts/graphics/__REAL_ESTATE/_CONCEPTS/

house_money_200.jpg 2. http://www.cnbc.com/id/42992433?__source=RSS*blog*&par=RSS

Fool.com: This Housing Market Is On Fire! (2011-05-17 20:33) Investors and analysts have tried to call the bottom in the housing market for years. Instead of trying to guess when home prices might stop falling, some investors have turned elsewhere to look for gains – and they’re finding them in the red-hot market for residential rental properties. Going with the flow Just five years ago, the key to success in real estate investing was simple: Buy just about any residential property, wait anywhere from a month to a year, and then sell it at a huge profit. After all, since the turn of 63

the millennium, similar investors had made boatloads of money flipping houses, and investors were seduced by the idea that even during past real estate busts, overall housing prices hadn’t actually fallen in price substantially. Of course, we all know the aftermath of the housing bust, as that long-held real estate wisdom fell prey to harsh reality. Millions of homeowners have lost their homes, and millions more are underwater on their mortgages. Shareholders of companies related at all to housing, from homebuilders and banks to Fannie Mae and Freddie Mac, have suffered greatly. It’s tempting to think that after such a huge drop in prices, the housing market must offer great values. But rather than trying to decide whether single-family homes are a great value or merely a value trap, look instead at these figures: Apartment rents have risen 6 % since 2006 and are expected to rise another 3 % this year. Vacancy rates for apartments have fallen from 8 % just a year ago to 6.2 % today. Millions of displaced former homeowners have no choice but to rent. At the same time, low interest rates have made it easier for prospective real estate investors to buy rental properties and have reduced carrying costs. Combined with higher rents, that adds to the profit potential of rental properties. How to cash in Plenty of real estate investors make a small business of their rental properties. But you shouldn’t look at rentals as free money. Investors earn a lot of their profits through hard work, going through the often difficult process of finding creditworthy tenants, dealing with repair requests and other problems that demand immediate attention, and juggling the ongoing maintenance needs that any property owner has to handle. And while you can pay a property management company to take care of some of those jobs, doing so adds to your overhead, reducing your potential returns. If you don’t want to deal with individual properties, you can find easier ways to invest. The obvious first place to look is at real estate investment trusts that focus on apartments and other rental real estate. Let’s look at a few of the biggest options in this space: Some REITs have national scope. Equity Residential (NYSE: EQR ) , for instance, has properties in 24 states. Apartment Investment & Management (NYSE: AIV ) and UDR (NYSE: UDR ) have a similarly wide area of operation. Other REITs have a more geographically focused approach. BRE Properties (NYSE: BRE ) rents almost 24,000 units on the West Coast and in Arizona and Colorado. Home Properties (NYSE: HME ) operates 125 communities on the East Coast. Some rental REITs have a more specialized focus. You can find plenty of REITs that include senior housing, such as health-care REIT Ventas (NYSE: VTR ) . On the other hand, American Campus Communities (NYSE: ACC ) targets the other end of the age spectrum, building and operating student housing facilities as well as providing management services for colleges and universities that own their own dormitories. When you look at the returns of these stocks over the past two years, you won’t see the losses that homebuilders have sported. Rather, their shares are reflecting the favorable fundamentals of the rental industry. Yet as REITs, these companies provide significant dividends to investors – returns that any real estate investor can appreciate. Wave of the future? Some have argued that the American dream of homeownership is dead. Rather than mourning that fact, though, you might do better for yourself by investing in the countertrend of rental housing. With conditions favoring renting, it’s possible that you’ll find more gains either in rental REITs or from rental properties you find on your own. REITs are just one way that investors can profit from dividends. Find out the Fool’s recommendations on 13 high-yielding stocks for your portfolio; instant access to the names of these stocks is free if you click here. by Dan Caplinger Motley Fool May 9, 2011 64

[1]Fool.com: This Housing Market Is On Fire!

1. http://www.fool.com/how-to-invest/personal-finance/home/2011/05/09/this-housing-market-is-on-fire.aspx

Toronto Retirement Homes (2011-05-25 05:27:34) Insightful view&& Providing house rentals often seems to be lucrative, but on other side it has many down sides. Foremost ones need to make the rental accommodation absolutely impeccable which requires huge investment. Then you have to leave it at the mercy of tenants whose trustworthiness is often doubtful.

The Extended Confessions Of An Economic Hit Man | zero hedge (2011-05-21 01:48) The book ”[1]Confessions of an Economic Hit Man” by John Perkins is easily one of the most engrossing pieces of non-fiction one can read to learn about the true drivers behind globalization, espionage, corporate cronyism, the emergence of such ”artificial” organizations as the World Bank and the IMF, and most importantly, debt ”enslavement”, all as seen from an insider’s view. It explains in simple words why over the past 40 years the developing world paradigm has been exploited as heavily as it has, why the BRIC concept was instrumental as a Red Herring to perpetuating the myth of endless growth, and why credit must always flow no matter what to keep the status quo in power. For those who have read the book, and for those who are on the fence about reading it, below we present the three part presentation by John Perkins at the 2006 Veterans for Peace National Convention in which he expounds on all the key ideas in his book, and does an extended Q &A covering topics not discussed previously. We urge everyone to spend at least a few minutes listening to Perkins who gives a unique and non-conflicted expert opinion on the primary force for why the the modern equivalent of enslavement is not by force, but by debt. Part 1 IFRAME: [2]http://www.youtube.com/embed/oARBdBtGenM Part 2 IFRAME: [3]http://www.youtube.com/embed/GAqG51uwzMI Part 3 IFRAME: [4]http://www.youtube.com/embed/Y8TDch24DAo by Tyler Durden Zerohedge May 20, 2011 [5]http://www.zerohedge.com/article/extended-confessions-economi c-hit-man

1. http://www.amazon.com/Confessions-Economic-Hit-John-Perkins/dp/1576753018 2. http://www.youtube.com/embed/oARBdBtGenM 3. http://www.youtube.com/embed/GAqG51uwzMI 4. http://www.youtube.com/embed/Y8TDch24DAo 5. http://www.zerohedge.com/article/extended-confessions-economic-hit-man

The Rich Are About To Get Very, Very Rich: Study Finds Global Millionaire Wealth Set To More Than Double By 2020 | zero hedge (2011-05-21 01:53) A new study by Deloitte confirms everyone’s worst fear (and every millionaire’s wettest dream): the wealth amassed by millionaire households is set to increase by more than 100 % over the next 9 years. From a total 65

of $92 trillion held by the world’s richest in 2011, by 2020 the world’s millionaire households will possess $202 trillion, or roughly 4 times current global GDP. Even though much of move up is attributed to the wealth surge in the developing world, the biggest beneficiary is, you guessed it, the United States where the millionaires (those with net wealth of at least $1 million), who currently account for $38.6 trillion of total wealth, will see their assets increased by 225 % to $87.1 trillion!And while a comparable study of how much wealth the lower and middle classes are set to lose over the next decade, we are confident that it will be roughly comparable...inversely. So if anyone harbored any illusions that the current status quo was about anything but the rich getting richer, all those can be promptly swiped aside. The key findings of the Deliotte anti-Robin Hood study: • According to our analysis, the total wealth of millionaire households in the 25 economies included in this study is forecast to grow from $92 trillion in 2011 to $202 trillion in 2020. • Our study suggests that the rebalancing of global wealth is expected to accelerate over the next decade. Emerging market (EM) economies are likely to prove to be more dynamic in terms of growth rates, creating significant opportunities for wealth managers seeking to gain a share of these potentially lucrative markets. Among emerging markets, China may continue to be the driving force in the growth of millionaire wealth, followed by Brazil and Russia. Of the 25 economies examined in this study, China and South Korea are likely to join the top10 in terms of the total number of millionaires by 2020. • However, there is a paradox at the heart of this story. According to our study, in spite of the rapid growth of wealth in the EM economies, U.S. and Europe will remain the global centers of wealth over the next decade, in terms of both the amount of wealth held and the number of millionaire households. Our analysis indicates that aggregate wealth of millionaire households in the U.S. in 2020 will likely reach $87 trillion, from $39 trillion in 2011. • Our forecasts suggest that, in 2020, 43 % of the world s wealth among millionaire households will be in the U.S. Opportunities for growth potentially exist via greater U.S. state penetration. In the U.S., California will likely have the most number of wealthy households, while New Jersey may continue to have the greatest density. The East Coast is likely to see the highest growth rates New York and Florida together may add 1.5 million new millionaire households by 2020. • Our forecasts suggest that total wealth among millionaire households will increase from $92 trillion in 2011 to $202 trillion by 2020, a growth of 119 %. In emerging markets, the growth over the next decade is potentially quite impressive (260 %), significantly outpacing the growth (107 %) in developed markets.

[1] The breakdown by country. Note that millionaire assets are poised to increase by well over 100 %... 66

According to our study, the total wealth among millionaire households of the 25 economies in this study generally exhibit little change in their ranking over the next decade. Emerging market economies will likely see some upward movement in rank (e.g., China).

[2]

...Even as the total number of millionaire households is expected to grow by well under 100 %.

In terms of the total number of millionaire households, emerging markets are likely to see an upward movement in rank, with some economies rising meaningfully (South Korea, Mexico) and others dropping slightly (Taiwan, Turkey).

[3]

And then a quick look at the creme of the crop: the households who likely account for well over half of the total trillions in assets held, those who have over $30 million (remember the Talebian scale issue here), are only 871 currently, of which well over half, or 496 reside in the US. The global number of uberwealthy households is expected to rise from 871 to 1,719 in 2020, with the US once again accounting for the majtority, even as China rises by the most: from 46 to 327. 67

[4] Lastly, here is what percentage of total households the uber wealthy ( $30MM+) represent: The proportion of the ultra-wealthy in relation to total households in 2020 is likely to be the highest in Singapore.

[5] Full report, which we are confident will set off an avalanche of protests against wealth aggregation among the general media ([6]link) [7]Deloitte Millionaire Study IFRAME: [8]http://www.scribd.com/embeds/55892416/content?start page=1 &view mode=list by Tyler Durden Zerohedge May 20, 2011 [9]http://www.zerohedge.com/article/rich-are-about-get-very-very -rich-study-finds-global-millionaire-wealth-set-more-double-2020

1. http://www.zerohedge.com/sites/default/files/images/user5/imageroot/images/Deloitte%201jpg.jpg 2. http://www.zerohedge.com/sites/default/files/images/user5/imageroot/images/Deloitte%202.jpg 3. http://www.zerohedge.com/sites/default/files/images/user5/imageroot/images/Deloitte%203.jpg 4. http://www.zerohedge.com/sites/default/files/images/user5/imageroot/images/Deloitte%204.jpg 5. http://www.zerohedge.com/sites/default/files/images/user5/imageroot/images/Deloitte%205.jpg

http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/FSI/US_FSI_

GlobalWealthExecutiveSummary_050611.pdf 7. http://www.scribd.com/doc/55892416 8. http://www.scribd.com/embeds/55892416/content?start_page=1&view_mode=list 9.

http://www.zerohedge.com/article/

rich-are-about-get-very-very-rich-study-finds-global-millionaire-wealth-set-more-double-2020?utm_source= feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline% 2C+the+survival+rate+for+everyone+drops+to+zero%29

Metro Phoenix rental homes dominate housing market (2011-05-22 10:43)

Metro Phoenix has long been known for its supply of affordable houses, easy to buy and resell. Now, the rental market is dominating the regionâ&#x20AC;&#x2122;s housing sector, something many real-estate experts and agents didnâ&#x20AC;&#x2122;t expect. Rental homes of all shapes and sizes are in much higher demand across the Valley than they were five years ago. Rents are rising, and rental properties - from foreclosure houses to huge apartment complexes - are drawing investors big and small, local and international. The housing crash is fueling a lot of the demand from tenants. Many former homeowners, who lost houses to foreclosure or walked away because they owed so much more than their houses were worth, have become new renters - and the most coveted by landlords. Another growing group of renters is made up of younger, more mobile workers who have little interest in buying houses because they have seen others take big losses on homes and donâ&#x20AC;&#x2122;t know how long they might have jobs in metro Phoenix. Enticing both groups is the growing number of still-affordable high-end rental homes and apartments across the Valley. Demand for investment properties has set off a buying frenzy for both homes and apartments in the region. With interest rates so low, investors usually get a better rate of return off a rental property than if they put their money somewhere else. Metro Phoenix foreclosure homes are selling at a record pace, and almost half are being turned into rentals by their new owners. Apartment complexes in areas with good schools, shopping centers and freeways are sparking bidding wars 69

among investors. During the past few months, sales of apartment complexes have been closing almost daily. New census data confirms metro Phoenix’s status as a growing rental market. The region’s homeownership rate has fallen back to 1997 levels, and in some cities, including Phoenix, 30 to 40 percent of all homes occupied are rentals. ”The shift from homeownership to rentals in the Valley will continue as homeownership shrinks more,” said Michael Trailor, director of the Arizona Housing Department. ”Unfortunately, I think we are going to see a lot less homebuying opportunities due to higher down-payment requirements.” Homes Nearly half of all foreclosure and short-sale homes purchased in metro Phoenix during the past year are now rentals, according to industry estimates and property records. The most popular homes for investor landlords have at least three bedrooms and are located in familyoriented neighborhoods. Caroline Thompson and her family rent a three-bedroom, two-bath home in northeast Phoenix for $950 a month. ”We have an excellent landlord,” she said. ”For Christmas, he sent us an edible food arrangement. We take excellent care of his house, as if it were our own.” Thompson said that, in the future, she may consider buying a home, but she is three years from finishing her degree in mental-health counseling and will owe the government a lot for student loans. She also doesn’t know where she will find a job or how much she will be able to earn. A family paying $3,000 a month for a mortgage on a four-bedroom house in a nice Peoria neighborhood can move next door and pay $2,000 in rent for the same house, according to Payam Raouf, owner of Glendalebased Arizona Property Management and Investments. ”There are great renters out there now, the cream of the crop for landlords,” he said. ”People who earn good money are losing homes to foreclosure, and they want to rent houses as nice as they ones they owned.” More than 80 percent of independent landlords say they would rent to someone who had lost a home in foreclosure if the tenant had decent credit, according to a new survey by the National Association of Independent Landlords. A growing trend is for investors to purchase bargain foreclosure homes and then rent them back to the former owners so they don’t have to move. As a result, they end up paying much less a month for rent than their mortgage. Monthly payments on rental homes are difficult to track overall for the region because of so many individual owners. However, most landlords and real-estate agents say rental rates on houses have been steadily climbing since 2009. Apartments Metro Phoenix apartment rents are slowly climbing as more units fill up. The average rent on an apartment in the Valley is $736, according to California-based RealFacts. That’s up $12 from a year ago. Only about 8 percent of the region’s apartments are empty, down from 10 percent in 2010. Luke Consuelo rents a one-bedroom apartment in north Scottsdale. ”I don’t have a family. I don’t want to buy and worry about taking care of a house,” he said. ”Renting is great. Plus, one of the big benefits of buying is the tax deduction for mortgage interest, and the powers that be in Washington, D.C., are looking at getting rid of that.” Renters such as Consuelo who don’t want to buy or can’t afford rental houses are enticing investors to purchase more metro-Phoenix apartment complexes. The amount of money investors spent on Valley apartment complexes during the first three months of this year was up 50 percent from the same period last year, real-estate brokers report. Commercial-realty brokerage NAI Horizon, which tracks the sales of complexes with 100 units or more, reports that investors spent $293.3 million on large complexes in the first three months of this year. During the first quarter of 2009, only three apartment complexes with more than 100 units sold in metro Phoenix for a total of $60 million. 70

Karl Abert, an apartment broker with Phoenix’s Grubb & Ellis, said investors both big and small are now bidding on apartment complexes in ”desirable locations.” He said investors from Canada and China are the most active international buyers of Phoenix-area apartments now. Scottsdale, Tempe, east and downtown Phoenix, and Chandler are some of the region’s most popular spots for apartments with investors. Last month, one Phoenix apartment complex drew 15 offers. ”I think rents will flatten out this summer and then increase in September again,” Abert said. A long-term shift The fact that many people are losing homes to foreclosure means a longer-term shift toward rentals. Most of those former homeowners won’t be able to buy for at least a few years because of the hits on their credit ratings, unless they pay cash. Some former homeowners don’t want to buy, even if they could. ”I have no plans on purchasing another house anytime soon,” said Debra Ledford, who ”walked away” from a home in Maricopa that she owed $304,000 on. It was valued at $120,000. ”I’m scared of what might happen again. I lost a great deal of money.” Now, Ledford rents a home in Ahwatukee Foothills for herself and her four children. Foreclosures stay on a person’s credit for five to seven years, meaning she couldn’t buy for at least that long. But, after record foreclosures, some lenders may change their requirement to spur more homebuying. ”A lot of people have lost their faith in the economy and their desire to own a home,” said Jay Butler, director of realty studies at Arizona State University. ”People used to buy because they had careers. Now, more people rent because they have jobs they aren’t sure about.” With expectations of slow housing appreciation in metro Phoenix during the next few years, some people don’t want to buy and potentially lose money on a house. ”The ’graduate from school, get married and buy a home’ model doesn’t work for everyone anymore,” said Trailor, the Arizona housing official. ”For someone who knows they may only be working for a Phoenix company for 12 to 24 months, I don’t think buying a home makes sense.” by Catherine Reagor The Arizona Republic May. 18, 2011 12:00 AM [1]Metro Phoenix rental homes dominate housing market

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Downtown Scottsdale set for ’metamorphosis’ (2011-05-22 12:09) For merchants in downtown Scottsdale, the days of sidewalks crowded with visitors eager to spend money have come and gone, and the long and slow summer season is here. But what if the business traffic in the area never slowed down? What if there were more people living in downtown Scottsdale patronizing nearby businesses all year? During the next several years, a surge in multifamily construction could bring nearly 2,000 new residential units to the downtown area. And if all of the units are filled, thousands of new residents could call the area home. Downtown businesswoman Ace Bailey looks forward to the boost in the area’s population. She is president of Ultimate Art & Cultural Tours and a downtown resident. ”When you have people living downtown and they can walk, then you’ve got a demographic who will start 71

going to these local businesses, going to the restaurants, doing their shopping downtown and helping support what makes Scottsdale special, and that is the local businesses,” she said. South Scottsdale’s residential population, which includes downtown, is expected to steadily increase through 2030, according to an Applied Economics report prepared for the city’s General Plan update. However, the increase is expected to be less than 10,000 as opposed to nearly 43,000 citywide, because the area is landlocked and many of the residential projects will be redevelopment. ”That’s why we are looking at a downtown area that is going to go through some kind of metamorphosis,” said Kim Hanna, the city’s economic vitality marketing and research specialist. The latest proposal for multifamily housing in the downtown area is Bristol Stadium Lofts, a two-building apartment complex with 162 units north of the northwestern corner of Miller and Osborn roads. It would replace four vacant buildings on the site. The proposal seeks additional height and density under the city’s Downtown Infill Incentive District. John Lupypciw, president of the Continental Group, is listed as the applicant and would not comment on the proposal. The project narrative says the complex would be ”marketed to people who currently or will be working in Old Town Scottsdale.” Construction boom ahead Later this summer, the Orchidtree apartment complex on the southeastern corner of Camelback Road and 68th Street will be demolished to make way for Optima Sonoran Village, a five-building condominium complex with 493 residential units. Orchidtree has been vacant for more than three years. And in late summer or early fall 2012, Gray Development Group should begin construction on Blue Sky, a three-building apartment complex northeast of Scottsdale and Camelback roads. It will include 749 units. The two-year construction job will employ at least 1,800 workers and will cost $170 million, said Brian Kearney, Gray’s chief operating officer. ”Once it’s built, you’ve got a built-in customer base for downtown businesses,” he said. ”Roughly 1,100 people will be living there day in and day out, all seasons, all year, that are going to need to eat, go to entertainment places, get their dry cleaning done and buy clothes, groceries and all the things that people need to do.” Blue Sky will open in stages, with the first building opening in 16 months from the start of construction and completion in another eight months, Kearney said. Numerous other multifamily projects will follow, including less than 200 condominiums in the final phases of the Scottsdale Waterfront, 160 condominiums in Phase 2 of Safari Drive, next to the Blue Sky site, and more than 100 condominiums at the Solis Scottsdale Resort and Residences, along the east side of the Arizona Canal. According to the Applied Economics report, the population per household in southern Scottsdale is 2.07, less than in the central and northern parts of the city. That ratio should remain the same through 2030. ”It’s younger residents that might not have families yet, and also the Baby Boomer generation is tending toward trading off all that maintenance (of a single-family home) and going with more of an urban setting,” Hanna said. Some happy, others not Rebecca Sether, an artist and real-estate investor, owns and lives in the Dwell apartment complex on 69th Street just a few blocks from the Hotel Valley Ho. She enjoys living downtown because everything is accessible without driving. ”Buying this building brought me here, and I love the activity, the arts and the restaurants and that I could get on my bike and go anywhere and there’s always music somewhere,” she said. ”I was in Seattle and then I moved to central Phoenix, and everything was always so spread out.” Sether looks forward to the new projects bringing more residents to the downtown area. ”I think more people in condominiums and apartments is not a bad thing,” she said. ”We’ve got so many venues that need to be (patronized), and I don’t like seeing restaurants and other businesses close.” Sonia Sorensen, one of Sether’s tenants, is less enthusiastic about the growth. She would like to see more 72

open space rather than more apartments or condominiums. ”I think with more developing here . . . it’s just going to get a little crazier, a little more congested, more cars, and we don’t need it,” she said. Stephanie Keating, a resident of the 4020 Lofts at Scottsdale Road and First Avenue, said the area is great for young professionals. ”But when my fiancé and I settle down and start a family, we don’t want to be around here,” she said. by Edward Gately The Arizona Republic May. 17, 2011 12:57 PM [1]Downtown Scottsdale set for ’metamorphosis’

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Metro Phoenix new-home market is on mend, experts say (2011-05-22 12:14) Metro Phoenix’s homebuilding market is on the second step of a five-phase recovery process, according to one of the nation’s top housing analysts. During a Wednesday Urban Land Institute panel discussion on the future of homebuilding, California-based real-estate consultant John Burns laid out the five stages the current market must go through to rebound: job growth, reduced housing vacancies, a market in which demand exceeds supply, increases in rents and home prices, and then, finally, new construction. ”Phoenix is on its way,” Burns said at the real-estate think tank’s national spring conference held in downtown Phoenix. ”The area has job growth and is firmly in Stage 2.” With Phoenix’s new-home construction slower than it has been in at least three decades, existing demand is slowly consuming the supply of empty houses, many built speculatively during the boom. Homebuilding had been metro Phoenix’s biggest industry and economic driver until the housing crash. During the boom of 2006, more than 64,000 new houses were built across the region. At the time, Phoenix rivaled Atlanta for the highest number of homebuilding permits in any metro area in the U.S. This year, only 2,064 homebuilding permits were issued across metro Phoenix through April, according to new data from RL Brown’s ”Phoenix Housing Market Letter.” That puts the homebuilding market on track for fewer than 6,000 new houses this year. ”The homebuilding market is confusing now,” Burns said. ”How can we have the best affordability levels in my lifetime and the lowest number of new-home sales?” The next steps in Burns’ recovery map are still further off. - Demand exceeding supply: Hampering demand for new homes is many buyers’ inability to obtain mortgages. Almost half of all homebuilders surveyed by John Burns Real Estate Consulting Inc. said too many potential buyers don’t have high enough credit scores to qualify for a loan, while other potential buyers don’t have enough money for a down payment. Mortgage giant Fannie Mae’s chief economist, Douglas Duncan, also part of the panel, said that consumer confidence hasn’t begun to rebound enough yet and that homebuilders are feeling the impact of that sentiment. - Increasing home prices: When home prices do climb, that could entice buyers who are now on the fence. ”Most consumers say they don’t like the economy much more than they did a year ago,” Duncan said. ”Consumers are uncertain about their employment and where home prices are going, so they wonder why now would be a good time to buy.” Fannie Mae’s data show that a record number of people 35 and under bought homes during the boom and that, now, because of foreclosures, the biggest drop in homeownership is among that age group. 73

Duncan said many people in that age bracket want to rent now and won’t consider buying until they feel more confident in the economy and home prices. - New construction: New-home builders now compete against an oversupply of foreclosure homes in metro Phoenix. As foreclosures slow, prices will rebound and home construction will begin again. ”New-home buyers are value-conscious now,” said the third panelist, Steve Hilton, chief executive of Scottsdale-based Meritage Homes. ”They are no longer interested in granite countertops and great rooms.” But he said it’s a myth that buyers want smaller new homes. A 4,000-square-foot house priced below $280,000, located not too far from a metro area, will draw buyers now, he said. According to the survey of 30 U.S. homebuilders conducted by Burns’ firm, new-home buyers are more interested in houses near good schools, job hubs and shopping centers than amenities such as golf courses. All three panelists were reluctant to forecast when the homebuilding market will rebound. Greg Vogel, chief executive of the Scottsdale-based Land Advisors Organization, moderated the panel and proposed a 2015 recovery. Hilton agreed. ”I thought the homebuilding market would be in better shape by now,” Burns said. ”We are in a recovery. It’s just a slow and long one.” by Catherine Reagor The Arizona Republic May. 19, 2011 12:00 AM [1]Metro Phoenix new-home market is on mend, experts say

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CityScape developer takes on 2 more projects (2011-05-22 12:17) The developer of downtown Phoenix’s $500 million CityScape retail and office project is going to handle leasing and management of two other Phoenix office and retail centers: Town & Country Shops at 20th Street and Camelback Road and the embattled CityNorth in the city’s northeastern corridor, near Loop 101 and Arizona 51. RED Development has entered a 50-50 joint venture with Town & Country Camelback, a limited-liability company that owns Town & Country, said Mike Ebert, a managing partner at RED. RED also has a separate agreement to manage and lease spaces at High Street - an office, residential and retail project at CityNorth, a 144-acre property that has been tangled in legal battles. That deal includes managing and leasing the luxury apartments on the site. The terms of the agreements at the two properties are private. But Ebert said RED was well-positioned to take over their leasing, given its track record with development and leasing in the Phoenix area. RED is building a Target center in Chandler, and it has nearly filled CityScape. ”We have in-house leasing, development, management, financing and marketing,” Ebert said. ”Those are all the things it takes to operate properties.” While some developers are still struggling to recover from the recession, RED, which has offices at CityScape and in Kansas City, Mo., is expanding its roots in Phoenix. But it has taken on two projects that have challenges. CityNorth 74

High Street at CityNorth has about 628,000 square feet of space. RED said the 99 luxury apartments that were part of the project are 97 percent leased. Retail tenants include restaurants such as Kona Grill, Blue Martini, Mojo Yogurt and Ocean Prime. Ebert said RED’s new role at High Street would not impact the legal cases that have hindered development around the 144-acre CityNorth, which has been the center of legal disputes. High Street opened in November 2008 and was CityNorth’s first phase. More phases were supposed to open annually, but the recession led to the withdrawal of three department stores and a halt to development. The first phase went into foreclosure in January 2010 and was sold in July to the lender, Capmark Financial Group. The rest of the land remained under control of Northeast Phoenix Partners, which in turn was controlled by the Klutznick Co. Klutznick teamed with Related Urban Development to promote the site. But NPP may lose control of the property once a resolution is reached in a $110.7 million legal verdict that NPP lost to Gray Development Group. Gray won the verdict in a lawsuit alleging NPP had blocked its efforts to develop a different parcel. The matter now is in mediation. The economic-development agreement with Phoenix for CityNorth remains alive. It survived a court challenge, but CityNorth is far from meeting the benchmarks required for the deal to take effect. Under the deal, Phoenix will give the developer either half of the sales taxes collected at CityNorth for 11 years and three months or about $97.4 million - whichever comes first. In return, the developer will build about 3,180 free parking spaces, with 200 of those for park-and-ride use. The deal goes through only if CityNorth first opens 1.2 million square feet of sales-tax-generating retail space. An analysis by The Arizona Republic shows that for CityNorth to reach the $97.4 million mark by the deadline, it will have to become one of the most successful shopping areas in the state. Town & Country Ebert said he and the other partners at RED have wanted to work on something with Town & Country Shops for at least three years. They knew that the residential areas around the center have been filling up with new homeowners, and local customers continue to patronize the shops in the quaint single-story center, recognized by its rough shingled rooftop. The 1970s look at the 325,000 square-foot outdoor shopping center is outdated, but ”everybody loves it,” Ebert said. The anchor tenant is Trader Joe’s. Other renters are LA Fitness, My Sister’s Closet, Yogurtology and Hi Health. A farmer’s market also is held there. Ebert said RED was filing the paperwork to knock down the Black Angus building on the property and come up with a plan for possible revitalization. RED managing partner Scott Rehorn, who handles leasing agreements, said the challenge RED faced at Town & Country is updating it without damaging its charm. But Jim Shough of Town & Country Camelback believes the new partnership with RED, a company largely known for building and leasing shopping centers will be a boost to Town & Country. ”We are optimistic about the revitalization of this Phoenix landmark with RED’s involvement and look forward to sharing more plans with the community as we move ahead,” he said in a statement. by Emily Gersema and Michael Clancy The Arizona Republic May. 19, 2011 12:00 AM [1]CityScape developer takes on 2 more projects

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Fraud alleged in resort case (2011-05-22 12:49)

The general manager of Chandler’s Crowne Plaza San Marcos Golf Resort harmed the value of the resort by improperly transferring real estate owned by the resort to the general partner, the resort’s lender says. The transfer was made about six months before the owners filed for bankruptcy protection, Guaranty Bank and Trust Co. alleges in court papers. Losing the real estate, known as the Bogle house, will hurt the chances of getting an optimum price in a sale of the resort, the bank says. Guaranty’s foreclosure proceedings stalled when the resort filed bankruptcy earlier this year. Sean O’Brien of Phoenix, an attorney for the resort’s owners, denied wrongdoing by his clients. ”We categorically dispute those allegations,” he said last week. The bank’s court pleading, which implies infighting among the owners, says the general manager, Frank Heavlin, transferred the Bogle property on Sept. 24. He recorded a deed giving the property to the general partner, apparently for no payment, according to the court papers. The resort’s owner is Denver-based San Marcos Capital Partners LP, and the general partner is San Marcos Resort Investors LLC. Managers and members of the general partnership are Robert E. Bigelow and brothers Joseph A. Witt Jr. and Jeffrey B. Witt, according to the Arizona Corporation Commission. The three men are from the Denver area. Since the owner is a limited partnership, only the general partner can be responsible for the debt. The series of entities are designed to limit liability. Guaranty Bank and Trust’s allegations of Heavlin’s property transfer appear in court papers filed last week in U.S. Bankruptcy Court. The bank asked the court to dismiss the Chapter 11 bankruptcy filing, convert it to Chapter 7 or appoint a trustee ”because it is in the best interest of debtor’s creditors and equity security holders.” The bank alleges ”fraud, dishonesty and gross mismanagement of the estate by (the resort’s) principals.” A court hearing is set for June 6. by Luci Scott The Arizona Republic May. 21, 2011 12:00 AM [1]Fraud alleged in resort case

1. http://www.azcentral.com/arizonarepublic/business/articles/2011/05/21/20110521biz-cr-sanmarcos0521.html

Smart homes in Phoenix area run by iPads, iPhones (2011-05-22 12:59)

[1] David Wallace/The Arizona Republic Home builder Rod Cullum demonstrates setting an alarm with an iPad at the front door of the luxury new home development The Village at Paradise Reserve in Paradise Valley. Instead, you may fire up an app on your smartphone, log in, press a button and hear the front door click open. Homebuilder Rod Cullum is almost there. With his new luxury homes, the Village at Paradise Reserve in Paradise Valley, buyers still get a key to their front door, but they also get an iPad in their welcome basket. [2]How the iPad controls new luxury homes Using that Apple iPad or an iPhone, homeowners can perform functions from viewing their security cameras to closing their window shades and turning on (or off) every light in the house. They can also let a visitor through the main gate or check to see whether a garage door was left open. ”You can be anywhere in the world and control your house from that iPad,” Cullum said, adding that he chose an Apple-based Savant home-automation system. ”I could be in my place in Utah and see if someone is swimming in my (Phoenix) pool. I could be in London . . . .” Cullum, whose Paradise Reserve homes start at about $1.5 million, isn’t the only homebuilder embracing smart-home features. Even homes starting at prices under $200,000 are starting to offer Web-based automated perks. At Meritage Green homes throughout the Valley, homebuyers can use a smartphone application to adjust their thermostat and can see their energy production, usage and hot-water temperature through an app tied to their Echo solar systems. And at Shea Homes’ Trilogy at Vistancia in Peoria and Encanterra Country Club in Queen Creek, new homebuyers can unlock at least one door remotely, turn on a light and adjust their thermostat using a Schlage Link smartphone app. Hal Looney, president of Shea Homes active-lifestyle communities in Arizona, recently demonstrated how a homeowner, while at work or away, can let someone in their home with a touch of the smartphone screen. People with second homes or vacation homes especially appreciate such automated features, Looney said. Although new homebuilders look at home automation as a good value-added perk, homeowners don’t have to buy new construction to get some of these features. In the age of smartphone and computer-tablet applications, automated systems are getting increasingly affordable. On the lower-tech end of the spectrum, homeowners can buy for less than $50 light switches with motion sensors that turn on automatically when someone enters a room and shut off when the room is empty. Faucets that turn on and off just by lightly touching the spout or handles are now sold at home-improvement stores. Homeowners can buy automated irrigation systems that monitor local weather-service information and adjust irrigation levels to prevent overwatering. Several area homebuilders, including Shea Homes, include the automated WeatherTRAK irrigation systems to save water in communities. 77

And through a local home-automation specialist or Smarthome.com, homeowners can buy systems that help them control lighting, appliances and anything that can talk to a Web-enabled system through their smartphone. The ability to control the main functions of a home from one Web-enabled device can make running a household a little easier. Think the Jetsons or Bill Gates’ smart mansion, said to be nicknamed Xanadu 2.0. No home-automation system can cook dinner - yet, but it can turn on the spa on your way home from work and have your favorite song playing as you walk through the door. ”One of the things I think automation adds is just peace of mind,” said Cullum, who has offered automated features in his custom homes for years. He likes the simplicity of the Apple-based Savant system, which was installed by Cyber Sound in Scottsdale. ”You don’t have to keep track of so many things.” Adds Cullum: ”They haven’t figured out how to make it to do laundry yet. That would be James Bond cool.” Home automation Want an automated home? Home-automation gadgets and systems linked to smartphone and computertablet applications are getting increasingly affordable. Here’s a sampling of automated home features. - Light up a room. Occupancy sensor switches, $20 to $40 at home-improvement stores, automatically turn on the light when someone walks into a room and turn it off when the room is empty. An energy-saving move, many homebuilders now install occupancy sensor switches in walk-in closets and bathrooms where people often forget to turn off lights. - Unlock a door. Schlage Link is a system that lets homeowners control Schlage door locks, Trane thermostats, Schlage security cameras and plug-in lights or appliances via its smartphone application. Some local Lennar and Shea Homes houses include the Schlage Link system for new homebuyers. A Schlage wireless-keypad deadbolt starter kit, which lets homeowners unlock a door remotely, costs $299.99 plus an $8.99 monthly fee. A Trane thermostat, security cameras and plug-ins that allow lights and appliances to be controlled remotely can be added for an additional fee. For details, visit link.schlage.com. - Adjust a thermostat. Locally, homebuilders Meritage, Cullum Homes, Trend Homes and Joseph Carl use the Echo solar system by EchoFirst. The system produces both energy and hot water and is tied to a smartphone application that lets homeowners adjust their thermostat and see how much energy they’re producing and using in real time. For details, visit echofirst.com. - Stop overwatering. Several local homebuilders, including Shea Homes, include the WeatherTRAK automated irrigation system as a standard feature in some communities. It uses local weather information to adjust amount of water needed to maintain one’s landscaping. For details, visit hydropoint.com. - Turn on a faucet hands-free. Shea Homes homebuyers can order an optional hands-free Delta kitchen faucet that turns on and off by lightly touching the handles or spout - even with an elbow. Homeowners can buy a Delta Pilar Touch pull-down faucet in stainless steel at Lowe’s stores or at lowes.com for $312.79. - Manage lights and appliances. Smarthome.com, which specializes in home-automation gadgets and systems, sells a whole-house Insteon control kit. It controls lighting and appliances via an iPhone (not included) for $1,101.45. For details, visit smarthome.com. - Control a household. The Savant Automation, Control and Entertainment System, sold locally by Cyber Sound in Scottsdale, ties together a home’s whole-house music system; intercom and video; security; lighting control; heating and cooling systems; security cameras; pool and spa controls; garage door and gate control to an iPhone, iPad or iPod control panel. The system lets a homeowner control all these functions remotely. Jon Summer, president of Cyber Sound, said installing the system starts at about $15,000 but can cost $100,000 or more, depending on the size of one’s home. For details, visit cybersound.tv. by Kara G. Morrison The Arizona Republic May. 19, 2011 01:26 PM [3]Smart homes in Phoenix area run by iPads, iPhones

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Phoenix-area housing auctions fast and furious (2011-05-22 13:11) Anthony Thomas held his iPad to his chest, clutched his cellphone in one hand and used his free hand to vault over the 3-foot fence around the food court in front of the Maricopa County Courthouse. It was noon, but he wasn’t in a rush to get something to eat. He had seconds to bid on a Mesa foreclosure home that one of his firm’s clients wanted to buy. The house was one of more than 100 that lenders intended to sell at auction that day. It was one of dozens that Thomas and his team were trying to buy. Despite hopping the fence to get into position, and then upping the bid more than a dozen times, he didn’t win the auction. His client didn’t want to go higher than $90,000, and the Mesa house sold for $98,000. On this day, a Thursday in late April, Thomas didn’t have time to linger. Another client wanted to bid on a house going up for auction at the next table. He weaved through the crowd and queued up with several other bidders to wait for the auctioneer to call out the address of the next house to go on the block. Five different auctions can go on at the same time in front of the courthouse. A record number of foreclosure houses were sold at these daily events, officially known as trustee-sale auctions, in metro Phoenix in April. The number of sales has been growing for months and the record pace is expected to continue through next year. The outdoor food court in downtown Phoenix has effectively become the trading floor for the region’s hottest commodity: foreclosed houses. Most days, more than 30 people surround the tables. At least five auctioneers set up their laptops and sell to the highest bidder. Like the exchanges for stocks, bonds and pork bellies in New York and Chicago, the scene outside the courthouse is fast-paced and appears chaotic to casual observers. But the method for auctioning foreclosure homes through trustee sales has evolved. A decade ago, foreclosures were so rare that only a handful of bidders regularly showed up at the trustee-sale auctions. Then after the housing crash, foreclosures and trustee-sale auctions soared, but the public auctions remained dominated by a few insiders. They huddled around auctioneers speaking in whispers. Outsiders found it hard to break into the process. Then the growing number of foreclosures drew more bargain hunters. The increased number of bidders, and firms like AZ Bidder, the one Thomas works for, has added competitiveness and more transparency to the auction system. Several firms bid for multiple prospective buyers, so a bidder outside the courthouse may be an agent using a cellular phone and a laptop to communicate with clients from around the world. Newcomers aren’t shunned. Instead, they are looked at as potential clients for the more than half-dozen bidding services that have representatives like Thomas at the auctions every day. The increased competition for foreclosure homes is pushing up prices, which may bode well for the housing market at large. Foreclosure homes at rock-bottom prices have kept the region’s median home price suppressed for several years. The increasing interest in the auctions also has more lenders moving to sell homes quickly, rather than let them sit empty after they seize them through foreclosure. Bidders see the flood of homes as a get-thembefore-they’re-gone opportunity. ”The auction frenzy for Phoenix foreclosure homes won’t last forever,” said Tom Ruff, a Phoenix real-estate analyst with Information Market and partner with AZ Bidder. ”Foreclosures appear to be peaking, but lenders still have big backlogs to get through.” 79

Trading floor Though he may handle tens of thousands of dollars in transactions a day, Thomas doesn’t have a businesssuit job. He shows up for work in shorts, T-shirt, baseball hat and sport shoes, toting a backpack with a water bottle. The first foreclosure auction in Phoenix actually starts at 9 a.m. on weekdays in the offices of one of the law firms hired to be trustees for lenders. Several larger trustees hold these in-house auctions. But most foreclosed houses that are put on the block are sold in front of the courthouse, starting at noon every weekday. Thomas’ employers maintain a database of every auction being run by every trustee in the county. Clients review the information on AZ Bidder’s website and watch the auction data update in real time, an eBay of sorts for foreclosure homes. The system feeds clients’ requests to Thomas via smartphone, and he sends back updates on the auctions as they happen. At the food court, bidders crowd around the auctioneers. Thomas easily weaves through the crowd from auction to auction. The main table, where three auctioneers sit, is next to a fence, so it’s typical for bidders to stand outside of it while they listen to the bids. Most bidders are ready to jump a fence or run to another table when another auction starts. The regulars are like co-workers, with nicknames for one another - here, Anthony Thomas is Tony. They even make occasional efforts to help each other by calling out when an auction has started or relaying bids for those who can’t get close enough to hear. Under Arizona law, when a homeowner falls behind on a mortgage, a lender must try to sell the home through a trustee sale. The trustee, usually an attorney, alerts the borrower and sets a date for the auction. According to AZ Bidder’s website, it provides the only live, online auctions of trustee sales in Maricopa County. Some states, including Florida, have judicial foreclosures carried out in courts so the live auctions aren’t an option for investors there. Trustees are self-regulated in Arizona. If an auction is conducted incorrectly or illegally, the trustee involved must fix it. After allegations in 2009 of some trustee sales being ”done under the table” illegally without a public auction, one trustee’s auctioneer set up a video camera beside her and records every auction she runs. ”Phoenix trustee-sale auctions used to be an experience straight out of the wild, wild West,” said Frank Gerola of PostedProperties.com, another group that bids at Phoenix foreclosure auctions for clients. ”But the process is definitely much more open and competitive now. Now, I call the front of the Maricopa courthouse Phoenix’s Wall Street. Money from Canada to Australia is there bidding on those houses.” To bid at an Arizona trustee sale, potential buyers must bring a certified check for $10,000 and have a photo ID. The money is used as a deposit on the house if a bidder is successful. The full amount of the bid must be paid in cash the next day. Customers of bidding services pay the companies, which handle the cashiers’ checks. Clients can transfer the money to AZ Bidder and other bidding services and let them handle closing the deals. When Thomas bids, he’s acting on behalf of people like Goodyear mortgage broker Steve Westerberg. Westerberg wanted to invest in foreclosure homes sold at auction because they are often less expensive than homes taken back by lenders and resold through real-estate agents. Last winter, he went to check out the auctions at the courthouse. ”I was totally confused by what was going on. There are lists of foreclosure homes that could or could not sell that day. Those lists are like books,” he said. ”Anthony (Thomas) actually helped me understand what was going on down there, but then I realized I didn’t want to be there bidding. I’d rather rely on him for that.” Westerberg signed up for AZ Bidder and started bidding online. After losing out to other bidders for six weeks, he successfully bought his first foreclosure home through the company’s online auction three weeks ago. Bidding started at $55,000, and the west Phoenix house drew several bidders. But Westerberg got it for $68,000, plus a $2,500 commission to AZ Bidder. The house was in pretty good shape, and Westerberg knew that from checking it out in person. He painted the inside and then planned to ”flip” it, reselling for a profit. He received a cash offer last week to sell it for $94,000. 80

”I almost hate to share my story because now the auctions are going to be even more competitive,” he said. His experience isn’t the norm for flipping foreclosure homes. Still, most investors make $10,000 to $20,000 on a flip, say auction experts. The trade Thomas checked his iPad to see if there were any new bids from clients. At the same time, he was plugging in the bids for a home then being auctioned. The data he supplies shows up on his firm’s website with less than five seconds of lag time. None of his clients was bidding on the home, but many would want to see how the bidding went and what it sold for. As he was multitasking, he heard that a home two clients were interested in was going on the block. Without looking up, he moved closer to the table where the new auction had started. He called out a bid for $100 over the last bid and continued to enter the bids for the auction a table away. The auctioneer repeated ” $100 from Tony,” every time he upped his bid. Two other bidders from different groups saw that the auction had started. They jumped over and started bidding while also making bids on a home being auctioned off at another table. The bids climbed to $80,000 for the house that Thomas was bidding on. He checked his phone to see if the clients had upped their maximum offers. He saw that one client was open to paying more, so he kept bidding. Then another new bidder joined the fray and upped the price by $1,000. Thomas’ client was out. Thomas doesn’t know who he is bidding for at the auctions. He logs into azbidder.com first thing in the morning to see what auctions he and his team need to be at. They figure out who will bid and monitor each one. Thomas bids on more than 50 houses a day. Typically, all he knows about the investor is what they are willing to pay, and he bids to their price. He doesn’t know anything about the houses. ”It’s not my job to know if a house is a good deal. I am not the real-estate expert,” he said. ”I am here to bid for people who do their research. When I reach their max bid, I stop and move onto the next auction.” Last month, $137 million was spent on a record 1,369 metro Phoenix homes purchased at trustee-sale auctions. Those sales accounted for 30 percent of all foreclosures last month. In April 2008, foreclosures were near 4,000, but then only 5 percent of all foreclosure homes sold at auction. The call Thomas’ cellphone rang while he was trying to track bids for an auction. He wasn’t bidding but was listening for bids and for the start of another auction that he had a client signed up for. The caller was Matt Thomas, his cousin, who works in the AZ Bidder corporate office. Anthony tried to get off the phone so he could hear the auctions, but his cousin had important news: Another auction was about to start, and the seller had just lowered the opening bid. Anthony entered the last bid on the auction he was watching and dashed to another table, where only one other person was bidding. He almost didn’t make it, and the lone bidder almost got the house for $40,000. Anthony started bidding aggressively, matching the other bidder. The price topped $80,000 before he dropped out. The other bidder was on his phone during the auction, talking to a client. At the end of the auction, he told the client, ”If the auction would have started 20 minutes earlier, we would have gotten the home for $40,000.” The opening bid on the house that morning had been $75,000, but the lender dropped it to $40,000 a halfhour before the auction started. Matt saw the drop bid on the trustee’s website and called Anthony. ”We didn’t win that bid, but we drove up the price to $80,000,” Anthony said. When an opening bid on a trustee sale is lowered hours or less before an auction, it’s known as a drop bid. The practice is considered illegal by some trustees who say Arizona statutes require all opening bids to be finalized and posted 24 hours before the auction. Some trustees from other states, where drop bids are part of the process for foreclosure auctions, continue the practice in Phoenix. Most Arizona trustees and bidders are against drop bids because they give buyers who know about the change an unfair advantage. Technology is leveling the playing field some. AZ Bidder’s system constantly tracks updates on prices and 81

found the drop bid in time for Thomas to react. An $80,000 price, instead of $40,000, means more money for the lender and a better comparable sale for the neighborhoods where the house is located. ”When I first went to a Phoenix courthouse auction, I thought there’s no way I want to get involved with this murky process,” said Dan Mayes, president of AZ Bidder. ”By showing auctions online in real time, I feel like we open up the process and make it much less mysterious.” Close of market By 5 p.m., Anthony Thomas was exhausted. The temperature soared to 100 that Thursday in late April. He and his team were so successful at auctions that day, Matt Thomas had to run over with another cashier’s check. Anthony looked at how many houses AZ Bidder bought for clients that day - six, an average day. He was hungry. He didn’t have a lot of time to stop for food even though he was at a food court. He packed up and headed for his car, knowing he would go through the same routine the next day. ”This is great training to work with clients and real estate. I know I have to put in the hours out here now, but it’s teaching me a lot,” he said. ”Plus, the auctions won’t last at this pace forever. We need to be here while the market is hot.” And the market is hot. Lenders are now trying to sell so many homes at auction that the traditional start time may move to 10 a.m. Trustee sales at the Maricopa County courthouse have started at noon for decades, but lately the auctioneers can’t get through all of the scheduled sales for a day by 5 p.m. But the pace isn’t likely to last. Foreclosures have been falling this year. Notices of trustee sales, or pre-foreclosures, are half of what they were a year ago. The number of pending foreclosures in Maricopa County is down to 19,000, half of what it was two years ago. ”Part of the reason there are fewer foreclosures in the pipeline is because of the increase in sales at foreclosure auctions,” said Ruff. ”Foreclosures aren’t good for the housing market, so the faster we get through them, the faster the market recovers.” by Catherine Reagor The Arizona Republic May. 22, 2011 12:00 AM [1]Phoenix-area housing auctions fast and furious

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20110522phoenix-housing-auctions-foreclosures.html

Foreclosure-auction website AZ Bidder a hot property (2011-05-22 13:13) Dan Mayes spends most of his days in a former church painted bright blue in south Phoenix. He rarely leaves his desk or takes his eyes off his computer. Mayes runs the first real-time, live online bidding service for foreclosure homes sold at trustee-sale auctions in metro Phoenix. His team of four bidders is at the auctions each day making bids for clients and tracking and reporting all the bids at other auctions. The service posts those numbers on its website, azbidder.com, where clients can place bids or just monitor sales. Most of metro Phoenix’s trustee-sale auctions are held in front of the Maricopa County Courthouse in downtown Phoenix. But to track all the auctions in the county, AZ Bidder also has to monitor sales that may be done in-house at five or six law offices that handle their own trustee sales. So anytime between 9 a.m. and 5 p.m., an auction may be going on somewhere. Mayes watches the numbers from every auction on two large computer screens at his desk. If one of his clients is the top bidder on a home, he and the client know seconds after the auction closes. 82

Often, he’s watching two to three auctions at the same time, the data being fed to the system by team members on the scene with smartphones. ”I am like the air-traffic controller for our system,” said Mayes, who helped build the bidding system for travel site Priceline before starting the firm. ”If something goes wrong or right, I see it within in seconds and can fix it or alert my bidders or clients if it’s something they need to know.” Watching the auctions online can be addictive for clients and those who see them for the first time. Mayes said sometimes he looks up and realizes he hasn’t moved from his desk in four hours. Mayes along with three other partners including his brother Tim Mayes, a former banker and prominent Chicago-based investor, started AZ Bidder.com late last year. The siblings had been operating the system for several months and realized as trustee sales started to climb in metro Phoenix it could be a popular tool for other investors besides themselves. AZ Bidder started taking subscribers early this year, charging $150 a month for access to the system, which includes a calculator to figure out rents for buyers who plan to become landlords. Although most clients log in and set their maximum bid, some bidders like to bid live. The requests are transmitted to an iPad or smartphone carried by bidders such as Anthony Thomas, who make the bids. Hundreds of people who knew Thomas from the auction or heard about AZ Bidder from friends and clients signed up - so many that AZ Bidder realized it could up its subscription to $1,500 a month. Then Mayes realized competitors were using the system, so he changed the fee structure. Now, to subscribe and bid on as many homes as they want, clients must pay a $10,000 deposit. The money is used to fund a cashier’s check required to buy a foreclosure home at a trustee sale in Arizona. AZ Bidder doesn’t receive a fee unless the bidder is successful. Commissions vary by client and volume of sales but generally are $1,500 to $2,500 a house. The company averages six successful purchases for foreclosure homes a day. AZ Bidder has more than 800 registered users now. ”I think we have opened the door to Phoenix’s trustee-sales auction for a lot of people who had trepidation about bidding before,” Mayes said. ”We probably also have some customers who are willing to pay the $10,000 just to check out the auctions as they happen everyday. They might start bidding when they are comfortable.” by Catherine Reagor The Arizona Republic May. 22, 2011 12:00 AM [1]Foreclosure-auction website AZ Bidder a hot property

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Montelucia Resort and Spa has better outlook under new ownership (2011-05-28 23:31)

Montelucia The Montelucia Resort and Spa in Paradise Valley is less than 3 years old but has already had three owners. Its new owners do bring experience in dealing with the Phoenix luxury-hotel market: They owned the Biltmore from 2000 to 2004. The Montelucia Resort and Spa, still less than 3 years old, has changed hands for the third time. The buyer is no newcomer to the metro Phoenix luxury-hotel market. KSL Capital Partners LLC, a Denverbased private-equity firm specializing in travel and leisure enterprises, owned the Arizona Biltmore from 2000 to 2004. The purchase price: $105 million, including $12.6 million in hotel furnishings, according to an affidavit of property value provided by Ion Data, a real-estate analysis firm. The transaction marks the end of a turbulent financial history for the resort in Paradise Valley. The resort’s previous owner, Eurohypo AG, was the original lender for Crown Realty & Development Inc. but became the resort’s owner when the developer defaulted on a $180 million loan. Until Friday, the German bank owned the resort and InterContinental Hotels and Resorts managed the property. ”When you go through a developer who leaves the project, and then you go through a foreclosure process and are bank-owned, there’s nothing really comforting about that from a long-range standpoint,” said Greg Hanss, the resort’s director of sales and marketing. ”This certainly brings an end to that uncertainty.” In addition to the new ownership group, KSL’s management arm, KSL Resorts, has replaced InterContinental as the property’s management company. But even though the property no longer will be branded as an InterContinental, KSL and InterContinental will continue to collaborate. The Montelucia will be an InterContinental Alliance Resort, meaning KSL Resorts will still have access to InterContinental’s global-reservations system and marketing channels. The Montelucia will also remain part of InterContinental’s loyalty-rewards program. ”Everything that InterContinental has done since their inception here, we can build upon that and then share resources,” said Matthew Hart, new vice president and managing director at the Montelucia. ”And now we have twice as many sales resources, so we should run 102 percent occupancy next year,” he joked. In the coming months, Hart will look to diversify the hotel’s revenue by catering not only to its guests but to the surrounding community. ”On the broadest level, we wanted to be back in the Scottsdale-Phoenix area because of our heritage,” Hart said. ”We’d been here before, and we know the dynamics of this market.” A bevy of clubs The Montelucia will partner with ClubCorp, a sister company of KSL Resorts that owns or operates a network of more than 150 golf and country clubs, business clubs, sports clubs and alumni clubs. ClubCorp members will have access to the Montelucia’s amenities, such as Joya Spa. ”It’s really about getting an asset in the right ZIP code, knowing that the people within a 20-minute drive might be interested in coming to a resort,” Hart said. Bill Murney, senior vice president at HREC Investment Advisors, said the purchase of Montelucia also illustrated a larger trend: a pickup in the number of hotel transactions that have occurred within the past 12 months. Last week, Murney, representing FelCore Lodging Trust, finalized the sale of Embassy Suites Phoenix-Tempe, at U.S. 60 and Rural Road in Tempe. In February, he brokered the Hotel Theodore sale in Scottsdale. ”I really think that one of the things that helps drive people’s confidence in doing transactions in the market is seeing that it has bottomed out,” Murney said. ”The (room) rate improvement that we saw in the first quarter of this year was that indication.” by Megan Neighbor The Arizona Republic May. 25, 2011 12:00 AM [1]Montelucia Resort and Spa has better outlook under new ownership

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U.S. April new home sales up 7.3% - MarketWatch (2011-05-28 23:37) WASHINGTON (MarketWatch) - U.S. new home sales rose 7.3 % in April, the Commerce Department estimated Tuesday. The increase in new-home sales to a seasonally adjusted annual rate of 323,000 was well above the 295,000 pace expected by economists surveyed by MarketWatch. New-home sales in March rose a revised 8.3 % to a 301,000 level compared with the previous estimate of an 11.1 % rise to 300,000. New-home sales are down 23.1 % compared with a year ago. The supply of new homes fell 2.8 % to a record low 175,000. The supply in relation to sales fell to 6.5 months in April from 7.2 months in March. Median sales prices have risen 4.6 % in the past year to $217,900. by Greg Robb MarketWatch May 24, 2011 [1]U.S. April new home sales up 7.3 % - MarketWatch

1. http://www.marketwatch.com/story/us-april-new-home-sales-up-73-2011-05-24?reflink=MW_news_stmp

12% of U.S.-backed banks were at risk in quarter (2011-05-28 23:43) WASHINGTON - The number of banks at risk of failing made up nearly 12 percent of all federally insured banks in the first three months of 2011, the highest level in 18 years. That proportion is about the same as in the October-December quarter last year, though the increase in the number of banks on the Federal Deposit Insurance Corp.’s confidential ”problem” list is slowing. The FDIC added only four banks to its list in the January-March quarter. That brought the total to 888 from 884. Banks on the list are deemed by examiners to have very low capital cushions against risk. In the January-March period, the industry reported its highest earnings, $29 billion, since before the financial crisis hit more than three years ago. But only a small fraction of the 7,574 federally insured banks - the 1.4 percent with assets exceeding $10 billion - drove the bulk of the earnings growth. They accounted for about $24.4 billion of the industry’s earnings last quarter. These are the largest banks, such as Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. Most of these banks have recovered with help from federal bailout money and record-low borrowing rates. By contrast, most of the banks that have struggled or failed have been small or regional institutions. These banks depend heavily on loans for commercial property and development - sectors that have suffered huge losses. As companies shut down during the recession, they vacated shopping malls and office buildings financed by those loans. The amount that banks set aside for possible losses on loans fell by more than half last quarter, to $20.7 billion from $51.6 billion in the year-earlier quarter. But many banks pulled in less revenue in the JanuaryMarch period than they did a year earlier. And overall net revenue declined 3.2 percent to $5.5 billion. It was just the second time in 27 years that the industry has reported less revenue than in the year-earlier quarter. As with the increased earnings, the drop in revenue was concentrated among the banks with more than $10 billion in assets. FDIC Chairman Sheila Bair said some of the revenue decline was likely due to new rules that limit banks’ charges for overdrafts on checking accounts. Banks are now barred, for example, from automatically enrolling customers in checking-overdraft programs, which often charge $35 or more per violation. 85

Bair said the financial overhaul enacted last year wasn’t the root cause of the decline in revenue. ”I think it’s a broader problem with the economy,” she said. Speaking to reporters, Bair said, ”While the industry as a whole shows signs of improvement, many institutions are still struggling.” Forty-three banks have failed so far this year, though the pace has slowed from last year, when 157 banks failed. That was the most in a year since 1992, at the height of the savings and loan crisis. Bair will step down as FDIC chairman in early July, ending a five-year term in which she helped craft the government’s response to the 2008 financial crisis. On her watch, the number of problem banks jumped more than seventeenfold, from 50 banks totaling $6 billion in assets in June 2006 to 888 banks with $397 billion in assets. Last year’s 157 bank failures cost the deposit-insurance fund an estimated $21 billion. But in the JanuaryMarch quarter, fewer failures allowed the FDIC’s deposit-insurance fund, which fell into the red in 2009, to strengthen. The fund’s deficit narrowed to about $1 billion from $7.4 billion in the October-December period. Bair said the agency expects the fund to turn positive in the current April-June quarter. Bair said banks may set aside less money for potential losses in the coming months, giving a boost to their earnings. Still, she said most institutions have already realized such gains. ”We may face the risk of the pendulum swinging too far back in the other direction, with banks having incentives to substantially relax lending standards in the pursuit of scarce loans,” she said. The FDIC is backed by the government, and its deposits are guaranteed up to $250,000 per account. by Marcy Gordon Associated Press May. 25, 2011 12:00 AM [1]12 % of U.S.-backed banks were at risk in quarter

1. http://www.azcentral.com/arizonarepublic/business/articles/2011/05/25/20110525biz-bankearnings0525.html

2 REIT veterans begin new venture (2011-05-28 23:56) The third time should be a charm for Valley financiers Christopher Volk and Morton Fleischer. The first two certainly were. Volk and Fleischer, who previously grew and sold two real-estate investment trusts in multimillion-dollar deals, have started a new firm, STORE Capital, with a similar model of extending financing to single-tenant properties such as chain restaurants, drugstores, supermarkets and other retail businesses. Volk and Fleischer announced Wednesday that they have raised $500 million in private equity, with proceeds used to fund the Scottsdale company’s initial real-estate investments. That includes a $400 million commitment from OCM STR Holdings, a subsidiary of Oaktree Capital Management, a Los Angeles firm managing $85 billion in assets. STORE, which stands for Single Tenant Operational Real Estate, was organized as a REIT. Volk and Fleischer previously led Franchise Finance Corporation of America until its sale for $2.1 billion in 2001, and Spirit Finance, which sold for $3.5 billion in 2007. REITs don’t pay income taxes and thus have a relatively low cost of capital. ”The strategy is similar to what we used to do at Spirit,” said Volk, the entity’s chief executive officer, adding that he believes now is a good time to form a firm like STORE. ”Banks are less active, especially in lending to the middle-market area,” he said. ”While the economy is fragile, companies that are surviving have good prospects for the future.” Fleischer is chairman of the new company. Other members of the senior management team, several of whom have worked together since the early 1980s, 86

include Catherine Long, executive vice president and chief financial officer; Michael Zieg, executive vice president of portfolio management; Michael Bennett, executive vice president of operations; and Mary Fedewa, executive vice president of acquisitions. The Volk-Fleischer team has invested nearly $10 billion in more than 7,000 properties over the past three decades, raised about $3 billion in capital and paid more than $5 billion to investors. Volk said he expects STORE to begin financing properties by early 2012 and anticipates the firm to have about 40 employees. It is looking for people in accounting, finance, sales and credit analysis. Potential job or financing applicants should visit store [1]capital.com. by Russ Wiles The Arizona Republic May. 25, 2011 07:15 PM [2]2 REIT veterans begin new venture

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Investors optimistic about housing market, survey says (2011-05-29 00:11) Investors in the housing market remain bullish about their chances for turning a profit, according to results of a survey issued today by online real-estate firm Move Inc., based in Campbell, Calif. Among their reasons to be optimistic were weak competition from traditional homebuyers, strong demand for single-family rental properties and the relatively low cost of buying and fixing up homes. However, the survey’s results also point to some perceived weak spots in the market, including stagnant resale prices and difficulty obtaining purchase loans. Move Inc., a publicly held company that trades on the NASDAQ exchange under the symbol ”MOVE,” sponsored the survey, which included responses from about 200 real-estate investors and 800 non-investors. All respondents were 18 or older. According to the survey’s results, real-estate investors were three times as likely as traditional buyers to express interest in buying a home within the next two years, and nearly two-thirds of investors said they believe lack of competition from traditional buyers will make it easier to find bargain purchases during the next six months. The survey results, which only include responses from U.S. investors and do not break them down by geographic area, also suggest that investor interest and activity could be on the rise. About 62 percent of investors said they are paying more attention to home values in their local markets than they were a year earlier. Responses indicated a widespread belief that prices will remain flat in the near future, with 22 percent of investors expecting prices to rise in the next six to 12 months, 23 percent expecting further price declines and 54 percent predicting no significant changes. Nearly 66 percent said they expect competition from first-time homebuyers to diminish because of difficulty obtaining financing. However, the majority of investors said they also planned to finance future home purchases, at least partly. The majority, about 57 percent, also cited difficulty obtaining loans as one of the biggest challenges they faced. Only about 19 percent said they planned to buy with cash, with about 81 percent of those expecting to receive a cash-only discount from sellers. Nearly 76 percent of investors said they plan to borrow money to cover a portion of future home purchases, with nearly 60 percent expecting to finance more than 50 percent of their investments. Just 16 percent said they would use cash to cover more than 50 percent of future home purchases. ”The fact that most real-estate investors plan on combining cash and credit for their purchases goes against 87

the conventional wisdom that investor transactions today are mostly cash-only sales,” Move Inc. Chief Executive Steve Berkowitz said. ”The data also shows they’re expecting high returns to match the level of investment they’re making in an arena that is new to many investors.” Only a small portion of respondents said their goal was to ”flip” the homes within the next 12 months. About half said they planned to rent out their homes for at least five years. About one-third of self-identified investors said they were in the process of researching or preparing to invest in a home but had not yet done so. Among active investors, about 59 percent said they had made at least one other real-estate investment in the past, while the other 41 percent identified themselves as first-timers. About 42 percent said they planned to do future repairs themselves, about 30 percent said they planned to hire a contractor for repairs, and the other 28 percent planned to buy homes that weren’t in need of any repairs. About 66 percent of respondents said they did not expect repair costs to exceed 20 percent of the property’s purchase price. ”This data suggests today’s climate is hot for investing and is attracting a lot of new people that don’t fit the stereotypical, deal-driven flippers that buy and sell properties quickly,” Berkowitz said. ”They’re mostly entrepreneurial individuals that will make vital contributions to local communities by investing their own money and sweat equity.” In exchange for their risk and hard work, investors responding to the survey expressed high expectations for reaping financial rewards. Nearly half said they expected a profit of 20 percent or more, such as with 4 percent annual rate of return over five years. Another 40 percent expected a profit of at least 10 percent. Just 7 percent said they expected to make a return of 5 percent or less. While the survey indicates investors will outnumber traditional homebuyers 3-to-1 during the next two years, it also revealed significant overlap between first-time investing and buying a home to occupy. About 27 percent of first-time investors said they also planned to buy a primary residence. Almost half said they planned to live in their investment property until it was sold or turned into a rental property. Slightly more than half planned to put their investments to work as rental properties, and 28 percent said they planned to buy a vacation property that they would sell eventually. The survey also found 30 percent of real-estate investors are interested in buying a retirement property as an investment. ”The survey suggests some first-time buyers may be looking at investment as a strategy to becoming homeowners,” Berkowitz said. ”While today’s market is tough for some, it’s also motivating millions to take an unconventional approach and creatively search for new ways of entering the housing market.” Move Inc. operates Move.com, a Web portal for home-sales and rental listings; Realtor.com, the official website of the National Association of Realtors; and other sites including SeniorHousingNet.com, MortgageMatch.com and Moving.com. The survey was conducted by telephone in April and had a margin of error of plus or minus 3 percentage points. by J. Craig Anderson The Arizona Republic May. 25, 2011 07:14 PM [1]Investors optimistic about housing market, survey says

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’It’s a niche market’ (2011-05-29 20:30) The market for multimillion-dollar vacation homes has experienced a slow but steady recovery since the housing market crashed, with a slight increase in sales of luxury getaways for the ultrarich each year. But builders and sellers of vacation properties aimed at the upper middle class said they are struggling to find a marketing pitch that will resonate with prospective buyers who still have the means but seem to have lost the will. Jim Chaffin, a Colorado recreational real-estate developer, was among a group of panelists who spoke earlier this month about the challenges that vacation-home sellers face at a time when the only thing wealthy Americans feel inclined to flaunt is their frugality. Chaffin, chairman of Aspen-based Chaffin Light LLC, said the challenge is on developers to construct a more relevant, persuasive pitch that keys into would-be buyers’ desire to feel smart, responsible and practical. ”It is no longer because you can or because you deserve it,” said Chaffin, speaking on the May 19 panel at the Urban Land Institute’s 2011 Spring Council Forum in downtown Phoenix. Chaffin and others said luxury vacation-home developers are likely to shift their focus from straight sales to lower-cost alternatives such as time-shares, fractional ownerships and private residence-club memberships - all of which allow consumers to vacation in style for considerably less than the cost of buying a luxury vacation home. In addition, they said, future vacation-home developers will need to build in places that are easily accessible from major metropolitan areas, set in breathtakingly beautiful locales and offer a compelling experience in addition to a pretty view. Drew Brown, chairman of Scottsdale-based developer DMB Associates Inc., who moderated the Urban Land Institute panel discussion, said that time-share and fractional-ownership projects have struggled along with traditional sales in the current recession. Brown said that is likely due to public perception that time-shares, fractional shares and club memberships are difficult to resell if the owners want or need out of the deal. Panelist Chuck Cobb, chief executive of Cobb Partners, a Florida-based investor in resort properties, said resort-community developers and operators still have a long way to go toward recovery, with a huge inventory of vacation homes yet to be sold. He said the most successful among them likely will offer a range of options for buyers, renters and traditional resort guests. Vicki Kaplan is a Scottsdale-based real-estate agent who represents buyers and sellers of fractional-ownership shares in vacation villas at the Rocks Luxury Residence Club, a resort community in north Scottsdale managed by Troon Golf. Kaplan, of Arizona Best Real Estate, said that the resale market for fractionals has been slow lately and that it can take up to a year to find a qualified buyer. Fractional ownership differs from time-sharing in several ways. Unlike time-share buyers, fractional owners actually purchase a portion of the vacation-home or condo. Private residence clubs are another variation on the time-share concept. With residence clubs, participants buy a membership that entitles them to a certain amount of guaranteed vacation time at the resort. Buyers of time-shares, fractional shares and residence-club memberships all must sell their stake in the resort community on the open market to be released from monthly homeowners’ association or maintenance-fee obligations, which can be considerable. At the Rocks, the standard fraction is one-seventh, which entitles the owners to a guaranteed six weeks of occupancy each year. They can stay even longer and can use any of the resort’s seven fractionally owned villas as long as no one else is using them. In addition, the resort community participates in a ”reciprocity program,” administered by Timbers Resorts, a fractional-ownership and private residence-club resort operator based in Carbondale, Colo. The program allows owners to stay at any of the company’s nine participating resort communities, which include locations in Colorado, California, Mexico and Italy. 89

Kaplan said fractional shares in the Rocks have sold recently for under $200,000 - considerably less than the developer’s original sale price of $325,000 to $335,000. The monthly HOA dues, which cover maintenance plus services comparable to a high-end resort and spa, is about $900 a month, 12 months a year. Kaplan said the recession has made it much easier for owners to take advantage of the reciprocity program because sister Timbers communities aren’t as likely to be fully occupied at any given time. Still, Kaplan was quick to point out that fractional ownership is not for everyone. When talking to potential buyers, she spends a good portion of the time explaining the downside of buying a fractional vacation-home share. Kaplan said she would much rather have prospects walk away than buy and later realize they made the wrong decision for their particular lifestyle. For instance, she said, fractional owners can’t book six solid weeks at their villa in the winter, so if the buyer is looking for a winter home, a fractional is not a good fit. About two years ago, banks stopped offering mortgage loans on fractional purchases, Kaplan said, so today’s buyer must be willing and able to pay cash. ”It’s not an easy product to sell,” she said. ”It’s a niche market.” by J. Craig Anderson The Arizona Republic May. 27, 2011 12:00 AM [1]’It’s a niche market’

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Slower growth felt worldwide (2011-05-29 20:32) WASHINGTON - From the United States to Europe and even to booming China, the global economy is showing signs of strain. Most major economies are expected to keep growing. But evidence is mounting that many around the world are struggling to expand as fast as they did last year. In China, interest-rate hikes designed to reduce inflation are slowing growth. European governments are struggling with debts and squeezing budgets. Britain’s economy scarcely grew at the start of the year. High unemployment, depressed real estate and still-high oil prices are slowing the U.S. economy, which grew at a scant 1.8 percent annual rate from January through March. Even Europe’s strongest economy, Germany, faces a slowdown. And after its earthquake and nuclear crisis, Japan has sunk back into a recession. Overall, the world economy will likely grow just 3.5 percent this year, down from 4.1 percent in 2010, according to the research firm IHS Global Insight. IHS has cut that forecast from 3.8 percent. As leaders of the Group of Eight rich democracies meet in Paris, slowing global growth is on an agenda already packed with concerns about instability in the Middle East, Greece’s debt crisis and who will be the next head of the International Monetary Fund. It isn’t a priority item at the meeting, though. ”The eurozone is a big mess, and the Europeans don’t want to talk about it,” said Simon Johnson, a former chief economist of the IMF. The most serious such problems exist in Greece, Spain, Portugal and Ireland, which are overwhelmed with debts run up during the financial crisis and the recession that followed. Financial markets have been signaling concerns about a worldwide slowdown. The Dow Jones industrial average has shed 450 points, or 3.5 percent, this month. Stocks have slid 3 percent or more this month in Japan, Britain and Hong Kong. IHS chief economist Nariman Behravesh said ”three headwinds are hitting the global economy at the same time”: " High commodities prices. Despite a recent dip, oil prices are still up 50 percent over the past year. Those 90

prices have squeezed household budgets in the United States and other rich countries and held back consumer spending. Rising food prices are hurting the middle class and the poor around the world. " Government budget cuts. Many European countries had to slash spending after the financial crisis swelled their budget deficits. Britain last year cut spending and raised taxes, choking the economy. Britain’s economy eked out just 0.5 percent growth in the January-March quarter after shrinking from October through December last year. " Japan’s earthquake and nuclear crisis. After factory production was disrupted, the Japanese economy shrank at a 3.7 percent annual pace in the first quarter. It will likely contract an additional 3.7 percent in the April-June quarter, according to the Organization for Economic Cooperation and Development. ”The highest degree of uncertainty lies in the effects of the disaster on Japan’s economy,” Bank of Japan Gov. Masaaki Shirakawa said in a speech this week in Tokyo. Economists do expect Japan’s economy to rebound in the second half of the year. Reopened factories and reconstruction projects in the quake zone should create jobs. The U.S. economy is also expected to accelerate in the next several months. More hiring will likely encourage consumers to spend more. Companies are expected to dip into profits to expand. And banks, having shed bad loans from financial crisis, will likely lend more to businesses and consumers. Still, economists are increasingly worried about China. Four interest-rate hikes since October have yet to do much to cool China’s inflation, which is running above 5 percent. Goldman Sachs this week cut its forecast for Chinese growth to 9.4 percent from 10 percent this year and to 9.2 percent from 9.5 percent in 2012. By raising rates and taking other steps to tighten bank lending, Beijing wants to slow growth to 7 percent this year to stem inflation. Some worry that Beijing’s controls, combined with power shortages in some manufacturing areas, are steering China toward an economic disaster. Still, most analysts expect a controlled slowing of growth. Other booming countries, such as Brazil and Turkey, are also trying to slow growth to control rising inflation. U.S. exporters had been counting on robust purchases in the developing world to offset lackluster growth at home. Those expectations might need to be scaled back. ”A hard landing for the emerging markets could significantly set back the world economic recovery,” said Eswar Prasad, professor of trade policy at Cornell University. ”They have been the key drivers of global growth in the aftermath of the financial crisis.” by Paul Wiseman Associated Press May. 27, 2011 12:00 AM [1]Slower growth felt worldwide

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Phoenix-area ”shadow inventory” of homes doing well in market (2011-05-29 21:01) Metro Phoenix has a ”shadow inventory” of nearly 100,000 homes, the kind that market watchers sometimes fear could flood the region’s long-suffering housing market and drive down prices. These homes are either in foreclosure or the owners are behind on their mortgage payments, signaling that the houses could eventually join the supply of properties offered by lenders for sale at a deep discount. But the region is actually in much better shape than other parts of the U.S. hit hard by foreclosures, according to new analysis from a national real-estate group. Foreclosure homes are selling fast in the Valley as investors jump at the low prices, and experts don’t think the area’s shadow inventory will suppress prices further. Analysts and investors have warily eyed the tough-to-measure shadow inventory since last year, when worries arose that banks were delaying foreclosures and holding onto large numbers of homes after foreclosing. Market watchers saw the potential for the growing backlog of homes to drive the entire market. If buyers 91

believed more bargains were coming, they would wait and prices would fall. New data from California-based John Burns Real Estate Consulting, one of the nation’s leading housing researchers, puts the number of homes in the Phoenix area’s shadow inventory at about 92,000, the size of a small Valley suburb. But that number, which includes Pinal County, isn’t alarming housing analysts. That’s because the rate of sales is as important as the raw number of homes. If sales are brisk, the homes are snapped up quickly, meaning they won’t lead to lower prices. And homes in the Valley, especially low-priced foreclosure homes, are selling. Other markets racked by the housing downturn since 2007, including Las Vegas, Orlando and Sacramento, are in worse shape - sometimes much worse. Based on historical rates of home sales, the Valley’s inventory would clear out much faster than other cities’. ”(Metro) Phoenix’s shadow-inventory figure may look scary, but the area is in much better shape than other markets,” said Tim Sullivan, a principal with Burns Real Estate. ”Foreclosure homes are selling and selling fast in Phoenix, which makes a big difference.” Measuring the inventory The supply of homes is as its name implies: shadowy, difficult to gauge. Burns Real Estate estimates the number through a series of steps. First, the group counts the number of homes already in foreclosure, including homes taken back by a bank and not yet resold: at least 40,000 in metro Phoenix as of January. Then, it adds the number of homes in which the owner is at least 30 days’ delinquent on the mortgage. From that number, it calculates how many are likely to end up being foreclosed on and resold, based on its formula tracking the same data during the past year. In all, metro Phoenix has 110,000 houses in or approaching foreclosure, based on the estimates. Bank-owned homes already listed are taken out. Also removed are homes listed for a short sale, in which the buyer is seeking the bank’s OK to sell for less than the house is worth, thus staying out of foreclosure. These homes total about 18,000 in the Valley. The remainder, about 92,000 houses, is considered the area’s shadow inventory. The rate at which homes sell is important to gauging the health of any market. Based on the region’s long-term sales rate over the past 10 years, the number of homes in the shadows is about as many as would sell in a year. Thus, the firm calls it a 12-month supply. That puts the Valley in better shape than many similar markets. Based on their local 10-year average sales rates, according to Burns Real Estate’s estimates: - Orlando has a 23-month supply of shadow inventory. - Modesto, Calif., a boom market inland from the Bay Area, has a 20-month supply. - Sacramento has a 16-month supply. - Las Vegas has a 14-month supply. ”Shadow inventory isn’t a big problem looming for the (metro) Phoenix market,” said real-estate analyst Tom Ruff with Information Market. ”The numbers have to be put in perspective. When you look at everything that’s going on with home sales in Phoenix, you see that shadow inventory isn’t something to worry about.” He said the number of pending foreclosures in Maricopa County is falling rapidly because new foreclosure filings are down and lenders are clearing out more of their foreclosure backlogs. Foreclosure sales Homes taken back by lenders through foreclosure have become a major part of metro Phoenix’s housing market during the past few years. Today, though prices have plummeted from their 2006 highs, the Valley housing market is moving at a healthy pace, partly because the low-priced foreclosure homes attract plenty of willing buyers. Homes are selling at foreclosure auctions at record-setting paces, with more than 1,300 sold in Maricopa County last month. The number of foreclosure and normal resale homes on the Arizona Multiple Listing Service is a five-month supply, based on the long-term rate of sales. 92

These homes, because they’re already listed, aren’t part of the shadow inventory. So, Phoenix’s combined supply of homes, including shadow inventory and current inventory, should take 17 months to sell. Other cities with high foreclosure rates all have higher levels of total supply. Las Vegas has a 21-month combined supply, according to Burns Real Estate. Orlando’s overall supply is 29 months. Experts say Phoenix-area homes are selling because investors see them as a good value. Many can hold the houses and turn them into rentals, earning a good return on the investment. Others move to resell or ”flip” the properties quickly, still turning a profit because the up-front price was so low. Another benefit of investment buyers: Many pay cash. Many homeowners who abandoned their homes during the crash did so because they lost little in the process, forfeiting only their small down-payments. A cash buyer owns a house free and clear and is less likely to walk away. The combination of more buyers and bargain prices is making the region’s housing market more competitive, and bidding wars have broken out for houses priced right. Investors are eager to get in before the deals end. ”(Metro) Phoenix’s inventory of homes for sale has been shrinking fast this year,” said Julie Bieganski, a real-estate agent and investor. ”It’s getting harder to find bargains.” Impact on prices What buyers are doing now - and what they expect to happen soon - is key to the direction of any market. The experience of early 2009 shows how the shadow inventory can affect those expectations. In early 2009, after seeing mortgages fail in historic numbers, lenders tried to resell a record supply of foreclosure homes in the Phoenix area, all at once. Buyers saw the supply was huge and kept their offers low, believing there were even more homes to come. The region’s median home price, already battered by two years of downturn and recession, sank to 2003’s level. However, metro Phoenix’s shadow inventory now doesn’t appear large enough to prompt a waiting game. The area’s supply of homes for sale continues to shrink, even as more foreclosure homes are listed or put up for auction. Last spring, some analysts estimated the Valley had 18 months of shadow inventory looming over its housing market. New estimates of a smaller supply could mean metro Phoenix’s housing market is poised to recover sooner than other areas. ”(Metro) Phoenix has seen an overcorrection in prices” said housing analyst John Burns. ”There are vacancies and shadow inventory. But now is the most affordable time to buy in my lifetime.” by Catherine Reagor The Arizona Republic May. 28, 2011 12:00 AM [1]Phoenix-area ”shadow inventory” of homes doing well in market

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Expert: Recovery falls short of target (2011-05-29 21:19) Barry Broome, president of the Greater Phoenix Economic Council, often hears that Arizona’s economy is on the road to recovery. ”Big deal,” he says. In an economic forecast presented by the Gilbert Chamber of Commerce earlier this week, Broome shared an up-and-down outlook on the state’s financial future. Optimists may cheer upon hearing that Arizona could regain nearly 300,000 jobs by 2015, but when Broome takes a deeper look, he doesn’t like what he sees. 93

The state’s recovering economy is even more dependent on retail, real estate and construction than it was before the recession, and those industries will continue to be the state’s breadwinner in 2014, Broome said. ”We’re creating jobs that won’t pay for themselves again,” Broome said. ”The economy we had in ’04, ’05 and ’06 - I don’t want it back. I’m not interested.” Broome’s organization focuses on attracting more sustainable industries to the Valley. In Gilbert, that includes bio-medical companies in areas such as nanotechnology, pharmaceuticals and medical equipment, said Dan Henderson, the town’s business-development manager. He also made a presentation at the luncheon. Although Arizona lags far behind bioscience leaders such as San Francisco and New England, Henderson said the current fiscal year has been Gilbert’s most successful for business development since he joined the town four years ago. While Henderson works to bring quality jobs to Gilbert, Broome is fighting for a better business environment throughout the state, which helps individual communities market themselves. This year, the Legislature passed two GPEC-supported bills that the organization said would create a more favorable business environment and make Arizona more competitive. House Bill 2001, passed during a special session in February, established the Arizona Commerce Authority and reduced corporate-income taxes. Broome called it ”the best bill that’s ever been passed in Arizona for the economy.” The legislation also provides a tax credit for companies that are either expanding or making a new capital investment within the state, Broome said. Within urban areas, a company must generate at least 25 new jobs and $5 million in capital investment to qualify. The bill reduces Arizona’s corporate income tax, a move that will improve the state’s national ranking from 25th to eighth place in that category, Broome said. GPEC also supported Senate Bill 1041, which would have reduced property taxes for certain businesses. The bill easily passed the Legislature but was vetoed by Gov. Jan Brewer, who said the incentive would ”allow one industry to jump the line in front of other industries.” But Broome said it would have improved the state’s regional competitive ranking and could have helped generate up to $371 million in new revenue for the state over 10 years. Despite his disappointment in the veto, Broome praised Brewer for her support of business-friendly legislation. ”Relative to the history of gubernatorial leadership . . . Jan Brewer’s done a better job on the economy than any governor in the last 50 years,” Broome said. Still, the state faces stiff competition from several ”star players” throughout the Mountain West region, including Texas, Washington and Colorado. To keep up, Arizonans must expect more from their political leaders instead of growing complacent with the status quo, Broome said. There are 90 communities in Arizona with an unemployment rate between 18 percent and 35 percent, he said. ”The idea that we’re in this comfort zone relative to our future is one of those things we have to boot out.” by Parker Leavitt The Arizona Republic May. 28, 2011 12:00 AM [1]Expert: Recovery falls short of target 1. http://www.azcentral.com/arizonarepublic/business/articles/2011/05/28/20110528biz-gr-econdevel0528.html

Tempe land sold for $3.24 million (2011-05-29 21:21) The high-profile, sought-after parcel of vacant land that once housed Gentle Strength Cooperative in Tempe has sold for about $40 a square foot. 94

That’s $3,240,000 for 1.84 acres on the northwestern corner of University Drive and Ash Avenue, a block west of Mill Avenue. ”We were very pleased with the price,” said Mindy Korth of the Phoenix office of CB Richard Ellis, which represented the seller. ”It was definitely competitive. . . . A number of people thought we weren’t going to achieve that kind of pricing.” Barry Gabel of CBRE also worked on the deal for the seller, ML Manager LLC of Phoenix, the lender that acquired the property at a trustee sale in November. ML Manager is the successor to the bankrupt Mortgages Ltd., once a high-flying Valley company. The buyer, who won out over multiple offers, is Brookfield Asset Management of Toronto, owner of 100 and 150 W. University Drive, totaling 300,000 square feet in the Centerpoint office complex. The company also owns two nearby parking garages, a public one and another used only by employees of JPMorgan Chase. Brookfield is a large REIT, or real-estate investment trust, and investment firm with holdings throughout North America and an active player in the Arizona market. ”They wanted to own it so they could have the authority over the development of the site since their investment was right there,” Korth said. ”They didn’t have a specific development plan they had already cooked up and were ready to serve.” Brad Wilde is a broker with Scottsdale-based Land Advisors Organization and an infill expert. He described the sale for $40 a square foot as a ”terrific price.” It shows a lot of confidence in the downtown Tempe market and that Brookfield wants to control the site, he said. ”The buyer is an adjoining property owner, and I believe they paid that high price to cover its flank and protect its interests,” Wilde said. Had the land been sold to an individual retail user, Wilde said, the square-foot price likely would have been $20 to $25. by Luci Scott The Arizona Republic May. 28, 2011 12:00 AM [1]Tempe land sold for $3.24 million

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Rocky Point vacation units hit by drop in buyers (2011-05-29 21:26) The vacation-home market in Mexico’s coastal city of Rocky Point, Sonora, is bound to the rise and fall of Arizona’s economic prosperity, like the ocean’s tide to the moon. That fact will come as no surprise to the hundreds of Phoenix-area residents who have purchased an estimated 2,400 beachfront condominium units and detached vacation homes in the city also known as Puerto Peñasco. Richard Savino, president of the Rocky Point Board of Realtors, estimates that Valley residents own about 60 percent of all vacation properties built in Rocky Point in the past decade. At the moment, the Rocky Point housing market is in a major slump. Of the city’s estimated 4,000 vacation condos and houses, about 650 properties are listed for sale, Savino said. Based on the Puerto Peñasco vacation-home market’s average transaction flow of about 16 sales per month, those listings represent a more than three-year supply of inventory. A healthy housing market generally has about six months’ inventory listed for sale. Although he expressed confidence that the Rocky Point housing market eventually would rebound, Savino said it would have to be preceded by significant economic recovery north of the border. ”We’re all kind of waiting for the U.S. economy to turn around,” he said. Savino visited the Phoenix area last week to meet with administrators of the Arizona Regional Multiple 95

Listing Service, which for the past two months has been involved in a mutual exchange of home listings with its Rocky Point counterpart. Savino, an American who has been living in Rocky Point since 2007 and brokering real-estate deals there since 2008, hopes the sharing of Rocky Point listings with metro Phoenix real-estate agents will bring added visibility to his area’s housing market while giving U.S. agents an opportunity to get more involved and potentially earn some additional referral fees. To represent either the buyer or seller in a Rocky Point real-estate transaction, agents must have a Sonoran real-estate license. Savino obtained his Sonoran license in 2008. He continues to work as a real-estate agent while managing two local condominium communities to make ends meet. Despite the market’s current problems, Savino said he is confident that buyer interest in the Rocky Point vacation-home market eventually will return. The introduction of direct commercial flights to and from Puerto Peñasco’s recently built, but barely used, airport would provide a significant boost to the area’s housing market, he said. One of Savino’s goals is to persuade a major airline to add Rocky Point to its itinerary. A small Mexican air carrier had been offering flights about a year ago, he said, but it canceled the service about six months later. Not enough passengers, according to Savino. He blamed the dearth of travelers not on the weak economy but on a string of news reports that started coming out just before spring break in 2010. The news reports linked Rocky Point to a public scare over recent drug-related murders in Mexico, Savino said, adding that most of the drug-related violence has been in major cities and not around Puerto Peñasco, which has a population of 45,000. ”It is a safe place,” Savino said. ”I would not be living there if it wasn’t.” by J. Craig Anderson The Arizona Republic May. 29, 2011 12:00 AM [1]Rocky Point vacation units hit by drop in buyers

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Be alert: Fees, taxes eat into fund returns (2011-05-29 21:29) If you’ve ever bought the Shed-No-Mor cat sweater or the Swiss Army Fork from a late-night television commercial, you know that some things aren’t quite what they are advertised to be. If you look at what you’ve actually earned in your mutual fund over time, you might be surprised to find that your returns don’t match what you find advertised. While you can’t control what Mr. Market will give you, you can control how much you earn from your fund. Let’s look at the American Funds Growth Fund of America, one of the largest funds in the universe. The A shares - the largest share class, and the one most likely sold to individual investors - have gained an average 4.17 percent a year for the past decade. That may not sound like much, but it’s better than the Standard & Poor’s 500-stock index, up an average 2.82 percent in the same period. To put this in some perspective: A $10,000 investment in the fund would have gained $5,046 in 10 years. If you paid the fund’s maximum 5.75 percent sales charge, however, your total return was 3.55 percent, according to Lipper, which tracks mutual funds. Your gain has now shrunk to $4,174. But wait, there’s more - because it gets worse. Most funds distribute income and capital gains at least once a year. You owe taxes on those distributions. Assuming you were in the highest tax bracket, your after-tax return would be 3.21 percent, according to Lipper. And if you had sold the fund after 10 years and paid taxes on your gains, you’d be left with a 2.96 percent average annual gain. 96

So: You invested $10,000 in a taxable account, paid the sales charges and paid taxes on distributions and gains. Your $10,000 is now $13,387. At that rate, you’d double your money in about 24 years. What’s an investor to do? You could fervently wish for higher returns from the stock market. While you’re at it, you may as well ask for an albino pony, too. You really can’t do anything about your future returns from the stock market. But you can reduce your costs as much as possible. One easy way, of course, is to buy a no-load fund. You pay no commission, but you get relatively little advice. If you absolutely must invest through a broker, you can save money on commissions by learning the different ways to reduce them. Typically, the more you buy of a load fund, the less you pay in commissions, or loads. The sales charge for the Growth Fund of America drops to 5 percent if you invest $25,000, and 4.5 percent if you invest $50,000. You can often combine holdings within one fund family to reach the break points. A complete list of ways to lower your load is at www.finra.org. Loads on nearly all funds vanish at $1 million, which might be rich for your blood, but probably isn’t for your 401(k) savings plan. If you’re dying to invest in a popular loaded fund, your 401(k) might offer it at no load - and, even better, with institutional fees, which are nearly always lower than retail fees. You can also control taxes to some extent. When you invest in a tax-deferred account, your earnings compound tax-free. But be careful. If you invest in a stock fund in a 401(k) or IRA, your gains will all be taxed at your ordinary-income rate, which is probably higher than the capital-gains rate, currently a maximum 15 percent. If you can, open a Roth IRA: Although you invest with after-tax money, your gains aren’t taxed at all. Reducing costs and taxes can make a tremendous difference in your returns over time. And if you want a sure-fire way to increase your balances, invest more. Unlike the things you see advertised on late-night television, increasing your savings rate always works wonders. by John Waggoner USA Today May. 29, 2011 12:00 AM [1]Be alert: Fees, taxes eat into fund returns

http://www.azcentral.com/arizonarepublic/business/articles/2011/05/29/

20110529fees-taxes-eat-into-fund-returns.html

Judges hear Elevation Chandler land dispute (2011-05-30 10:26) The feud over who owns Elevation Chandler was fought by lawyers who appeared before a three-judge panel at the Arizona Court of Appeals on Wednesday. Attorney Bob Lord argued for investor Tom Peltier of BT Capital, who insists he won the property with a bid of $1,000,001 at a trustee sale on June 15, 2009. A series of errors occurred before and during that sale, prompting TD Service Co., which held the sale, to refuse to accept Peltier’s payment. Later that year, Peltier sued in Maricopa County Superior Court, where Judge Bethany Hicks dismissed his lawsuit. ”Inadequacy in the sales price, coupled with irregularities in the sales process, may justify setting aside a foreclosure sale as a matter of equity,” she said at the time. Another trustee sale was held July 1, 2010, when Elevation Chandler’s lender, California-based Point Center Financial, took possession. Peltier appealed his loss of Elevation Chandler, a 10.5-acre parcel near Loops 101 and 202, south of Chandler Fashion Center. It contains a partly built hotel. Lawyers on Wednesday argued state statutes, case law and common sense. Lord told the appellate judges that Hicks had erred by saying the million-dollar bid was too low, referring to an earlier appraisal setting the value at $36 million. 97

Lord maintained the property is worth less than $2.7 million and that the buyer may even need to tear down the concrete and steel skeleton. ”The trial court determined the bid price was inadequate, but (Hicks) can’t if there’s no determination of value,” the attorney said. At the trustee sale in 2009, bidding had started at $1 million. Steve Vadas, the auctioneer with TD Service, was supposed to continue the bidding until Point Center could weigh in with a credit bid of $25 million. However, after Peltier bid $1,000,001, Vadas called his office and was told Peltier could have it. The next day, TD Service refused to accept Peltier’s money, and Peltier refused to take back his $10,000 down payment. TD Service declared the sale invalid. Joseph Cotterman, who appeared Wednesday for Point Center Financial, described the 2009 auction as a failed sale. ”It blocks a party from coming back after the sale and undoing it,” he said. ”What happened on the day of the failed sale were invalidating mistakes. . . . We were denied the opportunity to make the last bid.” Judge John Gemmill last week said Point Center could have had its own agent at the sale. Cotterman replied that regardless of that, TD Service ”blew it.” Complicating matters is that Vadas, the auctioneer from TD Service, actually held two trustee sales for Elevation Chandler on June 15, 2009. Arguments have centered on the second sale that day, in which Peltier participated. But the auctioneer had already ”cried” the sale earlier than its scheduled time, and Cotterman said Point Center got Elevation Chandler then. However, Peltier showed up a few hours later, after the scheduled time, and asked about the Elevation Chandler foreclosure. When he was told the sale had been held, Peltier insisted he be allowed to bid. So Vadas cried the sale again; it was at that sale that Peltier says he won the property. The auctioneer ”sold it twice in one day, and the first sale should have been conclusive,” Cotterman said. Gemmill said, ”If the trustee (TD Service) decides there are problems with the sale, the trustee has the power to say, ’There are too many problems; I’m invalidating the sale.’ ” Cotterman replied, ”Not only does it have the power, it has the obligation to do it over and do it right.” In 2010, after Hicks ruled in favor of Point Center Financial, a trustee sale was held July 1, at which Point Center took back the property. Cotterman said if BT Capital were serious, it would have tried to stop that sale. ”No pre-sale injunction gives us title,” Cotterman said. Representing TD Service was Roger Cohen, who mentioned the two sales on June 15, 2009, and said the auctioneer had called the second sale to accommodate Peltier. ”If the first sale was invalid, why wasn’t the second sale invalid?” Cohen asked. Judge Patrick Irvine told Cohen on Wednesday, ”If your client hadn’t done the second sale, we wouldn’t be here.” The judges took the matter under advisement. TD Service also made errors in posting notices before the 2009 sale. It posted the notice at the wrong location, and the description of the property was not accurate. Construction stopped on Elevation Chandler in April 2006. Developer Jeff Cline filed for bankruptcy protection in April 2008. The bankruptcy case was later dismissed as a failure. by Luci Scott The Arizona Republic May. 30, 2011 12:00 AM [1]Judges hear Elevation Chandler land dispute

http://www.azcentral.com/arizonarepublic/business/articles/2011/05/29/

20110529elevation-chandler-judges-hear-land-dispute.html

Mortgage Formulas (2011-05-31 14:03) In case you were wondering how to calculate the monthly payment and loan balance with an algebraic formula: Monthly Payment and Loan Balance Many readers, for reasons of their own, request the algebraic formulas used to calculate the monthly payment and loan balance on amortized mortgages. Here they are: The following formula is used to calculate the fixed monthly payment (P) required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of c. [If the quoted rate is 6 %, for example, c is .06/12 or .005]. P = L[c(1 + c)n]/[(1 + c)n - 1]

The next formula is used to calculate the remaining loan balance (B) of a fixed payment loan after p months. B = L[(1 + c)n - (1 + c)p]/[(1 + c)n - 1]

Annual percentage Rate (APR) Other readers ask about the formula used to calculate the APR. The APR is what economists call an â&#x20AC;?internal rate of returnâ&#x20AC;? (IRR), or the discount rate that equates a future stream of dollars with the present value of that stream. In the case of a home mortgage, the formula is L - F = P[1]/(1 + i) + P[2]/(1 + i)2 +& (P[n] + B[n])/(1 + i)n

Where: i = IRR L = Loan amount F = Points and all other lender fees P = Monthly payment n = Month when the balance is paid in full Bn = Balance in month n This equation can be solved for i only through a series of successive approximations, which must be done by computer. Many calculators will also do it provided that all the values of P are the same. The APR is a special case of the IRR, because it assumes that the loan runs to term. In the equation, this means that n is equal to the term, and Bn is zero. If there is a monthly mortgage insurance premium, that premium must be included in P for as long as the balance exceeds 78 % of the original property value. If there is an upfront premium, it is included in F. If the upfront premium is financed, P should be calculated based on the larger loan amount, but L should not include the premium. Note that on ARMs, the payments used to calculate the APR are those that would occur under the assumption that the index rate does not change over the life of the loan. On a cash-out refinance, the APR ignores the existing mortgage that is paid off, which makes it a poor guide 99

to the decision (see [1]The APR on a Cash-Out Refinance). The better guide is a ”net-cash APR”, in which the balance of the existing loan (including interest accrued to the day of payoff) is subtracted from the left side of the equation, and the ”Ps” represent the difference in payment between the old and new mortgage. Future Values Many of my calculators measure financial results in terms of ”future values” – the borrower’s net wealth at the end of a specified period. The future value of a single sum today is: FV[n] = S(1+c)n

Where: FVn is the value of the single sum after n periods S is the amount of the single sum now c is the applicable interest rate n is the length of the period The future value of a series of payments of equal size, beginning after one period, is: FV[n] = P[(1+c)n - 1]/c

Where P is the periodic payment, and the other terms are as defined above. by Jack Guttenag Revised November 26, 2008, Reviewed July 24, 2009 [2]Mortgage Formulas

1. http://www.mtgprofessor.com/A%20-%20Mandatory%20Disclosure/apr_on_cashout_refi.htm 2. http://www.mtgprofessor.com/formulas.htm

Spring-cleaning-for-your-credit-score-investopedia (2011-05-31 18:19) It’s springtime. The chaos of the holidays is long gone, spring break is over, and summer hasn’t arrived yet. Excuses are easy to come by when summer is in full-swing, so why not take advantage of this temporary lull and get your finances in order now? These six tips will help you get your finances organized and get your credit score cleaned up. 1. Check Your Credit Report Any time you’re trying to improve your credit score, your first step should be to check your credit report. You can get one free report every 12 months from each of the three credit bureaus (Experian, Equifax and TransUnion) by going to [1]AnnualCreditReport.com. Look closely at each account on your report to make sure that there are no mistakes dragging down your score. Also, make sure that you recognize all of the accounts on your report. Unfamiliar accounts could be a sign of identity theft, though often they are just old accounts that you’ve forgotten about or accounts for which you are an authorized user but not the primary account holder. Don’t panic until you research them further. 100

2. Assess Your Credit Card Debt If you don’t know the details of your debt, you probably don’t have an effective plan for paying it off. Make a list of all the cards that you carry a balance on, how much you owe on each, and what the interest rate is. This way, you’ll know which accounts are costing you the most and you can plan to pay them off first. If you’ve living off your credit cards because you’re unemployed or underemployed, assess your available balances. Also note which cards have lower interest rates and use those for your purchases if possible. If you added to your debt last Christmas, start thinking now about how you will avoid doing the same thing this year. May isn’t too early to plan for the holidays – you still have time to gradually buy gifts over the course of the year, as you can afford them, or time to save up a holiday fund so you don’t have to pay interest on 2011’s gifts in 2012 and beyond. A Black Friday deal isn’t a deal at 30 % APR. 3. Improve Your Interest-Rate Situation It may not be possible to qualify for a new card with a lower interest rate if you have poor credit, but it might be worth trying. If you do get approved, make sure you understand the balance transfer fees before moving your high-interest debt, and make sure you’ll come out ahead even after the fees. Applying for new credit does temporarily ding your credit score, but the savings from lowering your interest rate can be substantial. You can also try calling your creditors to negotiate a lower interest rate. If that doesn’t work, see if you can at least get your card’s annual fee waived (if it has one). Develop a strategy before you call because you’ll need a way to convince your creditors that there’s something in it for them if they give you a break. 4. Prioritize Your High-Interest Debt Whichever card has the highest interest rate is the one you need to pay off first. Keep paying the minimum on your other cards (and pay on time), and put what you can afford toward your highest-interest balance. The sooner you knock out your high-interest debt, the more money you’ll have to work with each month and the easier it will be to work your way through your remaining debts and contribute to your emergency fund. 5. Create a Bill Payment System <SCRIPT language=’JavaScript1.1’ src=”http://ad.doubleclick.net/adj/N3973.YAHOO/B2171904.203;abr=!ie; sz=206x200;click=http://global.ard.yahoo.com/SIG=15p43pprr/M=79160 8.14527774.14486891.13729527/D=fin/S=2143120766:FSQR/Y=YAHOO/EXP=130 6898183/L=KrQGIkPDkjlvrkQtTeWRzwEiRqJgz03lkucABCnM/B=937QB0oGYqI-/ J=1306890983348650/K= bemkHvhOn74kA3.BhVEMg/A=6110372/R=1/*;dcopt=rcl;mtfIFPath=nofile;o rd=0.4785420721754462”></SCRIPT> Thirty-five percent of your credit score is based on whether you pay your bills on time, so if you want to improve your credit score, getting on top of your due dates is a great place to start. Look at recent bills and add the due dates to your credit card list. Then, use an electronic calendar system like Outlook or an old-fashioned paper calendar to remind yourself of these due dates each and every month. A checking account with online bill pay can also help you get organized by allowing you to see and pay all of your bills in one place. Some online bill payment systems, like Ally Bank’s, can be synched up with your other accounts to let you know how much you owe and when it’s due. In addition to hurting your credit score, late payments cost you money. If you avoided just one $30 late fee per month you would save $360 in a year. That’s money you could put toward paying down your debt instead of adding to it. 6. Start Budgeting If you know exactly how much money you have coming in and going out every month, not only are you likely to spend less because you will be holding yourself accountable for your spending, but you’ll also know how much you can afford to put toward paying down your credit card debt each month. 101

The Bottom Line In the process of improving your credit score, you’ll also be improving your overall financial situation. So even if you don’t plan to do anything that will require you have an attractive credit score (like open a new credit card account, take out an auto loan or apply for a mortgage), taking these actions will be worthwhile. by Amy Fontinelle Yahoo Finance May 31, 2011 [2]Spring-cleaning-for-your-credit-score-investopedia

1. https://us.lrd.yahoo.com/SIG=124nuluj7/EXP=1308100583/**https%3A//www.annualcreditreport.com/cra/index.jsp 2.

http://finance.yahoo.com/banking-budgeting/article/112781/

spring-cleaning-for-your-credit-score-investopedia?mod=series-m-article-c

Cities that weathered housing bust now suffering - Yahoo! Finance (2011-05-31 18:23)

In this May 23, 2011 photo, a home is shown for sale in Chagrin Falls, Ohio. Home prices have reached their lowest points since the housing bubble burst in 2006, driven down by foreclosures, a glut of unsold homes and the reluctance or inability of many to buy. (AP Photo/Amy Sancetta) WASHINGTON (AP) – Even cities that weathered the housing market crash with relatively little damage are suffering now. Severe price declines have spread to Dallas, Denver, Minneapolis and Cleveland, which had mostly withstood the bust in housing since 2006. The damage has now gone well beyond cities hit hardest by unemployment and foreclosures, such as Phoenix and Las Vegas. ”We didn’t enjoy the highs and the lows like other cities,” said Kay Weeks, a Realtor with Ebby Halliday in Dallas, where prices fell nearly 1 percent in March and are expected to keep falling. ”But when we get bad news nationally, people take notice and cut back on spending and buying homes.” Home prices in big metro areas have sunk to their lowest since 2002, the Standard & Poor’s/Case-Shiller 20-city monthly index showed Tuesday. Since the bubble burst in 2006, prices have fallen more than they did during the Great Depression. The index, which covers metro areas that include about 70 percent of U.S. households, is updated every quarter and provides a three-month average. The March data is the latest available. Foreclosures have forced prices down so much that some middle-class neighborhoods have turned into lowerincome areas within months. Prices are expected to keep falling until the glut of foreclosures for sale is reduced, companies start hiring in greater force, banks ease lending rules and more people think it makes sense again to buy a house. In some markets, that could take years. 102

The latest report points to a ”double dip in home prices across much of the nation,” said David Blitzer, chairman of the Index Committee at Standard & Poor’s. Prices fell from February to March in 18 of the metro areas tracked by the Standard & Poor’s/Case-Shiller index. And prices in a dozen markets have reached their lowest points since the housing bubble burst in late 2006. The overall index fell for the eighth straight month and has dropped 3.6 percent in the past year. Prices had risen last summer, fueled by a temporary federal homebuying tax credit. But they’ve tumbled 7 percent since then. After adjusting for inflation, the home-price index has sunk to the level of 1999. Cities with high foreclosures such as Phoenix, Las Vegas and Tampa, Fla., are flooded with homes sitting vacant, awaiting buyers. Many banks have agreed to allow homes at risk of foreclosure to be sold for less than what is owed on their mortgages. That has pulled down prices. In Phoenix, for example, home prices rose about 5 to 6 percent annually in the pre-boom years before exploding nearly 23 percent in 2004. The next year, in 2005, they skyrocketed nearly 43 percent. Prices there soon leveled off before plunging in 2007 and 2008. They’re now back to 2000 levels. Coastal areas, such as San Francisco, San Diego, Los Angeles, Washington and Boston, have fared comparatively better in the past two years. They have been helped by healthy local economies, desirable city centers and limited space for new housing. In New York, homes are still 63 percent more expensive than in 2000. In the middle are cities like Dallas, Denver, Minneapolis and Cleveland, which are seen as bellwethers for the national housing market. Before the housing boom, prices in Minneapolis rose 7 percent or more a year. Then they stalled in 2006, fell in 2007 and 2008, and rose modestly in 2009. Last year, prices started falling again and haven’t stopped. Over the past decade, Dallas has grown faster than any other metro area. Among companies that have moved their headquarters there are Comerica Inc. and AT &T. Construction surged to meet the demand. But since the housing bubble burst, foreclosures have risen. Many homes have been sold at steep discounts. Dallas-area foreclosures bought at auction in March sold for just 57 percent of their appraised value, according to Foreclosure Listing Service. Denver had also avoided the peaks and valleys of the bubble and bust. It enjoys a diversified local economy that has expanded to include the telecommunications, wind-energy and space-technology industries. Foreclosures haven’t flooded the Denver market. But many of Denver’s potential buyers, most of whom would otherwise be first-timers, are opting to rent instead. ”When they’re doing the calculations to rent versus buy, they’re choosing to rent,” said Gary Bauer, a broker in Littleton, Colo., outside Denver. ”It’s simple math, and for many people, it’s too expensive to own.” As a result, falling prices have turned once-costly, newer subdivisions, including those in Aurora and Commerce City, into largely vacant neighborhoods. ”The closer to the mountains you are here, the pricier it is, so people built a lot of new, big homes during the housing boom,” said Yve Roberts, a Denver real estate agent. ”They thought that’s where the next wave of houses would be. But many of the young people that bought there can’t afford it anymore.” In the next two months, prices in Dallas and Denver are expected to reach their lowest since the housing downturn began. In 12 other cities, prices are already at the lowest point since the end of the boom: Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland, Ore., and Tampa, Fla. 103

Minneapolis fared the worst in March, with prices down 3.7 percent. They dropped 2.4 percent in Charlotte and Chicago and 2 percent in Detroit. Prices rose 0.1 percent in Seattle and 1.1 percent in Washington. The nation’s capital is the only metro area in the index where prices have risen in the past year. One obstacle to a rebound in prices: A delay in processing foreclosures. Homes in foreclosure sell at a 20 percent discount on average, which can hurt prices in the neighborhood. But many foreclosure sales have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out over the past two years. Once those homes are eventually foreclosed upon, they will cause prices to fall even further. Those declines are ”etched in stone,” said Patrick Newport, U.S. economist at IHS Global Insight. Falling home prices led Neil Isakson of Amery, Wis., about an hour and a half from Minneapolis, to pull his four-bedroom lakefront house off the market this spring after it went unsold for nearly two years. Isakson chose to rent out the home rather than reduce the price further. He had listed it in June 2009 for $359,000. Last summer, he cut it to $339,000. Yet fewer than a dozen people showed up to look at the house. He’s holding out for the market to recover. ”I’m willing to wait two to three years,” Isakson said. Home equity accounts for most of the wealth of typical households. So when prices fall, they have ”important spillover effects on other sectors of the economy,” said Yelena Shulyatyeva, an analyst at BNP Paribas. Those sectors include consumer spending and state and local property tax collections. Consumer spending fuels about 70 percent of the overall economy. ”Folks are having so much difficulty in getting financing for a home,” said Mark Vitner, senior economist at Wells Fargo. ”And foreclosures will likely bring about a third dip. It may be early next year before prices hit bottom.” That won’t change soon. Roughly 92 percent of homeowners say it’s a bad time to sell their home, according to the latest Thomson Reuters/University of Michigan index of consumer sentiment. In the seven years before its peak in July 2006, the home-price index surged 155 percent. Since then, it’s fallen 33 percent. During the Great Depression, prices fell 31 percent. It took 19 years for the housing market to regain its losses after the Depression ended. by Derek Kravitz and Alex Veiga Associated Press May 31, 2011 [1]Cities that weathered housing bust now suffering - Yahoo! Finance

1. http://finance.yahoo.com/news/Cities-that-weathered-housing-apf-3276336717.html

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