Arizona’s Moving in the Right Direction

Significant economic growth on the horizon for Arizona, U.S.

Ilana Lowery

Editor- Phoenix Business Journal

Feb 22, 2013, 4:04pm MST

It might feel like we’re experiencing an economic recovery this year, but actually, it won’t be until next fiscal year when we really begin to see signs of significant growth in the economy both locally and nationally.

That was the message delivered this morning by Jim Rounds, senior vice president and senior economist with Elliot D. Pollack and Co. Rounds was the keynote for Westmarc’s 2013 Annual Meeting and Economic Forecast held at Arizona State University West.

The good news is, “we’re moving in the right direction,” Rounds said, adding that it will be important for groups such as the Arizona Commerce Authority and the Greater Phoenix Economic Council to continue focusing on economic development tools and developing a qualified workforce throughout Arizona.

“We need to start talking about quality, not just job creation,” he said.

According to Rounds, more emphasis needs to be placed on tourism as an economic development vehicle, and there needs to be more of a focus on industries where Arizona tends to have an economic advantage, such as solar and manufacturing.

“We need to start promoting what we do well,” he said.

During his presentation, Rounds also said that according to the U.S. Bureau of Labor Statistics, in 2012 Arizona moved into the No. 5 spot for job growth after falling to a miserable 48th at the height of the Great Recession when the state lost 300,800 jobs. The top 10 states for job growth also include Texas at No. 4 and California at No. 10.

“Arizona has recovered nicely,” Rounds said.

The state has gained about 103,000 jobs back (from July 2010 to December 2012), he said.

“We are 33 percent of the way back and growing in a lot of sectors,” Rounds said.

One area where Rounds still has some concern is with home prices. A steady 10 percent growth — which is the expectation for this year — would be ideal, he said, versus the 34 percent growth in prices from 2011 to 2012.

Specifically speaking about housing in the West Valley, Rounds said the region will continue to experience growth, and it will continue to get quality projects. He is optimistic that more renters will buy and there will be some population growth. The West Valley also will see employment growth, he said.

While the national economy is experiencing sub par growth, Rounds said Arizona’s recovery should continue at a nice pace with “normal” returning in “2015-ish.”

http://www.bizjournals.com/phoenix/blog/business/2013/02/significant-economic-growth-on-the.html?page=all

See Inside Arizona’s Most Expensive Homes

Watch this video  or click on the link below to see some of Arizona’s most expensive homes.

http://www.myfoxphoenix.com/video?clipId=8442810&topVideoCatNo=237051&autoStart=true

Benefits to Home Ownership

Eight Tax Breaks for Homeowners

Taxes are due April 15, which means it’s time to start gathering your W2s, 1099s, child care receipts and bank statements.

But before you sit down with your accountant, it’s important for you to know that merely owning a home could mean you qualify for tax breaks. In most cases, you need to itemize your taxes in order to take advantage of these deductions. Yes, it makes the tax-filing process seem impenetrable, but the benefits may outweigh the complications.

Here are a few of the tax breaks you’ll want to investigate:

Mortgage interest paid at settlement

Take a look at your closing statement; one item that’s generally listed there is home mortgage interest. On a mortgage of up to $1 million, you can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). This amount should be included in the mortgage interest statement provided by your lender.

Points

Did you pay points in order to obtain your home mortgage? These fees are included on the income tax deductions list and can be deducted as long as they are associated with the purchase of a home. If you refinanced your home, these points are still deductible, but it must be done over the life of the mortgage.

Property taxes

As long as they are based on the assessed value of the real property, you can deduct your state and local property taxes. However, if your money is being held in escrow for the purpose of paying property taxes, you cannot claim this deduction until the money is actually taken out of escrow and paid. If you do this, check your Form 1098 for the amount you may deduct. Be aware that if you receive a partial refund of your property tax, the amount of the deduction you can claim will be reduced.

Selling costs

If you sold a home in the past year, you may be able to reduce your income tax by the amount of your selling costs. These costs can include things such as repairs, title insurance, advertising expenses and broker’s fees. The IRS only allows the deduction of repair costs associated with selling if the repairs were made within 90 days of the sale. It’s also crucial that the repairs were made with the intent of improving your home’s marketability. Selling costs are deducted from your gain on the sale.

Home office

If you use a portion of your home exclusively for the purpose of an office for your small business, you may be able to claim a deduction on your taxes for costs related to insurance, repairs and depreciation. You may only claim this deduction if the space within your home is used exclusively and regularly as either your principal place of business or a place where you meet and deal with customers or patients. You may also be able to take advantage of this deduction if a portion of your home routinely is used for storing items (product samples, inventory, etc.) used in your business.

In tax year 2010 (the most recent year for which figures are available) nearly 3.4 million taxpayers claimed the home office deduction.

Mortgage insurance premiums

You may be able to deduct the premiums paid for private mortgage insurance for your principal residence and for a non-rental second home.

The deduction begins to phase out once your adjusted gross income reaches $100,000 ($50,000 for married filing separately). In general, you can deduct the premiums paid for the current tax year only. A qualified tax adviser can provide information about rules for mortgage insurance provided by the Federal Housing Administration, Department of Veterans Affairs and Rural Housing Service.

Home improvement loan interest

If you’ve taken out a loan to make improvements on your home, you may be able to deduct the interest on this loan. Qualifying loans are those taken out to add “capital improvements” to your home, meaning the improvement must increase your home’s value, adapt it to new uses or extend its life. New carpeting or painting are not considered capital improvements, while adding a garage, installing a water heater or building a deck are all examples of capital improvements.

Construction loan interest

If you take out a construction loan to build a home, you may qualify to deduct the interest. The IRS only allows a deduction for mortgage interest if the loan relates to a “qualified” home, which means it must either be your principal residence or a vacation home that you will use for personal purposes. You can only use this deduction for the first 24 months of the loan, even if the actual construction takes longer.
Tax codes can be confusing. You may want to consult the IRS website for information concerning deductions and credits. Additionally, consider meeting with a professional to ensure you’re not missing any deductions for which you’re eligible.

http://www.foxbusiness.com/personal-finance/2013/02/15/eight-tax-breaks-for-homewoners/?intcmp=obnetworkan

A Recovering Market

Home prices up in 9 out of 10 metropolitan areas NAR says

February 11, 2013, 2:32 PM

Home-price growth is becoming more widespread, with year-over-year gains in almost nine-tenths of the country’s metropolitan statistical areas, according to data released Monday by the  National Association of Realtors.

The median price for existing single-family homes rose in 133 of 152 metropolitan statistical areas in the fourth quarter compared with the same period in the prior year. That result is a jump from year-over-year gains among just 29 areas for the fourth quarter of 2011.

“Home sales are being fueled by a pent-up demand and job creation, along with still favorable affordability conditions and rents rising at faster rates,” said Lawrence Yun, NAR’s chief economist, in a statement. “Our population has been growing faster than overall housing stock, so supply and demand dynamics are very much at play.”

Looking at cities, the Phoenix-Mesa-Scottsdale areas in Arizona saw the largest year-over-year price gain for the fourth quarter, with prices rising 33.9%, according to NAR. However, this area took a particularly bad beating when the housing bubble burst, and prices there remain relatively low.

Meanwhile, Kingston, N.Y., located about 100 miles north of Manhattan, saw the lowest price change, with a year-over-year decline of 7.9% for the fourth quarter.

Looking at the U.S., NAR reported that the national median price for existing single-family homes rose to $178,900 in the fourth quarter, up 10% from the same period in the prior year. That 10% jump was the largest year-over-year gain since the fourth quarter of 2005. By region, prices rose 20.1% in the West, 9.2% in the Midwest, 9.1% in the South and 0.7% in the Northeast.

Homebuilders have benefitted from the recovering market. An exchange-traded fund of builders, the iShares Dow Jones U.S. Home Construction Index Fund, has seen shares rise about 61% over the past 12 months.

Low inventory has been supporting price growth – unsold inventory is at the lowest level since 2001. Markets such as San Francisco-Oakland-Fremont in California saw outsized year-over-year price growth in the fourth quarter, with prices up 28.3%.

Also contributing to higher prices are fewer distressed sales. Foreclosures and short sales are making up a smaller portion of the market, declining to 23% in the fourth quarter, compared with 30% a year earlier, according to NAR.

Despite gains, price levels remain relatively low in the U.S., around 30% below a 2006 bubble peak. Indeed, NAR’s index of housing affordability reached a record high in 2012, thanks to favorable pricing conditions, which also include persistently low mortgages rates. Still, economists are concerned that overly restrictive lending standards are preventing many would-be borrowers from participating in the market, including first-time buyers.

– Ruth Mantell

http://blogs.marketwatch.com/thetell/2013/02/11/home-prices-up-in-9-out-of-10-metropolitan-areas-nar-says/#

Patrick Ritchie Teaches Financial Recovery Workshop

The Clear Title Biltmore branch offered a class aimed to help clients get back to financial health after short sale or foreclosure.

A Land Rush in Phoenix

Builders in Phoenix buy property for subdivisions

Developers and homebuilders in metropolitan Phoenix are scrambling to buy property for dozens of new subdivisions.

The Arizona Republic reports (http://bit.ly/WOlsWB) that new home building rose 71 percent in 2012 over 2011 and that the number of available lots is dwindling.

The land rush is further evidence that metro Phoenix’s homebuilding industry is recovering from its devastating six-year slump.

Homebuilders sealed nearly 100 land deals in December alone that will create thousands of sites for homes and are now buying more land in more moderately priced areas in the northwest and southwest parts of metro Phoenix as prices continue to rise in the metro area’s southeastern portion.

The number of empty lots ready for construction has shrunk to its lowest level in more than a decade, with only enough lots in hand to last builders a year.

The land purchases are mostly in communities started before the crash and in some ways echo growth in the boom years, except the developments farthest from Phoenix’s core aren’t yet attracting builder or buyer attention. Most of the land purchases are inside the outermost freeways.

Avoiding a repeat of the 60,000 houses built in the region during 2005-06 is good news. This time around, new-home construction is based on real demand from homeowners and not speculation by investors and builders. Metro Phoenix homebuilders began to see more people checking out their model homes and sales start to rise in spring 2012, six months after the resale market had begun to recover.

The number of new homes built in the Phoenix area climbed 71 percent to 11,600 in 2012. New-home sales followed the trend, with buyers closing on 10,034 new houses last year, up 41 percent from 2011. These are the biggest jumps for the new-home market since 2006. The median price of a new house climbed almost 15 percent during 2012 to reach $240,000.

“The recovery in the home market is real. It’s not about wishing and building for buyers who aren’t there or can’t afford the house,” said Arizona real-estate analyst RL Brown, co-publisher of the Phoenix Housing Market Letter.

Mike Orr, who studies real estate at Arizona State University’s W.P. Carey School of Business, believes builders must construct more houses in the Phoenix area this year to keep up with buyer demand. Another reason: The number of houses offered for resale has hovered near a record low for the past year.

“It seems many people may have decided to hang onto their homes in an effort to let values keep going up. I also anticipate another possible drop in supply this spring,” Orr said. “Unless homebuilders can start keeping up with rising demand, we may have a chronic supply problem.”

___

Information from: The Arizona Republic, http://www.azcentral.com

Construction Employment is Helping the Economy

CONSTRUCTION EMPLOYMENT, SPENDING LEVELS HIT 3-YEAR HIGH AS FIRMS ADD 28,000 JOBS

Posted on February 1, 2013 by AZRE

Revised government data issued today show the construction industry is contributing substantially to economic and employment growth, according to an analysis by the Associated General Contractors of America.

Association officials noted that construction employment rose for the eighth consecutive month in January, while construction spending in December increased for the ninth month in a row. Both totals were the highest levels in more than three years.

“The new employment data show the industry lost even more jobs in the recession than previously estimated but has added almost 300,000 jobs in the past two years, including nearly 100,000 since September,” said Ken Simonson, the association’s chief economist. “Meanwhile, the steady rise in construction spending since last March suggests contractors will be hiring even more workers in the months ahead.”

Construction firms employed 5.731M people in January, a gain of 28,000 from December and 102,000 or 1.8% from a year ago, Simonson noted. The industry unemployment rate, which is not seasonally adjusted and thus is typically high in January, fell from 17.7% in January 2012 to 16.1% last month.

Both residential and nonresidential construction added jobs for the month and year. Residential construction — building and specialty trade contractors — added 14,500 jobs in January and 53,200 (2.6%) over 12 months. Nonresidential construction — building, specialty trade and heavy and civil engineering firms — expanded by 13,700 employees in January and 48,900 (1.4%) over the year-ago level.

Construction put in place totaled $885 billion in December, the most since September 2009 and a pickup of 0.9% from November and 7.8% compared with December 2011. Private residential construction spending jumped 2.2% for the month and 24 percent year-over-year. Private nonresidential spending grew 1.8% and 7.6%, respectively. These increases more than offset a plunge in public construction spending of 1.4% for the month and 5.6% over 12 months.

“We are likely to see continued strong growth in single- and multifamily homebuilding, moderate increases in private nonresidential construction and shrinking public investment levels for the next several months,” Simonson said. “Those trends, in turn, will lead to a steady increase in the number of construction jobs.”

Association officials said the rosy outlook could be undermined if public officials do not begin to increase investment in construction. They urged Congress to avoid an abrupt slowdown in federal funding that would occur if an across-the-board spending sequestration or a government shutdown occurs in March.

“Instead of making short-sighted cuts in programs to provide flood protection and clean water systems, Washington officials need to find a way to address out-of-control entitlement spending,” said Stephen E. Sandherr, the association’s chief executive officer. “And we must continue to give the private sector the kind of stability and certainty it needs to thrive.”

http://azremagazine.com/economic-development/construction-employment-spending-levels-hit-3year-high-firms-add-28000-jobs#

Clear Title of Arizona Sponsors The West USA Kickoff Event

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U.S. Home Prices Continue To Rise

U.S. home prices post biggest jump in over six years -CoreLogic

NEW YORK | Tue Feb 5, 2013

Feb 5 (Reuters) – U.S. home prices rose for a tenth consecutive month on a year-over-year basis in December, posting their biggest gain in more than six years, data analysis firm CoreLogic said on Tuesday.

CoreLogic’s home price index rose 0.4 percent from the previous month and added 8.3 percent compared to December a year ago. The year-on-year jump marked the biggest increase in the index since May 2006.

Excluding distressed sales, prices were up 7.5 percent on a yearly basis and 0.9 percent compared to the previous month. Homeowners in danger of foreclosure, or in “distress”, often sell their homes at a significantly reduced price.

The near year-long run of improving home prices in most U.S. states has helped cement expectation that the housing market is finally on the mend – all be it at a slower pace during other recoveries – after the 2007-09 financial crisis and recession sent house prices crashing.

“We are heading into 2013 with home prices on the rebound,” said Anand Nallathambi, president and chief executive of CoreLogic. “The upward trend in home prices in 2012 was broad based with 46 of 50 states registering gains for the year. All signals point to a continued improvement in the fundamentals underpinning the U.S. housing market recovery.”

There continued to be big differences between the pace of recovery in different parts of the nation, reflecting, in part, the widely varying impact of the recession on house prices in different localities.

The five states with the highest home price appreciation when distressed sales are counted were: Arizona, up 20.2 percent; Nevada, up 15.3 percent; Idaho, up 14.6 percent; California, up 12.6 percent; and Hawaii, up 12.5 percent.

Four states posted home price depreciation. They were: Delaware, down -3.4 percent; Illinois down -2.7 percent; New Jersey, down -0.9 percent; and Pennsylvania, down -0.5 percent. Those numbers also include distressed sales.

Of the top 100 statistical areas measured by population, 16 showed year-over-year declines, down from 18 last month.

http://www.reuters.com/article/2013/02/05/usa-housing-corelogic-idUSL1N0B4B2E20130205