Let me know if you’re looking for a Realtor who specializes in representing sellers doing short sales. If you want to sell your Arizona home as a short sale because you owe more on it than it’s worth, then you absolutely, positively want a short sale expert as your Realtor. I’m not an expert on listing short sales but I can refer you to a Realtor who is.
If you are looking to buy a short sale home, however, then I would like to help you.
My contact information is in the right-hand column near the top.
Looking at the graph, sure you can’t see much of a trend but homes in greater Phoenix “only” depreciated 2.3% from March to April. Whoo Hoo! Pop the champagne.
You have to remember that from February to March, Phoenix home prices fell 4.7% so, what the heck, I’m calling 2.3% “starting to level off.”
Home buyers have had tons of good news for many months so I think it’s good that we show home sellers and home owners that the end may be near… um… maybe that’s not the best expression to use here.
Great News for Arizona Home Buyers
On the other hand, if you are a buyer, metro Phoenix home prices haven’t been this low since July 2000. Yep, that’s nearly 8 years ago. And I can remember when buyers thought it would be grand if they could only pay 2004 prices.
(On the other hand, if you are a homeowner and you bought your home after July 2000, that means, on average, your home is worth less than you paid. Boy, that hurts.)
The Mythical “Bottom”
I don’t know if Phoenix area home prices are going to bottom out this summer but I certainly expect to see an elbow in that graph when we get the May and June data. After that, I expect “gentle” price declines until we reach the bottom, say, next January.
(If interest rates take off, I reserve the right to revisit all my guesses.)
Two or three years ago, Maricopa got a ton of press, even national press, about being ground zero for the real estate bust. There was an article in the New York Times, a feature on ABC’s “Nightline,” and tons of other media attention. Long before the housing bust hit many areas of the Valley, Maricopa had already become the symbol of the real estate bust in Arizona.
The people of the Town of Maricopa have been through a gut-wrenching fall in housing prices that, no doubt, has scarred many families. I’m sure the real estate bust will be the low point of many people’s lives.
Now, however, the people of Maricopa are almost optimistic!
Many feel, with good reason, that Maricopa home prices can’t go any lower - that there is nowhere else to go but up from here. And I think they’re right.
Maricopa AZ 85239 - Average home price per square foot
CLICK GRAPH
Homes are selling for less than the cost of construction. The average sale price is $99,633.
Armed with low-interest mortgages and an $8,000 federal tax incentive, people are buying foreclosures and starter homes.
Nearly 1,000 homes sold in Maricopa in the first quarter of 2009, the highest first-quarter sales total since 2006. Combined resales and new-home sales for last year were higher than in 2007. Maricopa officials are hoping that the pace continues picking up this year.
“If you’re interested in a house in Maricopa, this is the ideal time,” said Mike Orr, real-estate analyst with the Cromford Report, which tracks the residential resale market in greater Phoenix.
I completely agree with Mike Orr, if you are want to live in Maricopa, Arizona or have a winter home there, this is an ideal time to buy.
In last week’s Update I said “My guess is we will see rates move up next week”. So much for my forecasting skills! Rates remained essentially flat for the week with a slight downward pattern at the end of the week. The Federal Reserve made it know after their meeting mid week that they had no plans to buy more Treasuries and they are still committed to buying $1.25 Trillion in Mortgage Backed Securities (MBS) in 2009. They will “continue to evaluate timing and amounts” of any future increases in purchases. This statement helped keep the market calm which will hopefully be the case for the near term. We do NOT need any surprises!
Date
Rate
6/26/09
5.42
6/19/09
5.38
6/12/09
5.59
6/5/09
5.29
6/26/08
6.45
6/28/07
6.67
Note that actual market rates vary geographically and by lender, credit score and Loan to Value.
Source: Federal Reserve Statistical H.15.
Mortgage Industry Update
There has been some discussion in D.C. about increasing the Making Home Affordable Refinance limit from 105% LTV to as much as 125% LTV.
In March FNMA said they would not guaranty loans in condo communities with fewer than 70% sold up from the previous guideline of 51%. Some Senators including Barney Frank have asked FNMA to “make some adjustments” to their guidelines.
The National Association of Home Builders (NAHB) wants the condition of the home tobe taken into consideration for home valuation. They argue that distressed homes are typically not as well maintained or damaged compared to others. They have suggested extending the geographical area for comps and/or the time frame for recent sales.
The Home Valuation Code of Conduct (HVCC) is getting a lot of attention from the mortgage and housing industry and it is not positive. There are many problems with theprocess which basically uses a centralized clearinghouse or management company to do appraisals. A big problem is there cannot be ANY communication between the lender, Realtor, Seller, etc and the actual person doing the appraisal. There are many groupsactively seeking to lobby for changes in the process. One of these is Think Big WorkSmall. They have developed a petition which we have signed and recommend interested parties also sign. If you are interested their e-mail address is tbwsdaily@thinkbigworksmall.com
Reminder:Smart Financial will pay for the appraisal on your first loan with us!
Good News
Existing home sales for May were up 2.4% to 4.77 million just below expectations.
Existing home inventory for May was at 9.6 months down from 10.2 months in April.
Median home price for May was $173,000 down almost 17% from May 2008.
Durable goods were up 1.8% compared to forecast of down .9% (even with the increase in May year over year durable goods are down almost 27%).
Continuing unemployment claims were up slightly to 6.74 Million.
New home inventory was at 10.2 months down slightly from 10.4 months.
Statistics of Interest/Concern
The Government said this week that it had raised 80% of the funds it needs for FY 2009.
The Securities Industry and Financial Markets Association (SIFMA) says Q3 2009 GDP will grow .8%.
The Labor Department said that mass layoffs (50 or more employees from single company) increased in May and were the highest since 1995.
Quarterly CEO Economic Outlook Index was 18.5 for Q2 2009 compared to -5 for Q1 2009 (above 50 indicates expansion in the economy).
Weekly jobless claims were up slightly to 627,000.
New home sales market share of 7.45% in May was the lowest since 1968.
Commentary
The Harvard University Joint Center for Housing Studies issued a report that said the housing recovery will be slow due to job losses and continued foreclosures. I wonder how much that study cost?
We know the median home price in metro Phoenix increased from April to May by $4,000 (MLS data) to $5,000 (ASU data). Now you can see where those increases appeared, or didn’t appear, within metro Phoenix by looking at the zip code data provided here.
All the zip code real estate charts available in the right-hand column have now been updated through May 2009 with the number of home sales, the median home price and the median home price per square foot.
Analysis of Phoenix Home Sales by Zip Code for May 2009
The video ends a bit abuptly as I reach the 5 minute maximum but I’m sure you can tell where I was headed.
The azcentral.com has a piece on Beth Jo Zeitzer, a Realtor who specializes in representing banks. She has about 400 lender-owned listings.
Zeitzer doesn’t think she will continue at this pace, explaining that the market is hitting its bottom, at least with entry-level homes. She expects to be dealing with smaller numbers of higher-dollar properties in the next several months. Over time, she figures to be listing mainly commercial properties, rather than slews of single-family homes.
Mortgage rates remained in a narrow range as the week ended. I think it is a safe bet that we will not see 5.00% rates going forward. The culprit is excessive government spending and borrowing along with the budget deficit as we have discussed before. Thursday the Fed announced the sale of a RECORD $104 Billion of bonds next week. My guess is we will see rates move up next week.
Date
Rate
6/19/09
5.38
6/12/09
5.59
6/5/09
5.29
5/29/09
4.91
6/19/08
6.42
6/21/07
6.69
Note that actual market rates vary geographically and by lender, credit score and Loan to Value.
Source: Federal Reserve Statistical H.15.
Mortgage Industry Update
Recently I have been asked about lenders property flipping guidelines. So what follows is a summary of what I learned;
FHA: Any purchase contract must be dated at least 91 days from the date the property changed hands.
VA: There are no seasoning limitations so they vary from lender to lender.
Conventional: Varies by lender with some having no season requirements and others having limitations for example.
Hope for Homeowners update! Back in late May the President signed into law legislation that among other things revised the Hope for Homeowners program. Some of the revisions are the loan balance can only be reduced to 93% of property value instead of 90%, servicers will be paid $1,000 per modification, there will be equity sharing with the investor up to the original appraised value and any servicer participating in the Making home Affordable program must offer Hope for Homeowners. For more information on this program the first place to call is your current lender.
Good News
May housing starts were up 17% to 532,000 annual rate.
Building permits in May were also up.
PPI (Producer Price Index) was up .2% in May compared to forecast of +.6% (in the past year the PPI is down 5% the sharpest decline since 1949).
CPI (Consumer Price Index) for May was up .1% compared to forecast of up .3%. The year over year CPI is down 1.3% the lowest since 1950.
Weekly initial jobless claims of 608,000 were right at expectation.
Continuing jobless claims were down 148,000 to 6.69 million.
The Conference Board report on leading economic indicators for May showed 7 of 10 positive resulting in a 1.2% gain. This follow April’s revised number of +1.1%.
Statistics of Interest/Concern
According to the Treasury Dept. the budget deficit for FY 2009 will be $1.84 TRILLION compared to the $455 Billion deficit for FY 2008.
New York Mfg Index of -9.41 was worse than expected (anything below zero indicates contraction).
The National Association for Credit Counseling said in 2006 it counseled 1.5 million people. The number increased in 2008 to 3.2 million and so far in 2009 that number has increased by 34%. They found that their average client has 6 credit cards that total 62% of family income EXCLUDING mortgages, autos, etc.
According to the Mortgage Bankers Association (MBA) 9% of the country’s 45 million mortgages were delinquent in May. This is the highest number since the MBA started tracking this statistic since 1972.
13 states now have unemployment rates of 10% or more.
Commentary
I was thinking of how to put the rate increases into perspective. So being a numbers person I decided to compare this year with last year at this time. Last May the average home price was about $271,000 compared to $163,400 in 2008. Last year’s average mortgage rate was 6.42% compared to this year’s rate of 5.38%. OK, so you already know where I am going. Clearly as far as affordability is concerned the decline in home prices far exceeds the impact of “higher rates”. Even with rates moving up a Buyer can still purchase more home for far less than a year ago AND the basic loan qualifying standards have not changed that much. Folks, it is a GREAT time to buy a home!
Finally, while there always seems to be bad news or data the amount of good news and positive data suggests that the recession is weakening. While the recovery may be slow and it may take some time for “full recovery” we are doing much better than the end of last year. So, if by the end of 2009 we see the same amount of progress in the last half of the year that will be fine with me.
I want to be your mortgage guy! Call me to get your Arizona mortgage started.
(”MLS Listings” are measured at one point in time, usually the 15th day of the current month. “Median Price” of homes sold and the total number of home “MLS Sales” are for the entire preceding month.)
Price (green line)
The median price in metro Phoenix of single family homes sold via the MLS rose $4,000 from $118,000 in April 2009 to $122,000 in May 2009. If the median home price continues to increase, it will once again match prices seen in the year 2000.
The median home price in Phoenix, Arizona has fallen 54% since the peak of $264,800 in July 2006.
This was the first increase in the Phoenix area median home price in two years, since May 2007.
Is this the absolute bottom or just the first bounce as we approach the absolute bottom? I don’t know. I do know the spell has been broken and the free fall in the Phoenix area median home price has ended.
Sales (blue line)
Single family home sales in metro Phoenix AZ in May were incredibly high at 8,287 homes. That was the best month for home sales since September 2005 and was 55% higher than a year earlier in May 2008.
Surprisingly, the number of homes sold increased strongly from April to May - up 8% - which suggests the market is so strong that the high season will stretch into June this year.
Listings (red line)
The number of single family detached homes listed for sale FELL an incredible 10% from mid-May to mid-June. The mid-June inventory is 38% less than a year earlier, in mid-June 2008.
The months of inventory in May of single family homes listed for sale was “normal” with the equivalent of a 4 month supply.
A year ago, in May 2008, we had a 10-month inventory. The inventory peaked at over 17 months in November 2007. Now it’s 4 months.
Be aware that the supply situation varies tremendously within metro Phoenix depending on the geographic location and the price range of the homes you are looking at.
Conclusion
After 2 years of stunning price declines, the median home price in Phoenix rose in May.
Mortgage interest rates increased rapidly recently so we may look back and see that April 2009 was the peak for housing affordability in this cycle with both a very low median home price and very low interest rates.
(Excludes repossessions but includes sales by banks after they repossess. ASU calls these “Traditional Sales”)
May 2009: $130,000
May 2008: $224,000
From May 2008 to May 2009 the median home price fell $94,000.
From April 2009 to May 2009 the median home price INCREASED $5,000. The median home price increased in 8 of the 14 cities detailed by ASU.
If we were going to see any increase in the median home price in Phoenix we would expect to see it in May. The overall price trend, however, may still be down. The median home prices in the next few months will tell the story.
Even if prices continue to fall, one thing is certain, the extremely strong downward momentum in the Phoenix median home price has been broken.
Phoenix - Number of Homes Sold
(Excludes repossessions but includes sales by banks after they repossess. ASU calls these “Traditional Sales”)
May 2009: 6,945
May 2008: 4,315
The number of homes sold in the Phoenix area in May INCREASED 61% over May 2008.
Great marketing! One home was written up in the Wall Street Journal and was on TV programs in California and Chicago… and now it’s in Arizona Real Estate Notebook. You can’t buy that kind of exposure for a home. But the home didn’t sell.
Lousy marketing can cause a home to sell for less than market price but great marketing can’t sell a home for more than it’s worth.
She is seeing a type of client that she hasn’t seen since the 1980s — the so-called “financially healthy” client.
“They can’t afford the consequences of all the real estate investments because the tax issues related to that, bankruptcy becomes their only way out,” said Drain.
Drain said many people are committing a cardinal sin by using their 401K’s to get by.
“Those are monies that are protected, so my stomach hurts when I see people take their retirement accounts and put it into a black hole called the credit card,” she said.
It sounds like she is saying that those people should have filed for bankruptcy sooner, before they used any of their 401K money, because they could have kept all their 401K money through the bankruptcy.
Burt Carlson of Smart Financial has the best weekly mortgage newsletter that I’ve seen so I asked Burt if I could post the information here on Arizona Real Estate Notebook. See below.
The son of Page, Arizona Realtor Heather Rankin shot this amazing video following a 2-inch downpour.
One summer in college, I worked for the U.S. Forest Service on the North Kaibab so I got a taste of the mystery and magic of the nearby Marble Canyon area whenever I drove through.
Interestingly, a few years ago, I met a Scottsdale woman who’s boy friend had bought a lot for a second home near Page, Arizona overlooking Lake Powell. It sounded like it had an stunning view. I wonder if they ever built on it?
