Saguaros in the snow

I have lived in Scottsdale for nigh on 26 years.  I never get tired of these views although they seem more frequent these days.  I suppose it must be due to global warming.

Well, it could get worse (couldn’t it?)–home prices

If you’re really worried about home prices, maybe they’re keeping you up at night, don’t read this post.

Hidden in all the news about Libya and the Christchurch earthquake, the Case-Schiller home price index came out this last Tuesday.  The data, which is issued by Standard & Poors, is for December.  In the latest survey, Case-Schiller found that while some markets – notably California coastal – are improving slightly, ours isn’t one of them.  Phoenix lost 1.7% in the Nov-Dec 2010 period, 8.3% for the year.  The National home price index lost 4.1%.

As if that weren’t bad enough, in the Barron's of February 21st, 2011 we read that CoreLogic has found that the National Association of Realtors (NAR) has consistently overstated home sales data leading to an overstatement in 2010 of between 15-20%.  Well, imagine that!  You can read a short article from UPI about this issue here.  The error was caused by a benchmarking problem caused by more sellers using Realtors rather than trying to sell homes themselves, and a consolidation of Multiple Listing Services, which is where Realtors list home for sale.

The good news from CoreLogic is that if a sale was not foreclosure or short sale, prices increased last year (that is, if the property could be sold), whereas distressed real estate obtained a little less.

Here is a video of the NAR chief economist explaining and excusing himself:



If you want to read a full explanation you may do so HERE.

Now, rather like politics, all real estate data is, or should be local.  You probably receive some of the most complete local real estate data in you mailbox every over month or so from local Realtor Helene Cass.  Her newsletter is also available online HERE.The key point is that forerclosures don't dominate in our ZIP code although whether that's also true of short sales I don't know.  In Cimarron Hills, 2010 sales were down by 0.37%; Cimarron Ridge, 8.52% and Sunset Point a tear-jerking 22.39%  Full $/sq.ft details are in Helene's newsletter.

Of course, how one views things is largely a function of what we focus on.  While the Barron's article we referenced earlier points out that demand for mortgages is at a 27-year low, on the other hand Case-Schiller points out that the ratio of home prices to average incomes is about back to normal:

So, I suppose, while we might consider from this that the so-called real estate "bubble" is over, it still remains to be seen how long it will take for home inventories to reach a normal level, whatever that means.

In all of this, if one's home has zero or minimal leverage, and one isn't planning to move, a lot of this data may be moot other than to make us feel more or less wealthy.  But if one is highly leveraged, or even under water, while there is light at the end of the tunnel, whether it may yet be a train is unknown.

The Board's Code of Conduct

In our commentary from the Board Meeting we referred to the Code of Conduct that was introduced, read and adopted by our Board.  At the meeting I didn't have much reaction beyond the fact that it seemed rather silly and only necessary if the Chair found himself chronically unable to run a meeting.  

The key take-home though is that we should wonder if this is really the best use of our Board's time.  At the Board meeting there were continuing resident concerns about speeding in our community, I would have though that the time might be better spent there.  However, back to the Code:

Although it didn't strike me at the meeting, afterwards, the more I thought about it, the less I liked the Code.  I have inserted a scan of the Code as it was distributed at the meeting and how it also, presumably, was written and thus reflects the views of its author.  I encourage you to click on the images so you can see the red bold type that I have concluded betrays a lot of the author's motivation, whosoever he might be, as I didn't see anyone claiming pride of ownership.

I eventually concluded that the code is a perfect example of mental masturbation in that this intellectual exercise serves no practical purpose.  As I said before, if the author was able run a meeting he wouldn't need the Code.  I might also add, and will be asking, where the Board thinks it is given the authority to levy fines or assess charges for bad behavior as I don't recall seeing that in our Bye Laws. We can also conclude that the author has an over-active imagination as I am somewhat at a loss to imagine what uniformed legions are going to swoop in to rescue the Board from an angry resident -- the Safeguard patrol?  And if the police are ever called to one of our meetings I really, really want to be present.  (A cynic might suggest that as Scottsdale PD is disinterested in enforcing our speed limits it is unknown how interested they will be in enforcing our meeting rules).

I am sorry to have to say this -- because at the end of the day we all want orderly and constructive meetings -- but I also have to say that this Code says more about the three gentlemen who voted for it than you ever wanted to know.  It is also not lost on me that, given current events, that our Board seems intent on subscribing to the Muammar Gaddafi method of dealing with dissenters. Odd how external poltics continue to be reflected in the doings of our HOA governance.

In light of the fact that our Board eschews action on other issues as they are only three, one has to wonder where the time and effort came from for them to work on this issue.

Impressions of Board meeting Feb 17th 2011

I will keep my observations on the last Board meeting as short as possible.

Mr. Flink has passed the task of running the meetings to Mr. Friedman.  I am unsure what else, in practice,  the President of the Board does, however there must be more, otherwise I am sure Mr. Flink would have divested himself of the Presidency.

The Board repeated that it had not appointed replacement Board members to replace those removed as the annual election occurs in May.  However, on the other hand they declare that they cannot continue with various projects and tasks as they are only three.  I thought this to be rather a case of having one’s cake and eating it.  However, there is little to be done about it even it ranks a C- on the good governance test.

The issue that will not die – I refer, of course to the speed humps or the removal of same – was again introduced by a resident complaining about the extra noise speeding cars now make on Queen’s Wreath.  The best reason the Board could offer for the removal is that emergency vehicles will not be delayed ascending Queen’s Wreath.  I had never seen them much delayed before and think this is more in the imagination of our Board than in reality.  Never has clutching at straws required such effort.

Trying to helpful and eschewing the role of armchair quarterback I asked if the Board had quantitative data to objectively prove that traffic is now slower on Queen’s Wreath.  Mr. Feldman advised that indeed they had data from before the speed humps had been removed.  At that point, Mr. Friedman decided he had heard enough and we moved along swiftly without any resolution.  So I conclude that either it is a mystery to both the residents and the Board if traffic is slower or faster on Queen’s Wreath, or, traffic is in fact faster, and the Board just doesn’t want to confront the fact as it was they who removed the speed humps. 

By my observation, the main benefit of the removal of the speed bumps is that one is no longer required to leap for one’s life from the sidewalk to avoid being mown down by fellow residents, their visitors and tradespeople who previously would drive on the sidewalk to avoid the speed bumps.  We should, I suppose, be grateful for small mercies.   And, of course, important visitors to open houses are no longer delayed in their precipitous progress.

And speaking as we were of open houses, Mr. Russell informed us that the Realtors’ lobby – which is well funded and effective – has persuaded the legislature that our community may no longer regulate “For Sale” signs.   And the same thing goes for open houses, so our community is now a seven-day-a-week open house.  Should you meet a realtor I suggest you congratulate them for their work on their behalf.

The continuing issue of the security of our community and access to open houses was raised from the floor.  I have some questions into Mr. Russell on this issue and will post his reply when I have the full story.  As you may know, I am passionately interested in maintaining the security of our community.

The crowning glory of the evening, at least in minds of the Board, I am sure, is the meeting code of conduct they introduced.  As I am reproducing it here, I will put it up as a separate post with my comments.

A manifesto for Cimarron Hills HOA

 A manifesto for the governance of Cimarron Hills Homeowners' Association ("CHHOA")

Anthony C. Humpage

I don't think the governance of CHHOA need be complicated.  Indeed, I think it would probably benefit from some simplification.

I believe that it is the responsibility of the CHHOA Board to maintain the quality of life that residents moved to CH to enjoy.  In fulfilling this overriding responsibility the Board should discharge its duties in a financially conservative manner.  In my first term on the CHHOA Board I said I was interested in obtaining value for our residents -- for example by using competitive bids for major financial expenditures .  Fiscal conservatism also requires that the Board ensure that reserves are always at least adequately funded as a percentage of expected future expenditures.  Our community should never be faced by a special assessment or a "tax" (assessment) on the sale of homes because reserves fell short.  When it comes to matters of finance, it is not the Board's job to be popular, necessarily.  The Board has a duty to be a good steward.  This includes avoiding encumbering the association with debt to finance discretionary projects.

Adequate communication is essential.  Again, given the state of online alternatives today, this is not hard or costly to achieve.  The community should communicate frequently with its residents through a menu of online options that are easy to navigate and which allow two-way communication.  Every year, six months after the annual meeting, the Board meeting should be held on a Saturday afternoon to better facilitate an exchange of views between residents and the Board.  Where substantial discretionary expenditure is contemplated, the Board should ascertain that a majority of residents support the project.

The Board should set policy and give direction and oversight but it is not the Board's job to manage the minutiae of the community's affairs.  We have a well-paid professional management company who has that responsibility as their "day job", and who are far more experienced in community management than the Board ever will be.    The board should remain in touch with its community, but it should not buy a dog and bark itself.

Maintenance of the quality of life and security of our community should be the primary concern of the Board consistent with conservative and sensible financial and operating practices.  This does not strike me as being that hard to grasp, but apparently it is for some.

In closing, I believe that Board members should limit their service to a maximum of two full terms.  If members are unable to physically attend meetings for an uninterrupted period of, say, four to five months, they should resign their position.  They should also avoid possible conflicts of interest that might arise by serving on the Board of the master association while also serving on the CHHOA Board.  Additionally, those residents whose professions or livings could place them in a conflict of interest situation should avoid offering themselves for service.  Finally, although it is countenanced by our bye-laws, Board members should physically reside in the community, i.e., ownership of a rental property should not qualify one for Board membership.