Coffee heat rising

property values

Police Presence and Property Values

by

Ever wonder whether frequent cop helicopter buzzing affects the property values in your neighborhood?

About ten minutes ago one of the cop copters came blasting in, low enough to rattle the windows in the house, and started circling about three lots to the west of me. This is a not-infrequent occurrence here, because my part of the neighborhood forms a buffer between some very upscale, Old Phoenix streets to the east and a cluster of slummy tenements to the west. The residents of the people kennels get up to all sorts of mischief, from petty theft all the way to shooting and killing Phoenix’s Finest. So as you can imagine, the police are somewhat sensitized.

I used to live closer to the tenements. Since I moved about three blocks deeper into the neighborhood, the cop flyby’s haven’t been so noticeable, but in the old house, which stood near the intersection of two main drags just south of a war zone, I could set my clock by the 11:00 p.m. Friday and Saturday night flyovers. They literally would park right over my house while they ran spotlights around the area and hollered down at perps from their bullhorns.

Besides shattering the peace and quiet (well…there’s not that much quiet to be shattered when you’re right on top of two six-lane thoroughfares), these episodes are disturbing. I figure if I were a perp and the cops were on my heels, I would try to get inside someone’s house and hide. If I were armed, I’d be well equipped to intimidate the residents—or worse.

So every time the cops come flying over (again!), I get up and go close and lock the doors and windows. Annoying, especially when the weather’s nice and you’d like to have fresh air moving through the house. This evening when I got up to do that, I found I’d left the back door hanging wide open the last time I let the dog out. Reassuring…

If you were to look at the city crime reports for this neighborhood, you’d see that the crime rate in this area is relatively low. It’s much lower than it is where my son is living, just two or three miles to the south, and we have fewer sex offenders living nearby. So, in theory, if a buyer were sensitive to that issue, the ubiquitous cop helicopters wouldn’t make much difference to the sale of your house. How, anyway, would a person know that we live under a cop helicopter traffic lane without being here to observe it?

On the other hand, middle-class residents’ nervousness about crime, especially in the presence of nearby low-income housing, has its effect.

When SDXB got up in the middle of the night and found two dudes climbing in his front window (he chased them off with a pistol…far as we know, they’re still running), the first thing he did the next morning was alert all the neighbors. Literally. He went from door to door telling the neighbors that he’d caught a couple of cat burglars in the act, after they’d quietly lifted out one of the windowpanes.

Within days, his next-door neighbor put his house on the market and moved away. He underpriced the place so as to unload it quickly, because, being a middle-class homeowner, he could afford to do so. He bought a house in Sun City, where property values are surprisingly low, and pocketed 60 grand in the exchange.

The buyer? Mr. B***, a.k.a. the suspected vandal.

As soon as this guy moved in, he started buying up houses in the neighborhood, often from elderly original owners who had no idea what they were worth. Before long he owned seven houses in this six-block-square neighborhood, five of which he converted into rentals. He added a tumbledown summer kitchen to the house next-door to SDXB, illegally connecting to the city sewer line. He did all the repair and fix-up on the other houses, always without benefit of building permits—apparently in the Old Country building codes, if they exist at all, are most honored in the breach.

These activities served to push property values down, leading to conversion of still more homes into rental properties; hence Biker Boob and Bobbie McGee in the house across the street.

You could argue that it was the absence of police protection that led to this state of affairs. It was an hour before the cops showed up after SDXB called 911 and said he had a .45 trained on two men who were clambering in his front window. And he made a big point of complaining to the neighbors about that, too.

At least nowadays the cops do show up (if noisily) when you call. A 45-minute to an hour’s wait used to be SOP; if someone actually was breaking into your  house, the trick was to open a door on the other side of the building and start screaming FIRE!!! This would usually bring the neighbors, who’ll come out to watch your house burn down but will hide behind locked doors when they think a crime is under way.

Still. There’s no question that when people who can afford to move don’t feel safe in a neighborhood, they will move. One of our long-term neighbors just moved out, before her house even sold, saying she wished to live “closer to people like herself” (read more white folks, less brown folks).

I wonder if too much police protection, especially when it’s conspicuous, is bad for business. The real estate business, that is.

Zillowing around Phoenix

by

Having perused today’s doom-and-gloom piece in the Times to the effect that property values in my neck of the woods have dropped 50 percent in the past three years, I was moved to visit Zillow by way of checking up on the current value of my real estate empire.

Buy me! Get original 1970s everything! Only $300,000!
Buy me! Get vintage 1970s everything! Only $300,000!

Lo! Zillow’s estimate of my house’s value is $293,000! That’s $61,000 more than I paid for it five years ago, an increase of about 4.75 percent a year. Not great appreciation on investment, but one heckuva lot better than the negative numbers we’ve experienced in stocks and bonds.

Meanwhile, the downtown house that M’hijito and I are copurchasing comes in at $177,000, a whopping $58,000 less than we paid for it and $34,000 less than we owe. That’s more like the stock market we know and fear. 

Our lending agent at the credit union points out that the depressed value in what ought to be a stable centrally located neighborhood came about because a high number of foreclosures is pushing prices downward. Indeed, the house directly behind his was foreclosed; the bank recently unloaded it for $153,000, and the house is 100 square feet larger than M’hijito’s. 

That house was bought and lost by a speculator who was halfway through renovations when he defaulted. The kitchen and front rooms were redone, but the rest of the house is stripped down to the concrete and needs significant fix-up. The yard, of course, also needs a lot of work. Meanwhile, a house at the corner of his street and a main drag is valued at $227,000; that place has been in foreclosure not once, not twice, but three times. It presently has an auction sign out front. 

Even though things aren’t looking so good there, the lender says we should wait another nine months before assuming our shirt is lost. She says their appraisers have found that when a series of foreclosures pushes values down in a neighborhood, prices start to recover after about that length of time. In discussing the matter, she remarked that the area, within walking distance of the new light rail line, can be expected to recover its value over the next few years.

Assuming we believe Zillow’s Zestimates (a big assumption, that), it looks like our real estate investments are about a wash just now: a gain of $61,000 less a loss of $58,000 leaves us $3,000 to the good. Still better than the stock market, eh?

Out of idle curiosity, I checked the house SDXB sold five years ago, one street to the north of me. Zillow values it at $314,500, up from the $215,000 or so he got for it. The slum house directly behind his (well, “formerly his”), which was allowed to run to ruin by its original slob owners, then absorbed into Mr. B***’s rental empire, then sold at the top of the market to a couple who did some serious fix-up but soon divorced and turned it back into a down-at-the-heels rental, supposedly is worth $305,000. 

La Maya and Bethulia’s house, around the corner and in the ritzier part of the neighborhood, sports a $392,000 Zestimate, almost a hundred grand more than they paid for it. My old house, about two blocks away, is valued at $243,000, having been bought out of a short sale for $253,000 a year ago. I sold the house to the woman who defaulted on it for $211,000, so even given the foreclosure, the house’s value has increased over the past five years.

My old friend’s house in Moon Valley shows a value of $273,000, a lot less than I would expect but still more than she and her husband paid five years ago. They’ve put more into the house’s renovation than it has allegedly appreciated. Interestingly, Moon Valley, arguably a nicer area than mine because it’s free of bordering slums and is built around a very attractive country club and golf course, seems generally to be exhibiting depressed property values; five years ago I couldn’t touch a house in that area, but now many apparently are worth less than the house I’m in.

And what about my beautiful old house in the Willo Historic District, a place my ex- and I were crazy to have sold? Five hundred and eighty-one thousand dollah.

How crazy were we to have sold that place? Crazy as foxes. His house—the one we moved into—is now $607,500. Allegedly.

Mwa ha ha! 

I'm only $299,500...and I have a LAWN!
Only $299,500...and I have a LAWN!

Of all the shacks in my present and past real estate empire, my current house is far and away the nicest. M’hijito’s is cute but needs more fix-up to qualify as cuter than cute. My house is newer than the ex’s, ever so much more snazzily renovated, with a real garage and a gas range and beautiful Mexican tile and skylights in three rooms and a gorgeous pool. The house in Willo is now 80 years old, all very quaint and all very expensive to keep shored up; it’s sandwiched between three heavily traveled streets with a fire station just down the road. My house has a beautiful park within a three-minute walk, and it’s located so far from every main drag that it’s quiet—something you can say about very few houses in grid-patterned Phoenix. Yet, like all the other houses, it’s centrally located, and soon it will have easy access to the wonderful light-rail system.

So…whatever’s happening, none of us seem to have lost 50% of the value of our homes. As in other parts of the country, the real estate crisis works on micro-local levels. If you bought in one of the new Styrofoam-and-plasterboard suburbs that were tossed together on Sonoran desert habitat the developers were blading at the rate of an acre an hour, you got shafted. But if you bought in town, sticking to a centrally located part of the urb, you spent a little more on real estate, got block construction and a big yard, saved a lot on gasoline, and probably did OK on your investment.

Foreclosure: Not all bad

by

Yesterday as I was chatting with the tile guy at the former home of Dave’s Used Car Lot, Marina, and Weed Arboretum (recently foreclosed upon, bought out of auction for $162,500, and resold to a flipper for $192,500), up comes a perky blonde Realtor. She was meeting a buyer there to eyeball the place.

Asked what they hope to get for the place, she showed me a listing sheet: $269,900.

Well. That’s not a disaster, all things considered: if they get $260,000 for it, the value of my house (relatively) at least will not drop below what I paid for it four years ago. My place certainly won’t sell for anything near $300,000 anytime soon (it was valued as high as a giddy $375,000 during the bubble), but at least I’m not going to go broke. Yet.

Really, as long as the new resident is not another biker, another furniture-flinging berserker, or another slob, the trade-off will be worth it. Cleaning up that pigpen across the street transforms this part of the neighborhood. If the place stays halfway decent, I can get rid of some more of the shrubbery designed to screen my front windows from the view of Dave’s hovel, which will improve the looks of my place considerably. And over time, without the drag of that run-down property, values should improve. If nothing else, at least the street is now a more pleasant place to live!

Eight strategies to protect your home’s value when neighbors are foreclosed

by

Contemplatingthe Wreck of the Titanic across the street, I decided to see if there are any broadly accepted ways to protect your own property value and preserve something like peace of mind in the face of a nearby foreclosure. Here are a few strategies you can use to cope with a disastrous property devaluation that will degrade your investment in your home.

  1. Remember that you haven’t lost money yet. Loss of value in real estate is not realized until a property is sold.
  2. Stay informed by estimating the value of your home. You can find a valuation calculator at the Office of Federal Housing Enterprise Oversight, along with some other interesting information. Zillow will give you a rough estimate of your home’s worth, if you have an idea of which properties in your neighborhood are comparable to yours in size and quality. OFHEO and Zillow provide only crude guesses; another way to get an idea is to ask a Realtor to run the comparables, view your home, and tell you what he or she thinks the home will sell for, realistically.
  3. Keep an eye on the foreclosed property. Pull weeds, mow the lawn, or have your own lawn service maintain the yard so that it doesn’t turn into a jungle. If you live next door to the house, use your own hose to water the plants enough keep them alive. While it’s true keeping up the house is not your responsibility, this step will help the value of your house by contributing to the value of the vacant house.
  4. Report code violations to your city’s code enforcement or slum abatement office. Most cities have regulations meant to fight illegal signage and unsightly deterioration. A call to your mayor’s office will give you the phone number. Enlist the city and the law to force the lender that now owns the house to keep the property up.
  5. Band together with the neighbors to form a specialized block watch for the purpose of protecting the house from prowlers, vandals, and squatters. Report prowlers to the police immediately. Banks commonly board up foreclosed houses that have been burgled or vandalized, creating eyesores that cause even more damage to neighboring homes. So, it’s in your interest to keep this kind of thing from happening.
  6. Keep up your own home. Tend to your landscaping, keep the paint looking fresh, and refrain from parking your rolling stock on the yard or in the street. If the neighborhood looks well maintained and appealing, the foreclosed property is more likely to attract buyers who will take care of the house and not let it deteriorate further. Such buyers often can afford to pay a little more for the house, which will help your neighborhood’s property values.
  7. On the other hand, put a hold on any elaborate home improvement projects you may have in mind. Limit improvements to maintenance, paint, and unavoidable necessities. This is not the time to add on a room, gut out and replace the bathrooms, or change out the HVAC system just to get a slightly more efficient unit.
  8. Don’t sell unless you have to. Just as selling stocks and mutual funds on the downtick locks in your losses, so selling your house when prices are at a low ebb guarantees that you will lose on your home investment. Stay put. Sooner or later the housing market will recover.

Believe it! And then some…

by

It gets better and better. Any doubts about my neighbor’s report that Dave’s Used Car Lot, Marina, and Weed Arboretum sold instantly at auction were resolved by a Saturday morning chat with the new owner, who surfaced with a gang of junk dealers come to cart off the trash Dave left behind. So, we might add, did a horde of neighbors, who showed up asking to take this piece of junk and that piece of junk, requests the proud new owner was happy to accommodate. The more junk the neighbors carted off, the less he’d have to pay his clean-up crew.

It is indeed true that the house has been sold. But the auction price was not $192,500, an amount $32,500 less than I paid for the house across the street before the bubble started to inflate. Oh, no. That $192,500 figure is the new owner’s asking price!

That’s what he wants to get for the house. The For Sale by Owner sign in the front yard is not Dave’s FSBO effort: it’s the new owner’s.

This guy is a bottom feeder who grabs the most desperately distressed properties he can get his grimy hands on, shovels out the debris, does virtually no fix-up, and then flips them at “drastically reduced” prices. (Reduced from what? Please: don’t ask.)

So I said to him, “Are you crazy? A house just as run-down as this, right around the corner, just sold for $265,000. Put the house on the market for an amount that will pay you for buying it!”

Oh, no, said he. “If I did that, I’d have to do a lot of fix-up and improvement…and if I were going to do that, I’d have to sell it for $340,000, the amount that one house over there sold for.”

That one house was dolled up as a freaking palace and has NO, count it NO blight near it.

What this means is, first, the guy paid even less than $192,500 for it, an unheard-of devaluation around here. Second, the jerk is going to sell it to another bottom-feeder who will slap on enough paint to cover up Dave’s purple-and-green ceilings and rent it or resell it to the unsuspecting. It will be sold as a dump and chances are it will remain a dump.

Lhudly sing goddam!

One thing you have to say about properties in this neighborhood: once they’re blighted, they tend to stay blighted. I know of only two badly run-down houses that were turned around to make them into reasonably clean, well-maintained properties. All the rest have stayed in the dumps through several owners. I guess that’s what we’re going to see across the street.

Foreclosed!

by

Poor old Dave, proprietor of Dave’s Used Car Lot, Marina, and Weed Arboretum, is finally moved out, having spent a week and used the services of three male friends equipped with pickups, a flatbed, and SUVs to haul off his collected junk. He’s posted a do-it-yourself “For Sale” sign in the front yard (“Drastically reduced!”) and ridden off into the sunset, leaving his weed garden behind.

This afternoon some kinda seedy-looking guys climbed over the weed haystack in the driveway to ogle the peeling batten around the eaves. Evidently they were calculating what it would take to revive the decrepit house to its former glory…or at least to rentability. Early in the evening, a father came by in the wake of his toddler’s tricycle. Dad and son broke into the back yard through the side gate and disappeared into the weed jungle. The kid’s trike is gone now, so either they came out and went on their way or the cockroaches carried the hardware off.

Old Dave, as we learned, was foreclosed. My neighbor and I found that out when the notice was mistakenly slapped on her front door instead of Dave’s. He borrowed $320,000 against the place. Zillow values it at around $307,000. Even though it has a pool (soon to be a mosquito pond, no?) and a good-sized corner lot, there’s no chance it’ll fetch that much. Another foreclosure in similar condition around the corner sold for $268,000.

In a way, I’m sorry to see Dave go, despite the mess he lived in. The trashed condition of his property and his habit of parking a used-car-lotful of rolling stock on the front lawn affected the property value of houses all around him, and that was irritating. But at least Dave was quiet. I dread what’s going to end up in that dump next.

O.K. There’s a remote chance someone will buy the house for a song, fix it up, and live in it. More likely, though, some speculator will grab it out of foreclosure, throw a cheap coat of paint on the outside and some apartment-house carpets on the floors, and rent it out. This will add to the already thick population of rentals in the neighborhood. It will join the place that houses Biker Boob, a Hell’s Angel who roars up and down our residential street on his unmuffled Harley and who uses the garage to conduct a shade-tree mechanic’s operation, complete with LOUD heavy-duty shop equipment that he starts up at 7 a.m. every weekend and operates until after 11 at night, and the shack whose out-of-state owner rents to SEVEN unrelated adult men, all of whom park their cars on the front yard and none of whom is interested in hacking back the knee-high weeds on the property.

The other possibility is that the new owner will be yet another of those folks who buys on the cheap, thinking he’s found a bargain, without having a clue to what’s involved in maintaining a forty-year-old tract house. Once they get moved in and discover how much it costs and how much work is involved in taking care of one of these places, they just let it go to pot.

Either way, the result is the same: a run-down house on a run-down lot, dragging down property values in the our little six-square-block development. Add to this recurring phenomenon the City’s kind decision to rip out a whole row of houses to make way for the train tracks, and you can see if you want to move up but stay in town, you’re flat out of luck. There’s no way you can afford a comparable (or even a lesser) house in a better-maintained neighborhood that’s located in the central part of the city. The only way to get back into the middle class is to move way, way out into the sprawl on the outer fringes of the metropolitan area.

You, too, can drive two hours each way to work. You’ll love it. It’s the American way!