Real Estate 
BULLHEAD CITY - The slide in the local real estate market began with residential sales dropping off sharply, but commercial sales continued at a good pace – but that has changed.
“To some degree businesses are contracting. Restaurants seem to be doing well. Mom and pops are not,” John Keith, of Keith Commercial Real Estate, said. “Renters are looking to reduce their rent. You’re seeing shorter terms on leases, too. Five-year leases are what we used to have. Now they want two or three years. Landlords are reluctant to lease for two or three years. It takes about six months to a year to recoup the cost of remodeling for the customer. They don’t want to put a lot of money in it for a two- or three-year lease.”
Most businesses that are relocating are doing so in order to cut costs and are looking for smaller or less expensive space.
“In the short term not much is expanding. People are moving sideways,” Keith said. “They don’t know how long (economic conditions) will last.”
The lone exception is the medical industry.
“Medical seems be in a growth mode,” Keith said. “Medical continues to be strong. Especially in this area with the demographics and retirees in this area there is a need for medical services.”
Two issues are slowing sales in the region and until they are resolved the local market is unlikely to see prices rise.
“The market needs to absorb the foreclosed properties before that happens,” Keith said. “There are 1,302 bank-owned properties in Mohave County. Bank-owned, pre-foreclosure and auction there are 2,935 properties.”
Owners biggest obstacle to making sales
The other issue slowing sales and leases is that property owners have not adjusted to current market conditions and are asking for more than current value.
“I have a lot of people call wanting me to list their property to sell or lease,” Keith said. “I tell them what to ask for their property and they want more.
“I won’t take the listings because it’s going to be a waste of time,” Keith said. “It costs me money to list property.”
Despite a slowdown in the local market the future continues to look solid if you look past the short term.
“I’ve watched these cycles for 30-plus years,” Lynn Robison, of Robison Development Consulting, said. “The strength of our community still lies where it was, in retirement, we have great weather, we have the water, visitors. We still have strong commerce in the community.”
Robison sees the commercial real estate market turning around in the near future, especially as California eye Mohave County as a distribution point.
“I think the short term is less than a year,” Robison said. “We’ve recently done considerable research of moving light industry out of California.”
Robison said his research concludes that Mohave County is an excellent distribution point for Southern California, the Las Vegas, Nev., area and the Phoenix area.
Commercial truck drivers are allowed to drive a maximum of 10 hours a day. That puts Mohave County within a one-day, round-trip to any of those points, which would save significantly in shipping costs for many industries. He believes there will soon be an exodus of Southern California distribution centers to the county that will, at least in part, be sparked by higher taxes as California tries to shore up its state budget.
“When you compare those items – their costs, their taxes, their labor – Mohave County looks really good,” Robison said. “Now is the time to investigate land in Mohave County.”
Influx of retirees will begin again
He also sees a return of the retiree migration to the county.
“As the retirement age increases, 55-70, they’ll come here for the same reasons they always have,” Robison said. “When we recover they will come. The financing will come. Things will reach a balance point. Prices won’t be what they once were, but people will start buying again.”
On the residential side there is a shift in the works as the number of foreclosures begins to contract.
“At the end of January there were 901 residential properties in Bullhead City alone, 72 were in foreclosure,” Evan Fuchs, designate broker of Bullhead Laughlin Realty, said. “The key is that if you look at the rate of sales of foreclosures compared to rest of market, at that time we had a three-and-a-half- month supply of foreclosures and a 31-month supply of the rest of market.
“Over six months is considered a buyers market, under six months is considered a sellers market. That is what we saw in December. For a month or two it was people bidding on foreclosures and other people bid against each other. The bank was seeing multiple offers. We had people losing out on them on foreclosures.”
And, again, it was private sellers who were hurting themselves.
“Non-foreclosures, if they’re not competitive in price with foreclosures they just age. Banks don’t have an emotional attachment. It is a depreciating asset. They price it at market and if it is not selling they re-price it or come down in price,” Fuchs said. “Non-foreclosures that are selling are the ones that are willing to compete with the banks and come down in price.
“In December it seems like they got to critical mass and people started buying.”
Mortgage money is available
And, contrary to popular belief, there is loan money available for buyers.
“We’re not running into any significant problems with getting financing on residential housing. They’ve raised FICA scores and are very particular with appraisals. This was a never an issue before but now the appraisers are much more detailed now. If you have a leaky faucet or some other small problem they’re reporting it,” Fuchs said. “Qualified buyers who have a job and have good credit, we’re getting them loans.
“There is a sense on the street that there are no loans available, but that is just not the case in our area.”
Unimproved vacant residential land is taking a big hit currently.
“For land, there were 641 lots on market as of end of January. That number is down maybe 10 percent from a year before, but that is still a lot of lots. The supply far outweighs the demand in residential right now,” Fuchs said. “You have to watch the prices, because the demand for unimproved prop has gone down in last couple years. When that happens deals pop up.
“That creates great opportunities for people to buy and hold.”
Sun 24 May 2009 22:07:37 CDT