January 12, 2012
Host: Ted Simons
Phoenix Real Estate Market
- Arizona Horizon updates the Valley’s real estate market with Mike Orr, founder of The Cromford Report and director of the Center for Real Estate Theory and Practice at ASU’s W.P. Carey School of Business.
- Mike Orr - Founder, Cromford Report, and Director, Real Estate Theory and Practice, W.P. Carey School of Business
| Keywords: housing
, real estate
Ted Simons: Is the Valley’s real estate market headed for a recovery? Here to share some of the latest data is Mike Orr, creator of the Cromford Report, which offers daily up sight into the Phoenix market. Mike was recently hired by ASU's W.P. Carey School of Business to direct its center for real estate theory and practice. Good to see you. Thanks for joining us.
Mike Orr: Thank you, Ted.
Ted Simons: Congratulations on the appointment. And what -- real quickly, what is the Cromford Report?
Mike Orr: It's a website where people interested in the Phoenix real estate market can get daily updates on how it's going. I've been tracking the market for about six years, and I post updates every day to make people up to date on what is happening.
Ted Simons: How does it differ from other analysis?
Mike Orr: Well, it's different in that it's up to date. Most other reports wait for the end of the month, and another month, whereas I'm trying to track it every day and spot trends before anybody else.
Ted Simons: The Cromford Report will continue despite you moving to ASU?
Mike Orr: I'm going to keep it going, focused on the needs of the real estate industry, the realtors and the brokers are probably the major users. But we're going to expand the sort of thing I do within the real estate center at the W.P. Carey School of Business to really provide information for everybody else too.
Ted Simons: Let's get some information right now. Prerecession market levels, when will we see that return?
Mike Orr: I don't think I can answer that question. Prices got up to ridiculous heights, and it's a long time before we'll see those again. There are some parts of Phoenix that lost as much as 75% of the value. So they have to quadruple to get back to that height. But a sensible recovery is looking much closer now than it has been for a while.
Ted Simons: You and I were part of a real estate and home builders symposium not too long ago in which an academic from back east and an expert really in real estate from back east said in Arizona, this would go against conventional wisdom, it's not so much a demand problem, it's a supply problem. Did that make sense to you, and what's going on here?
Mike Orr: Well, there's been a dramatic change in Phoenix. And I'm talking specifically the greater Phoenix area rather than the whole of Arizona in that a year ago we had quite a significant supply, and that is really dropped to today. Particularly the distressed homes, foreclosed homes or homes that are being short sold are way down. By as much as 75%. So we're used to being told there's a glut of homes for sale, depressing the market. Most people still think that's true, but it's not true. And if people are out there trying to buy homes, they find there's not much choice and a lot of competition.
Ted Simons: So when we hear half the market in the valley is distressed, 50% of the valley homes are under water, you're saying yes, but?
Mike Orr: Yes, I am saying yes but. Actually the number of homes that are distressed keeps going down, the number of normal listings keep going up. So we're in a swift process of getting back to normal. We're not there yet. We're nowhere near normal yet, but we're far beyond the worst, which was probably 2009, was really the most difficult year in terms of distressed homes.
Ted Simons: What is the credit situation right now? And is it still -- some people are saying it's very difficult to get money, some are saying it's suitably difficult to get money. What's happening out there?
Mike Orr: It's more difficult than it should be probably. And the normal person who wants to buy a home to live in has a relatively modest down payment, is going to have to jump through a lot of hoops to get approved for a loan. On top of that you've got a lot of people who have had a foreclosure or short sale in their history and they've got to come out of the penalty box basically. Wait until they can buy a home. But there's a tremendous amount of buying going on for cash. One of the key things that Phoenix has is relatively high rates versus the perfect price. That's attracting investors not only from Arizona, but across the country, Canada, Asia, Australia. A lot of homes that were distressed are being turned in addition rentals.
Ted Simons: For the overall health of the market, all that investor activity, good?
Mike Orr: Well, I think it's a lot better than the alternative, which is no buying. Because an investor will tend to take a home probably not that great a condition. When you see these foreclosures, there's appliances missing, they've been neglected for a while. And an investor can't rent it or sell it until he's cleaned it up, painted it, in some cases they're going as far as dramatically improving the property. And so they're doing good things in terms of improving the housing stock within the market.
Ted Simons: Are we close to having too much after good thing?
Mike Orr: I think there is a possibility that we end up with too many rentals. Because as the people who used to own homes come out of the penalty box, find they can get a loan, we may want to swing back again and have a little more homeownership and less rentals. At that point we may have too many landlord owned properties.
Ted Simons: In terms of home prices, just general overview here, are we seeing the graphs moving up, and how steeply if so?
Mike Orr: We have the worst housing price measurements during last summer. Between August and early September. And they've moved up probably 5-6% since then. Most of that movement is at the bottom end of the market and in the bank owned homes. They're the most attractive to an investor. At the higher end what we've got is stability. No longer going down, but it's not going up either.
Ted Simons: Last question, real quickly, for when the Cromford Report comes out and when we all get access and more folks get access to your information, what shut we look for most to know things are getting better?
Mike Orr: The supply and demand balance is what I focus on. It doesn't tell you what's going to happen immediately because the housing market is slow to respond. But if you keep track of supply and demand and the balance "Two and a Half Men" them it makes a good forecaster. And that way you can make your buying and selling decisions more promptly.
Ted Simons: Keep an eye on those numbers.
Mike Orr: That's right.
Ted Simons: Thanks for joining us.
Mike Orr: Thank you very much.
Storing Nuclear Waste to Fund Education
- State Senator Al Melvin, Tucson Republican and Chair of the House Commerce and Energy Commission, explains his plan to raise money for public education by storing nuclear waste in Arizona.
| Keywords: education
Ted Simons: Senator Al Melvin, a Republican from Tucson, has an idea to raise money for public education by storing nuclear waste in Arizona. Here to tell you us more about that plan is state senator Al Melvin. Good to see you again.
Sen. Al Melvin: Good to be here.
Ted Simons: Arizona energy education fund. What in the world are we talking about here?
Sen. Al Melvin: Well, basically what it is, it's actually a product of the Obama administration, they created an entity called the blue ribbon commission on America's nuclear future. And basically it's a bipartisan commission, the website is BRC.GOV, and its purpose is to find an alternative to Yucca Mountain in Nevada, to recycle and/or store spent nuclear fuel. So I've been looking at that commission, I visited them in Washington, and I've been a big proponent of nuclear energy, the U.S. navy's been underway on nuclear power for over half a century, safely without incident. We have 104 commercial reactors in the United States, three of them are just west of here at Palo Verde, the largest nuclear reactor facility in the country, so I thought this was a very interesting topic, and a way for Arizona to step up to the plate to help solve a national need.
Ted Simons: But where would this nuclear waste, where would the nuclear waste be stored, and have you talked to people in parts of Arizona saying, hey, would you like a nuclear dump in your back yard?
Sen. Al Melvin: It's not a nuclear dump. One could say perhaps that Yucca Mountain was, but what we're proposing is what France has been doing for 30 years successfully and safely. Instead of burying spent nuclear fuel in a mountain, as was proposed in Yucca Mountain, 95% of it, in France they recycle 95% to become new usable fuel and only 5% has to be disposed of. So it's a tremendous opportunity. That facility, it's estimated that if we do this here, it would be about a $20 billion investment by the federal government, I can talk about that a little later, it would employ about 18,000 construction workers over a period of eight to 10 years, once it was built there would be about 5,000 full-time direct employees as well as about 30,000 first-tier around it and it would probably result in about $500 million being inserted into that community on an annual basis of the facility would have a life span of about 50 years.
Ted Simons: And Arizona would be known as a place where nuclear waste is stored. Is that --
Sen. Al Melvin: No. No. Not stored. As I said, we would be recycling 95%.
Ted Simons: 5% would be --
Sen. Al Melvin: 5%, yes.
Ted Simons: But -- about 100 mil or so would go to education. Would it be dedicated, A, to education, and B, is this the best way to fund education in Arizona?
Sen. Al Melvin: No, it's just a supplemental education -- education funding. It's in addition to what we're doing now. We are -- we're spending, and we've protected this spending at about 9,000 per child K-12, if you include federal, state, and local property taxes.
Ted Simons: That includes some other folks also that aren't necessarily teachers. That -- we've gone through that number -- I get what you're saying though.
Sen. Al Melvin: This would be in addition to that. This would be part of an incentive for the state. It would be a user fee. And the way it would work, these 104 reactors generate about 2,000 tons of spent fuel per year. And our proposal is that we would charge a user fee of $50,000 per metric ton times 2,000 tons equal $100 million that. That would be the price that we would charge as a state to do this recycling here.
Ted Simons: We've got such little time here. I want to ask you, if this is such a great idea, are other states trying to horn in on this, A, and B, are we competing against anybody for this? Because it sounds to me like Yucca Mountain is out there and no one wants to touch it.
Sen. Al Melvin: It's because it was not a very well conceived idea. But for over 15 years, there's a program that I just visited in southeast New Mexico called the whip project. And it's as what we're proposing here -- U.S. department of energy, the state, and local private sector, and as -- they've been disposing of low level nuclear waste there for about 15 years, and as a result, $250 million dollars come into are that community and they want to expand and do what we're proposing here. I will be running a memorial which will be a sense of the senate, which will be transmitted to the federal government during the session because it's pending federal legislation that will occur next year.
Ted Simons: Last question, real quickly, you understand some people think this is a preposterous idea.
Sen. Al Melvin: I believe this would be a rejuvenation of education in Arizona. It would result in a renewed interest and what educators call stem. Science, technology, engineering, and math. This is technically sound, and we're having workshops with the education community to make a partnership in order to educate our people about an opportunity that is safe and scientifically proven.
Ted Simons: We've got to stop you there. Thank you for joining us. We appreciate it.
Sen. Al Melvin: I'll be back.
Tucson School District Ethnic Studies
- Arizona Superintendent of Public Instruction John Huppenthal discusses his final ruling that the Tucson Unified School District’s Mexican American Studies Program violates state law.
- John Huppenthal - Arizona Superintendent of Public Instruction
| Keywords: education
Ted Simons: Good evening, and welcome to Arizona horizon. I'm Ted Simons. Tucson unified school district's governing board voted 4-1 to immediately suspend the district's Mexican-American studies program. The move comes after a judge agreed with the determination bite state schools Chief John Huppenthal that the program violates state law. That law passed in 2010 by state lawmakers was designed to address the Tucson district's ethnic studies program. It allows the state board of education or the state superintendent to direct the department of education to withhold 10% of the district's state aid funding for violating the law. The Tucson unified district faced losing about $15 million had it not suspended its ethic studies program. Here to talk about the district's decision and where we go from here is state superintendent of public instruction, John Huppenthal. Good to see you again. Thanks for joining us.
John Huppenthal: It's great to be here.
Ted Simons: Your thoughts on the resolution down there to suspend that program.
John Huppenthal: I think the board has finally come to grips with the problem, so we think that was very positive.
Ted Simons: How can this program, though, be overhauled to comply with state law? How do you get that done?
John Huppenthal: I think one of the things they were in violation of was state law, they never at any time had brought the ethnic studies curriculum up to the school board and gotten it approved. Despite all the controversy, they never took those steps to say, hey, the school board is supposed to be in control, we have this controversy, and I've been in this business for 25 years, be it a zoning controversy at the corner, the first thing you do is convene the parties and have an active discussion. Those things, school board taking control, never took place. Essentially you had factions come into a school district and take control of classrooms.
Ted Simons: Just to make sure, talk about what the judge found, what your report found, lessons weren't reviewed, there was no syllabus, teachers would just come in and pretty much do what they wanted to do when they wanted to do it, with what they wanted to use.
John Huppenthal: There was no curriculum that you could identify. We came up with thousands of pages by which we could make our determination about what was going on in the classrooms, but in the sense of having an organized curriculum that somebody from the community could come in and say what's going on in these classrooms, this is what they're teaching in week Wynn, two, three, none of those healthy discussions ever took place.
Ted Simons: That would be an underlying concern. Again, in terms of the law promoting resentment, advocating ethic solidarity over students, as opposed to individuals, and the course is designed for pupils of a particular ethnic group. That's what violates the law. How can this program comply?
John Huppenthal: I think you start with the fundamentals of good curriculum development. And you have the people in the district lay it all out. What's going to be taught week by week, and what's going to be in there, what books are going to be used, how are those books going to be used? You can use controversial books if you do it correctly. If you're teaching, you're not using it a as a bible, but as an instrument for analytical and analyzing history, those types things.
Ted Simons: So what constitutes promoting resentment?
John Huppenthal: The record, there were thousands of pages were replete with examples of how -- and some were very ghastly about what they would have kids do and the exercises they would have kids go through. So when we took this out for independent examination, the judge did a very thorough job, he agreed with this, that there was a solid case that they had violated the law. And going past what the legislature might pass, they violated just -- these are things that are completely inappropriate to be doing in public school classrooms, really inappropriate to be doing anywhere in society.
Ted Simons: As far as the district is concerned, they need to figure out what to do to continue this program or find ways to get some of this information into a heavily Latino student population, which is important for them to be educated in these -- I think we would agree. But advocating ethnic solidarity over students as individuals, how does a Mexican-American studies program avoid that?
John Huppenthal: Well, some of it, when you look at the examples, I mean, I don't want to go in depth in the examples because any particular example could be dismissed. It was replete through this in how they were overtly polarizing. The reference the founders of the ethnic studies crick limb use, they want to erase the minds of the classes. They put that out there and then the examples they did was -- could you clearly see the linkage between what they said would be the direction of the programs and how that was enacted. It was very polarizing. The judge was very careful and I've been very careful to say that sometimes in history you're teaching historical incidents and even I when I read history, sometimes I'm shocked. And it has a racial context, but we all want to have -- teach this history and injustice in a way we're all working for a better tomorrow, not working for oh, boy I want to get even.
Ted Simons: In that respect, the district does have African-American studies, Native American studies, Asian-American studies, these are all down there as well, correct?
John Huppenthal: Correct. And we've never heard any complaints about this, and the evidence that we have looked at, they're really working hard on the academic achievement issues. Tucson Unified School District has 32-D rated schools that serve low-income Hispanic communities, the Hispanics in those schools are getting academic gains below statewide averages for Hispanics. And well below statewide averages. We view this whole controversy over Mexican-American studies as a distraction from the main mission. If these kids are going to have equal opportunity, they need above average economic gains to catch up. They're nowhere close to that.
Ted Simons: We kept hearing there were academic gains among the students who took the program.
John Huppenthal: That was a lack of a rigorous evaluation of those studies. If you compare students at different grade levels, the students at higher grade levels always have higher graduation rates. Once you compared the apples to apples that advantage for Mexican-American studies disappeared.
Ted Simons: That was inaccurate?
John Huppenthal: That was inaccurate.
Ted Simons: How do you verify compliance? To make sure they're doing what they say they're going to do?
John Huppenthal: I think it starts with your school board. And it also -- we're going to be Google doing good faith analysis. There are a lot of people, the situation is sort of a super charged right now. And so if they attempt to take this underground say it's going to be business as usual and we're going to keep teaching these lesson plans, we're going to pick this up very quickly. We're going to do a monitoring, but we want that school board and the peers are going to do -- this is a local control state. I'm a policymaker who's obsessed with local control. I'm telling them, get a healthy situation, what you're doing is unhealthy, get it under control. You take control. Don't let me get involved.
Ted Simons: Will you get involved in some way or the department get involved to help them out? To give them guidance, let them know what you're looking at and what you have a problem with?
John Huppenthal: Absolutely. We think they have a superintendent there, we've identified him as potentially among the top five superintendents over the last two decades, if that community will support him if that school board will support him, we think he has the ability to execute a good game plan. He's already taken the first step in the resolutions they've returned control of their schools to the principals. Unbelievably, they had a situation where people could come into classrooms in a school and not be under the supervision of the principal. That's how badly the situation had gotten. So now what they're -- with their resolution the principals are in control of their schools.
Ted Simons: And we should mention this is really in the over as far as the courts are concerned. A judge did say if a couple students as far as first amendment rights and such, they can proceed if they so choose. So we could still see court action here.
John Huppenthal: Yes. At the federal level, but we view what the federal judge did as significantly holding us up. They refused to give us preliminary injunction. So we can proceed on through to remedy and in our remedies we'll be able to illustrate those students, we have not -- done nothing to damage their free speech rights. We have strengthened their speech rights by getting them a broad-based curriculum that allows them to analyze all aspects of history, including injustices.
Ted Simons: Good to have you here. Thanks for joining us.
John Huppenthal: It's always great to be here.