Phoenix-area home prices continue to soar


June 27, 2012

Phoenix-area home prices have been zooming up for months, and the streak continued in May. However, a new report from the W. P. Carey School of Business at Arizona State University takes a closer look at the short supply of available houses, an increase in foreclosures, and a possible leveling off of skyrocketing prices this summer.

The report on Maricopa and Pinal counties reveals: Mike Orr Download Full Image

• The median single-family home price went up more than 32 percent from May 2011 to May 2012.

• The overall housing supply dropped by 50 percent in the same time frame.

• The number of completed foreclosures of single-family homes and condos combined went up 18 percent from April to May.

The median single-family home price jumped 32.4 percent from May 2011 to May 2012. It went from $111,000 up to $147,000. At the same time, the median townhouse/condo price soared 37.3 percent, from $69,900 to $96,000, and the average price per-square-foot shot up more than 22 percent. Prices have been increasing since they reached a low point in September 2011.

The report’s author, Mike Orr, says high demand and low supply remain the dominant factors in the Phoenix-area housing market. For example, the number of active listings for single-family homes without a contract in the greater Phoenix area was down to 8,550 as of June 1. Fierce competition for available homes has continued to push prices up.

“Most houses below $250,000 priced realistically are attracting large numbers of offers in a short time, and many exceed the asking price,” says Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “We recently saw a Chandler home get 84 offers and a Glendale home receive 95. The Glendale house closed within four weeks for 17 percent above asking price. Needless to say, this is not something we would see in a normal market.”

The amount of overall sales activity is down, due to the short supply. The number of single-family home sales fell 5.8 percent compared to last May. Orr says things are especially quiet in the luxury and active-adult sectors of the market, where there’s less demand. But new-home sales are up 57 percent over last May, as buyers look for alternatives to the intense competition for existing homes under $250,000.

Orr says, “Contractors are trying to keep up with the new construction demand by supplementing a small skilled labor pool. They’re attempting to lure away competitors’ employees with higher pay and to attract back foremen who’ve gone on to other housing markets or industries.”

Investors are also playing an influential role in the area. In May, almost 28 percent of home purchases were made by investors. Orr says the average area home buyer faces an uphill battle against those offering all cash, instead of a financed offer requiring an appraisal. He does believe, though, that things are about to calm down somewhat.

“Prices gained further strength over the last month, but I suspect they cannot continue to rise at the extremely fast rate we experienced this spring,” says Orr. “This rate can’t be sustained long term, and the most likely time for prices to stabilize is during the hot summer months of June through September.”

At the same time, foreclosures are unfortunately going up in the area. The new report shows completed foreclosures of single-family homes and townhome/condos combined went up 18 percent from April to May this year. However, Orr doesn’t see this as reason to worry yet.

“Completed foreclosures were still down 52 percent year-over-year in May,” he explains. “Since the signing of a legal agreement between the states and five of the nation’s largest lenders, we have seen a slight uptick in the rate of foreclosure notices, but we are still a long way below the peak levels of March 2009.”

The areas of the Valley most affected by the foreclosure crisis are now seeing the biggest surge in prices. For example, El Mirage, Maricopa, San Tan Valley, Glendale and Apache Junction are doing much better. The areas least affected by foreclosures have seen prices improving slowest. Still, some are moving into positive territory, such as Cave Creek, Fountain Hills and Sun City. The only areas still showing a decline in average prices per-square-foot over the past year are Eloy, Paradise Valley, Rio Verde, Sun City West and Sun Lakes.

Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/finance/real-estate/upload/Full-Report-201206.pdf. More analysis is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com.

Adventures in microgravity: Students experiment in simulated space-flight conditions


June 27, 2012

Six Arizona State University students spent a week in June conducting airborne research in low gravity under the guidance of scientists and engineers at the National Aeronautics and Space Administration’s Johnson Space Center in Houston.

They’re members of the ASU Dust Devils, one of 14 teams of students from universities throughout the United States selected from among more than 60 teams that applied to do experiments as part of NASA’s Reduced Gravity Educational Flight Program. Dust Devils in microgravity Download Full Image

Each of the teams’ projects required performing experiments in low gravity – or “microgravity” – conditions. The work was done during flights in a modified Boeing 727-200 jet used to train astronauts that is capable of creating microgravity conditions. The aircraft is sometimes called the Weightless Wonder.

Microgravity is the extremely weak gravitational force that is experienced, for example, by people in a spacecraft orbiting the Earth, enabling them to become virtually weightless and to float inside a spacecraft.

Students from the University of Southern California, Yale University, Purdue University, the Massachusetts Institute of Technology, Virginia Polytechnic University and the University of Washington were on some of the other teams conducting the microgravity research.

From dust to solar systems

In flights over the Gulf of Mexico, the Dust Devils were looking at dust electrification and coagulation – how dust particles clump together and bond in low-gravity environments.

Understanding the ways in which dust particles stick together could be important in revealing the fundamental process that allows solar systems and planets to form, says Dust Devils member Amy Kaczmarowski, who graduated in the spring with a degree in aerospace engineering from ASU’s Ira A. Fulton Schools of Engineering.

The team varied the size and composition of dust particles placed inside 12 vacuum chambers containing different combinations of particles of three materials – silica, aluminum and a material believed to be similar to dust on the surface of Mars.

The idea was to examine how varying the size and composition of the particles would affect clumping.
 
Kaczmarowski carried out experiments with Dust Devil teammates Emily McBryan, a senior aerospace engineering major, Danielle Hoots, a history and anthropology major, team leader and senior Pye Pye Zaw and junior Jacob Higgins, both studying in ASU’s School of Earth and Space Exploration, and junior accounting major Craig Hoots.

 As microgravity was achieved on the jet, each vacuum chamber was shaken to unsettle the dust it contained. Cameras monitoring activity in the chambers then recorded the behavior of the dust. Some experiments required multiple flights to complete.

It took some self-discipline for team members to keep focused on the experiment amid the excitement of experiencing microgravity.

 “It was an absolutely incredible feeling to be floating,” Kaczmarowski says. “It was difficult to keep steady. I was having a lot of fun,” she says.

Soliciting mission support

The team was able to make the trip to Houston by writing an experiment proposal that earned a grant from the NASA Space Grant program, which supports students studying areas of science, engineering and math with applications to space-exploration endeavors.

Another proposal got the students equipment and additional funding from Kip Hodges, director of the School of Earth and Space Exploration. The team raised more funds for research equipment and travel expenses from family and friends, and from private donors who contributed in response to local news media reports about the Dust Devils’ project.

School of Earth and Space Exploration faculty members Steve Desch, Chris Groppi and Srikanth Saripalli assisted the students.

 Associate professor Desch helped design the experiment and provided background on the experiment’s implications for understanding solar-system formation.

Assistant professor Groppi advised them on engineering aspects of the project, including design of research instruments, and on writing of the research proposal and the project budget. Professor Saripalli supplied some computers and computer software.

Learning the art of experimentation

Besides performing experiments, the Dust Devils toured the Johnson Space Center, during which they got a look at a replica of the Space Shuttle Explorer.

“We learned a lot from this experience, from better ways of designing future experiments to make them easier to handle and work with, to learning how to work with different types of people.”  Kaczmarowski says.

“We learned a lot about all that it takes to make a scientific experiment.  Specifically, we learned how to try to find a compromise between the cost and the engineering feasibility and the scientific objectives. We also learned a lot about vacuum systems and how finicky they can be.  It really is an art form,” she says.

“We know we were successful in creating the vacuum system, moving the dust, and collecting images during the flight,” Kaczmarowski says.

Now Danielle Hoots will spend the summer performing the bulk of the analysis of the data collected during the Dust Devils’ experiments.

The team is expected to issue a final report to NASA later this summer on the results of the experiment. The report will analyze the experiment’s effectiveness and scientific findings.

Team leader Zaw will be looking at opportunities to obtain future support from the NASA Space Grant program and working to recruit new Dust Devils members to help carry on the team’s work next year.

Written by Joe Kullman and Natalie Pierce

Joe Kullman

Science writer, Ira A. Fulton Schools of Engineering

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