PHOENIX DEFICIENCY AMENDMENT

Recently, the Governor of Arizona, Jan Brewer

is getting ready to sign legislation that is supposed to take effect on September 1, 2009 eliminating our current anti-deficiency policy in the State of Arizona.  This is HUGE.  The banks, who are the ones on the band wagon here, have lobbied the Governor to change this law.  Essentially, SB1271 would allow banks to go after homeowners for the balance owned on their home after foreclosure…..the difference between the amount they received for the foreclosure and the amount owed on the house.  This also will affect investors because in order to be covered by the anti-deficiency law, the investor will have to prove that they have lived in the home(s) for a period of not less than 6 months.

Here’s a quote as described in layman’s terms:

Cause: One of the problems Arizonans facing foreclosure have is the very short timeline involved. We have one of the shortest in the nation – only 90 days from default. And now we are going to let banks chase defaulting borrowers for recovery above and beyond that which is recouped when the bank sells off the foreclosed house.

Effect: So suddenly the banks no longer have any incentive whatsoever to work with a borrower to resolve delinquencies. Now the bank can quickly foreclose, sell the house below market value and then go after the defaulting owner for the difference! This will in turn drive down Arizona real estate prices even further. Perpetuating falling real estate prices will only worsen our struggling economy. Furthermore, the relationship between the lender’s rights and the borrower’s rights will be seriously imbalanced by this change to the current law. The only winners here will be the banks who got us into this financial mess in the first place.

Our real estate market has taken enough of a hit, this will virtually kill it.  If you can, call Governor Brewer’s office and express your concern about this terrible piece of legislation and tell her you support the Arizona Association of Realtors plea to her to revisit this decision as soon as possible through the special session.

I don’t know about you, but I’m getting worn out from all this government intervention and having to put my 2 cents in!

PHOENIX HOUSING MARKET UPDATE

While the number of closings has been creeping up

over the last several months, we should not get too excited just yet.  We still have a long way to go.  While the foreclosures tend to dominate the market, we still need to pull in traditional buyers to get the market up out of the hole.  We are still seeing investors purchasing the really low end properties.  Hopefully, they will repair them and hang on to them for awhile while the market stabilizes.  The only way we’ll see an increase in value is when the demand is higher than the inventory.

I’m not an advocate of runaway price increases…..that is what contributed to putting up in this mess.  We need to see a gradual increase in prices as buyers gain confidence in the marketplace once again.  Let’s see what the next report brings.

REAL ESTATE SALES STATISTICS-PHOENX

Real estate sales statistics, according to the

Cromford Report are down from the same time last year and last month.  I am going by normal transactions….this meaning that this particular statistic does not include foreclosed properties or short sales.  Active listings are down, which is good for keeping over saturation in check, pending listings are down slightly from last month and up from last quarter.

As far as percentage of all types of transactions, number of active listings are down across the board; pending sales are down slightly from last month, but up overall.  We can attribute most of the activity to first time home buyers and the fact that the prices are low enough to entice them into the market.  The sale of townhomes and condominiums is down significantly.

I believe people are still cautious.  Consumer confidence is down, credit is available, but not like it should be.  I don’t think you should be able to buy a home without a downpayment.  Homeowners need to have some “skin in the game” in order to feel compelled to make it work.  We will most likely continue to see foreclosures for some time to come.

Should you be interested in a statistical report for your particular zip code or city, please feel free to contact me.

WHAT REALLY CAUSED THE MORTGAGE MELTDOWN?

Recently, there’s a very interesting article in the

Wall Street Journal that brings attention to other factors that contributed to the mortgage meltdown.  Written by a professor of Economics, Mr. Stan Liebowitz, from Texas University, says that politicians need to stop trying to make this a politicial issue and deal with the root cause.  He states that “51% of all foreclosed homes had prime loans, not subprime” therefore, tighter regulations on lenders who would lend money to people who did not understand the complexity of the loan….i.e., an ARM (adjustable rate mortgage).  Moreover, he states that “Sharing the blame in the popular imagination are other loans where lenders were largely at fault — such as “liar loans,” where lenders never attempted to validate a borrower’s income or assets.”

Loans that were made to people without substantiating their income/assets has largely contributed to this situation as well.  If someone doesn’t have a “stake” in the transaction, they are more likely to walk away.  “If substantial down payments had been required, the housing price bubble would certainly have been smaller, if it occurred at all, and the incidence of negative equity would have been much smaller even as home prices fell.”

This is something I have been saying all along.  If you don’t have any “skin in the game”, what’s to say you won’t walk away?  This too will pass and would have passed even if the politicians weren’t involved.  Nobody “deserves” a home if they cannot support the upkeep — that includes mortgage payments — or substantiate their income stream.  Larger downpayments should be required…..we don’t want to go through this again.

LIFE IN SCOTTSDALE

Hope you all had a good 4th of July weekend.  We

stayed in town.  Last year we headed up north to Show Low for the holiday and it was crazy.  I love it up there, but I’m more laid back and like the peace and quiet, so we tend to steer clear of the holidays when everyone else goes up.  Anyway, we stayed here and it was a lovely weekend.  We had a quiet Friday night and on Saturday we ate at one of our favorite spots….Eddie’s House on Indian School Road in Scottsdale.  The food is terrific and you can always count on a great meal and great service.  The restaurant was quiet at 7:00 pm, but we don’t mind.  I love that it’s small and intimate instead of large and noisy.  Eddie wasn’t cooking, he was spending well deserved time with his young family.

As always, my husband had the meatloaf which is out of this world.  I settled for the lobster special.  Everything was amazing and we took the Tiaramisu home for many bites over a couple of days…..we understand that the desert will be sold through Costco and/or Sam’s Club come fall…..can’t wait to try it….after dinner we went home and enjoyed watching the fireworks from our patio.

We had some family over on Sunday and the weather was wonderful.  We expect 100+ degrees at this time of year, so no surprise there.  However, it doesn’t seem so bad when you’re floating around your pool with a cocktail!

FORECLOSED PROPERTIES

Because I’ve recently had an experience with a

foreclosed property that didn’t close on time, I want to share with you how you keep on top of things during one of these types of transactions.  First, be sure that you have an agent who is willing to stay on top of the transaction.  This means that he/she is calling title and/or the selling agent at least weekly to find out how the process is moving along.

My deal was all cash and should have been a no brainer.  However, there was an HOA involved and arrearage due.  The HOA hired an attorney.  Once they do that, it puts another element into the mix.  When the HOA submits their invoice to title for transfer fees, etc., title then has to submit this statement to the bank holding the note on the property.  If there’s an attorney involved, the cost will be higher.  Just be sure that the attorney has a “breakdown” of their costs.  The attorney for the HOA on my transaction did not and it held up the closing for an extra week putting my clients in a bind as they had already moved here from California.

I became the “squeeky wheel” and it did close, but my buyers could have walked…..you must be diligent in dealing with these transactions and also have an agent who will put in the time to make sure that you get the home you want!

CAP AND TRADE AND YOUR HOME

I don’t like to bring politics into my real estate blog

except when it will impact the housing market.  Americans need to be informed on the massive Cap and Tax (Trade) bill that squeeked by in the House of Representatives and is headed to the Senate where hopefully calmer heads will prevail.  Be advised that there is a provision in this 1,300 page bill that the government wants to mandate that the California building codes be instituted across the nation.  This has worked so well for California that we all want it, right?

Be sure to check online…there are many sources where this information is available.  This is not a party issue this is an issue that will affect your ability to buy or sell your home.  If you care at all about what’s happening as the politicians slip this under our noses in the dark of night, you’ll become involved and make sure that you are contacting your Senate representative to vote NO to this legislation that will not only impact your ability to sell your home, but will add up to $6,000 per year in additional energy costs to run your home…..do you want the government telling you what temperature to keep your home, mandating the quality of your windows, doors, etc.?

Don’t take my word for it….google Cap and Trade and read all you can….we should be outraged!!!  We must be informed.

TAX CREDIT UPDATE

The President of the National Association of

Realtors recently updated us on the status of the $8,000 first time homebuyers tax credit.  Not only is the association looking to extend this credit to homebuyers, but they are seeking an increase to $15,000 and extending it into 2010.  We do not know the details, but I will keep you posted when I hear any other news to confirm or deny.

Remember, as it stands now, the credit will expire on December 1, 2009.  That means you must have a contract dated by no later than November 30, 2009 to qualify.  I am once again reminding you that you qualify as a first time home buyer if you HAVE NOT owned a home in the last three years and you will not have to pay this money back…..as long as you stay in the home a minimum of 3 years.

GOOD NEWS IN THE PHX HOUSING MARKET

Up from the lowest point in April, 2009, we’ve seen

a rise in the median price from $116k to $124k.  This is a 7.8% increase in sales prices.  Of course, these prices are seen in areas where buyers were seeing homes selling for $50k.  These homes have now cleared the market place and this bodes well for the gradual increase in value…..as we have experienced in years past.  In addition, the market is clearing itself of the bank owned properties according to the Cromford Report data.

There are rumors, however, that the banks will be releasing more toxic assets at the end of this month.  The quantity remains to be seen.  As a realtor, I can only imagine what a large influx of foreclosures would once again do to our market.  I believe that if we continue to see unemployment rise we will continue to see more foreclosures.

I work with a group doing loan modifications and they are having great success.   This may be our only hope of holding the market steady while we wait for the economy to rebound.   While not everyone is a candidate for a loan modification, there are many who are.

FIRST TIME HOMEBUYER TAX CREDIT

I’ll keep hammering this home until it’s almost

at an end.  The first time homeowner’s tax credit, that is.  You are a first time home buyer if you HAVE NOT owned a home in the last 3 years.  This is a true tax credit and not a “loan”…..does not need to be paid back.  However, the one caveat is that you must remain in the home — primary residence — for at least 3 years.

This is a win win situation.  The FHA loan program requires 3.5% downpayment requirement and if you need help with that, say from your parents, they can “gift” you the downpayment by submitting a letter stating that the money is a gift and does not need to be paid back.

This tax credit is set to expire on December 1, 2009.  We don’t know if it will be extended and most likely won’t know until close to the expiration.  If you are entertaining an FHA, you will need approximately 60 days to close.  Of course, if you are paying cash, the closing are typically quicker.  Beware of the bank owned properties as they can sometimes take a little longer especially if there are issues with HOA arrearage.

This is a terrific opportunity for people to get into a home and have the government pay you to do it.  Don’t miss out.  If you need more information, please feel free to contact me.  I have recently closed on a bank owned, first time homebuyer property — cash deal and I am currently working with a first time home buyer in an FHA situation.

In addition, if the home you are looking at is a townhome/condo there are lenders getting spot FHA approvals.  I know two lenders who are having good luck with this scenario.