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By the Numbers: Phoenix Home Prices Up for 7th Straight Month

by Bob Stahl on March 12, 2010

in Newsletters, Phoenix Housing Market, Phoenix Real Estate News

It’s really nice because I save these newsletters as templates on my computer and for the past 7 months I haven’t had to change but one number in the title.  That’s because Phoenix home prices continue to rise, now for 7 months in a row.

Usually for my monthly look at the Scottsdale and Phoenix real estate market numbers I turn to The Cromford Report – there’s really no better source of up-to-date information on the Phoenix housing market.  But a fire destroyed all of The Cromford Report’s computer equipment last month and they’re still working to restore their databases.  I wish them all the best.

So for this month I’ll look at the Case-Shiller numbers (which are good, too) to analyze what’s been going on in the Phoenix and Scottsdale real estate market.

The S&P/Case-Shiller Home Price Index released February 23, 2010 (and covering through December 2009) had more good news for the Phoenix real estate market: prices increased for the seventh month in a row.

Phoenix real estate market highlights

  • Phoenix home prices were up 0.5% in December 2009 compared to November.  That gain followed a 1.1% gain in November over October.  It was the 7th straight month of month-to-month price increases in the Phoenix real estate market.
  • Rising for the seventh month in a row, Phoenix home prices are beginning to eat away at the overall price decline since the real estate bubble burst.  As of December, Phoenix home prices were down 9.2% over the previous year (that’s compared to 14.2% in November).  Year-over-year price declines in the Phoenix real estate market have been shrinking since March 2009 – from 36% in March to 9.2% in December.  In other words, the Phoenix housing market continues to improve!

Phoenix Real Estate Market Home Prices in 2009

Phoenix Homes 2009 Prices
Phoenix Homes 2009 Prices

Source: S&P/Case-Shiller

  • As you can see from the chart below, Phoenix home prices have clearly fallen from their June 2006 peak (down 50.5% since then), but home prices have been rising since June 2009.  The dotted line is the trend line for Phoenix home prices since 1989 – it makes clear the fact that prices are rising over time, despite the real estate crash here.  In other words, homeownership is still a good investment.

Phoenix Real Estate Market Price Index
Phoenix Real Estate Market Price Index

Source: S&P/Case-Shiller

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National Real Estate Market Update – March 2010

by Bob Stahl on March 11, 2010

in Newsletters, Phoenix Real Estate News, Real Estate Trends

Across the nation, winter weather is being blamed for slowing real estate sales.   According to the newly released  Credit Suisse Monthly Real Estate Agent Survey, the market is still being moved by first-time homebuyers and investors.   Here in the Phoenix area, the survey found that we are bucking the national trend with traffic being up although it is still well below expectations.  Agents highlighted buyers’ concerns over economic stability and uncertainty about price stability.  Buyers seem to be unwilling to move forward because of the fear of further price erosion.  There appears to be a belief among many that prices have more room to decline even though in many areas of the Valley prices are actually rising.

Meanwhile, as the market continues to show shoots of recovery, experts believe that the roots will continue to grow. In his annual letter to the shareholders of Berkshire Hathaway, Warren Buffett said, “Within a year or so, residential housing problems should largely be behind us.”

After a steep run-up in prices during the first half of the decade, home values have readjusted back to normalized levels. Fixed mortgage rates are sitting near record lows and the number of homes available for sale is providing home buyers with more options. Also encouraging are indications that the high end of the housing market could begin moving again as luxury financing becomes more readily available.

Despite high unemployment and looming foreclosures, experts maintain their expectations that the economy will grow in 2010, while the government carries on its search for solutions to help both troubled homeowners and the unemployed.

The National Housing Market

Existing Home Sales

Existing home sales slowed in January. According to Lawrence Yun, NAR chief economist, this is mainly due to the lack of urgency with the extension and expansion of the first-time buyer tax credit in November. January sales of 5.05 million remain 12 percent above the 4.53 million-unit level last year.

Median Home Price

Existing-home price was $164,700 in January, 3.4 percent below December and unchanged from January 2009. Distressed homes, which accounted for 38 percent of sales last month, continue to skew prices downward as they typically are discounted in comparison with traditional homes.

Inventory

The supply of homes continued to shrink, falling 0.5 percent to 3.27 million, representing a 7.8-month supply at the current sales pace. Compared to a year ago, there are now 10 percent fewer homes on the market. This is the lowest level of competing homes on the market since March 2006.

Inventorymar10US 001 National Real Estate Market Update March 2010

Mortgage Rates

Mortgage rates edged above the 5 percent threshold during the week of February 25, but remained near historically low levels. As the Federal Reserve mortgage-backed securities purchase program is scheduled to run out at the end of March, the Fed has held the door open to extending it if the economy weakens.

interstratesmar10US 001 National Real Estate Market Update March 2010

Affordability

Affordability remains at record levels, supported by the lowest mortgage rates in decades, low home prices, as well as the first-time buyer tax credit. So far this year, the home price-to-income ratio has fallen well below the historical average of 25 percent. The ratio now stands at 14.1 percent.

Sources: National Association of Realtors, Freddie Mac

Government Action

Thawing National Real Estate Market Update March 2010

Jumbo Mortgages Begin to Thaw

The cost of jumbo loans, often used to purchase luxury homes, shot up during the financial crisis because lenders steered clear of anything that could be considered somewhat risky. Plus jumbo loans are too large for the government to support through the Federal Housing Administration, Fannie Mae, or Freddie Mac.

Jumbo1 000 National Real Estate Market Update March 2010

The good news:  The jumbo loan markets are beginning to unfreeze and return to normal.

The difference between interest rates on conventional loans and jumbo loans has decreased from higher levels seen last year.

Jumbo2 National Real Estate Market Update March 2010

In some cases, the down payment requirements are easing as well, but they often still depend on the level of borrowing – the more the mortgage, the higher the down payment percentage. In New York, mortgage professionals report the following common down payments:

Jumbo3 National Real Estate Market Update March 2010

Borrowers will still need a good credit score, typically at least 700, evidence of high income, and a sizable bank account.

Sources:

Los Angeles Times, Inman News

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Phoenix Real Estate Trends: Rising Short Sales

by Bob Stahl on March 10, 2010

in Real Estate Trends, Short Sales

The Obama administration, which has struggled to implement effective programs to help homeowners in trouble, has introduced a plan for homeowners who can’t be helped by a loan modification or refinance.  The program will pay homeowners $1,500 to do a short sale rather than let their homes go into the foreclosure; it also includes a $1,000 incentive for lenders to approve the sale.

The program is set to begin on April 5, though the administration is still working out the details.

An article in the New York Times the other day well articulated the benefits that a short sale offers (compared to foreclosure which, for most distressed Phoenix homeowners, is the alternative):

  • For the homeowner: A Phoenix short sale is typically less damaging to your credit than a foreclosure.  And, short sales completed under the program will include a deficiency release — meaning that the lender can’t come back later and sue the homeowner for the unpaid mortgage balance.
  • For neighborhoods: “As many as half of all foreclosed properties are ransacked by either the former owners or vandals.”  A short sale might help neighborhoods avoid that outcome.
  • For lenders: In part because they avoid the high legal costs (tens of thousands of dollars) associated with Phoenix foreclosure, and in part because short sales are often discounted less than foreclosures, lenders may well get more money from a short sale.

I still do a lot of work selling Scottsdale and Phoenix REO properties (homes that have been foreclosed on) but in the last few months I’ve been helping a lot of homeowners short sell their Phoenix and Scottsdale homes, too.  So by my experience, at least, Phoenix short sales is a growing trend.

Wondering how the Phoenix short sale process works?  Here’s a rundown:

Step 1: Write a “hardship” letter and gather supporting documents to submit to your lender to request a short sale. A hardship letter explains why you can no longer afford to make your mortgage payments and outlines the steps you’ve taken to work out a modification or refinance (and why they failed).  If you can make your mortgage payments but you have to relocate (to another state for work, for example), owe more than the house is worth, and don’t have the funds to make up the difference, explain that situation.

I’ve blogged a lot about strategic mortgage defaults, but it’s easy to see why lenders don’t want to approve a short sale unless the homeowner can prove an inability to pay the mortgage or absolutely has to move and can’t pony up cash for the difference between what he owes and what the house is worth.  Lenders will use your hardship letter and supporting documentation to ensure that you’re not just trying to skip out on a bad investment.

Step 2: List your home for sale. Much of the sale part of the short sale works just like a traditional sale; I list your home on the MLS, put out a yard sign, market the home to my buyer database, hold open houses, etc.

Step 3: Submit the offer to the lender. Once we receive an offer on your home, we’ll submit it with a range of financial documents that your lender asks for (W2s, bank statements, expense sheets, etc.).

Step 4: The lender will send a real estate agent to do what’s called a BPO, or broker’s price opinion.  Basically, the BPO gives the lender an idea of the fair market value for your home.  If your offer is too far below the BPO value, the lender will likely reject the short sale.  If the lender rejects an initial offer, we can always go back to the prospective buy with a counteroffer (or market the home more to get a higher offer).

Step 5: Once the lender accepts the short sale, close of escrow is scheduled, typically within 30 days.

I’d be glad to help with your Phoenix or Scottsdale short sale — it can be a great alternative to foreclosure.  Give me a call and we’ll go over the details.

Phoenix Short Sales
Phoenix Short Sales

Thinking about doing a short sale?  Click here to get a FREE ebook with PROVEN SOLUTION to sell you home in just 60 DAYS!


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10 Steps to Buy a Phoenix Home

by Bob Stahl on March 8, 2010

in Home Buyers

I posted a blog and sent out an e-mail blast reminding everyone about the incredible deal that the homebuyer tax credits is – and about the fact that the great deal is going to expire soon.

So if you’re on board with buying your first home, or a new home, what are the steps you should take to make sure that you get a good deal?  First, and most importantly, you need to sign a purchase agreement on a home before April 30 (that’s less than 60 days from now) to get up to $8,000 back from Uncle Sam.

Even though 60 days may not sound like much (and it’s really not), if you follow these 10 steps you can get a great deal on your new home, and cross your t’s and dot your i’s.

  1. Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

  2. Develop a wish list of what you’d like your home to have. Then prioritize the features on your list.

  3. Select three or four neighborhoods you’d like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.

  4. Determine if you have enough saved to cover your down payment and closing costs. Closing costs, including taxes, attorney’s fee, and transfer fees average between 2 percent and 7 percent of the home price.

  5. Get your credit in order. Obtain a copy of your credit report.

  6. Determine how large a mortgage you can qualify for. Also explore different loans options and decide what’s best for you.

  7. Organize all the documentation a lender will need to pre-approve you for a loan.

  8. Do research to determine if you qualify for any special mortgage or down payment-assistance programs.

  9. Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.

  10. Find an experienced REALTOR® who can help you through the process.

Some material reprinted from REALTOR® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS®.  Copyright 2005. All rights reserved. www.REALTOR.org/realtormag

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Sell or Remodel – What the experts say

by Bob Stahl on March 7, 2010

in Home Sellers, Newsletters, Phoenix Real Estate News

Copyright 2010 NATIONAL ASSOCIATION OF REALTORS®

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Getting Your House In Order

by Bob Stahl on March 6, 2010

in Home Buyers, Home Sellers, Newsletters, Phoenix Real Estate News

Visit houselogic.com for more articles like this.

Copyright 2010 NATIONAL ASSOCIATION OF REALTORS®

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Still Waiting To Buy? Why?

by Bob Stahl on March 5, 2010

in Phoenix Real Estate News

You know, I was just reading the latest news from the National Association of Realtors and something interesting caught my eye. Did you know that the experts are saying that potential home buyers who are still on the fence have a lot more to lose than gain? With the first-time home buyer and move-up tax credits worth $8000 and $6,500 expiring April 30; buyer’s who don’t take advantage of these programs could face other obstacles.

For example, there is concern in the market that our historically low mortgage rates could rise if the Fed stops purchasing mortgage-backed securities. That could happen as soon as the end of this month.

Plus, prices are rising in about 30% of all markets across the country INCLUDING Phoenix.

So really, what are you waiting for? This isn’t about me making a buck. This is really about YOU getting in on what could be the best deal we’ve ever seen in real estate. When was the last time the government gave you a dollar for dollar reduction in your taxes for a purchase of a property? When do you think they’ll ever do it again? I think the answer to both is “never”.

Let’s do this… if you’re thinking now is the time (and it is), then let’s just chat. A 5 minute phone call is really all it takes. You have my number.. it’s 602-318-1114 or you can email me. I want you to do the right thing. I want you to look back and say to yourself, “yep, I took advantage of the best deal in real estate history”. Sound okay?

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Ask a REALTOR® in Phoenix: What Do I Look for in a Real Estate Agent?

by Bob Stahl on March 1, 2010

in Home Buyers, Home Sellers

This is my response to a recently-asked question on the REALTOR.com® Ask a REALTOR®.

So my answer to the question “What do I look for in a REALTOR®?” is really two steps: in the first, you should create a short list of Phoenix real estate agents that you’d like to interview.  To do that, I recommend searching for agents active in your Phoenix neighborhood (you can do that easily using Find a REALTOR® from the REALTOR.com® home page).  Search by the specific neighborhood – remember that all real estate is local.

I recommend creating a list of three agents that you’d like to interview.  It may sound like a tedious, over-involved process, but remember that if you’re selling, this is someone who can make you (or lose you) tens of thousands of dollars on the sale of your home.  If you’re buying, this is someone with whom you’ll be spending lots of time looking for your “perfect” home.

When you sit down to interview an agent, I recommend asking these questions:

1) Will you write a marketing plan that’s tailored specifically to my home?

Marketing is one of the most important ways your Phoenix REALTOR® will let people know that your home is for sale, and why it’s such a great buy.  Yet the best marketing strategies really depend on the kinds of buyers you want to target.  I sell a lot of Scottsdale bank-owned homes and Phoenix short sales, so a lot of my buyers are investors – I market to them differently than I market a home in a neighborhood where a lot of first-time homebuyers and young families live.

2) Are you a real estate agent or a REALTOR®?

All REALTORS® are real estate agents, but not all agents are REALTORS®.  REALTORS® are licensed by the National Association of REALTORS® and bound by a strict code of ethics.  They’re also expected to maintain a high level of home buying and selling knowledge.  The REALTOR® designation is a sign of quality you can trust.

3) Do you have the connections necessary to get my house in front of many other real estate agents and prospective buyers?

According to the National Association of REALTORS®, 82% of home sales are the result of agent connections.  In other words, Scottsdale buyers agents in my office who bring their buyers to see your home.  Or buyers who I represent.

4) Do you have references (other homeowners you’ve worked with) who I can contact?

I can tell you that I’m the greatest thing since sliced bread, but you probably want to hear it from my past clients.  Ask for references and then actually call them.  Ask about their overall experience with the agent and ask for the stats ­– how many days the home was on the market, sales price compared to original listing price, etc.

5) What’s your track record?

In addition to references, an agent’s track record of selling Scottsdale homes recently, in your area, is your best indication of how well he’ll be able to sell your Scottsdale home.  If an agent has sold five homes within a few miles of yours in the last six months, all at or close to list price, you can feel confident that he will do the same for you.

6) Will you discuss with me the market analysis you did on homes in my area? Will you be forthcoming with the information you use to price my home?

Home sellers are often inclined to price their home too high.  That’s a bad idea, for a number of reasons.  So while you should hire an agent with a strong track record in your area, and then trust him to price your home at market value, you should also expect your agent to be forthcoming with the information he used to price your home.

7) What makes you different? Why should I list my home with you?

Let the agents you’re interviewing explain in their own words what they think sets them apart from the pack.

8) Do you have experience selling homes like mine, in my area?

See #5.

9) How many buyers are you currently working with?

On one hand, an agent who works with a lot of buyers has a ready supply of prospective buyers for your home.  On the other hand, he may not have a lot of experience or expertise in helping sellers.  So if the agent you’re interviewing has a lot of buyer clients, ask some detailed questions about his experience with sellers.  Then ask how he’ll leverage his buyer relationships to benefit you.

10) Can I cancel my listing contract if I’m not happy with your service?

On one hand, as agents we need to protect ourselves against clients who sign a listing contract with us, use us to market their homes, and then cancel the contract before their Phoenix home sells (and before we’re reimbursed for the out-of-pocket money we’ve spent to market the Phoenix home).  On the other hand, it’s important for you to be able to “fire” your agent if he isn’t performing.  Ask about cancellation provisions in the listing contract.

By creating a list of several Phoenix real estate agents who are active in your area and then interviewing them using the 10 questions I’ve listed above, chances are good that you’ll find a Phoenix real estate agent who will not only do a great job helping you sell (or buy) your home, but who you’ll be able to “live with” for the several months it will take!

What do you think?  How have you found your Phoenix real estate agents?  Click on the “Comments” link below and join the discussion!

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Gated Community, Granite Counters, Travertine all for LESS than 100K!

by Bob Stahl on February 26, 2010

in Home Buyers, Our Listings, Phoenix Homes

Pool 150x150 Gated Community, Granite Counters, Travertine all for LESS than 100K!This is your chance to swoop in and get a GREAT deal on some bank owned Phoenix real estate!  This one bedroom, one bath upgraded condo is close to everything the Biltmore has to offer!

 

 

 

Just past the security gate you’ll be able to fire up some romance in the cozy family room at this 1 bedroom, 1 bathroom condo near 32nd St and Camelback. Located just a few blocks from the Biltmore, your new home has travertine floors, designer paint, granite counters, a breakfast bar and stainless appliances. You’ll be able to celebrate life just steps from a cooling pool and spa. This is a real find, an excellent value at a bank owned price! Sold ‘as-is’ with no repairs.

For more information or to schedule a showing, contact me today!

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Phoenix Real Estate of Affairs: The House is on Fire!

by Bob Stahl on February 25, 2010

in Phoenix Housing Market

I grew up in California, and I lived through a number of economic downturns and housing market crises there.  So I’m not stranger to fiscal pain.  But some of the wacky ideas that Arizona’s government has proposed to resolve the $2.6 billion deficit (which is about a third of the entire budget) really take the cake.

Phoenix Real Estate of Affairs: The House is on Fire!
Phoenix Real Estate of Affairs: The House is on Fire!

A blog today by the Arizona Investment Council (The Economic Impact of Arizona Healthcare Budget Cuts Will Touch All of Us) talked about one of the proposals – cutting $1 billion in Arizona healthcare expenditures.  That would take away healthcare coverage for 310,500 low-income adults and 47,000 kids.  As if that’s not bad enough, the healthcare cuts would actually lower real Gross State Product (basically, the state’s total income) by $3.3 billion.  Oh, and 42,000 people would lose their jobs.

Another proposal would save $63 million by transferring the Arizona Department of Juvenile Corrections to the counties – who admittedly have no idea where or how they’re going to take care of these kids.

I know that there are no good answers when you have to raise $2.6 billion in the middle of the worst recession since the Great Depression.  But, still. . .

Which brings me to the Phoenix real estate market.  Arizona has historically relied on population growth (everyone wanted to live in our affordable and sunny state) to keep the economy humming.  Now that people aren’t moving here (or anywhere) from other states at the same pace, well . . . you know what the outcome has been.

But what if Arizona’s budget troubles make the state a place where no one wants to live, even when people start moving from one state to another again?  What if we cut the heart out of the state’s public programs, out of education, out of infrastructure like roads, and companies don’t want to locate here?  What if jobs don’t come back to the state?

That would be really bad for the real estate market.

In a recent podcast with associate professor of real estate at ASU, Jay Butler, the editor of Knowledge@W. P. Carey asked this insightful question: “Arizona has historically depended on in-migration to keep things moving.  The housing market is certainly part of that.  So whether or not Arizona remains or becomes a state where companies want to locate and create jobs is going to have an impact on how quickly or how slowly our housing market comes back, yes?”

Butler’s answer: Yes.  “Arizona’s state and local governments have to keep both [the housing and the budget] balls in the air – how do you put the fire out now and what do you do with the building once the fire is out?”

I think that fixing Arizona’s budget mess is important from a social standpoint – I hate the thought of 47,000 kids not being able to go to the doctor.  But there’s a powerful selfish motivation, too: the Phoenix real estate market will never recover if Arizona’s economy doesn’t recover.  And that won’t happen if we don’t get our fiscal house in order.  And to do that, we’ve got to put the fire out.

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