Trends & Property Values AASBO November 2012 Bi-Monthly Meeting Wednesday, November 14, 2012 Megan Wienand Judy Richardson Vice President Vice President RBC Capital Markets Stone & Youngberg, (602) 381-5367 A Division of Stifel Nicolaus (megan.wienand@rbccm.com (602) 794-4012 jrichardson@syllc.com
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Section One Fiscal Year 2014 2
Secondary Assessed Valuation Changes County FY 2008 FY 2009 FY 2010 FY 2011 FY 2013 Maricopa 17.70% -0.55% -14.27% -22.02% -11.25% Pima 16.72% 2.77% -5.26% -9.57% -3.28% Pinal 47.75% -1.47% -21.34% -17.01% -1.88% Yuma 23.66% 7.94% -3.99% -7.52% -6.55% Other Counties 25.69% 3.31% -9.53% -12.32% -6.06% Source: Arizona Tax Research Association. 3
Arizona Market Situation Pending foreclosures down 73% from peak Delinquent home loans down 48% from peak New home sales are up 55% - supply constrained Overall supply of homes for sale remains low Average $ / sq. ft. up 25% in last year Labor shortage in skilled construction trades Source: W.P. Carey School of Business - Center for Real Estate Theory and Practice . 4
Delinquency & Foreclosures Source: W.P. Carey School of Business - Center for Real Estate Theory and Practice . 5
Foreclosures Source: W.P. Carey School of Business - Center for Real Estate Theory and Practice . 6
New Homes Rising from an unprecedented 4 year low Demand since January 2012 is very strong Spec supply at a 7 year low Builders capping sales to conserve lots Active subdivision down 18% since January 63% will sell out within 12 months Source: W.P. Carey School of Business - Center for Real Estate Theory and Practice . 7
New Home Sales – Maricopa County Source: W.P. Carey School of Business - Center for Real Estate Theory and Practice . 8
Outlook Low inventory will cause prices to rise Investors will slow down as cap rates fall Foreclosures will quickly drop to normal levels Short sales will continue but at lower volumes Builders will slowly ramp up production Faster if a solution is found for labor shortages Source: W.P. Carey School f Business - Center for Real Estate Theory and Practice . 9
FY 2014 Values Conclusion What does all of this mean for FY 2014? − While the housing market seems to have turned and is steadily rebuilding itself, the impact will not be felt until FY 2015. − Since assessed valuations for FY 2014 are based on fall 2011 values, FY 2014 AVs are still falling. − From preliminary values we have seen from Maricopa, Pinal and Pima Counties, assessed valuations are still on the decline for next fiscal year. ~ 5% declines on average 10
FY 2014 Maricopa County Estimated Full Cash Values by Property Type Median Full Cash Values FCV % Property Type FY 2013 FY 2014 Change Vacant Land 17,000 15,770 -7.24% Single Family Residential 11,810 109,100 823.79% Condominium 70,500 61,000 -13.48% Apartements 71,700 69,600 -2.93% Commercial 392,901 345,263 -12.12% Manufactured Housing 49,695 47,877 -3.66% Source: Maricopa County Assessor. 11
FY 2014 Maricopa County Estimated Full Cash Values by City Median Full Cash Values FCV % Median Full Cash Values FCV % City FY 2013 FY 2014 Change City FY 2013 FY 2014 Change No City/Town 142,000 135,200 -4.79% Tempe 124,500 107,500 -13.65% Avondale 83,700 76,300 -8.84% Tolleson 33,000 32,700 -0.91% Buckeye 74,800 69,300 -7.35% Wickenburg 116,800 114,600 -1.88% Chandler 136,600 127,700 -6.52% Youngtown 37,000 36,700 -0.81% El Mirage 56,800 53,500 -5.81% Carefree 409,900 406,800 -0.76% Gila Bend 30,100 26,800 -10.96% Cave Creek 315,000 309,500 -1.75% Gilbert 143,300 135,300 -5.58% Litchfield Park 141,300 131,300 -7.08% Glendale 81,000 72,100 -10.99% Fountail Hills 206,000 204,600 -0.68% Goodyear 124,100 118,200 -4.75% Queen Creek 148,300 137,700 -7.15% Guadalupe 35,500 31,750 -10.56% Sun City 77,700 69,500 -10.55% Mesa 100,700 91,500 -9.14% Sun City West 130,300 122,800 -5.76% Paradise Valley 828,250 833,500 0.63% Sun City Grand 202,100 192,600 -4.70% Peoria 118,700 108,700 -8.42% Sun Lakes 160,000 151,200 -5.50% Phoenix 78,300 69,000 -11.88% Ahwatukee 165,600 154700 -6.58% Scottsdale 227,000 220,500 -2.86% Total 111,000 101,600 -8.47% Surprise 96,600 91,100 -5.69% Source: Maricopa County Assessor. 12
Section Two Fiscal Year 2015 13
Current Values Become FY 2015 AV Home values are up in Maricopa and Pinal counties AZ Republic 10/29/12: − Metro Phoenix average home prices up 35% in past year − Most economists predict continued increases for the next 3 years (10- 12%/year) Hard to get information on rest of state, but increases are probably less in areas where home values didn’t fall as much 14
Inconsistent Price Increases Across state Within metro Phoenix, prices in one zip code increased 45% in the first 8 months of 2012 while other areas decreased as much as 15% Examples of ranges in zip codes within cities: − Chandler: -1% to +23% − Glendale: -10% to +27% − Mesa: +9% to +34% − Scottsdale: 0% to +24% 15
Inconsistent Price Increases Some reports on home price changes compare with the same month in the prior year − This causes numbers to be inconsistent and not helpful in projecting impact on assessed valuation − For example, Scottsdale − June 2012 up 13% over June 2011 − July 2012 up 9% from July 2011 − August 2012 up 6% over August 2011 16
Impact on FY 2015 District AV Current home price increases don’t represent increases over the current (FY 2013) AV These are increases over next year’s (FY 2014) AV (based on fall 2011 values) AV in many districts will decrease in FY 2014 Therefore, FY 2015 residential AV increases may just bring districts up to where they are now in FY 2013 17
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