Trends & Property Values AASBO November 2012 Bi-Monthly Meeting - PowerPoint PPT Presentation

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