February 23, 2011
Host: Ted Simons
Arizona Real Estate
- The latest news about Arizona’s real estate market from Arizona Republic reporter Catherine Reagor.
- Catherine Reagor - Arizona Republic -
| Keywords: real estate
Ted Simons: Home prices in Phoenix dropped over 8% in 2010, according to the latest Standard and Poor Case-Schiller home price index. Here with more on what is happening in real estate is Catherine Reagor, a reporter for "The Arizona Republic." And a good friend of the program. Good to see you again.
Catherine Reagor: Good to see you.
Ted Simons: This is 8% at the end of the fourth quarter. Can we update that?
Catherine Reagor: It's probably down closer to 10 to 12% so far. January was a rough month, our median price is down to $109,000, where we were in the late '90s. And it's tough. And it's foreclosures.
Ted Simons: I want to get to that in a second, as far as raw numbers are concerned, how do we stand compared to the rest of the country?
Catherine Reagor: We are dropping, but the thing is, other cities are catching up. Washington, DC, New York, and they were immune to the housing crash at first, but now are seeing bigger drops than we are seeing. And I don't want to say -- but you know, misery loves company. So we'll see. We're all in it together now.
Ted Simons: Really, no one has been -- has anyone been immune to this?
Catherine Reagor: No. And it could be -- the hope is we went -- we had the biggest run-ups, like California, Las Vegas, Florida, we had the biggest crash, and maybe we are now bouncing around the bottom, and possibly our ills will be behind us sooner.
Ted Simons: Let's focus --
Catherine Reagor: optimistic.
Ted Simons: Let's focus in on those. Why are our prices continuing to fall?
Catherine Reagor: Foreclosures. Foreclosures dropped off late last year because particularly B of A's moratorium, but now they're climbing again. And unfortunately the loan modification programs are not working, homeowners are getting frustrated because the home down the street, people can't get a short sale, they can't get a loan modification, the bank takes it back and sells it for a fourth of what a short sale or modification would go for.
Ted Simons: Why aren't they working? I think the plan was for them to work.
Catherine Reagor: Yes. And there was a federal program, and incentives, two, $3,000 per lender. Part of the issue with metro Phoenix has been how much our home prices have dropped. And so homeowners are so underwater, lend would have to cut principal. If you owed $200,000 by cutting your interest rate by 2% from 7% to 5%, isn't enough to cut your payment. They need to eat some of that principle and drop what you owe from $200,000 to $150,000 to make the program work. And they just have not been willing to do that.
Ted Simons: I know you recently wrote foreclosures as far as could you tell were the most important gauge, the most important factor of the home market why did you write that?
Catherine Reagor: It's just everything follows through from foreclosures. It starts with basically the home being taken back, what it's resold for, and that is affecting home prices. Foreclosures the number of foreclosures out there, people who walk away, we can't predict who is going to get frustrated. Those are more homes for sale that's going to drive down prices as well. Preforeclosures, the best leading indicator we have and those are three months, if you fall behind -- if those climb, we know foreclosures will climb, we know supply is going to climb and prices will drop.
Ted Simons: You mentioned the moratorium. I think we've talked about this, there was always stories out there that banks are holding back. And they're holding back. And eventually we're going to get a flood of these properties again. Are we going to get a flood of these properties again?
Catherine Reagor: It's a real concern. If you look at the number of foreclosures and the number of homes listed for sale, they're holding on to them. And there are some tax incentives for them to do that. If they flood the market again, that's when our prices plummeted. 50%. Because of all those foreclosures came back on the market for homes that have mortgages for $250,000, came back on the market for 60,000. If you're in that neighborhood, what does that do to your home price?
Ted Simons: We heard maybe 70% of homes in the Phoenix area under water, is that an accurate number?
Catherine Reagor: It was probably accurate about a year and a half ago, and now because there are so many foreclosures and short sales, they dominate the market, almost 70% of all home sales. Foreclosures being resold and short sales. It's closer to 40%. We are behind only Nevada and Nevada is still above 50% under water, and that's -- not because of our home prices unfortunately continue to dip, it's because fewer people are under water because they no longer have the home.
Ted Simons: You mentioned the factor of people walking away from their mortgages. Are more folks doing this? You hear radio shows, and people on the internet, everyone saying if you're in this situation, just go ahead and walk away. Do people understand the consequences?
Catherine Reagor: I think people do, I think in some cases it's like a bad investment and they're making that decision. I would be very upset if my neighbors walked away because what that would do for my value. On the other hand, when foreclosures are selling for homes in central Phoenix, south Phoenix, nice suburbs are selling for under $100,000, and they don't have the credit, they can't get a mortgage, but they might be able to save the cash and buy an all-cash deal. And right now its mostly investors big those homes, but you don't make your mortgage payment for a year, unfortunately not good for the neighborhood, but good for your bank account.
Ted Simons: It's an interesting phenomenon, because you got folks who are not the kind who would walk away who are now trumpeting go ahead and do it, it's the best thing not only for your finances, they're saying it's best for the economy.
Catherine Reagor: And you feel like you've done everything right, you qualify for the program and your lender loses your paperwork, the Arizona attorney general sued Bank of America last year over these issues, losing paperwork, and there are instances where it appears allegedly it was done on purpose. To stall it, stall it, stall it. And then if you continue to pay where could you have walked away, it's become a very nasty game.
Ted Simons: A couple more questions here. Right now who is doing the buying, and where are they buying?
Catherine Reagor: Investors, investors, investors, and they are buying in those suburbs with good schools, where people who are foreclosed or sell a house to short sale or walk away can rent in the same neighborhood two to three, four-bedroom, that their kids went to school for half of their mortgage payment.
Ted Simons: So investors for the most part, in the nicer areas for the most part, but I know, we talked when this was starting off, investors were a part of the original problem. Are people looking at this situation saying, this isn't necessarily the healthiest thing?
Catherine Reagor: It's tough, because you automatically think too many investors have you an issue. But if these homes were not selling, the glut we would have -- Detroit, the homes are not selling. And they're setting -- sitting empty. In this case if someone is buying, they're paying cash, what are the chances they'll walk away And they're renting it and receiving like six to 7% return on your dollar, which you cannot get, because we have people to continue to move here, job growth is coming back, and people need houses.
Ted Simons: wow. What a dynamic. Great stuff, thanks for joining us. We appreciate it.
- A mid-week legislative update with Arizona Capitol Times reporter Jim Small.
- Jim Small - Arizona Capitol Times
| Keywords: update
Ted Simons: Good Evening and Welcome to Horizon I am Ted Simons. The senate appropriations committee worked past midnight last night giving its approval to laws that deal with everything from illegal immigration to getting rid of AHCCCS, the state's insurance program for the poor. Here to talk about last night's flurry of legislative action is Jim Small, a reporter for "The Arizona Capitol Times" and a regular on our mid week legislative round-up. Good to see you again. So this was quite the night on the appropriations committee. Let's get it going. Birthright citizenship bills. What happened?
Jim Small: These were the bills that were considered a couple weeks ago by a different senate panel, they debated it for about three hours, and ultimately didn't have a vote on it because the votes weren't there, the bills would have failed. So after that hearing senate president Russell Pearce, who is shepherding these measures through, pulled them out of the committee and pulled them in the appropriations committee where he felt there was a better mix -- basically more Republicans who would support it. And they debated last night again about 2½ hours, three hours worth of debate. Much of the debate very similar to what was had several weeks ago. And this time the bills did pass. And so now they're ready to go for a constitutional check, and after that they'll go to the floor and they can be considered by the senate.
Ted Simons: Basically the move to appropriations worked for Russell Pearce.
Jim Small: Yeah. It did. The goal was to get the bills out of committee and get them to be considered by the entire body, and he certainly got that to happen.
Ted Simons: OK. The two bills, one is joining other states with this compact regarding two different birth certificates and the other, I guess basically redefines an Arizona citizen? Am I getting that correct? I've gone over these so many times I'm starting to get loop de loop. Close enough?
Jim Small: Yes. A lot of the critics of these bills, look at them and say, these aren't going to do what the propose opponents want. The goal is to provoke a fight and go to the courts and get a lawsuit that will challenge more than 100 years of legal precedent and challenge the interpretation of the 14th amendment, which was drafted in the 1860s. And the question really is, does the -- do these bills even do that? Will they get the court to answer the question that they want answered, or will it just result in the court saying, you can't do this because of, you know, X, Y, and Z?
Ted Simons: Was there -- it strikes me as being a lot of debate over things like the 14th amendment subject to the jurisdiction, those particular words, all sorts of things. It sounds like it went on and on.
Jim Small: Yeah. It did. In a lot of sense it was a little legal scholar history lesson. And certainly that's what it was in judiciary, which is the committee that has more attorneys on it and typically delves into legal matters. A lot of the debate did focus on those words, and I think really the interpretation of those words is what is at issue for the proponents of the bill. They say that subject to the jurisdiction of means you have to be either a citizen or legal resident of a country, and if you're not, then if you sneak into the country or if you come here on a Visa and you overstay illegally, you're no longer subject to the jurisdiction of the United States, and hence your children should not be U.S. citizens.
Ted Simons: Is there -- what are you hearing down there as far as likelihood of this, A, getting out of the senate, B, finding success in the house, and C, getting a governor's signature or at least passing it into law?
Jim Small: I don't think it's ironclad any of those happen. The senate -- there is a lot of discontent over this legislation. There are senators who I think conservative senators who otherwise you would think would be on board with this idea who may not be. And there's a lot of talk about who is for and it who is against it, and whether these Republicans really want to push forward with this idea. There is a certainly a group of people who believe this is what should happen and that the state needs to do this to pick this legal battle. But there are a lot of other people who don't, and they are I think in a lot of ways a little bit timid about coming out and saying they don't want to do it because it opens them up to attacks, and even though it's not an election year, it will be next year.
Ted Simons: OK. With that in mind, we now move on to the omnibus bill that senate president Russell Pearce is pushing hard and getting success on, getting out of committee. Correct?
Jim Small: Yes. Did it get out of the appropriations committee last night. Like the other two bills. Another hour plus debate on this measure. And this really is kind of -- it's almost like a grab bag of different illegal immigration measures that we've seen over the past six or seven or eight years. Things that have been proposed and never sign in addition law for one reason or another, all got thrown into this big kind of stew of a bill, and it's got -- it probably does 25 different things, hence the omnibus title. And it's got critics crying that this is far worse than anything the legislature has ever considered in the past. Including senate bill 1070.
Ted Simons: 1070 on steroids, I've heard it described as. We're talking enrolling kids in school, targeting public benefits, hospitals would have to check the immigration status of patients, unlawful for undocumented folks to drive if they're caught, the car gets -- so if your car is being driven, your company's car being driven, enrolling in colleges, all of these things in one fell swoop, again, was this -- were you seeing Republicans having problems with this? Or was this pretty much party line business?
Jim Small: Republicans had problems with this. This bill got out by a narrower vote. Rich Crandall, Republican senator from Mesa among them who voted against it and said this, is not what we need to be doing. We've got other problems and this goes far beyond what Arizona should be doing in terms of illegal immigration.
Ted Simons: So again, is this not necessarily a done deal in the senate? You have the house and the governor to look at this as well. It's so full of different ideas, where do you start?
Jim Small: Yeah. I think so. I think that this face as lot of the same hurdles as the birthright citizenship bills. Especially considered the budget hasn't been tackled yet. That's an issue for the Republicans, we need to do the budget. The whole idea was to do the jobs bill and to do the budget, so let's do that stuff first and then we can tackle these other issues.
Ted Simons: OK. We could talk forever about this, but there are other things that were considered as well. Abolishing AHCCCS, that got through committee?
Jim Small: Yeah. It would basically end the state's AHCCCS program. It's an idea that has been put forward by a number of different conservative legislators and conservative think tanks and kind of antigovernment and antitax groups to say, look, Arizona doesn't need to do this, they can handle this on their own, doing so means you forfeit billions of dollars in federal match, typically the way it works for saying for every dollar the state spends it gets $2 in return from the feds. That's money that goes to hospitals, doctors, other health care providers. So all of that money would be lost. And that's really what the debate is. And I think at the end of the day a lot of these things boil down to a state's rights issue. And it's the idea of, should Arizona control its own destiny or should it be involved in federal programs and take money from the federal government that in turn make it beholden to act the way the federal government wants it to.
Ted Simons: And one more before we let you get out of here, replacing the Arizona board of regents also got out of committee, right?
Jim Small: Not so much replacing it, eliminating it. But replacing it, I --
Ted Simons: I thought the idea was replacing it with smaller groups.
Jim Small :I think the ultimately the way it would work, each school would have their own mini-board of regents and trustees who would determine what each school wants to do, so ASU would have -- its own board of directors, NAU, etc.
Ted Simons: Back in the omnibus bill, it seems like this came out of nowhere and was at the last minute, Ba boom, here you are. Is that a correct impression?
Jim Small: Yeah. It was a late introduction bill, which means on Monday the senate rules committee met and they gave permission for the late introduction of a bill, and it was filed about 4:45. Right before 5:00 Monday afternoon for a committee hearing at 2 -- that was supposed to start at 2:00 the next day. And, yeah, it did come out of nowhere. I think people realize there'd was going to be a bill coming when they saw the agenda for the rules committee that said they were going to consideration a late introduction of a bill related to immigration.
Ted Simons: Was there grumbling?
Jim Small: Certainly. For something this massive it was amplified a little more than normal.
Ted Simons: Jim, good stuff. Good to have you here. Good luck. Thanks for joining us.
Jim Small: Thank you.
Technology and Innovation: Snaring Devices
- A Phoenix firm has invented a new tool for law enforcement to stop people fleeing in vehicles. The Safe Quick Undercarriage Immobilization Device, or SQUID, is a self-propelled device that police can use to stop a car by entangling its moving parts underneath the vehicle. Martin Martinez, president of Engineering Science Analysis Corporation, will talk about his company’s invention.
- Martin Martinez - President, Engineering Science Analysis Corporation
| Keywords: technology
Ted Simons: You've no doubt seen reports of police chases that include officers using stop sticks to deflate the tires of a suspect's vehicle. A Phoenix company is advancing that law enforcement tool with a new technology called Safe Quick Undercarriage Immobilization Device, or SQUID. And it's the focus of tonight's edition of "Horizon's" ongoing series, Arizona technology and innovation. Here to talk about SQUID is Martin Martinez, president of engineering science analysis corporation. Good to have you here. Thanks for joining us.
Martin Martinez: good to be here.
Ted Simons: Before we describe exactly what this does, where did this idea come from?
Martin Martinez: Depends where you read it, because it came out of the front page of the "Wall Street Journal" and they said the way we came up with it, I was sitting down drinking a lot of Guiness and smoking cigars. There's a little truth to that, that's a good way to do ideation. But Sharon Ballard helped me put my thoughts together, and later on my father-in-law and I came up with a final design, if you will, over cigars and Guiness.
Ted Simons: OK.
Martin Martinez: So did it happen.
Ted Simons: Let's describe exactly what this device does.
Martin Martinez: The device itself, the original embodiment of the SQUID, there are several spiraled technologies. The way it works is, it stops the vehicle by immobilizing the rotating components underneath the vehicle itself. So as it goes over, it will lock up a drive train, be it the drive shaft, and in essence what it does is lassos the rotating components.
Ted Simons: How does that work? Give us an example, if a car is fleeing, how does -- we're watching a little video here, how does it exactly work?
Martin Martinez: The way it would work, it's in the middle of the road, and as the vehicle goes over, what you're seeing is several embodiedments. That one, you were asking the size, it's less 2 1/2 feet long by 15 inches wide. It's a speed bump. And as the vehicle goes over, the officer would push a button, it throws out these arms which spike the front tires and lassos the front suspension. As it continues going over, it fires tendrils up into the rotating components, and they think of it as a fishing line, it's a fishing leader and it pulls the strap into the rotating components. So it locks up the drive train. It's almost like a spider net.
Ted Simons: Forget the cigar and Guiness, I had read that you were inspired by spiderman.
Martin Martinez: That too.
Ted Simons: So you were inspired by spiderman.
Martin Martinez: Definite.
Ted Simons: I that's how this thing kind of works.
Martin Martinez: Yeah.
Ted Simons: In terms of weight, is this the kind of thing that law enforcement can easily transport? Does it need a little -- how does this work?
Martin Martinez: It's transportable. It weighs less than 50 pounds. When we were developing for the department of homeland security advanced research projects agency, we got it through a grant to develop it. And the whole thing, they wanted something less than 100 pounds, and we ended up coming in pretty much under everything they needed. One thing we did learn was when we were done developing this thing, it was a little too MacGyver for local law enforcement, so we were thinking of other ways of helping. So we thought of spiral technology. So we said, OK, the way the SQUID works, it throws arms out. If you chop an arm off, put an ammo box, now have you a spike strip. So those are some of the videos you're seeing there. That we were calling the SQUID strip. Now it's being called a viper. Another company is actually developing it in the valley, further developing it.
Ted Simons: Talk more about how this original SQUID idea is now advancing. You can -- can't you load these things into the street?
Martin Martinez: Yes. Exactly. And you saw somewhere the spike strip is actually in barriers, so if you're having a police chase and these things are embedded in a barrier, you'd never see it coming. So the police could just push a button, spike strip would come out, spike your tires and reel it back in and you wouldn't know what hit you. The thing about that, we were inspired unfortunately while we were working on the SQUID itself, it takes two years to get there. Well, we were in our first year, and border patrol agent had gotten run over in Yuma, and we had read he was trying to deploy a spike strip trying to get a fleeing felon crossing the border. And he tried to throw it out, you know how dangerous that is. We said, well, what kind of quick technology can we strip off the SQUID right now? We came up with what we call the SQUID strip, and it was self-deploying spike strip.
Ted Simons: Interesting. Response, not in use yet, but being tested, correct?
Martin Martinez: There's another embodiment as well, another speed bump that puts out a net, and it spikes the front tires and it wraps the front tires, like a burrito, and it locks up the vehicle. If you went to our website SQUID-technologies.com, you can see the videos where it shows the embodiments that came from the SQUID. That one is being tested by DOD. The spike strip itself, we've been trying to secure more funding from the department of homeland security to further productionize it. We do have working prototypes, everything is there. But trying to penetrate the market is always difficult.
Ted Simons: Talk about the funding aspect as well. Because the department of homeland security is involved, and you're mentions SBR, talk about how you get funding for this particular program.
Martin Martinez: SBIR -- the acronym is small business innovative research. And the federal government, all the agencies have this discretionary funding they put aside, they're required to put it aside. And it's in phases. Phase one what they will do is they'll put a call for need, if you the, and say, OK, you little companies, tell me what crazy ideas you have to solve this problem. Our crazy idea was spiderman. So they said, prove to me you're going to be able to do it for phase one we'll give you $100,000. 75-100,000. And with that, a small company can turn into a lot, a big company, would you just get a meeting. The small company, they have to try to prove feasibility. And if you make whoever the sponsoring agency comfortable enough, they'll actually -- ask you to propose phase two, which is $750,000 to $1 million. That's a two-year program. So in essence you're getting investors in the federal government, but you get to keep the technology. And you can license it, and that then from there do you to phase three, so that's technically productionization, but phase three is somewhat nebulous. You dock whatever you want, and you'll score phase three. We did it a difficult way, we licensed it, we didn't have to get investors, we licensed it to a company. But my company is actually meant to -- we're innovators. We have a core team of engineers that are very, very, very innovative. We put in rocket scientist was monster garage.
Ted Simons: Last question, we have about 30 seconds. When you first worked with the idea, I guess if you got a bunch of innovators no one really thinks your crazy do they, some get that but you don’t.
Martin Martinez: They talk themselves out of it.
Ted Simons: Interesting.
Martin Martinez: Engineers too.
Ted Simons: So basically it's been all systems go since the first idea came up.
Martin Martinez Yes. We also now have another phase two with navy, where we are developing the aquatic version, which lab boat stopper, slash, swimmer stopper.
Ted Simons: once that works we'll get you on to talk about that. Thanks for joining us.