$8000 HOMEBUYERS TAX CREDIT-FREIND or FOE??

Now that the end of the first time homebuyers tax

credit is upon us and the government is thinking of extending it, I’ll put my economic 2 cents in.  I don’t hold myself out to be anything but a concerned tax payer.  I will agree that the tax credit has spurred on people to buy homes.  However, as in all these types of programs, there is massive fraud.  It’s so disheartening when you hear about people purposefully scamming other Americans to this degree.  And, why is this even able to happen?  Could it be because the government is keeping as much of an eye on this as they do every other program they run?

I am not a proponent of artificially “propping up” the economy.  It does no good.  Cash for clunkers is a prime (and recent) example and so this this first time home buyers tax credit.  Are we putting ourselves into the same situation that got us here in the first place, i.e., allowing people who cannot afford to maintain a home buy a home?  I’m sure there are people who will do fine, but what are the odds that we’ll end up with more foreclosures out of this?  My guess is that yes we will…..

When are people going to realize that “the government” consists of its citizens.  It’s not some magical pot of gold that the elected officials in Washington are going into each day.  It’s borne on the back of us the American citizenry.  We are saddling our children and their children with massive amounts of debt.  The free market should be allowed to ride this storm out without “Uncle Sam”.

I believe that the low interest rates and the affordability of homes in this market would have brought buyers to the table.  Perhaps the numbers would have been smaller, but maybe it would not have cost us as much.  I am a realtor who loves to work, but sometimes it’s as if the hurrier I go, the behinder I get.  Basically, buyers should just go door to door and ask their neighbors for the $8000, because that is in essence what we’re doing.

$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.

WHAT’S HAPPENING IN THE PHOENIX REAL ESTATE MARKET?

Each and every time I take a client out to find a home

it’s an interesting experience…..last week was no exception.  I have a client moving here from Colorado.  A young man and his young family.  We spent about 5 hours looking at homes in Buckeye.  Because his price range is below $100k, all of the homes we looked at were bank owned.  There are a lot of short sales as well, but we don’t have the time to wait for those to go through.

While a couple of the places needed way more work than he was willing to do, the majority weren’t too bad.  The homes were all built in 2005 and later.  Very sad to see how people’s dreams fell apart….very evident that many of these homes were filled with children.  In any event, we put an offer in on a home that had been on the market 2 days….by the time I faxed the offer, there were 2 others submitted as well….I would hope that we get the house and hope that it’s not an investor buying to hold onto it for a couple of years to make money.  There are actual people out there who can buy a home and shouldn’t have to fight against all cash buying investors….that is where I think this is all wrong.

I am a total optimist and am holding out for the best possible outcome for my client…..unfortunately he lost his bid.  But, there are others and we’re getting to it!

INVESTOR BUYING IN PHOENIX REAL ESTATE

I just read an article that Fannie Mae has recently

launched a home buyer’s program called “First Look”.  This program bars investors from purchasing a foreclosed property for the first 15 days that it is on the market.  This is terrific.  How can a first time homebuyer using an FHA program compete against an “all cash” investor buyer who can close within weeks.  It’s a matter of business and, of course the bank will take the all cash buyer….it’s easier for them.

This is a terrific way to get people who will stay in the homes for longer than an investor will.  I think we need to stabilize the market for awhile.

While I also represent investors, I think this is a move in the right direction for those buyers who are just trying to take advantage of the bargains out there (in the form of foreclosed properties) and have a home of their own.

Kudos to Fannie Mae….what about Freddie Mac now???

DELAY IN CLOSE OF ESCROW

If you’re in the process of purchasing a

home and your close of escrow has been scheduled, great!  Just don’t change anything.  The new disclosure requirements may delay your closing.  Be sure that you continually check with your lender to make sure you’re still on schedule.  ANY change to the mix, i.e., rate change, will require additional days for “disclosure” requirements.  Keep in mind that weekends and holidays are not “business days”.

When writing a contract language has been added to the effect that any delay in the close of escrow because of the new disclosure requirements imposed on lenders shall not be the fault of the buyer.  If you do not cover yourself, you could be charged “per day” for any delay.  So, be sure that the language is in the contract.

In today’s marketplace (especially so), an informed buyer is very important.  Make sure that you have an open relationship with both your lender and your realtor.

DOWNSHIFT IN FORECLOSED PROPERTIES IN PHOENIX

From July to August, Phoenix saw a decline

in the number of foreclosed properties.  This according to ASU’s realty studies Director, Jay Butler.  The number of sales are up from the same time last year as well.  The foreclosures are driving the market and we will not really know if the housing market here in Phoenix is truly “recovered” until we see the investors slow down in their buying.  The true measure of a healthy market is “normal sales”…..i.e., people who want to move put their homes up for sale — not people are losing their homes and banks just want some if not all of their money back.

Prices have also increased here in the Valley.  A mere 1%, but it’s an improvement.  In one year, the prices (on the average) have dropped 29%.  Hopefully, we will be able to continue to see recovery.  This will also depend on the rate of unemployment and the state of the economy.  As you know all of these factors are tied together….it’s a house of cards, so to speak.  When you remove a bottom card, the whole tower falls.

Only time will tell.  Consumer confidence needs to return and we need to stop bleeding jobs and opportunity.  This is a capitalist economy and the government needs to let us come back on our own.  By artificially propped up the economy we’re just heading in the wrong direction.

IT’S A GREAT TIME TO MOVE TO PHOENIX

Well, it’s fall and it’s our best time of year!  We wait all

through the hot summer to finally get to the “season” here in Phoenix.  It’s still a little hot during the day, but the daylight hours are shorter, thus the nights are getting cooler.  The real estate market here continues to move along.  While the bulk of the sales are below $200,000, there are many, many opportunities to get a great buy at all price points.  I’m not a fan of short sales — non-responsive selling agents — non-responsive banks — agents taking multiple offers to drive price up — months of waiting with no word.  Frankly, I try to steer people away from them unless there’s realtor notations that say that they have everything in place and can close.

Lender owned properties can sometimes be a challenge as well.  I’ve closed a couple of these, but once again you’ll have multiple offers and the selling agent (who is representing the bank) will come back with “submit your highest and best offer”….these do workout more often than short sales.  Keep in mind that these distressed properties are sold “as is”.  If you’re handy, it’s great so long as the property is structurally sound.  Be sure to get an inspection.  Most of these homes are also missing the kitchen appliances as well.

Because the short sale and lender owned properties are running the market, the “normal” type of listing is taking a hit.  However, keep in mind that there’s most likely someone living in the home and taking care of it on a day to day basis, the appliances are still in place, they will negotiate better than a bank, you’ll get answers to your offers.  Also, if you’re able to wait a little bit to buy, the short sales will eventually turn into lender owned if not sold prior to auction.

All in all it’s still a good time to move to Phoenix….our winters are worth the wait!  In addition, real estate is the best hedge against inflation…..

PHOENIX HOUSING MARKET

What’s up next for the Phoenix housing

market?  Well, all indications are that the prices are leveling off and we’re seeing a “bottom” to the downward spiral.   I believe that may be true.  However, what is happening with the foreclosure market?  When I look at the Multiple Listing Service and check the listings that are coming up for my clients on a regular basis, there are a good deal of short sales.   What happens to the homes that are listed as short sales but don’t sell?  Right, they turn into foreclosures.

We still have a ways to go in this market.  While I’d like to think that we’re done, I don’t believe that is the case.  I’m hoping that the marketplace can absorb all these distressed properties.  Are the banks holding onto these properties?  I would hope that if they are that they will be put back into the market at a slow enough pace to keep things moving.

Only time will tell.  I’m still an advocate of “if you don’t have to sell, wait it out”…..if only because all of the short sales and foreclosures are keeping the prices down.  Especially in large communities.

On the other side…if you can buy now, get busy!  I think we’re going to see huge inflation within the next couple of years…..at that time I don’t think the Fed will have any choice but to raise interest rates.  This market is very hard to read…..good luck and let me know if I can help!

LOAN MODIFICATIONS

I blogged awhile back that I was working with a

loan modification company.  They are having success.  There are a few things you should know about the process.  Keep your payments current if possible and if not, don’t wait until you’re 3 months behind to talk to a company that can help you (don’t spin your wheels with the bank unless you get immediate attention–they’ll drag it out).  I’ve spoken with many people who have tried to deal with the banks directly and have gotten NOWHERE.  It’s such a shame that we cannot call our lender and work something out directly with them.  Instead, you may have to become delinquent in your payments and then hire a loan mod company to negotiate for you–check with a professional.

Keep in mind that if you make too much money, you most likely will not qualify for a loan mod.  Take your gross income and start subtracting all of your expenses.  Now, this does not include fitness memberships, golf club memberships, entertainment expenses and the like.  The only thing the bank is interested in as far as hardship is what the bottom line is after you’ve paid your monthly LIVING expenses, i.e., mortgage, insurance, property taxes, payroll, federal and state taxes, groceries, utilities, car payment(s), gas for your car, school loans and similar items — NECESSITIES.  If you have huge credit debt, you will be required to go through credit counseling.  Bottom line….THE BANK DOESN’T CARE IF YOU’RE UPSIDE DOWN IN YOUR PROPERTY.  You will have to prove a hardship, i.e., curtailment of income, loss of job, illness, etc.

The fact of the matter is that the banks don’t care if the property’s value is less than you owe.  They just want to be paid.  I’ve heard stories of people who’s home value has dropped; the house down the street is for sale for less (and perhaps it’s bigger), so they walk away from their obligation and buy the one down the street….maybe they even take all the nice things out of their current home, i.e., refrigerator, ceiling fans, lights, other appliances, even countertops.  I have a problem with this.  I think it’s immoral.  This has got to stop somewhere and people who are doing this are part of the problem, not the solution.

Most of us are victims of this mess.  Just sit tight, pay your bills and hopefully we will see an end to this.  If you’ve lost your job or have fallen on hard times because of illness, that is a different story.  Just don’t perpetuate the problem by being a quitter.   Get a handle on your situation and talk to as many people as you can to get good information.