Home Prices Surge Courtesy of Wall Street

I am sure you have been hearing that home prices have been on the rise in Phoenix AZ. Here is an article that give some in depth information as to why this is and what we can expect in the future. Some choice snippets are below and here's the link to the full article

"It’s no secret that Wall Street has been bullish on real estate. Housing stocks have surged over the past year, many teetering on the edge of overbought, and billionaire investors like Warren Buffett have been exceedingly vocal about the investment opportunities brick and mortar properties have represented. "

"Not surprisingly inventory levels plummeted as demand increased, putting upward pressure on prices that have created a ripple effect. "

"many areas have welcomed notable year-over-year price increases as well — though none quite as much as Phoenix, which welcomed a nearly 23% uptick in prices throughout 2012,"

Ask Debi, How do I figure out what I can afford?

Hi Debi,
We are just starting to look for a new home but we are not sure how much we can afford. We don't know what the up front costs are or what a payment will be. Can you guide us in the right direction? Thank you!
Searching Suzanne

Dear Search,
This is a really good question and you are definitely ahead of the game to start your home searching process here.

One of the first thing you should do is take a look at your savings and figure out how much you have for a down payment. Right now the minimum down payment is 3.5% for an FHA loan.  Of course there are some other options for down payments. See this article about coming up with a down payment.

The next step will be to find a really good loan officer. Choosing your loan officer is just as important as choosing your Realtor. You should ask friends, family and your Realtor for referrals. Also, here is an article on how to choose a loan officer.

Your loan officer will be an invaluable resource throughout your home buying process. A good loan officer will be able to explain what type of loan program will fit your needs, how much of a down payment you will need, estimate your closing costs and tell you what your payment will be.

Here are some links to articles on home buying costs and affordability.
Can you afford to buy?
Mortgage Pre-Approval
Basic Mortgage Questions

Good luck in the process and remember the great saying by Alexander Graham Bell- "Before anything else, preparation is the key to success"

-Debi

Ask Debi, How to choose a real estate agent

Dear Debi,
How do I choose a real estate agent to help me sell my home and help me buy a new home? I have heard some horror stories and I want to choose someone that will look out for my best interests.
Sincerely,
Leery Lucy

Dear Leery,

You are right to want to do some research about who will represent you when you are making such a momentous purchase and sale. There are some really great articles around the web about just this topic so I will summarize some of the best points and then link to them at the bottom.

First, ask around. The best realtors have done such a good job for their clients that they all sing their praises and are happy to refer them.

One you get a few referrals don't be afraid to reach out to them. This will be a good first test. Is the agent responsive? A full time agent should be ready to respond to inquiries very quickly. If you are selling your home do you want potential buyers having to wait several days for a response to their questions? If you are buying a home, do you want to wait a few days to find out if a home is still available?

Another question you may want to ask is if the agent is familiar with the areas that you will be looking in. Some agents specialize in certain areas and some agents are pretty familiar with a large swath of the City. It is good to have an agent with experience in the area that you are buying and selling in.

You can also do some research online. Of course you should google the agent's name and see what comes up. You can also check out their website and also look online at zillow and trulia for agent profiles and reviews.

The bottom line is you want to feel like the agent is honest and looking out for your best interests but you also want an agent that can educate and inform you along the way. A good agent is your best asset when buying or selling a home.

Here are some links to articles on how to choose a real estate agent.
How to choose a real estate agent do's and don'ts
Questions to ask your potential Realtor
7 tips for choosing a Realtor

Good luck making your choice and remember the lovely quote by Tehyi Hsieh- "Life is partly what we make it, and partly what it is made by the friends we choose."

-Debi

Ask Debi, Is it worth it to pay for a home inspection?

Hi Debi,
We just had our offer accepted on a newer house in the Peoria, Arizona area. The home was built in 2006. The house looks like it is in pretty good shape and the seller has indicated that they will not fix anything. Do you think we should get a home inspection and what would be the point if the seller will not fix anything?

Sincerely,
Analyzing Annie

Dear An
The short answer to your question is yes, you should get an inspection. Regardless of whether or not the seller will fix anything it is a very good idea to know of any major issues the house may have. This information can be used to cancel the contract if you find a very costly deal breaker of an issue. It is also possible to negotiate with the seller if you still want the home but find an unexpected and costly repair.
The cost of an inspection is typically $350-$450 and the piece of mind that you gain in knowing all that you can know about this momentous purchase is incomparable.

Ask Debi, Short Sale Timelines

Dear Debi,
My husband and I just put in an offer on a short sale. Our agent told us that the offer was accepted by the seller but we have to wait for the bank to approve it.  How long should we expect to wait until we can close on this house?
Sincerely,
Ready to Move

Dear Ready,
Congratulations on getting an accepted contract! A short sale can take anywhere from 2-4 months to get approved. There are a few questions you can request that your agent ask the listing agent in order to get a better idea how long of a wait you are in for.

1. How many lenders does the seller have? If there are two lenders this means two approvals which will take about twice as long. 
2. Has the seller submitted the paperwork to the lender? If the seller has not submitted the paperwork yet it may add additional time for the approval. 
3. Which mortgage company is the seller working with? Some mortgage companies post their timeline on their website.

This is not an all encompassing list of questions but just getting answers to these three will give you an idea of how knowledgeable and responsive the listing agent is and you can gauge the time line from there.

You may also want to ask your agent to request weekly updates from the listing agent. You may get a few updates of "nothing happened this week". Do not get discouraged, this is not unusual. 

Good luck with your short sale and remember that your patience will pay off!

-Debi

Ask Debi, Why aren't there very many homes on the market?

Dear Debi,
I have been looking for a new house for a few months now but it seems like there aren't very many homes to choose from and the stuff that comes on the market gets snapped up really fast. Why do you think there aren't very many properties for sale in the Phoenix area?
Sincerely,
Flummoxed Franky

Dear Flum,
I feel your pain, I really do. The real estate market in Phoenix is challenging for a buyer right now. There are several factors that are creating the lack of inventory. The top three reasons I am noticing are:

1. Homeowners are not putting their homes on the market because they are still under water but with the new HAFA and HARP programs homeowners are able to refinance and stay in their homes with a more affordable payment. 
2. Investors are buying up the homes at trustee sale and instead of "fixing and flipping" they are keeping the homes and leasing them out to maximize their investment while our home prices in Arizona continue to rise. 
3. Banks have been slower at foreclosing and have become better at approving modifications. 

There is a great article in the Wall Street Journal that has a few more reasons for the lack of inventory.

The real estate market is always changing so keep your eyes open, hire a great Realtor to help you keep on top of the new houses that hit the market and your perfect home will find you!

Phoenix Posted Largest Home Price Gains in the Nation

Hey all you sellers out there, check out the latest data from Arizona Business Journal!

"The latest figures released Tuesday by Zillow Inc. show Phoenix home values soared by 22.5 percent year-over-year during the last three months of 2012."

If you have been thinking of selling your home and want to know your options, please give me a call. Now could be the time!

Ask Debi, Closing Costs and Seller Contributions

Hey Debi!
My friend just bought a house and she did not have to pay any closing costs. How did that happen? How can I get in on this deal?
-Doug Dealmaker

Hello Deal,
This is a great question. It sounds to me like your friend was able to have the seller pay her closing costs. This is typically done by including the closing costs in the sales price. For instance, if a home is listed for $150,000, she may have offered $155,000 and requested that the seller pay $5,000 in closing costs.

While this is a great option, please be aware, not all sellers will agree to this in a market as competitive as the Arizona market is right now.  As a buyer in a seller's market you will want your offer to be as appealing as possible. You will want to beat out all of the other buyers that will be vying for every house out there and asking the seller to pay buyer closing costs could weaken your offer.

Remember, every situation is different so there may be some houses where it is a possibility to request seller contributions. If this is important to you then keep on trying and recognize that it may take a little longer to find that perfect home.

I wish you the best of luck in your search and thank you for your question!

Ask Debi, Home Availability

Hi Debi,
I am thinking of moving to Phoenix from my chilly home in Manitoba and I want to buy a home in the Peoria area. I notice that when I search online at one of the real estate websites they show a lot of properties for sale but when I inquire about a specific property it is not available anymore. Either it is already sold or I am told that it is under contract. What does this mean? Do the homes go that fast or is this false advertising? 
-Sincerely,
Sally Snowbird

Hi Sally!
Thank you for writing to me. I do get this question often. Yes, the homes do sell very quickly here in the Valley but that is not the only reason you are running in to this issue.

Here is the inside scoop; real estate sites like zillow and trulia do not receive their information from our MLS system. In order to get the IDX feed from the MLS system you must be a licensed Realtor, therefore the information non-members get is not always up to date. No false advertising here, they just don't have the ability to give you the most recent data.

Don't let this discourage you though, these websites are great tools to get your search started and when you are ready, they have many Realtors to choose from.  They all come with a rating and recommendations.

You can check out my profile on zillow here and you can check out my trulia profile here.

I wish you the best of luck in your home search and when you are ready to find a place I would love to help!

Phoenix Home Prices Rise 34% in 2012

According to the Phoenix Business Journal, "After a seasonal slowdown during the scorching summer months, the metro Phoenix housing market was back on the upswing again in October with existing home prices up more than 34 percent year-over-year"

More news from the same article indicates that the median sales prices are going up. " single-family home price climbed to $157,000 in October, compared with $116,800 in October of last year, the report said. The October price gains were also notable given the fact that area’s dramatic surge in home prices earlier this year had leveled off in the four months prior, hovering around $149,000 and $150,000. It was also better than September when the median single-family home price, $150,000, was up by 27 percent year-over-year.

Click Here for the entire article

Great News for Home Buyers

For all those buyers out there that have been discouraged about the crazy bidding process and the cash investors driving the prices out of reach, good news as reported by Trulia, cash investors are beginning to lose interest in the Phoenix market.


"Shrinking inventory and decreased foreclosures may mean that big investors are losing interest in Phoenix area real estate. As more folks wanting to move into their home purchases enter the market, investors are finding increasing competition for the relatively low number of available homes for sale. These two groups of buyers generally have different approaches to the home buying process; investors seek low priced properties where they feel they have a profit margin, while home buyers are willing to pay more for properties that meet their needs for shelter. Statistics indicate that around 1500 homes were foreclosed on last month, versus the 4,000-5,000 per month we commonly saw in 2011. This drop in foreclosures means that the primary source of inexpensive real estate that investors have been purchasing is drying up, forcing them to either compete with home buyers willing to pay higher prices to secure a purchase, or to seek other markets where the real estate recovery isn’t quite as far along as it is here. Although we owe a “thank you” to investors who carried the real estate market in Phoenix during the darkest times of the past several years, the increased interest of future home owners may mean increased stability in neighborhoods hit hardest by the double whammy of the mortgage crisis and real estate bust."

Shadow inventory Myth or Fact?

The debate among housing market watchers over whether metro Phoenix has a looming shadow inventory goes on, even as foreclosures fall and home prices keep rising.

Some believe there are thousands of homes in the region on which mortgage payments haven't been made for years, but lenders haven't moved to foreclose.

The concern is those homes make up a "shadow inventory" that could be dumped on the market anytime or all at once, stalling the current recovery.

Other housing experts don't believe the area has a shadow inventory problem.

New numbers on mortgage delinquencies show the number of borrowers behind on their monthly loan payments in Arizona has fallen. Also, foreclosures starts in metro Phoenix have been slowing since January. Those who don't believe the region has a shadow inventory problem point to the declines in these key indicators as evidence.

Mike Orr, a real estate analyst at Arizona State University's W.P. Carey's School of Business, said there's no "shadow inventory" in sight. "There is still no sign of any significant new supply of homes coming onto the market, and those who anticipate a flood of bank-owned 'shadow inventory' are likely to be very disappointed," said Orr in his latest real estate report.

Last week, the Mortgage Bankers Association released its latest data on late loan payments. Arizona's mortgage delinquency rate fell to 6.2 percent at the end of the second quarter. It was 6.5 percent at the beginning of the year.

According to the mortgage association, Arizona ranks 35th for mortgage delinquencies.
Mississippi ranks No. 1 with a delinquency rate of 11.8 percent. The national mortgage delinquency rate is 7.3 percent.

The number of new foreclosure filings, or notice of trustee sales, in Maricopa County dipped again in July. Last month, 3,219 new notices were filed, according to the Information Market and AZBidder.com. That's down from 3,711 in June and 4,328 in May.

Foreclosures, or trustee sales, have remained below 2,000 since March. A year ago, there were regularly 4,000 foreclosures or more a month in the region.

By Catherine Reagor, August 17, 2012
Original Article posted in AZ Republic AZCentral.com

Maricopa County Foreclosure Data March 2012

 I have been out looking for houses for my buyers and I keep noticing the inventory shrinking down. According to the Cromford Report, this isn't my imagination! See below for the latest stats. 

 

Default Properties: The status of a property currently within the Foreclosure process after the Bank records a Notice of Trustee Sale due to lack of borrower making payments for at least 90 days. Properties remain in this status until there is a recorded Trustee Sale or Cancellation of Trustee Sale.

• At the end of February 2012, there were 17,331 Active Default Residential Properties. This is up by 376 units from the previous month when there were 16,955 Active Default Residential Properties. This is the first month that we have seen an increase after 13th consecutive months of decreases in the number of Active Notices. FYI: The All-Time high was in December of 2009 when there were 47,606 Active Default Residential Properties.

Foreclosures: When the Bank either sells the property at the Trustee Sale (Auction) or takes the property back via Trustee's Deed.

• Foreclosures hit an All-Time, one-month high in March 2010 with 5,451. Last month, there were 2,104 Foreclosures. This was down by 449 units from November.

REO Properties: Properties that the bank owns due to lack of sale at the Trustee Sale (Auction).

• There are currently 7,909 Residential REO Properties - vs. last month when there were 8,539. This is a drop of 630 REO units in one month! In February 2011, there were 20,076 REO Properties - so we are down by 61% from then. There are approximately 1,588 REO Properties listed in the MLS, with an additional 1,425 REO Properties that are in Pending Status in the MLS. This means that there are approximately 4,896 REO Properties that are Foreclosed on, but have not yet been listed in the MLS.

Housing market recovery

 As a real estate agent that is out in the trenches trying to get her buyer homes, I have noticed the lack of inventory. It has been creeping up on us for sure and now other outlets are noticing it. Check out this graph from NAR

 

Also as noted in the great economics and business blog Money Box The above graph shows that "existing home inventories are way down from 12 months ago and basically back to where they were in mid-2005 before we were slumping. That obviously doesn't mean that we're primed for a return to full boom levels of residential investment and construction employment, but it does mean that we should be primed for a return to something like long-term average levels of residential investment and construction employment. For the past few years we've been seeing historically low levels of these things, so even a very meh 2012 would involve a lot of growth and take a meaningful bite out of joblessness."

Great news for sellers!