Archive for the ‘First Time Home Buyer’ category

Phoenix Area Home Real Estate Update

November 7th, 2011
4 bedroom home with pool, near Intel, Hamilton High School in Chandler Unified School District and Hospitals

4 bedroom home with pool, near Intel, Hamilton High School in Chandler Unified School District and Hospitals

Sorry, it’s been a couple of months since my last update but I was waiting for more of a statistical trend to be confirmed. Ending October numbers were very similar to September’s. The bottom line is “Active” listings continue to go down and  pricing is inching its way up, especially in the under $175,000 price range in Chandler, Gilbert, Mesa and Tempe, AZ.

 

 

 

 

 

 

There are multiple reasons why:

  1. Fewer foreclosures notices and fewer foreclosures taking place 
  2. More short sales are being approved by the banks, in a shorter period 
  3. Investors and 1st time home buyers continue to buy. Out of staters and Canadians will be coming soon. A wave of previous short sale sellers will be eligible for buying. 
  4. Local economy is ever so slowly starting to improve  

Fewer Foreclosures- In the last 6 months the number of Trustee’s Deed recorded in Maricopa County has gone down each month from May 4393, June 4073, July 3309, August 3568, September 2838, to October 2400. While August was higher than July on a per working day basis August was lower. Another indicator that this trend will continue is the decrease of the Notice of Trustee Sale which is sent 90 days in advance of the sale to the owner.

More Short Sales- It appears there are fewer foreclosures because the banks are coming to the realization it is better for them to do a short sale vs. forcing a foreclosure.  This is more favorable to the individual because it doesn’t hurt their credit as much. It is more favorable to the community since the short sale home owner continues to live in the house, causing less neighborhood blight.  It is more favorable to the real estate market in general because short sale homes do not depress the pricing like foreclosed homes end up doing.

Investor, Out of staters, Canadians and 1st time Home Buyers, original short sale sellers – Traditional most of the country experiences a peak in real estate activities in the summer time when families like to move when children are not in school.  The Phoenix market with its sunshine is different. In Phoenix there is little move up market home buying going on right now. Most of the activity is in the under $175,000 price range. Out of staters and Canadians are not here in the summer time. Their buying period typically is November to May. I believe with the favorable Canadian dollar exchange rate, we will see another strong buying season from Canadians. The 1st wave of short sale sellers will be eligible to get a FHA loan after waiting their 3 yr ineligible period. They are eager to take advantage of the great buying opportunity out there now.

 Local Economy-   Growth from employers in Chandler, Tempe, Gilbert and Mesa has occurred over the summer.  For example Intel is building a $5 Billion Fab expansion and the solar energy jobs in Goodyear, Tempe, Mesa, Surprise and Peoria. Another example of the economy improving is the local municipals sales tax revenue collection has been increasing. In other words, people are feeling better about the economy are spending more money.

In summary, I like how Michael Orr wrote in the Cromford Report on November 3, 2011, “We have emphasized many times that changes in the balance of supply versus demand take a long time to be reflected in changes to pricing. This is illustrated by the latest numbers. The supply increased and demand fell during October, yet pricing made the most positive move it has done for at least 15 months, driven by the large reduction in supply over the last 12 months:

  • average active listing $/SF – up 2.3% to $139.98 per sq. ft.
  • average pending listing $/SF – up 1.8% to $79.65 per sq. ft.
  • average monthly sales $/SF – up 1.1% to $80.95 per sq. ft.”

 

In other words, the number of “Active” homes on the market (supply) has been going down, down, down and finally the pricing is starting to turn around. The pricing improvement is even more dramatically upward in the under $175,000 price range.

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Posted in First Time Home Buyer, Foreclosure Articles, Real Estate Market Report, Short Sales

Dog Days of Summer?

August 23rd, 2011

This morning as I stepped outside before sunrise to go for my morning walk with my lab, Bella, my breath was almost taken away. It was already hot!!!  No wonder, on the front page of the AZ Republic there was an article confirming this August already was the hottest on record. This doesn’t even count today and tomorrow which are expected to be 115.

As I was walking, I wondered where this expression came from…” Dog Days of Summer”? I always thought it was named for that summer period when it was so hot, dogs just laid around. Partially correct.

It really has an ancient astronomy origin defined by the period in late July in which the “Dog Star,” Sirius, rises in conjunction with the sun. The ancients believed that the star’s heat added to the heat of the sun, creating a stretch of hot and sultry weather. They named this period of time, from 20 days before the conjunction to 20 days after, “dog days.” Sirius is the alpha star in the constellation Canis Major. Canis Major is called the Big Dog, which gives Sirius its nickname of “the Dog Star”. The name Sirius means “scorching,” which may relate to its brightness as a star and its relationship to summer.

Or simply put “Dog Days od Summer” can also be defined as the time period or event that is very hot or stagnant, or marked by dull lack of progress.

The weather might feel like the “Dog Days of Summer” in Phoenix but the housing market is anything but stagnant and sultry. There is plenty of activity in Chandler, Gilbert, Mesa and Tempe with short sales, foreclosed and traditional home sales being purchased by investors, 1st time home buyers, 2nd home/vaction buyers AND people moving here from out of state because of JOBS.

In the last 2 weeks, I completed 2 purchase contracts. They were both moving into the Phoenix area for work related reasons from out of state. This last week, I was showing homes to a Canadian couple. Typical this time of year I don’t see Canadians or northern staters. Interesting enough their reasoning was exactly that, they didn’t want more competition in the home buying process. So they came during the “Dog Days of Summer”. The strategy worked. We got a contract on a home that was not a short sale or foreclosed home, just a good old traditional home with the sellers in it looking to move up.

The weather might be defined by the “Dog Days of Summer” but the real estate activity certainly isn’t.

However,  I do look forward to the cooler September weather    :-)

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Posted in First Time Home Buyer, Foreclosure Articles, Other, Retirement, Short Sales

Buyer’s Market or Seller’s Market?

June 4th, 2011

Buyer’s Market or Seller’s Market?

In February and March I started to see changes. Sellers were being  more demanding about what they needed in the offers from buyers. There were multiple offers on many of the homes my buyers were making offers on. There were fewer foreclosed and short sale homes on the market. The number of investor fixed up homes was increasing. Fannie Mae and Freddie Mac implemented a 1st Look initiative for owner occupants for the first 15 days a home was on the market. This froze out investors or 2nd home buyers from making offers for 15 days.

In April, I posted a blog after attending a conference put on by our local MLS. One of the sessions I attended was presented by Michael Orr, the owner of the Cromford Report.  I always look forward to hear his perspective on the local real estate market. To recap, he was seeing very positive signs in the real estate market numbers he follows daily. Go to my blog to read the full post.

In May, I sent out an email to many of my clients expressing my concern this shift from a buyer’s market to a seller’s market was occurring.  I wrote back then  “In the
last 3 weeks, I  had clients lose out of getting a house with multiple
offers and above list pricing. These have not just been “starter” homes.
I had one client make an offer on a $444K home and within 5 days there
were 9 offers!!! The number of foreclosure notices getting sent out 90 days prior to the
Trustee Sale went down in April.
http://www.azcentral.com/business/articles/2011/05/03/20110503foreclosure-activity-catherine-reagor.html
So the number of foreclosures coming down the pipeline in the next 90
days is not going to be increasing.”

Now in early June, not only have my clients & I continued to experience these changes but the statistical data by Michael Orr, the owner of the Cromford Report supports it as well. In his latest market update he compares what’s going on today with what was occurring 6 years ago when the market was crazy with “irrational exuberance” BUT in reverse. In many ways everything has been turned upside down. Back then if you were looking at supply and demand you were SELLING BEFORE things started to collapse. Now you should be BUYING before pricing catches up with supply and demand.

I say this because the main stream media either reports national real estate news, (which is irrelevant because real estate is a “local” market and nothing to do with what is occurring in New York, Chicago, Atlanta or Seattle) or reports on outdated information from sources such as Case-Shiller Index which averages 2 previous months and compares it to the same 2 month period the year previous.  For example the latest Case-Shiller Index out on May 31, 2011 was reporting on data from February and March 2011.

I have re-printed Michael’s full post below in its entirety for those that want to see the information.

Market Summary for the Beginning of June

By Michael Orr, Cromford Report

It feels almost like the inverse of 2005.

In the second half of 2005, supply rose dramatically but no-one seemed to take any notice. There was a widely believed myth that prices could never go down. Between March 31, 2005 and June 30, 2006, active listings rose from 8,394 to 45,729 (up 445%) creating a huge glut of homes for sale. Yet average sales prices continued to rise throughout this period, up 28.6% from $146.98 to $189.05 per sq. ft. Meanwhile demand fell 16.5%, with sales per month dropping from 8,490 to 7,093. It was as if everyone believed the laws of supply and demand no longer applied. Of course we found out by 2007 that supply and demand really did matter and the bubble burst explosively in 2008 causing untold damage to the economy and family finances.

It’s a question of timing. Supply and demand do control pricing, but in real estate there is a very long time delay between cause and effect. That timing can be extended even further by sentiment. In 2005 sentiment was off-the-charts positive – “irrational exuberance” ruled the roost and caused people to make decisions that in hindsight look crazy. Not just homeowners and developers, but especially lenders and the investors who fueled the credit surplus. Those few of us who tried to warn people in early 2006 that prices would fall dramatically were treated a bit like Harold Camping predicting the end times.

The opposite seems to be happening now. Sentiment is very negative. Everyone seems convinced that prices can only fall further, yet demand is rising and supply has been falling like a rock dropped off a cliff for 6 months now. It comes down to one simple fact: people believe what they want to believe. The facts do not exert a significant influence.

Here at the Cromford Report, we only deal with facts and figures, not beliefs, so here is the market update.

Sales – We are currently recording 9,814 sales in May. This is up 3.5% over April and up 10% over May 2011. This is a very strong sales total because in May 2011 sales are not being boosted by the government bribe (sorry, tax credit) that applied in 2010 for buyers of owner-occupied homes.

Pending Sales – At 13,268 on June 1, pending sales are down 0.4% compared with May 1 but up 6.7% compared with June 1, 2010. Again an extremely strong indicator of demand. In 2010 demand fell sharply during the summer after the tax credit expired, but there is no sign so far that the same will happen in 2011.

Active Listings – At 31,346 on June 1, active listings are 9.4% below May 1 and 23.3% below June 1, 2010. Supply is clearly falling fast. However this understates the situation because a large proportion of the active listings already have a contract against them. In fact there were 7,737 AWC (active with contingent contract) listings as of June 1, 2.6% higher than the very high level we saw on June 1, 2010. If we exclude these AWC listings, we have only 23,609 active listings, down 12.7% in a month and down 28.8% compared with last year. This is almost 60% down from the peak of October 2007.

Supply Versus Demand – The average months supply (active listings divided by monthly sales rate) for the period Jan 1, 2001 to June 1, 2011 is 5.9 months. Right now we have a 3.2 month supply. Yet we read everywhere that there is a “glut of foreclosed home on the market”. What we are reading may have been true in November last year. It is not true now. In fact available supply is really even tighter than this. If we only count active listings that don’t have a contract the months supply number drops to just 2.4 months. Anyone who thinks this is a “glut” is not living in the real world. They should just ask anyone who is actually trying to buy a home right now. Competition is intense, and not just for bank-owned homes and trustee sales. It is also heating up for short sales and normal listings. If you are trying to buy a home that is at all desirable and is priced at market or below, expect multiple bids. If you are a seller, then you only need to price realistically and your home well sell quickly.

(All the above numeric information is for “all areas & types” within ARMLS.)

Records Being Set

In Maricopa County, May saw the largest ever number of distressed homes disappear from inventory. Pending foreclosures fell by 3,394 homes while REO inventory fell by 971 residential properties.

For Maricopa County, May gave us the highest ever percentage of out-of-state buyers. 29.9% of sales went to non-Arizona residents. The average between January 1999 and May 2011 was 11.9%. The absolute count was also a record – 2,648 homes sold to out-of-state buyers. The average since Jan 1999 is 1,446.

For Maricopa County, May saw the highest ever number of foreclosures selling direct to third parties at the courthouse steps. The record set was 1,476, 33% of all the trustee sales.

Paradise Valley

Exceptionally strong market activity is occurring in Paradise Valley where sales are now averaging 52 per month compared with 31 last year at this time. Inventory is down to 319 from a peak of 581 in April 2009 when sales were averaging only 9 per month.

Prices

After a bump upwards between mid April and mid May, average sales price per sq. ft. is back down a little at the beginning of June. Although we are still some 2% to 3% above the market bottom in January and February this year, in most places prices have not yet responded to the huge changes in supply and demand. Why not? Please refer to what happened in 2005, but with everything upside down. The rules of supply and demand have not been lifted. Of course, you don’t have to believe me, but please don’t say I didn’t warn you.

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Posted in First Time Home Buyer, Foreclosure Articles, Real Estate Market Report, Short Sales

Phoenix Area April Real Estate Market Update

April 10th, 2011

April Market Update

I recently attended a conference put on by the Arizona Regional Multiple Listing Service. It was a day of mini-training sessions and speakers on various current real estate topics. One of the sessions I attended was presented by Michael Orr, the owner of the Cromford Report.  I always look forward to hear his perspective on the local real estate market. For those that don’t know, Michael has been accumulating sold MLS date for approximately 10 years. He is a mathematician with IBM work history.  Talk about a geeky guy who thrives on numbers and what they mean….he takes it to a whole different level. Let me see if I can simplify it for us mere mortals.

  1. He sees a very positive trend developing.  He didn’t think this way back in November 2010.
  2. If it wasn’t for the negative perception the numbers would be a lot higher. The demand is higher than the supply but it is overwhelmed by negative perception.
  3. He evaluates 8 criteria to predict/forecast changing trends in the market place. The 1st 6 of the 8 have already changed

                                                               i.      Cromford Market Index- this is an index of housing demand & supply. It looks at homes available for sale as compared to homes under contract and recently sold. Supply is decreasing and the demand is increasing.   

                                                             ii.      Days Inventory or Absorption Rate- homes available for sale has been decreasing. Month’s supply has decreased to 3.8. This is a huge shift and in the lower price range it is even less. For example Maricopa and Queen Creek only have 2.4 & 2.6 months of available homes on the market to sell.

                                                            iii.      Pending Sales- currently there are 13,540 homes that are “under contract” not yet closed. This is the 2nd highest ON RECORD, even going back to the crazy 2005/2006 market. This means homes are moving in recent months.

                                                           iv.      Contract Ratio- this is an indicator of how “hot” a market is. It specifically measures the number of completed sales contracts relative to the supply of active listings. Currently it is 28.5. Last year it was 24.7 and two yrs ago it was 12.7.

                                                             v.      Sales Volume-  The number of homes sold is growing.

                                                           vi.      Listing Success Ratio- this measures the % of listed homes that ultimately end up closing.  A year or 2 back when short sales came on the market and sellers were listing their homes at an unrealistic price this number was very low.

                                                          vii.      Pending $/ sq ft- the price per sq ft of homes under contract has not improved

                                                        viii.      Sales  $/Sq Ft-  the price per sq ft of homes that have closed has not improved

  1. Other Michael Orr comments

                                                               i.      Investor demand is key for low end property (investors and 2nd home buyers are very strong on my website)

                                                             ii.      Downward pricing pressure has disappeared

                                                            iii.      Growing sign of recovery for homes above $300K

                                                           iv.      Slower recovery in areas with highest population decline

                                                             v.      Prices have declined so much we are seeing it “drag” people/buyers from other states so we will recover faster

                                                           vi.      There is a rental house shortage still and the rent rates are still improving, obviously good for investors

 

So where does this leave us? I believe these improving factors (demand increasing and supply decreasing) show this is the ideal time to be buying because factors 7 and 8 have not changed yet, mainly because negative perception (emotions) is too big of a factor and is keeping the pricing down. This is occurring without governmental interference in the market place, such as last year’s 1st Time Home Buyer Tax Credit.

You have to ask yourself …. Once the mainstream press and other statistical measurements catch up, what will happen in the market place?  Will it change this negative perception in the market place? Will prices be moving up?

What is your viewpoint on the real estate market?

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Posted in First Time Home Buyer, Foreclosure Articles, Real Estate Market Report, Retirement, Short Sales

Sunshine & Fun In Phoenix

January 28th, 2011

The weather in the Phoenix metro area is in the 70’s all week.

 Phoenix Sunset

There are some great winter/early spring activities for everybody in the Phoenix area:

  1. Auto auctions are all over the valley. The most famous one is the Barrett-Jackson. The Silver Auction will be over 1-29-11. On Barrett- Jackson, I saw a 1966 Mustang convertible and a 1970 GTO listed. Those sure brought back memories. Maybe too late for this year but put it on your calendar for next year.
  2. If you like to watch golf The Phoenix Open will be starting on Thursday 2-3-11 and concluding Sunday 2-6-11. The 16th hole is golf’s most entertaining spectator viewing spot. The afterhours lineup of great entertainment includes Doobie Brothers, O.A.R, Slightly Stoopid and MetalHead at the Birds Nest this year.
  3. Maybe you want to play some of the best courses in the world while you are here or some that are more reasonable.
  4. For the baseball fans spring training starts with pitchers and catchers reporting 2-14-11 and the games starting 2-26-11. The AZ Diamondbacks & the Colorado Rockies have moved from Tucson and will be joining the other 13 Cactus league teams in the Phoenix area. They will be opening a new spring training facility near Indian Bend & the 101. It has seating capacity for 7,000 and the outfield berm will hold 4,000 more.
  5. If you like speed and the pure adrenaline of racing, NASCAR has moved the Phoenix stop to 2/25/11-2/27/11.
  6. If you are more into the arts and entertainment, Kenny G, Rod Stewart and Stevie Nicks are performing in the valley. Check out the many other entertainers coming to the various venues around the Phoenix metro area.  Body Works has also returned to the Phoenix area. The Heard Museum is always a popular for local artifacts and history.  

 

What more could you ask for; weather in the 70s, sunny blue skies and a lot of fun things to do?

 

What’s the weather like where you live?Winter in New York

 

 

So when are you coming to Phoenix?

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Posted in First Time Home Buyer, Other

Short Sale Fiasco

September 8th, 2010

No matter how hard the sellers and buyers try to complete a successful short sale purchase, there is always a 3rd party who makes the final decision. After waiting for 6 months, Aurora Loan Services said “NO” to my buyers contract on a home in Gilbert.

Chalk another screwed up short sale to Aurora. I believe they purposefully strung this along so they can foreclose. They totally mislead the seller, the buyer and the agents involved. The National Association of Realtors or AZ Association of Realtors should be compiling statistics from Realtors and go in front of Congress and the American public to disclose how (with some banks) the short sale process is a total sham. OK, I’m venting.

Here’s the back ground info:

My client, from out of state, was looking for a home where he could eventually retire to during the winter season. Since he wasn’t ready to retire for the next 3-5 years he wanted to rent it out. He wanted to take advantage of the very affordable housing market in the Ahwatukee, Chandler, Gilbert or Tempe area.

We found a 2100 sq ft, 4 bedrooms, 3 bath home in Gilbert built in 2001 with a tenant who had 11 months still on the lease. The Buyer made an almost a full price cash offer and it was accepted by the seller.

Since May, Aurora had indicated they had all of the necessary short sale paper work but then they would need something updated, such as the seller’s most current bank statement. This went on for 3 more months. Aurora would say …”Yes, we have everything” and then ask for an updated document. They postponed the foreclosure (Trustee Sale) 3 times while this went on.    

The seller has been unemployed for 10 months so there was a definite hardship. The current rental income doesn’t come close to covering the mortgage and taxes. To agree to the short sale, Aurora wanted the seller to pay $7,500 cash at closing PLUS sign a promissory note for $20,000. They were going to require the promissory note knowing full well that Arizona is an anti-deficiency state. This means the bank (Aurora) COULD NOT collect the difference on the short sale but yet they still wanted the $20,000 note!!!

Back in February, I thought it was the perfect situation for all…. seller sells via short sale, renter gets to stay in the house for at least another 11 months, and my buyer gets an investment home for his future retirement. But obviously it wasn’t in Aurora’s best interest.  

This is just an example of some of the pitfalls of short sales.  Others include buying property “AS IS”, unnecessary damage done by short sale seller when moving out, the length of time to close, higher buyer’s closing costs and the bank changing (or canceling) the terms of the purchase contract.

I have helped many buyers and sellers complete successful short sale transaction. They have been very satisfied with the outcome. However, this sale has taught me to advise future buyers of my experience with Aurora.

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Posted in First Time Home Buyer, Foreclosure Articles, Short Sales

Promising Home Sale Trends In Phoenix Area

May 23rd, 2010

Yesterday morning I started my day with a cup of coffee sitting on the patio reading the AZ Republic’s front page article “Promising Trends in Home Sales”. I wondered how it compared with my clients that I am showing short sales and some foreclosures in the Ahwatukee, Chandler, Gilbert, Mesa and Tempe area.

The just of the article indicates the April numbers are positive & May is continuing that trend:

  1. The number of home sales continue to be near record highs
  2. Foreclosures didn’t dominate sales
  3. Homes purchased by investors dropped
  4. More buyers purchased with the intend to occupy the home vs. renting or fixing & flipping
  5. The federal tax credits for home buyers helped

 

 As a comparison, I took a look at my little microcosm of real estate over the last 50 days in the Ahwatukee, Chandler,Gilbert, Mesa &Tempe:
  1.  I have worked with 12 clients; 3 sellers, 8 buyers and 1 renter
  2. Of the sellers; 2 were short sales and 1 from Sun Lakes had to sell for medical reasons
  3. Both of the short sale sellers had their homes rented and lost their renters
  4. One is in a Pre-foreclosure with the foreclosure date set for next month
  5. Of the 8 buyers; 2 are Canadian, 2 are 1st time home buyers, 2 out of state buyers looking for a primary residence moving her because of their work and 2 others who previously had lost a home either from a short sale or foreclosure. All of these homes were in Ahwatukee, Chandler, Gilbert, Mesa &Tempe, not the far out areas of Maricopa or Queen Creek.
  6. The renter is in the process of losing her home of 8 yrs to foreclosure after being laid off 3 time in the last 2 yrs.
Short Sale home purchased by my Canadian buyers

Short Sale home purchased by my Canadian buyers

Do I see a trend here? Yes, people are still hurting (5 out of 12 were involved in a short sale or foreclosure) but they are also figuring out ways to get back into a home via renting back from a relative who buys the home.  The sun is still attracting buyers from out of state/country. We might see a lull with first time home buyers because many of them tried to get under the 4/30/10 tax credit deadline. We saw this same lull in Dec 2009 after the 11/30/09 deadline that got extended.

In the near future (late May and June), I have appointments already set to show out of state buyers coming from Seattle, Chicago, and British Columbia, & Alberta, Canada. The volume of calling activity from local buyers has been increasing as well. It’s interesting that more of my callers are asking about Ahwatukee, Chandler, Gilbert, Mesa & Tempe not the hardest hit foreclosure and short sale areas of Maricopa and Queen Creek.

While nobody can predict the future. I can tell you:

  1. Interest rates continue to be at historical lows. What direction do you think they are headed?  
  2. The supply side of homes has been trending down.  The day’s inventory (# of days it would take to sell all of the active homes on the market) has dropped from 417 days 2 yrs ago, 203 days last May, 165 on 2/23/10 to 159 today.
  3. As the supply decreases, what typically happens to the price?
  4. For those that say, “But wait for all of the “Phantom Inventory” to be thrown on the market”, I ask how long have you been hearing that? I have been hearing about it for over a year.
  5. I believe about 15 months ago the banks got their act together and determined it was to their best interest not to foreclose and to try to work with the financially hard hit short sale sellers. 

If you are looking to sell your home or buy a new home, I invite you to contact me or search the complete MLS. I’m experienced and knowledgeable about homes for sale in Ahwatukee, Chandler, Gilbert, Mesa & Tempe, Arizona as well as the surrounding areas.

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Posted in First Time Home Buyer, Foreclosure Articles, Real Estate Market Report, Short Sales

Short Sale Home & Bankruptcy Court

April 4th, 2010

Even though I have represented many Short Sale clients in Chandler, Gilbert, Tempe and Ahwatukee, Arizona, I ran into a different twist on one this last week.

I have a buyer who entered into a purchase contract for a short sale house. It had previously been a rental. Interesting enough, my buyer is a Realtor from another state moving to Phoenix. I feel fortunate she asked me to represent her on this transaction.

Over approx a 2 month period, the somewhat typical sequence of short sale events were occurring:

  1. The purchase contract was forwarded on to the mortgage holder (bank) for approval
  2. Seller also submitted their “Hardship” paperwork.
  3. Listing agent contacted the bank to follow up only to find out 1 & 2 above couldn’t be found. They said they never received the fax.
  4. Resubmitted everything again.
  5. Bank requested the Broker Price Opinion to be done. This is a valuation process to determine for the banks negotiator the contract price is reasonable for the market
  6. Wait
  7. Wait some more
  8. Waited for 2 months

This is where things changed from typically to unusual. The seller filed Bankruptcy. At this point since the contract on the related asset (home) & debt (house mortgage) is under the control of the Bankruptcy court. The seller’s bankruptcy attorney filed a motion asking the court to approve the sale of the home to my client. The hearing was this week.   

I decided to attend it. While Bankruptcy court is not exactly the Perry Mason, Matlock stuff you see on TV, I always fancied myself as a wannabe “legal eagle” so I was more curious than anything.  I was told by the seller’s BK attorney; most likely the mortgage company would not dispute the sale because they don’t want the house back as a foreclosure and our purchase price on the contract was a fair market price. If the bank had wanted to, they could have tied this home and mortgage up in BK court for some time. At least longer than my buyer client wanted to wait.

The bank (Chase) did send an attorney to ask the judge for more time to evaluate the short sale contract. The judge indicated there was no formal objection filed and was on the verge of postponing the sale when I found myself standing up near the back of the court room raising my hand like a polite school kid in class. The judge motioned me forward. I testified Chase had already had 60 days to evaluate the short sale contract. I found myself boldly asking the judge in my best Perry Mason voice “Isn’t that long enough? That truly is “representing” the best interest of my client.

Decision: Judge “finds” for the Debtor (seller), house sold to my buyer, she is happy. It will close in about 16 days and she can move in when she arrives in Phoenix on 4/30.

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Posted in First Time Home Buyer, Short Sales

A Lender’s Perspective On The Phoenix Real Estate Market

March 13th, 2010

Earlier this week I attended our brokerage’s monthly meeting. We usually hold these meetings at one of our strategic partner’s office. This month it was held at Suburban Mortgage.  I won’t bore you with the general rhetoric of our meetings but what I did find very interesting were comments given to us by Tom Osselaer, Executive Vice President of Finance for Suburban.  Tom is a follower of the market, especially of the financial markets and how they relate to the real estate lending world.

Here are a few of his comments that I found interesting.

  1. When asked about where he thought interest rates were going? His answer was, they will be going up and down or they will be going down and up. Meaning nobody knows. So stop being obsessed with hitting the exact bottom because by the time you realize it’s bottomed it will be too late. A bigger concern is if you could qualify today at these interest rates, will you qualify when interest rates go up?  Maybe that uptick will prevent you from getting a loan. Today’s interest rates are still very low at 5-6%. How many of us remember when interest rates were approaching 20%?
  2. Jumbo loan funding (over $417K) is improving. In the fall of 2008, during the financial meltdown these loans were impossible to get. Without the Federal government backing these loans, they couldn’t be sold on the secondary market, now they are. This is a very positive improving sign.
  3. Even though the Phoenix area has seen its share of unemployment, there is still this attitude around the country of “Go West Young Man (or Woman)”. Besides, where would you like to be unemployed…Phoenix or Detroit?   
  4. The Phoenix market has always been cyclical. It will rebound faster because of the natural inbound migration.
  5. Housing affordability ratio hasn’t been this good in over 20 yrs. If you add in the Home Buying Tax Credit of $8000/$6500 it improves the ratio even more.
  6. Individual’s home buying decision should NOT be a short term decision. Think long term. If the home price goes down for the 1st few months you are in it, so what? You are not selling after living in it only a few months. Where do you think the housing market will be in 3-5 yrs? Financial planner’s usually advice putting away (investing) consistently every month for your retirement. A mortgage payment is exactly that. Again, think long term.

When I meet my clients for the 1st time I ask;

  1. Where do you want to live?
  2. Can you afford it?
  3. Are you comfortable with the payment?

Do you want to take advantage of low interest rates, a government incentive, great affordability and home selection?  If you haven’t already and you want to search on Phoenix area homes go to www.Steve.ViewAllPhoenixHomes.com

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Posted in First Time Home Buyer, Foreclosure Articles, Real Estate Market Report, Short Sales

Phoenix Real Estate Symposium Looks Back at 2009 & A View Forward on 2010

January 17th, 2010

A Look Back and a View Forward Symposium by Fidelity National Title 1/13/2010

I attended this real estate symposium hosted by Fidelity National Title. A panel of who’s who in the local Phoenix real estate market shared their perspective on local market conditions. Their market area covers Ahwatukee, Chandler, Gilbert, Mesa, Tempe and the rest of the Phoenix metro area. In 2009 their real estate firms sold over a thousand Short Sales and Foreclosed homes. The panel included:

Mike Orr, founder of the Cromford Report;

Realtors Lester Cox, Don Matheson, Scott Gibson, Sandra Wilken, Kenny Klaus, Curtis Johnson, and Mark Parris;

Lenders Tracy King from Wachovia and Mark Morrison from Bank of America;

Reginald Givens, the Dept of Housing; and Irving Hymson, Real Estate Specialist Attorney;

The symposium was narrated by Steve de Laveaga, Senior Vice President, Fidelity National Title

Some Notable Notes:

Mike Orr gave a very detailed account of the 2009 real estate market. His background is in mathematics with work experience at IBM and Fujitsu, so he knows his numbers. His firm takes input daily from the local MLS, county records and other sources to compile an extremely comprehensive document called the Cromford Report. The number of homes sold in 2009 was the 3 rd highest on record. He showed statistically how the median home sale price hit bottom in April and has climbed each month ever since. He illustrated how this recovery is shaped like the Nike swoosh, very sharp down trend over the last 2 yrs with a slow upward recovering trend. The starter home price range is further along in recovery because the increase demand created in 2009 from both the 1st Time Home Buyer Tax Credit and investors buying homes. The mid-priced homes are beginning that upward trend and the higher priced homes have leveled off, not increasing or decreasing.

 Mike is predicting the following for early 2010:

  1. The number of Short Sale transactions will continue to increase;
  2. Pending foreclosures will start to go down;
  3. More 3rd party investors will buy homes at Trustee Sales;
  4. Traditional sales are slow until March;
  5. Sales pricing will be flat to slightly higher (long, slow increase). Remember the Nike swoosh;

In the rental market, the number of homes available has decreased a startling 18%. Obviously, investors have not flooded the rental market buying homes with the intent of renting.

For the “View Forward” Steve de Laveaga, ask the panel for their insights by asking, if we were playing a baseball game, what inning are we in and what’s the score?

 It was interesting, the responses ranged from the 1st inning to the 7th inning and the relievers are pitching. We are slightly ahead. Acknowledging the Cardinals are in the midst of the playoffs, Lester Cox couldn’t relate to baseball and gave his own football analogy… “We’re on our own 38 yard line advancing the ball slowly with a possibility of a 15 yard penalty.”

It seems as though the market is as diverse as these respected Realtors. Their comments seem to be related to their location of where they do business, the price range they are working in and their client base. There is a direct correlation with these elements to the Nike swoosh recovery model.

 Additional information, included the announcement Bank of America Processing Center in Chandler has hired 1200 employees to shore up the Short Sale Dept to help reduce the lengthy process.  Tracy King from Wachovia indicated they had studied the cost factor for Short Sales vs. Foreclosures. They determined on average it was $38,000 more expensive to take a home to Foreclosure than accepting a Short Sale.  All of this is encouraging banks to work harder in completing a Short Sale, in a timely manner so there will be fewer Foreclosures.

So what does the 2010 Phoenix real estate market look like? Regardless of whether (or how much) the economy or unemployment improves, there will still be buyers looking to purchase homes. First time home buyers will be looking to cash in on the extended tax credit. Move-up buyers may see opportunity to keep (and rent out their existing home) and buy another home at much lower pricing than a few yrs ago. Buyers from out-of-state & Canadians will see this as a great opportunity to acquire a 2nd home for spending winters here in the sunshine. Investors are buying for positive rental cash flow or to fix and flip. With banks becoming more Short Sale oriented we will experience a higher Short Sale market and fewer Foreclosures.

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Posted in First Time Home Buyer, Foreclosure Articles, Real Estate Market Report, Retirement, Short Sales