HAPPY NEW YEAR-WHAT’S AHEAD IN 2010?

I don’t know about you, but I’m glad to see

2009 come to an end.  My family and I have not been immune to the affects of the downturn in the economy.  While my real estate has been my best year yet, my husband’s business definitely saw a tremendous downturn.  We’re hoping that the new “streamlined” attitude within his office and our home will help us to get a better handle on our finances for 2010.

The real estate market will be a buyer’s market for the foreseeable future.  I don’t see the foreclosures and/or short sales ending any time soon.  I will be increasing my knowledge in the short sale process and my brokerage will be marketing to short sale properties within Scottsdale.  I typically steer my buyers away from short sales, but sometimes those are the only properties that are affordable — especially with my first time buyers.

If you’re fence sitting at all perhaps you should take the plunge.  From all indications we could see interest rates inching up by the end of the year.  The way the government is spending money, we are in for a tremendous period of inflation and it’s only a matter of time….

$8,000 TAX CREDIT — A GOOD IDEA?

Now that the window is closing on the $8,000

first time homebuyers tax credit the government is mulling over the possibility of extending it.  Is this a good thing?  Do we want to continue to artificially prop up our housing market?  While this incentive may have brought more people into the housing market is it a good thing to continue?  Would people buy anyway based upon the affordability of home prices and the lower interest rates?

I’ve had people both want to close before it runs out and then I’ve had people say that it’s not a deal breaker for them.  I have very mixed feelings about the government (that means you and me) spending any more money.  We are a capitalist economy and while this is definitely a challenging time, hopefully, this too will pass.  The markets whatever they may be need to ride it out.  Consumers are still a little gun shy and it’s going to be a slow and painful recovery.

I believe there are still homes that will go into foreclosure and we’ll likely see those start to drop off.  If nothing else, this has been a huge lesson for everyone about spending beyond your means.  We need to get back to what’s important in life….friends, family, etc……and not worry so much about what the neighbors are doing or buying.  Then and only then will we begin to see a light at the end of the tunnel.

$8,000 FIRST TIME HOME BUYER TAX CREDIT

I have mixed feelings about the first time home buyers

credit.  As a realtor, I think this has been a good thing to spur movement within the market.  I do, however, believe that the affordability factor does come into play here as well.  Perhaps people would not have “flocked” to buy, but I think that they still would have bought.  A tax credit incentive certainly sweetened the pot.

However, as a tax payer and proponent of small government I am not so sure that this is a good thing.  We are once again artificially propping up our economy.  Will the bureaucrats in Washington ever get it right?  Are we creating another mortgage crises?  Are we looking down the road at another collapse?  Perhaps a different one?  I cannot help but be concerned.  What has happened in our market should be of concern to everyone….no just homeowners.

We can no longer stick our heads in the sand.  Remember, you cannot complain about the problem if you have done nothing to help correct it.  We are all guilty of going along with the flow.  I think the “flow” has stopped and we all need to get involved.

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.

REFINANCING NEWS FROM HUD

Good news for those in need of refinancing

and they are upside down….the following statement was recently released:

1)  WASHINGTON - U.S. Housing and Urban Development Secretary Shaun Donovan today announced an expansion of the Obama Administration’s Home Affordable Refinance Program to include participation by borrowers who are current but up to 125 percent underwater on their mortgage. Under authorization provided by the Federal Housing Finance Agency, borrowers whose mortgages are currently owned or guaranteed by Fannie Mae and Freddie Mac will now be allowed to refinance those loans according to the terms of the Home Affordable Refinance program established earlier this year.

As you know there are a great number of people upside down in their home loans.  Hopefully, this news out of Washington will help many.  Especially people who have been making their payments but perhaps need refinancing because of an expired interest only loan or an upcoming ARM (adjustable rate mortgage).  Contact a lender to help you through this process.

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!

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.

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.

INFLATION AND HOW IT AFFECTS THE REAL ESTATE MARKET

As the government continues to spend

in record amounts, the threat of inflation looms ever large.  Continuing the printing of money devalues it, that is an economic reality.  What does this mean to the real estate market?  Most likely rough times will continue.  The cyclical nature of the real estate market is upon us.  There are many things in play here that we haven’t seen before.  The collapse of the housing market, banks, financial institutions and the constant bailouts by the Federal Government of businesses “too big to fail”.

The unrealistic increase in property values which we saw several years ago was not a good thing — it was unrealistic and unsustainable.  The overvalued prices of real estate have left many homeowners upside down with regard to value vs. debt.  Many who are not able to ride it out, are walking out….as in foreclosures and short sales.

In the Phoenix area we are still seeing foreclosures, but sales have picked up lowering the number of homes on the market.  The vast majority of buyers are first time home buyers.  The government induced $8,000 tax credit has spurred much needed interest in homeownership, as well as the affordability and lower interest rates which make it very attractive to buy a home.

The rise in inflation will make it harder for people to purchase a home in the coming years as wages seldom keep up with inflation.  Dennis Torres, a California realtor and adjunct professor at Pepperdine University claims that he predicted what is currently happening about three years ago.  At a conference organized by the University, Torres “spoke of an impending housing market collapse…..we would soon see housing values decline 35 to 40 percent”.  He was not a very popular person at that convention.

In addition, Torres believes that prices will continue to decline throughout 2009 and then we will experience several years — perhaps up to five — of stagnant housing prices.  It’s a dark forecast indeed, but if one is prepared one can dance in the rain.