Today's News Hearld
August 28, 2007

Ryan Radtke, a Realtor has evaluated and listed foreclosed properties locally for10 years. Lately, he says, he has been so swamped he cannot handle the volume of calls coming his way. “I’m turning them down because I’m too busy,” he said. A few years ago, that wasn’t the case. Between 2003 and 2005, there were hardly any foreclosures at all, Radtke said. That has changed dramatically. “Right now, I’m nearing 50 properties that are REO,”
he said. REO, or real estate owned, is a bank term that refers to repossessed homes.
Yet with many risky adjustable-rate mortgages still timed to reset to higher rates in the coming months and local home prices in decline, Radtke predicted he would be busy for quite a while. “I think we’re just at the tip of the iceberg right now,” he said. “I think that there’s a lot more to come.”

The meltdown in the subprime mortgage market, and its destabilizing effect on Wall Street, has been frontpage news for weeks. Yet the effects on smaller cities like Lake Havasu City of what can only be described as a historically unprecedented binge in risky lending remains difficult to gauge What is not in question is the sharp rise in foreclosures nationally and statewide. In the first six months of 2007, there were 27,500 foreclosure filings in Arizona, up 118 percent from the year before, according to RealtyTrac, a real estate research firm.
During the same period nationwide, 925,986 foreclosure documents were filed, a 55 percent increase from last year. Arizona is ranked eighth in the country for foreclosures.
Jack Hudock, a spokesman for the Arizona Department of Financial Institutions, which regulates banking statewide, agreed that the end of the housing freefall had yet to come. “There will be a bottom, but you’d need a crystal ball to know when,” he said. “I think it’s safe to say that we’re not there yet.” It is not only low-income borrowers with bad credit who are being hurt by the current lending crisis, Hudock said. “Anybody who has overreached their means is in trouble,” he said. Even those with good incomes and solid credit have been tempted by low teaser rates and exotic mortgage products, such as interest-only or no-moneydown loans, and overstretched their
bounds, Hudock said.

A devastating and increasingly common bind for homeowners of all stripes was the combination of rising interest rates and falling home prices. “It puts people in the position where they can’t sell and they can’t refinance,” he said. For those falling behind on their mortgage, there are few options for help othe than contacting the lender directly and attempting to strike a deal, Hudock said. “Nothing good will come if they don’t talk [to the lender],” he said. “They’ll just think the borrower’s a deadbeat.”What many homeowners don’t understand is that lenders have a financial interest in not seeing a homeowner
foreclosed on. “It costs a fortune to foreclose on a house,” he said.
There are legal remedies available, but only for those who have been victimized by a mortgage scam, said Bryan Burke of Mohave County Community Legal Services in Kingman. Those who are falling behind on their mortgage have few remedies available, he said. “We have people who just can’t paytheir mortgage, but there’s not much legally we can do, other than give them counseling,” Burke said.

Today's News Hearld
August 30, 2007

Housing market still stuck The housing market continued to stumble last month as home sales hit an eight-month low, a sign that the local sector is still struggling to break out of its recent downturn. “We’ve had better months,” said Carl Flusche, of Flusche Realty. “The numbers are what they are. They could be better, but I’m optimistic that we’ll have some better months ahead of us.” Total sales in July fell more than $15 million, or 29 percent, compared to July 2006, according to the Havasu Real Estate Report, a monthly compilation of local real estate transactions. In all, 80 single-family homes were sold last month, the fewest since December 2006. “We had a slow month,” Flusche said. “But we’re still doing better than most people (in other housing markets in the United States). We’re not in the tank.” So far, 698 homes have been sold this year, down 27 percent from this time last year but still a respectable figure for a city our size, Flusche said. Yet the amount of inventory appears to be growing, an ominous sign for a market in which there are already more homes than buyers. There are 1,446 single family homes on the market, 134 more than when the calendar year began, according to the report. Flusche said the homes that aren’t selling are usually overpriced. With so many homes on the market, buyers can be more selective, bypassing homes they think are too pricey, he said. Meanwhile, the commercialsector continues to pick up steam. A building permit was issued last month to J.C. Penney Co. Inc., one of the anchor stores of an open-air retail mall being built on the city’s north side. Residential is “only part of the picture,” Flusche said. “From a commercial standpoint, I think we’re doing really, really good.” Housing may also pick up if the Federal Reserve lowers interest rates next month. “Cheap money always spurs activity, so that’s something we can look forward to,” Flusche said. When the market was booming, a lot of Realtors were riding the wave, said Don Clark of Brooks-Clark & Associates Real Estate. That wave crashed into the shore about a year ago. Now they have to catch another wave, Clark said. “It’s not that the business is going dead. It’s just that people have to work harder than they did two years ago to make money,” he said. “It’s going to pick up. We’re going to get healthy.” You may contact the reporter at raap@havasunewscom

Tepid market means affordable homes are back in town
The return of the under-$200,000 houses

 By JOHN RUDOLF TODAY’S NEWS-HERALD
August 18, 2007

When Becky Rollins, 22, and long-time boyfriend Jake Lauer, 23, started looking for a home in Lake Havasu City back in June, they never thought they would find a house they were happy with for under $200,000. The couple both had just graduated from Arizona State University and had moved back to town; Rollins is a kindergarten teacher at Havasupai Elementary, while Lauer works as a service technician at Havasu Motor Sports.

But with the housing market cooler than it’s been in years, the young couple was surprised how far their housing dollar stretched. They settled on a three-bedroom, twobath house with a two-car garage on Sorrel Lane. The house was built in 2000. “We looked forever,” said Rollins, “For the price, it was unbeatable.” Rollins and Lauer paid around $190,000 for the house, they said. News of falling prices and rising inventories in the local housing market have mostly focused on the negative, said Donna Ball, the realtor with Selman and Associates who helped Rollins and Lauer find their home. But there was an upside as well, she said. “It’s not just a predicament, it’s an opportunity,” Ball said. “Everybody’s preaching doom and gloom, but if you’re a buyer, this is a fantastic time. You can’t beat the rates.” According to Vicki Runyon, another realtor with Selman and Associates, while the market was admittedly in a slow phase, many sellers still stood to make a profit. “If you are a seller who bought five years ago or earlier, you still are probably making a profit on your house. It may not be what it would have been a year ago, but you’re still probably making a nice profit,” Runyon said. Runyon also said there was no reason to panic. “All markets cycle,” she said. “This is normal. We will cycle back up again.”

Carl Flusche, publisher of the Havasu Real Estate report, said the reason for the turnaround in housing prices was simple: what comes up, must come down. The market has driven home prices higher and higher in an inflationary cycle, he said, and that cycle has now run out of steam. With higher prices, and more sellers than buyers, the stage was set for falling prices. “We have a lot more (houses) on the market now. People couldn’t sell them, so they kept dropping the prices down to the level where they would sell,” he said. At the end of June 2006, there were 32 single-family homes priced under $200,000, Flusche said. Now, that number has almost quadrupled, to 119. In total, there are 1,436 homes listed for sale in Lake Havasu City. “That’s a lot, when you don’t have any buyers,” Flusche said. Recently only about seven percent of the housing inventory has sold each month, he said. A strong market would show at least 12 to 15 percent of houses changing hands per month. While falling prices mean a headache for sellers, buyers — particularly those who felt priced out of the market only a year or a few months ago — are now positioned to pick up some great deals. “It’s definitely a buyer’s market,” said Flusche. Rollins and Lauer would certainly concur. They looked at more than 30 houses, but eventually found what they consider a great deal. “I think the market’s been really good for us,” said Rollins. Lauer agreed. “There’s some really nice stuff out there for reasonable prices,” he said. “You just have to get out there and look for it."

2nd bridge goes before Council
Today's News Herald
August 14, 2007

STAFF REPORTS
City Councilman Brian Wedemeyer and other members
of the city’s Second Bridge Committee will unveil their plans for a second bridge to
the Island over Bridgewater Channel, incorporating for the first time a “Freedom Bridge” concept, memorializing America’s veterans, at tonight’s city council meeting. Wedemeyer said public input would play a large role in the ultimate design of the project.
“I hope that after [the presentation] the community gets involved in a big brainstorming
effort,” he said. “We want a bridge that’s going to knock people’s socks off.”
The proposal will be open to public discussion, but a binding vote by the Council
was not expected, said Wedemeyer.
The second bridge has long been a priority for a number of reasons, including better access for emergency service vehicles, and reducing traffic
on London Bridge. It is also thought that a second bridge would spur development on
the Island. Various financing options
for the bridge will be discussed, including the possibility of tolls. One estimate of the future cost of the bridge is $14 million; a municipal bond at 5.5 percent over 20 years would cost an additional $1.2 million. Potential revenue to pay the bond off, in addition to tolls, would be development fees, property taxes, special
assessments and sales taxes, said 2006 Community
Investment Advisory Committee.

Panel Proposes Making Second Bridge Memorial
Today’s News-Herald-by John Rudolf
July 29, 2007

City officials have long made a second bridge over the Bridgewater Channel a high priority, but a City Council member announced Friday that he plans to soon unveil his vision for a ‘Freedom Bridge’ that would make the proposed second bridge a memorial to America’s veterans.

“It’s called the Freedom Bridge, and it would serve as a memorial to all veterans, including those now serving in Afghanistan and Iraq,” said council member Brian Wedemeyer, who served in the U.S. Air Force during the early 1990s during Operation Desert Storm. Wedemeyer and the other members of the Second Bridge committee, John Parrott and Gary Meyers, will present their vision for the bridge to City Council Aug. 14 at an open meeting.

“We are actively seeking public input,” he said. Wedemeyer also said plans for the bridge were still very preliminary. “We’re very, very early in the process,” he said. Jim Salscheider, executive director of the Lake Havasu City Main Street Association, said he strongly supported the Freedom Bridge, expressing optimism that the bridge would not only honor American veterans, but also serve as an attraction to visitors and as an engine for revitalization.

“This could be the galvanizing vision that moves this city forward,” he said. Wedemeyer said he anticipated strong support from the city’s veterans, an opinion echoed by John Ryburn, commander of the Veterans of Foreign Wars Post 9401 in Lake Havasu City. “It’s a great idea. I think it is way past time that Lake Havasu had a memorial for veterans,” Ryburn said. “There are quite a few veterans in Lake Havasu that would support this idea.” Ryburn saw  combat in the Korean War and Vietnam.

No plans for the design of the bridge exist yet, Wedemeyer said. One idea was to sponsor a contest in which architects locally, nationally and perhaps internationally would be invited to submit plans for the bridge, with the winning design chosen in an as-yet-undetermined fashion, he said. “We really want to open the door to anyone’s suggestion,” Wedemeyer said.

To Salscheider, the design and construction of a spectacular bridge would hearken back to the days of Lake Havasu City founder Robert P. McCulloch, who masterminded the purchase and transport of the London Bridge to Lake Havasu in the late 1960s. “Should our effort be any less?” Salscheider said of the design and construction of the second bridge.

The design of a new landmark bridge was one of the suggestions made by the Regional Urban Design Action Team, a civic consulting group that produced an assessment in February of how to revitalize and beautify Lake Havasu City. “In dusting off Mr. McCulloch’s tool box, we unveiled many physical and symbolic bridges that have yet been built, ”the authors of the report said. “It is time to unite the community and your vision for the future.”

For Wedemeyer, the Freedom Bridge is the kind of idea that could lead to a renaissance in Lake Havasu City. “The city has already committed to building a second bridge,” he said. “I think we can use this construction project to create an opportunity for the community.”

Bella: Rent To Own
Today’s News-Herald-by Tony Raap
July 28, 2007 

Unlike many first-time business owners, Crystal Alger eventually won’t have to worry
about paying rent. The 22-year-old American Family Insurance agent decided to set up shop in Bella Plaza, an 18-unit retail/office complex on Mesquite Avenue. After her one-year lease expires, she can purchase her 1,051-square-foot unit.  

For her, the option to buy was perhaps the biggest selling point. “I didn’t want to put in a whole bunch of tenant improvements just to give it back to the landlord,” Alger said. “I just liked the location and it was a new building. It was a good investment.”  

By some estimates, as much as 90 percent of the city’s retail/office space is lease only. While that may be advantageous for the property owner, it often puts the tenant in a less-than-favorable position. “Most people who are in a lease don’t want to be in a lease. They want ownership,” said Joanna Pryor of Joanna & Associates Realty, which developed Bella Plaza. “When you’re leasing office space, you’re paying off someone else’s retirement.”  

Most upstarts start off with very little cash. Tenants tend to monopolize on this, Pryor said. The little guy has the choice of building a big building himself, which he doesn’t have the money to do, or to lease. 

“I wanted this to be affordable so that the small-business owner could own his own office space, so he could buy his own, individual unit. He doesn’t have to be held captive to the big guy who just leases out property,” she said.  

Bella Plaza’s tenants are on a buy/lease program where they lease their unit for a year before it becomes a sale. That way, they will have built up enough equity to make their down payment, Pryor said. “Basically, there’s so much tax advantage. The government really blesses you when you buy something as opposed to lease it. So by the time you get appreciation on it, actually you come out ahead. You pay less money buying it than you do leasing it,” she said. 

Bella Plaza has been in the works for about three years. Since opening in November, seven of its 18 units have been sold. The units range from $239,900 to $309,900. The average size is about 1,080 square feet.  

Besides American Family Insurance, the building houses Huffman Chiropractic, Valerie’s Sugar Brook Bakery & Cafe and Boardwalk Galleria, among others. “These are people who would never had been able to build a building themselves. But they felt like they were just throwing money away by leasing,” Pryor said.  

Another appealing feature is Bella’s ambience. The exterior is made of Tuscan stone to give it an Italian look. “I loved the way the building looks and I love the location,” said Valerie Howard, owner of Valerie’s Sugar Brook Bakery & Cafe. “I’m centrally located to downtown. It’s really the perfect location.”  

One of the challenges of buying or leasing an office space is finding a complex that has ample parking. Bella has 36 parking spaces in front of the units for customers and clients. Behind the building is a several-hundred-space parking lot where employees park. The two-story structure also has a full-size commercial elevator. Near the entrance is a lit monument sign. “You can see it from both sides, which is huge because half of the battle of having a business is having people know where you’re at,” Pryor said. 

Mall Provides An Economic Bump
Today’s News-Herald
July 17, 2007 

It turns out, after years of waiting, the timing of the new lifestyle mall in Lake Havasu City couldn’t have been better. 

Why? Its construction comes at a time when the local construction industry is down. The mall, due to open in March of 2008, will provide lots of construction jobs before it opens and lots of sales tax revenue once it does. 

City figures point to the significance of the mall construction that was recently permitted by the city. With the mall, the city issued permits for commercial projects worth $24 million in June, more than the rest of the value for the previous 11 months combined. 

With permits for new homes way down, the mall’s construction offers the local economy a shot in the arm and is the precursor of other projects in the area. Construction of an auto mall near The shops at Lake Havasu should begin next year. A citywide effort known as “Connecting Havasu” promises a municipal project that should provide some construction jobs. And an industrial park near the city’s airport is still on track. 

Local economic problems are often as much perception as reality. When a large percentage of the workers in the largest local industry — in this case, construction — complain about lack of work, the ripple effect is large. In reality, the city’s taxable sales remain stable and even home construction is large by many standards. The city showed some 750 new home permits issued in the past fiscal year. Work on a new mall may help change some perceptions. 

At the same time, there’s no room for complacency. Several years ago, the Partnership for Economic Development proclaimed that 40 percent of the city’s jobs were tied to construction and real estate. Whether that percentage is still true or not, there are still a lot of eggs in that one basket. Tourism and retirees are big on the economic screen as well, although to a lesser extent than construction and real estate. 

To repeat the message everyone knows so well, it’s important to attract new employers who diversify the types of employment. The industrial park will be an essential ingredient, of course, but in and of itself won’t change the economy. 

Congratulations to the mall developers who are investing in the future of the city. More of those must be courted to assure the city’s economy doesn’t boom and bust with a single industry.