Prices keep soaring in Phoenix-area housing market


May 3, 2013

Home prices continue their upward climb in the Phoenix area, with more momentum expected until at least June. A new report from the W. P. Carey School of Business at Arizona State University reveals the latest information about the Maricopa and Pinal County housing market, as of March:

• The median single-family home price was all the way up to $175,000, about a 30-percent increase from March of last year. Mike Orr Download Full Image

• The supply of homes for sale continued to fall, but the problem is not so much the high demand, but more the lack of sellers getting into the market.

• Rebounding population growth in the Phoenix area is also blasting past the rate at which builders are constructing new homes.

Phoenix-area home prices reached a low in September 2011 and have largely shot up since then. The median single-family home price went up 29.7 percent – from $134,900 to $175,000 – in the year from March 2012 to March 2013. Realtors will note the average price per square foot went up 23.6 percent during the same time. The median townhouse/condo price increased 43.2 percent – from $81,000 to $116,000. A big reason for all this upward movement is the scarcity of affordable homes for sale.

“The number of active single-family listings has been dropping fast and went down another 4 percent from March 1 to April 1,” says the report’s author, Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “Fewer than 12,000 single-family homes were up for sale (without an existing contract) on April 1, and 80 percent of those were priced above $150,000, making it very tough to find properties in the lower price range.”

Orr adds it’s actually not high demand that’s the major culprit here.

“The low number of sellers is what’s unusual, not the number of buyers, which is only slightly above normal,” he says. “Higher prices would normally encourage more ordinary home sellers into the market, but many are either locked into their homes because of negative equity, or they’re simply waiting for prices to go up more.”

Orr says most homes priced below $600,000 continue to attract multiple offers, and March is the peak of the buying season that lasts from January to June. However, due to the chronic supply shortage, the amount of single-family home sales actually went down 8 percent from March 2012 to March 2013.

Investors are also starting to lose some interest in the Phoenix area, since bigger bargains can be found in other areas of the country that haven’t rebounded as fast. The percentage of residential properties bought by investors dropped from 29.2 percent in February to 27.1 percent in March, the lowest percentage in several years. The market is now seeing increased demand from owner-occupiers and second-home buyers, instead.

Completed foreclosures were down an incredible 60 percent from March 2012 to March 2013. Foreclosure starts – homeowners receiving notice their lenders may foreclose in 90 days – dropped 53 percent. Orr believes we’ll see foreclosure-notice rates “below long-term averages” by the end of next year.

Meantime, new-home sales are also going up, in tandem with resale prices. In Maricopa County alone, new-home sales increased 37 percent from March 2012 to March 2013. However, new-home construction isn’t keeping pace with the Phoenix area’s rebounding post-recession population growth. The U.S. Census reports 1,220 single-family-home construction permits were issued here in March, a very small number by historic standards. For example, the total in March 1996 was 3,071, and the total in March 2004 was 5,490.

“The population is growing much faster than the housing supply, with an expected 50,000 to 60,000 people being added to the Phoenix-area population this year, but only around 12,000 new single-family homes being built,” Orr explains. “Builders are scratching their heads, trying to figure out what to do. They don’t want to overbuild like they did during the peak, and they don’t want to build a bunch of new homes for people who can’t secure the mortgages needed to buy them with such tight lending conditions.”

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-201304.pdf. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

Engineering students help build instrument for NASA asteroid mission


May 3, 2013

Four engineering students at Arizona State University, three of them undergraduates, are gaining practical experience by helping to build a mineral-scouting instrument that will fly on a NASA mission to an asteroid. They are drafting the detailed plans for each of the instrument's components and helping analyze its structural and thermal behavior.

The instrument is called OTES, short for OSIRIS-REx Thermal Emission Spectrometer. It is being built on ASU's Tempe campus in the Interdisciplinary Science and Technology Building 4 (ISTB4) of the School of Earth and Space Exploration. OTES is scheduled for launch in 2016 as part of NASA's OSIRIS-REx mission. ASU's Philip Christensen is the principal investigator and designer for OTES, which is a descendant of a similar instrument that went to Mars on NASA's Mars Exploration Rovers in 2004. Engineering students OTES Download Full Image

Three students – Ian Kubik, Tyler Lemonds and Justin Pourkaveh – are senior undergraduates in mechanical or aerospace engineering, while the fourth, Austin Pezzella, is working toward his master's degree in mechanical engineering.

They were recruited because OTES project managers and engineers were becoming overloaded with detailing work. What the project needed most was knowledgeable but entry-level help to create accurate drawings so the parts could be manufactured.

"We made a request to professor Jami Shah of the engineering school, and he spread the word among the students," says Dan Pelham, lead optical and mechanical engineer on the project. They were recruited starting in early 2013.

The design tool the OTES project uses is called NX, from Siemens PLM software. It integrates design, analysis, production and manufacturing. Siemens also provided Teamcenter, software that lets several people work on OTES components at the same time.

"We were just starting to put our computer models together, and we recruited Zoltan Farkas as lead mechanical engineer," says Pelham. "He had extensive experience with NX in his former job."

NX has proven highly useful, Pelham notes. "In particular, it includes an analysis component called NX NASTRAN, which we needed. It's an industry standard item for structural analysis."

Getting real

For the students, working on OTES represents an important step beyond the classroom. As Lemonds explains, "Most of my engineering experience has been with class work and lab exercises, and tutoring students – all very theoretical. This is real."

The nature of the job was also appealing.

"I had applied for the job because it sounded like an amazing project – and something I can look back on, and be proud of having worked on a NASA mission that took samples from an asteroid," Pezzella says. He originally expected to work on drafting with the undergraduate students. "However, I have mainly been assisting with the thermal and structural analysis."

For their part, the undergraduates begin with a 3-D computer model of each part in the instrument.

"Most of the digital design and analysis work falls on me, and I double-check it with Dan Pelham," Farkas explains. "We then turn the models over to the students for detailing."

To manufacture the parts requires precision drawings with dimensions, allowable error tolerances, and specifications for things such as materials, surface finishn and paint. The students' job is to use NX to create the manufacturing drawings from the computer models. They also work from drawings from the earlier Mars-going version of OTES.

"The drawing reflects how a part is going to be made," says Kubik. "If you don't have any drafting experience, its difficult to know what needs to be incorporated into the drawing, and you can easily overlook the guy who's going to have to make it."

All the students hope that working on the OTES project will be a boost when they graduate and look for jobs.

"Industry uses drafting a lot, and employers like to see it in your resumé," Pourkaveh says. "You have all these kids graduating and they sit down at a computer – and they don't know how to draw anything. It's good if you can get that kind of experience in college. It gives you a leg up."

As always, real-world experience is critical.

"You can be the best engineer in the world and design the most awesome 3-D model," says Lemonds. "But if you can't communicate with the machinist who'll fabricate it – it's just a digital model."

After the students have finished with the drawings, they go through another round of checks with Farkas and Pelham. Then the drawings are sent out for manufacturing.

"It's unbelieveable how user-friendly this is. It has all the tools you need in a single package," says Kubik.

Into deep space

After OSIRIS-REx launches in 2016, NASA's flight plan calls for the spacecraft to rendezvous with asteroid Bennu (1999 RQ36) in 2018 and spend about a year orbiting and surveying its surface.

After mission scientists decide the best place to go to, OSIRIS-REx will collect the sample from the asteroid's surface and send it back to Earth, with the sample arriving in 2023. OTES plays a key role in choosing the right place to sample.

"OTES is the first complex piece of electro-optical space hardware to be built at ASU," says Christensen. He is a Regents' Professor of geological sciences in the School of Earth and Space Exploration, part of the College of Liberal Arts and Sciences. "This is a great step forward for ASU and for students involved in engineering for science."

For the students, there's another plus to working on the OTES project. Unlike a typical aerospace company, it's not a gigantic organization.

"The team here is really small," says Pourkaveh. "You get to see the whole picture and participate in every part of the process."

Robert Burnham

Science writer, School of Earth and Space Exploration

480-458-8207