Archive for category Business
Things Are Looking Better for Phoenix…
Posted by Dario Lorenzo in Blog, Business on July 6, 2010
Things are looking Better for Phoenix. The private sector gained 16,800 jobs during April while the government job count was up by 2,700. Most of the private employer gains came in the leisure and hospitality sector. Other areas with job gains were professional and business services; transportation and warehousing; construction; services; education; health services; and resources and mining.
Read more below to learn all that’s going on.
Apartment Vacancy Rate Declines to 12.3%
Vacancy rates for first quarter of 2010 for all-sizes of multifamily units decreased from 14.2% in the 4th quarter to 12.3%. Of the 338,126 total multifamily units, there were 41,450 reported as vacant and an amazing 7,938 units were absorbed. This could be due to a shortage of available single family homes for displaced owners. The total inventory gained 1,788 units from units that came on-line.
|
Multifamily Data – Greater Phoenix Area |
|||
|
Year |
Permits |
Absorp. |
Vacancy |
|
2001 |
7,201 |
1,525 |
8.0% |
|
2002 |
5,351 |
4,273 |
9.0% |
|
2003 |
4,836 |
3,702 |
9.6% |
|
2004 |
4,997 |
9,230 |
7.9% |
|
2005 |
3,250 |
4,756 |
5.0% |
|
2006 |
3,922 |
(4,653) |
5.3% |
|
2007 |
6,675 |
(5,846) |
8.5% |
|
2008 |
6,365 |
(4,466) |
10.8% |
|
2009 |
637 |
(5,319) |
14.2% |
|
2010 (1) |
180 |
7,938 |
12.3% |
There are only 3,067 units currently under construction – mostly in Deer Valley, North Tempe and the Western Suburbs Districts. Phoenix apartment rents are climbing as more units are leased. New data from RealFacts shows the average rental rate in the Phoenix-area climbed 4.5 percent during the first quarter of this year. The region’s new average rent is $725, up from $694 during the last quarter of 2009.
Apartment sales activity maintained their momentum from the previous quarter with 37 transactions in our market. Almost every transaction was lender controlled, either via a short sale or REO. Building permits and newly completed apartment complexes remained at minimal numbers – which is good for the future when demand returns.
Obviously this is a great time to be a buyer with prices far below what it costs to build.
Residential Market Update
May sales numbers were good as a lot of escrows were closed on the large number of purchases made in April. A total sales volume for May of 9,203 just below April’s monthly total of 9,230. The total for May 2009 was 9,149, so we are still seeing a slight increase in transaction volume of 2.6% over last year. Because sales pricing is higher than last year, we saw a more significant 8.6% jump in dollar volume. Good news for the optimists.
Why is all this happening? Well it seems likely that almost anyone who wants a “starter home” in 2010 and can get approved for a home loan has already arranged to contract to buy one before the “government bribe” expired at the end of April. There has been a precipitous fall in pending listings(down 14% in May), especially in the lower price ranges during May, as these tax-credit-inspired contracts get closed but are not replaced by new signings. Now that it is no longer possible to qualify for a tax credit, new active listings are not proving as attractive to buyers.
Foreclosures
Pending foreclosures peaked in December 2009 and have fallen back 13% since then. Those pessimists who have been forecasting an imminent large new wave of foreclosures every month for the last twelve months must be very disappointed. The truth is much less exciting. Nevertheless market distress remains very high and will dominate the market for at least the rest of this year. Short sales are becoming more significant as each month goes by, while lender-owned properties become gradually less so.
Pricing
Sales pricing took a quick dip lower in April but bounced back again in May. Overall we are still seeing a slight upward long term trend and confirm the bottom of the market is now over a year behind us. The fact that list prices for active listings continue to tumble is what leads many people to believe that “home prices are still falling”. Like many widely held beliefs, this is false, and it only takes a brief moment to prove it. Active listing pricing is a highly misleading indicator of the real market, and is virtually irrelevant since so many of the highest priced listings fail to sell at all. The most important measures of real home pricing – the average price, median price and average $ per sq. ft. of homes that actually sell have been moving in a general upward direction for Greater Phoenix since April 2009.
End of Tax Credit Forecast Looks to Be OK
The article, End of Home Buyer Credit Unlikely to Deter Most Real Estate Buyers, from www.RISMedia.com reports that according to a survey released by Prudential Real Estate and Relocation Services, Inc of 1,000 Americans between the ages of 25-64 with at least $35,000 household income, the expiration of the USA 2010 Home Buyer Tax Credits on April 30 is unlikely to put off Americans looking to purchase homes who believe now is a good time to buy and are confident that home prices will rise. Among consumers actually shopping for homes, 65% believe that the end of the tax credits will have little or no effect on their interest in purchasing a home.
While consumers remain unsure about the direction of the housing market, the survey reveals that they are optimistic about real estate values with 46% of consumers expecting real estate prices in their area to increase over the next year. Just 12% expect prices will decline. Over the next five years, 79% expect real estate prices to increase, with 20% expecting prices to increase substantially.
Despite the significant downturn in the real estate market, the survey underscores that the dream of home ownership and the perception that owning a home is a good investment remain intact. Among current renters, 75% still believe owning their home is a better long-term choice for their needs than renting.
The majority of consumers also believe that home ownership is a better investment than individual stocks or bonds (75%), mutual funds (72%), or savings accounts (74%).
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Commercial Market Starts To Perk Up
Posted by Dario Lorenzo in Blog, Business, US Market on April 25, 2010
By Paul Davidson, USA TODAY
The darkest cloud over the economic recovery — the troubled commercial real estate market — may be clearing a bit. Prices of commercial property are up slightly compared with last fall. Loan modifications have risen sharply the past six months.
Commercial mortgage-backed securities (CMBS), a big funding source that was comatose for two years, has come to life recently.
The developments won’t alleviate the sector’s biggest problem: the rising pace of defaults. But they should contain the damage and provide a lifeline to better-performing properties, analysts say.
Pending home sales rise 8.2 percent in February
Posted by Dario Lorenzo in Blog, Business on April 6, 2010
Alan Zibel, AP Real Estate Writer, On April 5, 2010, 3:08 pm EDT
WASHINGTON (AP) — The housing market is coming back from the winter doldrums.
The Seven Secrets of the Rich – Part 5 of 7
Posted by Dario Lorenzo in Blog, Business on March 28, 2010
Focus Obsessively and Work, Work, Work…
Having a great business plan, vision or idea is a great slant, but executing it can require an almost neurotic attention to detail, a self-assured devotion to serving the customer and being willing to follow a grueling work schedule.
It’s not an effortless road. The rich don’t base their actions on what is easy and what is convenient.
Many of the wealthy relentlessly sweat the small stuff. Roy Kroc was famously obsessed with cleanliness in his McDonald’s restaurants. He was fastidious to the point of using a toothpick to clean out the holes of the mop wringer.
Roger Penske, race car driver turned trucking magnet and race-team owner, demanded that workers clean the underside of his race cars daily. And, as Donald Trump likes to say, “If you don’t know every aspect of what you’re doing down to the paper clip, you’re setting yourself up for some unwelcome surprises.”
The customer is truly king in the eyes of those who made fortunes in the service industry. This based on the reality that disaffected customers can always take their business elsewhere. “There is only one boss–the customer,” Sam Walton used to say. “And he can fire everyone in the company simply by spending his money somewhere else.” Ray Kroc agreed: “If we focus on satisfying our customers and take care of the top line of our business, the bottom line will always follow.”
Coddling customers and catering to often fickle tastes calls for an unreserved commitment to work. While some may follow the Dale Carnegie model–pick good managers and head home at noon–they are probably in the minority. In fact, says Robert Frank, author of the Richistan replacing the idle rich is a new breed of, “workaholic wealthy who can’t stop building empires even after becoming billionaires.”
Centi-millionaire Martha Stuart is in a perpetually manic state. Most recently she designed 2,000 household items for Macy’s department store while peddling a line of wines and food along with her other publishing and TV ventures.
Communications mogul Ted Rogers, now 74 is still a notorious micromanager and workaholic. “He doesn’t golf: he doesn’t have hobbies. His company is his life,” said a former executive of Rogers’
For many, inhuman working hours are de rigueur in the early days of a start-up. In his first six years at Microsoft, Bill Gates averaged just two vacation days a year. eBay co-founder Jeff Skoll who underwent several back surgeries blamed his physical troubles on years of 100 hour work weeks at the company.
Grinding work schedules can sometimes go hand in hand with a penchant of frugality. Mexican industrialist, Carlos Slim Helu, among the world’s richest man works out of an unadorned poorly lit headquarters and admonished employees to, “maintain austerity.”
Costco co-founder and chief executive Jim Sinegal answers his own phone and wears $12.99 house-brand shirts.
Warren Buffett’s partner, Charles Munger, worth $2 billion is a Costco board member often found shopping at the big-box store picking up golf balls, wine, and even his clothes.
IKEA founder Ingvar Kampred recycles tea bags and drives a rusty Volvo.
And Donald Trump’s centi-millionaire father was known to collect spare nails at his construction site in case he might need them for later use.
Next week…#6–Timing is Everything.
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www.realestatebreakthroughsystem.com
2010 Outlook from PricewaterhouseCoopers
Posted by Dario Lorenzo in Blog, Business, US Market on March 18, 2010
Apartment Sector to Lead Rising Property Sales in 2010
As cap rates begin to stabilize, investors are showing more confidence in the commercial real estate market than at any point in the last two years, a new report from New York-based PricewaterhouseCoopers shows.
CNN Money- Plan To Save Commercial Real Estate
Posted by Dario Lorenzo in Blog, Business, US Market on March 10, 2010
A Plan To Save Commercial Real Estate
NEW YORK (Fortune) — Economists have long been predicting commercial real estate could be the next day of reckoning for the financial markets, with a wave of defaults looming as billions of dollars in troubled loans come due in the coming months.
The Seven Secrets of the Rich – Part 6 of 7
Posted by Dario Lorenzo in Blog, Business on March 3, 2010
Timing is Everything
Of course all Markets have their ups and downs and timing the gyrations is not an easy feat but many members of the rich got there thanks to great timing by riding a creative business boom or conversely by seizing opportunities that often accompany the inevitable bust.
Spurred on my the strong stock market and low interest rates of recent years one crowed of Billionaires has scored big in high finance.
Hedge fund honcho Bruce Kovner , Paul Tudor Jones II, Steve Cohen and Edward S. Lampert for example have all more than doubled their net worth since 2004 according to Forbes.
33 year old John Arnold whose Texas Base Centaurus Energy Fund returned up to 150 percent in 2005 transformed an $8 million bonus in 2002 (from former employer Enron) into a net worth of $1.5 billion in 2007.
Meanwhile the boom in private equity has flattened the wallets of among other multi billionaire financiers Stephen Schwarzman, Henry Kravis and Leon Black whose fortunes have more than tripled since 2004.
Needles to say finance is a high-risk game. For one thing and uptick in interest rates can wreak havoc on hedge funds that borrowed heavily to buy bonds of already highly leveraged companies. Such a structure based on reckless risk can easily tumble. How to survive the high finance rollercoaster? As Paul Tudor Jones II who predicted the 1987 market crash put it…”you adapt, evolve, compete or die.”
The dot-com crash of 200 meanwhile offers a few survival lessons. Many of the fortunes amassed during the 1990’s internet bubble mainly by young high tech whizzes came tumbling down. Even the very richest like Bill Gates and Oracle’s Larry Ellison lost billions in one year. Yet a few companies such as E-Bay and Goggle which where able to adapt and evolve weathered the storm. In fact the long view shows that the percentage of fortunes founded on high tech between 1982 and 2006 has quadrupled.
For one dot-com founder Texan Mark Cuban it was impeccable timing the earned him multibillionaire status. Cuban sold broadcast.com to Yahoo for nearly $6 billion in 1999 just before the bust. The deal made since to Yahoo in that they needed a multimedia component but shortly afterward Cuban also bumped Yahoo stock and not a moment to soon. “I had zero expectations that the market was efficient or had a clue about what it was doing. So when I had the opportunity to protect myself I did” Cuban later said.
Timing is just as vital in the volatile real estate market. A hot market in pre-2000 Silicon Valley for example vastly increased the fortunes of real estate mogul John Sobrato, Carl Berg, John Arrillaga and others. As Sobrato sum up his success “A lot of it is focus. I have always worked hard at whatever I did. Bt I was certainly in the right place at the right time.”
And although the US real estate market was in a duldrum in 2006 the right place was Spain. Its sizzling property market created nine new billionaires according to Forbes including Enrique Banuelos, whose net worth came to more that $7 billion. Behind the surge in Spanish real estate is the appeal of beaches property on the Mediterranean.
Next week… It’s Not Just (Or Even Mostly) About the Money.
click below to sign up for my free 38 week online video course called “The Real Estate Breakthrough System”
www.realestatebreakthroughsystem.com
The Seven Secrets of the Rich – Part 4 of 7
Posted by Dario Lorenzo in Blog, Business on February 20, 2010
Know Your Market… Intimately
Immersing oneself early in a given market can often be the fast track to expertise. Draw material from your own life experience–it is what we all know best.
Know your Market…. Intimately
Budding writers and playwrights are often advised to draw material from what they know best–their own experiences or lives. The business equivalent–know your market inside out.
The Seven Secrets of the Rich – Part 3 of 7
Posted by Dario Lorenzo in Blog, Business on February 1, 2010
Gamble, but wisely.
Risk-taking seems to be built into the DNA of the rich. Not surprisingly many are avid card players, such as financier Henry Kravis, Investor Steven Cohen and Carl Icahn and the nation’s most famous bridge partners, Bill Gates and Warren Buffet.
Real Estate and Casino tycoon Phillip Ruffin admits being guilty of playing Black Jack. Poker was entertainment mogul John Kluge’s pleasure during his college years and by the time he graduated from Columbia University in 1937, he had amassed $7,000 in winnings.
The seven secrets of the rich part 2 of 7
Posted by Dario Lorenzo in Blog, Business on January 23, 2010
Making your own luck
Think about the last time you closed a deal. Or the last time your effort paid off in large returns. Was it pure luck?
Forbes magazine recently asked members of its 400 richest list how much of their success they attributed to sheer luck. Responses varied. But none accredits their heaping success to sheer luck alone.