Solar Power - Not So Sunny - Part 3

This is the third in a series of blogs about #Solar power.  The deeper I dig, the more I find out, so I don't know when this will end.

Solar panels just sit there - there are no moving parts, there are no levers to pull or knobs to turn, so it seems that they might just produce electricity forever...

There are only a few articles out there that tell you how much solar panels degrade - on average - about 1% per year.  That means for each Kilowatt your panels produce, each year they will produce less and less power for you.  So, it follows that the first year you use solar will be the best year ever.  Every year after that, your power output decreases.  Here is a chart that shows how much power output is warranted by several solar power panel producers:

This degradation is covered in the lease - as a matter of fact, the lease under-promises so much that it is almost funny.  Remember Mr. and Mrs. Smith?  Their system is supposed to produce 9 Kilowatts of power.  In Arizona, the sun shines nearly every day for at least 8 hours.  The system should easily produce 72 Kilowatts per day.  The lease promises nearly 15,000 Kilowatts to be produced Annually, which sounds like a lot, until you discover that 15,000 Kilowatts is only 200 days worth of energy production - or just a little over 6 months of power.

So, the warranty is nearly worthless.  The power produced by the Smith's solar system could be cut nearly in half, and the warranty would still hold.  They would still be paying the same lease amount, their bills from their power company could double, and they would have no recourse.

At the end of the lease, the system is only warranted for 12,000 Kilowatts annually - nearly 25% less than originally promised.  That means the amount paid to the power company will go up proportionately, and their "savings" will decrease.

Let's pretend that a car had a warranty on gas mileage like solar systems have a warranty on Kilowatts produced.  A car that gets 20 MPG brand new would only be warranted for 15 MPG by the end of the warranty period.  Is that OK with you?

Yes, there is still more to come!


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Cheap Homes Becoming Extinct

Cheap homes are going the way of the Dinosaur!  In a survey of the MLS this morning, the Greater Phoenix Area reveals that there are fewer homes available in the $0 to $100,000 than there are in any other price group until you reach $400,000 - $500,000 price group.  Here is how they break down this morning:

$0 - $100,000                   2009 Homes available
$100,001 - $200,000        6690 Homes available
$200,001 - $300,000        4908 Homes available
$300,001 - $400,000        2593 Homes available
$400,001 - $500,000        1314 Homes available


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

House Construction Down, Rental Prices UP!

From the Cromford Report:

The Census Bureau has just released its permit counts for March and they tell us a lot about what is going on with new home construction.
The single family permits totalled 1,003, breaking down as follows:

• Maricopa County = 862, down 14% from 997 in March 2013
• Pinal County = 141, down 37% from 223 in March 2013

Clearly the developers are cutting back on production in the light of reduced demand compared with last year. Since very few investors buy new homes, the numbers illustrate that the fall in demand cannot be explained away as purely because of the departure of a large number of investors. The 12 month rolling average is falling now, and currently stands at 12,480 single family permits per year. It has been at or close to this mark throughout the last year. Single family permits are only at one third of the rate we saw in 2002.
The multi-family numbers are going crazy. In March alone there were 1,586 single family units that obtained permits. This is highest monthly total in the last 13 years apart from February and November 2007. The monthly numbers are quite volatile, but the 12 month moving average is now up to 6,660 units. We can justifiably claim that this rate is fully recovered to the level of 2002.
The multi-family developments permitted over the last 12 months have been in:

• Scottsdale = 2,075
• Phoenix = 1,750
• Tempe = 1,400
• Chandler = 965
• everywhere else = 499 (includes Gilbert, Glendale, Goodyear, Mesa, Surprise, Cave Creek, Apache Junction, Maricopa, unincorporated Pinal)

These multi-family developments are very concentrated in a small area and relatively expensive. The average construction cost is $129,605 per unit. This is almost double the average construction cost reported in the same period 10 years ago.
The developers are depending on strong demand from affluent renters.

Average renters are seeing very little built to satisfy their price point and the supply of single family rentals is starting to drop again. They are down to the lowest supply level we have measured in recent history. Average rents are starting to increase too.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Solar Power - Not So Sunny - Part 2

Part 2 in a series of blogs examining the effects of #SolarPower on the selling of a home.

Meet Mr. and Mrs. Smith (not their real name) who retired to their oasis in the Valley of the Sun.  Abhorring the idea of paying more than they have to for anything, they decided to install #solar power on their 2000 sq ft single level home with a pool.  Upon meeting them to list their property, I discovered that they had a very nice lease payment - $60/month.  After speaking to them for a while, it was eventually revealed that they had made a $7000 up-front payment on the lease of the solar equipment.  That is enough to pay for about 4 years worth of electricity bills at their house.  Now, after having the equipment in for less than 3 years, they want to move again.

The representative from their solar company says that they can move all their equipment for $1000.  That is not very much money.  In their lease, it says that they can only move the equipment if: 1) They are in the same utility district 2) They have to pay the costs of all new permits,  3) They have to deliver an easement to allow the installation of the system.  It also doesn't say that the company will move it for $1000.

In addition, any person who wants to buy their house also has to qualify for the lease.  If they don't qualify, then the Smiths have to pay off the lease and have the option of transferring the warranty to the new owner.

At this point, the Smiths have paid about $8,830 for electricity over a period of 2 1/2 years.  That is about $295 for every month that they have owned the system - Winter, Summer, Fall and Spring. About 30% more than they would have without the solar.  If the average cost for a house like theirs is $200/month, it will take 7 years just to break even and that is only if the system completely replaces all the energy supplied by their electric company which is not the case.  They still make monthly payments to the electric company as well.

So, the new owner will get a sweet deal - he won't have the $7000 up front, and will spend less for his electricity right up front.  By deciding to lease a solar system, the Smiths are effectively giving the new owner $7000 off the purchase price.

There is more to this story - did you know that solar panels degrade, and produce less electricity as time goes on?  More on that later.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

The Sellers are Making A Comeback!

From the Cromford Report:

Things are starting to look up for sellers in a few more areas now. We see 18 cities showing an increase in the CMI from last week with 1 unchanged and 10 decreasing.
However we still note the cities that are improving tend to be the smaller ones and several of the largest cities like Phoenix, Scottsdale, Gilbert and Glendale are mostly flat to lower.
The largest improvements are to be seen in:

• Apache Junction
• El Mirage
• Tolleson
• Gold Canyon
• Sun Lakes
• Fountain Hills
• Avondale
• Sun City
• Tempe
• Sun City West
• Arizona City

The largest deteriorations were in:

• Litchfield Park
• Gilbert
• Scottsdale
• Goodyear
• Glendale

Underwriters - The people we Love to Hate

Underwriters are a natural portion of the loan process.  However, there should be a series on TV for "Underwriters gone Mad".

I have a client selling a home in a rural area.  The owner has lived in the home for the past 20 years.  Inside the home is neat and clean, and outside it is obvious that the home has been cared for.  The home was built in 1942, and the buyer for the property said that they would take the property "as is".  The home appraised for the agreed-on price, the inspection turned up a couple of items that did not cause the buyer any heartburn.

Enter the Underwriter.  From his lofty perch, the underwriter has decreed that despite the fact that the buyer has decided to take the property as-is, and has the ability to make any necessary repairs, there must be a roof certification done saying that the roof will last another two years, and some random holes in the ceiling of a basement room repaired.

The roof has been maintained by the owner for the past 20 years, and has never had a leak.  The holes in the basement ceiling have no structural nature to them.  To another underwriter these items would never come up.

However, we must dance to the tune that this underwriter plays, just days before we are to close.

What an abuse of power!


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Return of Alternative Financing Methods

Last year at this time, there were virtually no "alternative" types of financing being offered on the MLS.  Now we have:

Seller Carry - 660 Listings
Lease/Option - 199 Listings
Lease/Purchase - 253 Listings
Wrap - 52 Listings

Let me know if you are curious about any of these types of financing.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman