REAL ESTATE

From Uptown to Downtown, we cover Chandler like the sun

Little to cheer about on home price front

BY PAUL MARYNIAK

Executive Editor

Amajor Valley real estate tracker last week reported that new data show 13 of 17 cities in the Phoenix Metro area – including Chandler – “moving in favor of buyers.” But homebuyers likely won’t find much to cheer about in the Cromford Report’s latest findings.

That’s because prices are so high and inventory so little changed that it will seem like same-old, same-old in the market: prices are red-hot and pickings are slim.

“We must remember that these are declines from extreme heights and the situation is not going to feel much different in the real world,” Cromford said.

“It is only the mathematics that detects the slight cooling in the market,” it said. “This does NOT look like a bubble bursting and it is actually a healthy sign that the market cools a little while prices rise.”

Nevertheless, Cromford also predicts that things are slowly starting to change, noting “prices are rising at an unsustainable pace.”

“We now have supply increasing and demand falling,” it said. “This will gradually release some of the steam from the over-heating engine and the market can trend back towards normality.”

If they don’t he said, “we would see the median sale price rise to $514,000 by the end of the year.”

But it adds, “I doubt that will happen.”

Cromford has developed what it calls the Cromford Market Index that uses a variety of data to indicate whether the housing market in various Valley communities is tilting toward buyers or sellers.

Anything over 100 is considered tipping toward sellers and anything below 100 favoring buyers.

For more than a year, the index rating for individual cities has been well over 200 and in recent months has been as high as 900 in some communities. Chandler, for example, recently fell from 606 to 556 – still well above a buyer-friendly index rating.

Cromford cautioned that its index “is designed to be the earliest of leading indicators and other indicators (listing success rate, percent of list price, days inventory, etc.) do not have to follow suit.

“If all indicators begin to drop like dominos, then we need to worry. At the moment, this is not the case. Nobody should be expecting prices to reverse direction just because the CMI takes a breather. In fact, we are expecting price rises to remain very strong for a long time yet.”

Indeed, it said that in any community showing 200 or more on the Cromford index, bidding wars for homes can be expected.

Meanwhile, it also noted that homebuilders are approaching the low inventory with a vengeance and that March “was a monster month for single-family building permits.”

Pinal and Maricopa counties issued a combined total of 3,536 permits in March, the highest monthly total since June 2006, Cromford said, noting that also “was the month in which prices last hit their peak before tumbling.”

Permits issued in March 2021 were up by 39 percent over March 2020, prompting Cromford to observe:

“Clearly developers are doing what they can to compensate for the derisory amount of re-sale single-family homes available to buyers. It is fair to assume that we will see a 30 percent to 40 percent increase in the supply of new homes across Greater Phoenix over the next 12 months.

“This could alleviate some of the pressure on re-sale listings and allow them to start to grow again. We certainly would not expect to stay at the current low level of re-sale forever. If they did, prices will reach levels that are unaffordable to the majority of buyers, which would eventually slacken demand and cause supply to rise anyway.”

The surge in permits – which is expected to continue – has Cromford predicting a “slow and steady effect, rather than a sudden flooding of the market.”

He noted that for every new home sold, it generally means a re-sale goes on the market.

Of course, that assumes the seller will be giving up the old home for a new home and not joining the equally hot rental market either as a landlord for long-term tenants or vacation renters.

Years of under-building has caught up with the U.S. Now, the country has a serious shortage of homes—as many as 4 million, according to Freddie Mac—to meet the demand from buyers.

Realtor.com noted, “Millennials hit the point in life where buying a home becomes very attractive, and the pandemic has caused people to rethink their living situations. All of which is to say that demand in this market is organic, according to economists and not fueled by risky lending practices.”

It said builders are having enough trouble keeping up with demand – partly because of disruption in supply lines for crucial supplies, such as lumber and appliances – which also is driving up prices.

Realtor.com also foresees “some headwinds for the market.”

“While mortgage rates have fallen in April thus far, if they begin to rise again in the future that could constrain buyers’ interest in pricier new homes,” it said.

“Supply is the biggest limiting factor in home sales. There is a 2.1 month’s supply of existing homes at the current sales rate, which is up from an all-time low of 1.9 months last December,” Chris Low, chief economist at FHN Financial. “But the rise from the low is not because there are more homes for sale, it is because the sales pace slowed.”

Meanwhile, the S&P CoreLogic CaseShiller Indices, the leading measure of U.S. home prices, last week released national and regional data showing prices in February were 12 percent higher nationwide than they were in February 2020.

“Phoenix, San Diego, and Seattle reported the highest year-over-year gains among the 20 cities in February,” it said. “Phoenix led the way with a 17.4 percent year-over-year price increase.”

Among homes in Chandler that sold in the past month were the 3,070-square-foot home, left, on W. Erie Street that sold for $650,000 and the 4,164-square-foot home in Fulton Ranch that closed at $1.23 million. The first home was built in 1995 and the other in 2010.

(Special to the Arizonan)

HOAs can run rampant collecting debts

BY PATRICK MACQUEEN

Guest Writer

We were recently contacted by several owners in an HOA because their names appeared on a public “collection” list. Specifically, a local HOA, through its management company, “posted” a list of homeowners with delinquent HOA obligations on the HOA’s public website.

These homeowners wondered whether the HOA (and/or its management company) had any legal basis to make the list public.

Oftentimes, an HOA or its managers take it upon themselves to collect delinquent amounts from owners that have failed to pay HOA assessments. And, oftentimes, these HOAs and managers violate the detailed federal laws governing debt collection.

The primary law governing HOA collection activities is the Fair Debt Collection Practices Act (the “FDCPA”), which was created to protect consumers from unfair practices from debt collectors. Consumers are generally defined as any natural person obligated to pay any debt which arose out of a transaction where the services were primarily for personal, family, or household purposes. Individual owners and their HOA assessments fit within this definition.

A “debt collector” is anyone who regularly collects or attempts to collect a debt owed to another, whether directly or indirectly.

The FDCPA is only applicable to those collecting debt owed to someone else. Therefore, it usually does not generally apply to the HOA itself in the HOA’s efforts to collect what may be owed.

That said, once an HOA management company, or other third party, attempts to collect on behalf of the HOA, this may trigger the FDCPA.

The FDCPA is very strict in its application, meaning that liability for an offending party is easy to identify and there is not a lot of “wiggle room” to argue that the FDCPA is inapplicable. Liability includes actual damages, statutory fines, reasonable attorneys’ fees, and even punitive awards.

There is a list of common prohibitions that may create liability.

These include making threatening or false accusations to the person owing the debt; representing that the nonpayment may result in arrest and/or the seizure of property; placing telephone calls or sending communication without properly identifying oneself or the creditor; publicizing the owner’s debt to third parties; and communicating directly with a consumer who is represented by an attorney.

In addition to avoiding these activities, the FDCPA requires the debt collector to provide certain information within five days of their initial communication to the consumer.

This communication must clearly include the amount of the debt, the name of the creditor who is owed the debt, and the contact information for whom to contact to discuss the debt and make payment. There must also be language in written communications setting out the consumer’s rights, including their right to request written verification of the debt and dispute its validity.

In short, if your HOA, the HOA’s management company, or any third party attempting to collect HOA debt, is attempting to collect past due assessments, these parties must do so very carefully.

Ultimately, the HOA and its management company mentioned in the initial paragraph of this article settled out of court to avoid the full extent of the penalties imposed by the FDCPA, which was the only good move on the management company’s part.

If you have additional questions about your HOA, or you are an HOA board or member, or have other real estate related questions, you can contact me.

Ahwatukee lawyer Patrick MacQueen is cofounder of MacQueen & Gottlieb, the state’s leading real estate firm. Reach him at patrick@mandglawgroup.com or call 602-533-2840.

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