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Trends & Property Values
AASBO November 2012 Bi-Monthly MeetingWednesday, November 14, 2012
Megan Wienand Judy RichardsonVice President Vice PresidentRBC Capital Markets Stone & Youngberg,(602) 381-5367 A Division of Stifel Nicolaus([email protected] (602) 794-4012
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Secondary Assessed Valuation Changes
Source: Arizona Tax Research Association.
CountyMaricopa 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%
FY 2013FY 2008 FY 2009 FY 2010 FY 2011
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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 tradesSource: W.P. Carey School of Business - Center for Real Estate Theory and Practice .
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Delinquency & Foreclosures
Source: W.P. Carey School of Business - Center for Real Estate Theory and Practice .
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Foreclosures
Source: W.P. Carey School of Business - Center for Real Estate Theory and Practice .
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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 monthsSource: W.P. Carey School of Business - Center for Real Estate Theory and Practice .
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New Home Sales – Maricopa County
Source: W.P. Carey School of Business - Center for Real Estate Theory and Practice .
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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 .
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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
FY 2014 Maricopa County Estimated Full Cash Values by Property Type
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%
Median Full Cash Values
Source: Maricopa County Assessor.
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Source: Maricopa County Assessor.
FY 2014 Maricopa County Estimated Full Cash Values by City
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FCV % 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%
Median Full Cash Values Median Full Cash Values
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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
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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%
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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
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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
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Impact on FY 2015 District AV
Total district AV increase may be less than the % increase in home values
− Increased residential AV will be partially offset by Class 1 Assessment Ratio decrease from 19.5% to 19%
−Values for other classes of property may not be increasing at all or as much
−These factors may be offset in some districts by new construction (new home building has doubled this year)
Prop 117 limits AV increase of an individual property to 5% a year
It won’t be in effect for FY 2015 (first impact is in FY 2016)
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Impact on Taxpayers
If home values increase more than the total district AV increases
−Shift in tax burden – residential taxes go up, other property taxes go down
−This may not be good for elections in Nov 2014
Value changes can be very uneven within districts
−Even if there is not a large overall increase in home values in a district
−Taxpayers in areas where home prices have gone up a lot will be unhappy
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Impact on Taxpayers
AV changes in Maricopa and Pinal Counties tend to drive statewide AV changes
− Any increase in statewide AV will cause the QTR to go down
−This will help homeowners whose home values have not increased much
−November 2014 could be a good year for an election in a district with stable home prices
