Now Apartment Rents are About to Soar (and what to do about it)

Now Apartment Rents are About to Soar (and what to do about it)

Ben Bernanke's money printing is starting to hit the apartment rental markets. This is real consumer level price inflation. Not a good sign. This means that the price inflation is already  moving beyond the capital goods sectors.

The apartment vacancy rate is expected to fall below 5% this year, crossing a benchmark into what it is commonly considered a “landlord’s market,” said Brad Doremus, senior analyst for Reis, a commercial real-estate research company. That means securing an apartment will become more difficult and rents are likely to be higher by the end of the year, reports MarketWatch.

Nationally, average advertised one bedroom rents have already gone up by 4.1% between March 2011 and March 2012, according to Apartments.com. The cities showing the most aggressive hikes in rent include   Chicago where one bedrooms are, on average, priced at $1,451 in 2012, up 11% from $1,302 in 2011. In Denver, rents are $1,067 this year, up 12% from $950 last year and in Charlotte, rents are $876 this year, up 13% from $774 last year.

Bottom line: If you are in the market for a rental and the price looks reasonable, grab it immediately, before someone else does and you end up paying more for a place.

I can recall many years ago a landlord was showing office space to me and another potential tenant. The first space he showed was just what I was looking for and appeared priced under the market. I shouted out immediately, "I'll take it." The other prospect ended up taking other office space in the building, but I got the prime location.

When rents are rising and you see exactly what you want at what appears to be an under market price, don't mess around grab it. Some landlords are quicker than others to adjust to new market conditions. The under market apartments will go quickly, leaving apartments available that are at the new higher rent level.

Or, buy a home while mortgage rates are at an all time low. prices are rising and bidding wars are back on while Phoenix sits at a 1.9 month supply of homes on the market...less than 2005.

Valley Home Prices on the Upswing

Valley home prices on the upswing
With fewer houses for sale, buyer competition mounts

By Catherine Reagor
The Republic

Home prices are climbing in metroPhoenix faster than they have since the housing boom.

Some parts of the region experienced home-value increases of 5 to 10 percent a month this year because of a shortage of homes for sale that is sparking bidding wars between investors and regular buyers armed with pre-approvals for mortgages.

This emerging recovery of homeprices in the Phoenix area started late last year and has been building each month.

Home values still have a long way to go to recover to pre-boom levels. MetroPhoenix’s median existing-home price is currently $124,500, about $20,000 below the area’s median in 2002 and well below the $267,000 from the height of the boom in summer 2006.

But many housing-market analysts see this as the beginning of a long-awaited recovery for the area’s battered housing market. The uptick in prices is enticing more buyers who have been waiting for the market’s bottom to purchase a home and now have likely missed it.

Willo Historic District in Phoenix, Arizona

Willo Historical District History Plus Light Rail Access

Nestled in the very heart of urban Phoenix, Willo was once the epitome of suburbia - a collection of subdivisions on the outskirts of the small, but thriving metropolis of Phoenix. The Willo neighborhood between 7th and Central Avenues can be divided into two sections. J. P. Holcomb used a Homestead Patent in 1878 to acquire and settle the southern portion of Willo between Encanto Blvd. and McDowell. Mr. Holcomb acquired the northern portion, between Thomas Rd. and Encanto Blvd. in 1886 through a Timber Culture Land Patent.

For the next 20 years or so, the land was primarily for agricultural purposes and lay on the outskirts of town. In the early 1900's, four subdivisions were platted, containing home sites with long narrow lots. In the early 1920's, Home Builders, a residential construction firm, built 41 homes in the Bungalow style. During the mid to late 1920's Phoenix, like the rest of the West, experienced tremendous growth and a building boom.


Standards were set for residential construction, and "exhibition houses" (now called model homes) were developed to market the new construction. Most of the building activity in Willo during this period occurred in the N. Kenilworth and Broadmoor subdivisions, and included a "Spanish Rancho Home" exhibition house.


During the 1930's the Period Revival movement brought tremendous variety in architectural styles, including Tudor Revival, Greek Revival, American Colonial Revival, Spanish Colonial Revival and Pueblo Revival. However, the Depression brought construction to a near standstill. The mid to late 1930s and the development of the Federal Housing Administration (FHA) brought construction back to Willo. Construction from this period and later years often featured French Provincial and Monterey styles, with an architectural design that would eventually become what we know today as the Ranch Style house. Construction was also more standardized due to the influence of the FHA and other government-imposed standards. Most of these newer homes are found in the northern section of Willo.


In all, 22 separate subdivisions were platted and developed in Willo by various entrepreneurs from the turn of the century up to the beginning of WWII. Eventually, with the growth of Phoenix over the last century, the individual subdivisions platted by early developers were forgotten and the area blended into one cohesive whole. Unfortunately, the amazing growth of the city resulted in the encroachment of commercial development on what were once quiet suburbs. In the 1980's, residents of Willo successfully lobbied for status as a special conservation district, achieving historic status and assuring that this beautiful part of Phoenix history will be preserved for the enjoyment of future generations.

Development Influences

The historic development of Willo was the result of deliberate actions that shaped and controlled the neighborhood's visual and social characteristics. Many parties, including the local and national real estate trade, prominent civic leaders and the federal government, were responsible for these actions.

Over 700 homes were constructed in Willo, making it one of Phoenix largest historic neighborhoods. Seventeen subdivisions were platted in Willo, each indicative of the land development and architectural trends of their time. This brochure describes how the resources of public agencies, private firms and organizations were used to create the Willo community. 

Home Builders

In the early 1920’s, most of the Willo area was undeveloped agricultural land on the outskirts of the city. It was difficult to attract families to build their homes in Willo because of its somewhat isolated nature. Home Builders, a speculative residential construction firm, saw great opportunity in this new area.

Through the large-scale construction of homes, the company had the opportunity to create a new community, an atmosphere that encouraged people to purchase a house. Home Builders constructed 41 residences in Willo between 1920 and 1925, each in the same architectural style. The company was also responsible for the marketing of these residences, offering an affordable time payment plan, which appealed to middle class homebuyers. Home Builders thus set the standard for the appearance of the neighborhood, the quality of buildings to be located there and the economic and social characteristics of the area's residents.

Home Builders, like other builders of that time, constructed homes in the Bungalow style. Bungalows have large porches and broad roof overhangs and are usually one story. Wood clapboard, wood shingles, and stucco or brick masonry form exterior walls. The Bungalow style easily accepts simple plan variations and emphasizes the use of common building materials such as brick and wood, making the Bungalow simple and inexpensive to construct.

The Roaring 1920's

During the mid to late 1920’s, Phoenix witnessed phenomenal growth in its population and a great expansion of its city limits. Consequently, there was a growing concern over how the City should accommodate this growth without losing its unique qualities. Civic leaders and members of the local real estate trade agreed that haphazard development would be detrimental both to the current residential population and to property values. The residential building developers of Willo used four strategies to accomplish their goal of forging an economically and socially viable community: deed restrictions and protective covenants; platting large-scale subdivisions; constructing model homes and supporting the local zoning movement. Unlike Home Builders, these early developers only sold residential lots; they did not build speculative homes.

Subdividers controlled land values by placing building restriction clauses on the lots sold. For example, a building cost restriction of $2,500 would prevent those of modest means from building there and would dictate the quality of materials chosen for the structure. Other restrictions regulated specific building materials and types of building use, such as excluding an apartment house from a subdivision. As in many parts of the nation, racial restrictions were imposed as well. These restrictions gave Willo an upper middle class identity. Many store owners; professionals and upper echelon public service employees were the initial homebuyers in Willo.

Developers also set the tone of development in Willo subdivisions with the use of "model homes." The National Association of Real Estate Boards, local real estate firms and the American Construction Council sponsored a national program of model home construction during this period. This program emphasized the American Dream of home ownership as a marketing tool. New building technology was promoted in the model home campaign as well, offering added convenience and low building costs for homebuyers.

The "Spanish Rancho Home," the first building constructed in the Broadmoor Subdivision, was an "exhibition house." The house received wide publicity during its construction and opening. The interior was decorated, and the latest electrical, plumbing and heating systems installed and brought to the attention of the visiting public. After the house had successfully attracted prospective lot buyers to the subdivision and had set the architectural standard for the area, the building was sold to a private buyer.

Most of the building activity in the late 1920's occurred in the large North Kenilworth and Broadmoor subdivisions. Both were platted in 1928. By purchasing lots in large subdivisions, prospective homeowners were assured of neighbors who would meet the same deed requirements as they did, thereby guaranteeing social homogeneity in the area. The large size of the subdivisions offered the opportunity for a creative layout of lots and streets. The curvilinear street pattern of Broadmoor was touted for its design along 11 artistic lines" in keeping with the city beautification and planning movement of the period.

While deed restrictions assured Willo residents that nearby buildings would be of a character similar to their own, there was no means by which residents could control development immediately beyond the boundaries of their subdivision. However, by the 1910’s, large cities adopted zoning ordinances which granted municipalities the authority to regulate development within their city limits. Following suit, Phoenix civic leaders recognized that a zoning ordinance was an essential feature of a modern city.

Therefore, the city hired a prominent San Francisco consultant to draft a zoning code for Phoenix. The first zoning ordinance was passed in 1930. Zoning was supported by the local realtors for its ability to stabilize property values. William Hartranft, the first chairman of the Phoenix Planning Commission and a longtime resident of Willo galvanized their support. With the exception of a few lots zoned 11 neighborhood commercial" at major street intersections, all the Willo area was designated for single- family residential use. An exception was the provision for modest apartment buildings (such as the El Encanto Apartments) along Central Avenue, which was the historic edge of the Willo neighborhood.

Period Revival Architecture

The "Spanish Rancho Home's" design reflects the influence and popularity of the Spanish Colonial style through the mid and late 1920’s. By the early 1930’s, the Period Revival movement introduced a range of historical styles reflecting picturesque images of early American or European domestic architecture. Period Revival was the dominant style in California at the time, a factor that influenced design trends in Phoenix. The Spanish Colonial Revival style was first exhibited before the American public at the 1915 Pan-American Exposition in San Diego. Characteristics of these low, horizontal one or two story buildings include simple stucco or plaster walls and chimneys, low-pitched red tile gable roofs, arched window and door openings and modest detailing from several earlier eras of Spanish and Mexican architecture.

Tudor/Elizabethan Revival buildings have their origins in medieval England. The style, which was often described as picturesque and romantic, is characterized by its irregular shape; steep roof with sharp gables accented with half-timbering details; large chimney; cast concrete or stone-framed doors and various combinations of sheathing materials such as rough stone, stucco and brick. An interesting variation of the Tudor / Elizabethan Revival found in Willo is the Cotswold Cottage. The style's most distinguishing feature is its curved wood shingle roof, which suggests the appearance of a historic English thatched roof.

Also found in Willo are examples of the American Colonial Revival style. Although American Colonial is the nation's most popular revival style, it is not extensively represented in Phoenix. Characteristics of the style include Greek Revival door and window surrounds; shuttered, multi-paned windows; low-to-medium pitched gabled roofs, usually with the broadside facing the street and wood clapboard or brick outer walls.

The Impact of the FHA

The worst years of the local economic depression, 1931 through 1935, are illustrated by the virtual standstill of real estate development and construction activity in the Willo neighborhood. The National Housing Act of 1934 rejuvenated residential growth in Willo. The purpose of the Act was to "improve nationwide housing standards, provide employment and stimulate industry, improve conditions with respect to home mortgage financing, and to realize a greater degree of stability in residential construction." The Act created the Federal Housing Administration (FHA) that stimulated new construction by insuring residential mortgages, thus making them easier to obtain. In return, the FHA required that housing built with insured loans meet certain design and construction standards.

The development of Willo during this period was a direct consequence of Phoenix' zoning regulations converging with the policies of the FHA. The City's zoning regulations established types of land uses in Phoenix. The FHA policies mandated a specific palette of building materials and designs, which could be used to qualify for financing programs. The program also encouraged speculative development in large subdivisions by limiting the risk of mortgage foreclosure and by increasing demand for houses based on the FHA's low interest rates. As a result of these influences, like no other time in Phoenix history, there was a uniform, coordinated and controlled vision for developing new residential areas of the city. 

The FHA's directives gave developers a blueprint for the most cost efficient and marketable designs. The FHA sought uniformity in their subdivisions in hopes of creating stable, secure and attractive communities. Building components and styles were mass-produced, thereby cutting costs. Developers were able to plat and subdivide property confidently, for they were assured of financial backing from the banks.

In an effort to boost the public's awareness of their mortgage financing and to show future homeowners the advantages of the program, the FHA, with local lending institutions and building contractors, sponsored the construction of two "demonstration houses" in the Willo neighborhood. The houses, built in the summer and fall of 1936, were constructed for private owners but were opened for public inspection to demonstrate the ultra modern dwellings achieved through FHA financing." The prominent and prolific Phoenix architectural firm of Lescher and Mahoney designed both of these homes. The P.W. Westerlund House, designated the "House of Romance," was the first of three houses to be built Economy of construction and convenience were billed as the main features of the house. The "Home of Happiness" was the second FHA sponsored demonstration home in Willo. The Arizona State Fireman's Association sponsored the "Miracle" demonstration home in Willo. This home, which was endorsed by the FHA, promoted the use of fireproof construction materials such as adobe, cement, steel and asbestos.

Unlike the architecturally diverse subdivisions developed during the 1920’s, the subdivisions developed in Willo during the New Deal years are more uniform in appearance. This uniformity was a response of local developers to federal housing initiatives.

FHA era houses were constructed in two basic styles: French Provincial and Monterey. The FHA borrowed the general shape of their homes from the Period Revival styles but stripped the houses of elaborate exterior details, ornamentation and finishes. Built when the private automobile had become the dominant mode of transportation, these buildings incorporate garages or carports into their design.

The most distinctive feature of the Phoenix-FHA interpretation of the French Provincial style is its steeply pitched, hipped roof. These one-story buildings are asymmetrical in plan and have interlocking wings, giving the appearance of a rambling farmhouse. The Phoenix version of the FHA Monterey style is a forerunner of the modern Ranch style house. These are one-story structures with a low, horizontal orientation and an asymmetrical front facade. Exterior walls are covered by stucco or plaster. They have low-pitched gabled roofs usually sheathed in Spanish tile, and have adjoining garages.

Preserving Neighborhood Character

The effort to maintain the Willo neighborhood's character still continues. In 1986, Willo residents and city officials prepared the Willo Neighborhood Conservation plan, addressing such quality-of life issues as the development of high-rise office buildings in the area. In 1990, a neighborhood coalition successfully promoted designation of Willo as a local historic district. With the continuing commitment of its residents, the Willo neighborhood will remain proud of its past and preserving the neighborhood's unique qualities for the future.

Call Laura B. with DPR Realty, LLC at 602.400.0008 to buy or sell a Historic Home in the Willo Historic District in Downtown Central Phoenix

Wondering Why It's So Hard to Buy a Home In Phoenix?

Uncle Sam wants you to rent out its foreclosed homes

Wednesday, February 29, 2012 

Want to become a landlord in one of the nation’s hardest-hit foreclosure neighborhoods? Well, Uncle Sam has a deal for you.

Fannie Mae (FNMA, Fortune 500) will offer up nearly 2,500 distressed properties in eight locations to investors who are willing to buy them in bulk and rent them out for a set number of years.

Foreclosure Fiasco

The properties, which are located in Atlanta, Phoenix, Las Vegas, Los Angeles / Riverside, and three Florida regions, include all types of housing units, from single-family homes to co-op apartment buildings.

“This is another important milestone in our initiative designed to reduce taxpayer losses, stabilize neighborhoods and home values, shift to more private management of properties, and reduce the supply of REO properties in the marketplace,” said Edward J. DeMarco, the acting director of the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae.
Steal this home! 

7 foreclosure deals

The sales, which will cover a small fraction of the more than 180,000 properties Fannie and Freddie Mac (FMCC, Fortune 500) hold, will be open to qualified buyers under strict guidelines.

Most of the properties already house tenants and buyers will be required to continue to rent out the properties to them for as long as their leases last. Investors will also be required to rent the properties out for a specified number of years. The exact number of years has yet to be disclosed.
Investors must post security deposits in order to bid and also must prove that they are financially stable, have property management experience and have strong ties to the local community, such as a history of working with local development organizations.

Contact Laura B. at HistoricCentralPhoenix.com today to buy a foreclosed home.

Warren Buffett Bullish on Housing

Wednesday, February 29, 2012 

Warren Buffett, the billionaire investor and Berkshire Hathaway CEO, said on CNBC’s “Squawk Box” recently that he’d “buy up a couple hundred thousand” single-family homes if it was practical.

Buffett said that’s because he believes purchasing a home with ultra-low mortgage rates and holding it for the long-term has become a better investment than stocks right now.

“Housing will come back, you can be sure of that,” Buffett wrote in his annual letter to shareholders recently.
Buffett forecasts an increase in household formations, as more people who moved in with their parents or family members during the recession look to move out and get their own home soon.

“People may postpone hitching up during uncertain times, but eventually hormones take over. And while ‘doubling-up” may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure,” Buffett said.

Buffett said the recovery in the housing market could vary quite a bit among local housing markets, however. He did not provide a timeline of when he expected a full housing recovery, admitting that his prediction last year that a housing recovery will take shape within the year turned out to be “dead wrong.”

Valley Has Wealth of Luxury Homes

Catherine Reagor
The Arizona Republic Jan. 20, 2008

Metropolitan Phoenix, long known for its affordable new houses on the fringes, has become a magnet for affluent home buyers.

Nearly every suburb of the Valley, from rural Buckeye in the far southwest Valley to the farm community Queen Creek in the far southeast, posted sales of homes with seven-figure prices.

Paradise Valley, Scottsdale and the Biltmore and Arcadia neighborhoods of Phoenix continue to be the hot spots for the Valley's poshest homes. Nine out of metro Phoenix's 10 priciest homes are in Paradise Valley. The town hosts the most expensive dwelling: a $26 million estate with more than 31,000 square feet of space.

But as Historic metro Phoenix grows, more deep-pocketed buyers are opting for other areas closer to their work, family, favorite golf course or mountain preserve.

A few years ago, more sales of million-dollar homes started showing up in the older central Valley neighborhoods, in the new high-rises in Phoenix and Tempe, in well-established West Valley neighborhoods of Litchfield Park and Glendale and next to the mountain preserve in Ahwatukee.

More recently, luxury-home builders have started constructing speculative million-dollar homes in farther out communities known more for semi-affordable luxury homes and good schools. Among them: Ocotillo in Chandler, Las Sendas in Mesa, Estrella in Goodyear, Verrado in Buckeye and Vistancia in Peoria.

Craig and Wendy Kasten recently bought a $1.1 million home in Gold Canyon's Superstition Mountain golf community. The couple, who live most of the year in Wisconsin, have been visiting the Valley in the spring for several years.

"We looked in Paradise Valley and north Scottsdale, but the homes were smaller and there was more traffic," Craig Kasten said. "We wanted the best house for our money."

The Valley's million-dollar-home market slowed in 2007, but seven-figure sales weren't down as much as the rest of the market.

Last year, 2,227 million-dollar homes sold across metro Phoenix, according to an Arizona Republic analysis of real-estate data from the Information Market. That compares with 2,505 in 2006, which is about an 11 percent drop.

Overall, home sales were down almost 30 percent Valley-wide.

"Buyers are definitely looking for values," said Walt Danley, a luxury-home real-estate agent in the Valley with Coldwell Banker Residential. "But I haven't run into any million-dollar buyers having trouble getting financing because most are paying cash or putting significant down payments down."

Like the rest of the housing market, the number of listings of million-dollar homes is up.

There are 3,500 new and existing homes with price tags above $1 million for sale on the Arizona Multiple Listing Services Web site. In 2005, there were half that many pricey homes for sale Valley-wide.

Lawrence Yun, chief economist of the National Association of Realtors, said many people from pricier housing areas such as California and New York are buying million-dollar homes in Arizona because they are deals compared with the home prices they are used to.

Sandra Baldwin, a luxury-home agent with the Phoenix office of Equitable Real Estate Co., said the Valley's growing luxury market continues to attract a lot of buyers from not only out of state but also internationally. But she said like the rest of the area's housing market, some owners of million-dollar homes are overpricing their properties, which works to slow sales.

Two-thirds of the Valley's ZIP codes with large residential sections had million-dollar home sales last year.

The adage that buyers get more house and land for their buck the farther they drive holds true for the luxury-housing market, as well.

"A million dollars will get a buyer an old, smaller home that needs work in Paradise Valley and a newer home on a golf course with almost everything they need but their toothbrush in Chandler," said Mo Yaw of Realty Executives Ahwatukee.

A Mesa home listed for $1 million has 5,500 square feet, an acre lot, two master suites, a pool and spa, five baths and two offices. The least expensive home for sale in Paradise Valley was listed at $2 million. It has 3,500 square feet, three bathrooms and a pool.

Buyers looking for million-dollar homes can find them in most new suburbs. Besides getting bigger homes, some people who grew up in parts of the Valley and can afford million-dollar homes don't want to move away from their longtime neighborhoods.

"People who lived in Arrowhead on the west side and now can afford a million-dollar home are moving to Verrado, not necessarily Scottsdale," Baldwin said. "People from the old farming families in the southeast Valley are buying million-dollar homes in Chandler and Gilbert."

Only a few of the Valley's biggest suburbs didn't have million-dollar sales last year. But two of those ~ Laveen and New River - now have residential properties listed for more than $1 million.

"The housing market may be slowing now," Yaw said, "but new exclusive pockets of million-dollar homes are going to keep opening up in the Valley."

Search for luxury homes with Laura B. at her Historic Central Phoenix website who specializes in Historic Luxury Homes. Contact her today at 602.400.0008. Laura B. is a licensed Realtor in Phoenix with DPR Realty, LLC. Member MLS, NAR, PAR. EEOC.