Buy now with .5% program, or wait?

Her is a question that received this morning:

Hi Tim,

I recently got pre-approved through my credit union for 73k and change but the letter also said I would need close to 7k in the bank to cover closing costs.  I emailed them bank asking about the FHA program you mentioned in your newsletter.  Is there hope or should I just wait and save?  It will take a lot longer than I'd like to wait to save that kind of money.

And here is my reply:

Thanks for the question!  Here is the situation: Although Phoenix is supposed to be a "buyer's market" right now, that doesn't mean that the houses are becoming less expensive.  All that means is that there are more homes on the market to choose from at this time.  The statistics also show that the market is appreciating at over 15% per year.  That means that a $73,000 home today is potentially going to sell at $83,950 next year if the appreciation keeps up.  That means a down payment next year would be $383 more than today, and your payment would be about $55 per month higher.

Credit Unions are nice to use if you fit inside the box that they have to work within.  They are very conservative, and only offer one or two loans.

I would recommend that you talk to the gentleman below.  He is well versed in the .5% down program, and will be able to help you, I think.  Give him a call, and let me know what happens.  I will also give him your contact info so you two can get together as quickly as possible.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix , #Surprise , #Peoria , #Tolleson, #Laveen , #Waddell , #Wittman

Phoenix Appreciation Still Over 15%

 Homeowners are still Happy, Home Buyers are beginning to be Sad...

Yes the stats say that it is a buyer's market.  However, despite the increase in listings and the drop in sales since November, the market doesn't show any indication that prices are softening.  Actually, the values in the Phoenix area continue to rise, with over 15% appreciation.

Appreciation is measured as the percentage of increase (or decrease) in price over the past 12 months.  The best way to understand appreciation is to use $100,000 as a baseline.  If appreciation is currently 15%, then if you bought a $100,000 house 12 months ago, it would be worth $115,000!

As you can see from the graph, appreciation has topped 40% during periods of the past two years. 

Don't let the graph fool you - as long as the number is more than 0, houses are gaining in value!

#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix , #Surprise , #Peoria , #Tolleson, #Laveen , #Waddell , #Wittman

Realtor to Realtor Business Etiquette

A long time ago, way before texting became a valid method of business communications, there was an idea called "The Golden Rule".  The essence of The Rule was that everyone should treat others the same way they would like to be treated in turn.  It seems that everyone who is asked about it agrees that The Rule is a good idea, but it seems to be falling out of practice.

Realtors are fond of saying that our profession is a 24/7, go-get-em, no holds barred type of life.  However, it seems that the real estate practices that are thriving put a limit on hours worked, include quality time with spouse and family, and strive to provide a quality of life as well as a quantity of sales.  Do you know anyone who would gladly take business calls regarding a property at 2:00 in the morning?

So, I ask you, why would a buyer's Realtor believe that repeatedly calling a seller's Realtor well after any any "normal" working hours to ask a question that could easily wait until morning be OK?  Using The Rule, would it be OK to call the buyer's Realtor at 4:00 am to add a little more explanation be OK?

People, we often gladly stretch the notion of a "working day" to accommodate our client's requirements.  Let's keep our peer-to-peer interactions to a reasonable working day!


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix , #Surprise , #Peoria , #Tolleson, #Laveen , #Waddell , #Wittman

Jumping for Joy - Phoenix Leads Nation - Positively This Time

No amount of bad news can dim the facts that show #Phoenix is once again leading the nation - this time in a positive fashion.  Notices of Trustee's Sale - the leading indicators of #foreclosure in Arizona - are down to levels not seen since August of 2006.  The Notice of Trustees Sale is the first document filed by a lender when they intend to foreclose.  The property is then auctioned off after a 90 day waiting period, during which the owner of the property can remedy the situation if they choose.  This puts us back to a "normal" foreclosure rate of about 1000 foreclosures/month.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix , #Surprise , #Peoria , #Tolleson, #Laveen , #Waddell , #Wittman 

Why Prices Won't Drop in Phoenix

Prices in Phoenix are not going to drop!  There, I said it.  Now, here's why.

This is so simple, I can't believe that nobody else is mentioning it.

Consider the past 7 years of the Phoenix market - 5 years had prices going down, and the past two years have seen a resurgence in prices, but they have not yet come back anywhere near where they were.  People are looking at the last two years and saying with "wisdom", that the prices went too high too fast, and we are looking at a "bubble" that may burst.

Not So!

The market now is *so* different than two years ago - It is totally "upside down" in that now 85% of the homes on the market are resales, not foreclosures.  There are hardly any short sales.

The people who are selling are people who have wanted to sell for a long time, but couldn't due to the mortgage they held.  The people selling now are happy to break even, or maybe take a few dollars out of a sale, but no so much that they can buy a new home with 20% down.  Their motivation is a "better" neighborhood, being closer to a job, #up-sizing or #down-sizing, but - and huge emphasis here - not to make a killing on selling their home!

These people cannot afford to market their homes for any less.  If they market for less, then they will not be able to make the move to where they want to be.  There is no "give" in their pricing.

They cannot change their prices.  Therefore, the prices in Phoenix will remain stable, and appreciation will continue, although slower than past years.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix , #Surprise , #Peoria , #Tolleson, #Laveen , #Waddell , #Wittman 

US Home Builder Confidence Down

US home builder confidence has suffered its largest ever monthly drop between January and February 2014. The National Association of Home Builders (NAHB) housing market index plunged from 56 to 46. This is the first reading since May 2013 that has dropped below the crucial 50 mark. When it is below 50 the majority of home builders think that market conditions are poor rather than favorable.

• current sales conditions fell 11 points from 62 to 51
• expectations for the next 6 months sales fell 6 points from 60 to 54
• prospective buyer traffic fell 9 points from 40 to 31

The NAHB blamed the drop on poor weather conditions. However when we look at the changes by region we find:

• Northeast dropped 8 points from 41 to 33
• Midwest dropped 9 points from 59 to 50
• South dropped 7 points from 53 to 46
• West dropped 14 points from 71 to 57

Since the largest drop was in the West where the weather has been rather good (too dry in fact), we are not buying the poor weather argument.
The weakening trend in demand that is all too clear in Greater Phoenix is reflected in the lower buyer traffic reported by home builders at the national level.

Supplied from the Cromford Report.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix , #Surprise , #Peoria , #Tolleson, #Laveen , #Waddell , #Wittman 

Phoenix Population Driving Sales?

It is going to be in the 80's again today - we slept with all the windows open last night.

Forbes projects the Phoenix population to increase slightly more than 4% this coming year.  However, that unlikely that any population increase is going to make the Phoenix market to change significantly.  The vast majority of people are migrating from another (usually colder) state, and a huge number of them are planning on renting.  That should be good news because investors should be buying properties to rent, but in fact, the rental properties are already out there.  There are currently 6200 active rentals on the MLS.  Because most do not use the MLS for rentals, it would be reasonable to suspect that there are probably over 12,000 homes for rent, and who knows how many apartments?

In addition, when moving from another state, unless you have a job secured in the new location, obtaining a mortgage is very difficult within the first 6 months after the move.  Since most leases require a 12 month commitment, it is very unlikely that home sales will be affected by the population change.

Just before you sign, Do a Walk-Thru!

It is every Buyer's nightmare - something happens to their dream home after the current owner moves out, and they move in. OMG!

Make sure that you are protected against any problems like this with a walk-thru of the home prior to signing any paperwork.  The Seller is obligated to keep the home in the same condition it was in the first time that you saw it, until the Buyer moves in.

Many things are possible with a home sitting idle.  Copper pipe can be stolen - hacksawed right off the wall.  Air Conditioner cores can be stolen or mangled.  People can break in and vandalize the home.  Vehicle accidents can occur, and the home can be damaged as a result.

Make sure that your home is in the proper condition before signing.  It only takes a short while to quickly go through things to make certain that all is secure, but it can have such an impact!

Remember, My Purpose in Life is to help you find the best home for YOU!

#Avondale Real Estate, #Goodyear Real Estate, #Buckeye Real Estate, #Glendale, Real Estate, #Phoenix Real Estate, #Surprise Real Estate, #Peoria Real Estate, #Tolleson Real Estate, #Laveen Real Estate, #Waddell Real Estate, #Wittman Real Estate

Median Price Starting Down in Phoenix Real Estate Market

My Orchid tree is blooming - this isn't supposed to happen for at least another 6 weeks or so!

From the Cromford Report:

February 16 - The monthly median sales price for all areas & types dropped below $180,000 today. At the same time the annual median sales price reached $180,000 from below. When the long term average moves higher than the short term average this is a distinctly negative signal for prices. The cooling in the market has now been around long enough (since July 2013) to cause some clear negative signals to start showing up in pricing measurements. We expect to see more of these over the next few months.

%1/2 down payment via FHA loan!

I just heard about a new FHA loan that only requires one half of a percent down.  This loan features: Total financing up to 99.5% of the sales price or appraised value, whichever is lower 30 year fixed rate FHA loan Down payment and closing costs assistance via low, fixed-rate second mortgage up to 3% of the sales price No first-time home buyer requirement Minimum credit score of 620 Home buyer education is required If this interests you at all, please let me know.  I have no idea how long this program may last.

Stupid Lender Tricks

The Dodd-Frank bill has everyone running scared.  Lenders are supposed to "source" any funds that come from a person buying a home.  This includes your down payment and any funds for closing.

A large bank making a mortgage loan just required a buyer to provide documentation showing that the buyer actually took their down payment from their 401K.

The buyer actually had to provide documentation of the following for their down payment funds:

The original amount in the 401K account.
The Wire Transfer documentation from the company holding the 401K account to the Bank.
The Wire Transfer receipt from the Bank.
A new statement from the 401K account showing that the amount had been removed from the account.
A statement from the Bank showing the balance of the account prior to receiving the funds from the transfer.
A statement from the Bank showing the balance of the account after receiving the funds from the transfer.
The wire transfer documentation from the Bank to the Title company.

To top it all off, the lender was the same bank in the transaction - Holy Cow!

It is Official - Phoenix is now in a Buyer's Market

From the Cromford Report:

February 9 - In true Phoenix tradition, the balanced market did not last very long - from October 27 to February 8 to be precise. We are now in a confirmed buyer's market with the Cromford® Market Index dropping below 90. Demand is weak with the Cromford® Demand Index at 78.7, its lowest level since May 2008. Supply is not high, but it is growing fast and the Cromford® Supply Index stands at 87.7, its highest level since July 2011. The deterioration in market conditions for sellers is across the board. No geographic area or price range is improving. However some sectors are much more favorable to sellers than others. In general the luxury market and the active adult areas are more favorable for sellers than the rest of the market. In the majority of sectors, prices are now under downward pressure, although they have not responded much yet due to residual seller optimism. However, if current market conditions prevail we are likely to see lower sales prices in many of these areas before too long.  (Supporting graphs below)

Personally, I think that the market conditions are a reflection of the current economy.  Everyone is uncertain about what is going to happen this year with health care, there still seems to be more jobs being lost than created, lots of people have gone onto government programs in the past 4 years and don't plan on going off of them, and the people who are working are paying more in taxes.

Until we get some stability in the economy, we are likely to see a leveling of prices in all areas.

Home Warranties

One of the things that many people overlook when they plan to own a new home is a home warranty.  Even if you are a great handyman yourself, it often pays off to have a home warranty, at least for the first year that you own a home.  Not only is it a great way to prevent nasty surprises, it allows for repairs to be done quickly by a professional who will warranty his work.

Consider this:  Most heat pumps are unable to show that they actually have a cooling cycle in the winter.  When the temp gets down to the low 70's, a heat pump just cannot go any lower.  So, if you buy a new home in the winter, and the cooling function of the heat pump is broken, you are stuck with the repair bill.  However, that repair bill could be as little as $50 with a home warranty.

During the summer, if the heat pump is making cold air, it can be changed to heat mode and warm air can be detected coming from the air ducts, so this doesn't really apply to summer.

Warranties can also be good for water heaters, breaks in the plumbing and electrical problems. 

They can provide a lot of peace of mind during your first year!  After that, it is up to you to renew them.  I have warranties on all my homes, and they have always paid for themselves!

Investor Activity Down in Phoenix

The highs here have been in the 60's for the past week or so, next week we will head back into the 70's again.

Investors are being partially blamed for the recent sluggishness of the Phoenix market.  It isn't really surprising that they are no longer buying homes.  Consider that the appreciation over the past two years has been over 20% year-over-year.  That sort of appreciation can't go on forever, and the appreciation rate is beginning to slow, with the Phoenix area appreciating between 10% and 15% for the first time in two years.

Also, the number of "bargain" homes has dwindled to just about nothing.  The number of Notice of Trustee's Sales being issued has declined to just 1,052 in January - very close to the number issued in 2005 and 2006 before the bubble" began.

It looks like we are heading back into a "normal" market.  Normal being a reasonable appreciation rate, more homes to choose from, and real people buying homes instead of investors.

Have a look at the graphs, and draw your own conclusions - I would like to hear them!

January Sales Numbers - Phoenix Real Estate Market

Not good for sellers...

Closed sales numbers for January 2014 were down about 20% compared with a year ago. Now we have the initial numbers for single family homes plus condo/townhomes from the Maricopa County recorder and they show us that:

• total sales were down 11% from January 2013
• re-sales were down 9% from January 2013
• new home sales were down 25% from January 2013

At 560 the new home closed sales are the lowest monthly total we have seen since February 2012 and represent a fall of 40% below December 2013's more impressive 929. January is often one of the weakest months, but this one data point suggest that annual sales may be significantly lower in 2014 than in 2013. The problem is clearly much weaker demand than we all expected a year ago.


Avondale Real Estate, Goodyear Real Estate, Buckeye Real Estate, Glendale, Real Estate, Phoenix Real Estate, Surprise Real Estate, Peoria Real Estate, Tolleson Real Estate, Laveen Real Estate, Waddell Real Estate, Wittman Real Estate
Avondale Real Estate, Goodyear Real Estate, Buckeye Real Estate, Glendale, Real Estate, Phoenix Real Estate, Surprise Real Estate, Peoria Real Estate, Tolleson Real Estate, Laveen Real Estate, Waddell Real Estate, Wittman Real Estate

January Rental Stats plus Market Index

This past January has brought some interesting insights into the market.  More homes were rented out than last year, and the market appears to be sliding into a "Buyer's Market" again! 

Why would it be that the numbers of rentals continue to increase in the Phoenix market, when the prices for homes are so reasonable?

Also, why are we sliding into a Buyer's Market again when the prices of homes are still at 50% to 60% of their top average values?

Could it be that Washington is not exactly being truthful and that the economy still isn't picking up?

I don't know the answers, but I know what is happening.  Home prices have stagnated, the number of homes on the market has gone up, and the number of sales has remained steady.  Typically, at this time of the year, we are seeing sales increase.  Here are the charts to back up my story:

Cromford Market Index™ is a value that provides a short term forecast for the balance of the market. It is derived from the trends in pending, active and sold listings compared with historical data over the previous four years. Values below 100 indicate a buyer's market, while values above 100 indicate a seller's market. A value of 100 indicates a balanced market.


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January Market not too hot - February likely to be the same

Market Summary for the Beginning of February - Not Good for Sellers

1. Bigger rise in Supply than in Demand
2. Low Sales in January
3. Supply up 9%, Demand down 20%
4. Prices should stay flat through June

For more detail, read below:


The market stability and balance which prevailed between the end of November and mid January seems to be coming to an end. Both demand and supply are now rising, as is normal for the time of year. However it is the rise in supply that is having the stronger effect and this is bad news for sellers.

Sales were very low in January, giving us the lowest January sales total since 2009. Pending listings have risen sharply since the start of January but started at such an unusually low point that they are still at their lowest level for early February since 2008. In fact the weekly pending listing chart looks a lot like 2007 which is not a year we take any pleasure remembering. We expect 2014 to do better than 2007 once we get past the end of February, but at the moment the tepid demand is not making much of a dent in the rise in active listings. If we were going to have a strong spring for sellers then active listings would have peaked in mid January and be falling by now. On the positive side, the new supply is almost all non-distressed, whereas in 2007 we faced an onslaught of foreclosed homes coming to market.

New listings have been arriving at a rate which is about 9% higher than last year, so if demand remains below par we can probably expect to get back to a "normal" level of supply around 32,000 listings (including UCB) during the second half of this year. With supply normal and demand some 20% below normal we are heading towards a classic buyer's market.

This means increasing concessions from sellers and erosion of their pricing power. The monthly median sales price is already starting to look a little wobbly, both overall and in a number of specific locations including the City of Phoenix. The medians are not assisted by the relative strength in the luxury sector. However the average price per square foot is being given a significant boost by the luxury segment and although the monthly average fell between December and January, the under contract $/SF is still moving upwards.

If current trends stay in place then we expect no significant sales price rises during the first half of 2014. Indeed, if current trends stay in place through the second half of the year then pricing is likely to be lower by January 2015 as sellers compete with each other for the attention of the smaller pool of buyers. However, five months is a long time in the ever-volatile Phoenix housing market and trends may very well change by then.

Here are the basic ARMLS numbers for February 1, 2014 relative to February 1, 2013 for all areas & types:

• Active Listings (excluding UCB): 25,541 versus 17,573 last year - up 45.9% - and up 11.0% from 23,091 last month
• Active Listings (including UCB): 28,526 versus 21,757 last year - up 31.1% - and up 12.7% compared with 25,319 last month
• Pending Listings: 5,723 versus 9,523 last year - down 39.3% - but up 23.9% from 4,667 last month
• Under Contract Listings (including Pending & UCB): 8,595 versus 13,707 last year - down 36.8% - but up 25.7% from 6,895 last month
• Monthly Sales: 4,728 versus 5,928 last year - down 20.2% - and down 20.9% from 5,975 last month
• Monthly Average Sales Price per Sq. Ft.: $125.13 versus $108.05 last year - up 15.7% - and down 1.4% from $126.89 last month
• Monthly Median Sales Price: $182,700 versus $154,900 last year - up 17.8% - but down 1.4% from $185,000 last month

We are seeing an increasing number of price cuts among the active listings and a fairly rapid rise in the average number of days on market for closed sales. The average days on market for active listings is not rising, because there are plenty of new listings coming along that start with zero for days on market. This is not a good sign.

The Cromford® Market Index has started to head downwards again, though it currently remains above 90 at the lower end of the balanced zone. Should it drop below 90, as seems very possible, this will signal that a buyer's market is fully in effect. Many sellers are understandably reluctant to accept that the market has changed so dramatically in just 7 months, but they will probably need to be very realistic in the coming few months and price and negotiate accordingly.

We will need a significant acceleration in demand to change the current direction of the market. The most obvious potential cause of such a change would be an increase in the flow of money from lenders due to a relaxing of their guidelines, especially for first time homeowners. The lowering of the FHA loan limits has had a noticeable effect in the opposite direction. It will impact the price range from $275,000 to $375,000 in a major way. The introduction of the Dodd-Frank Act provisions has had little noticeable effect so far except by putting more constraints on seller financing by larger investors. However its main provisions are designed to limit mortgage money flow rather than encourage it. In contrast, Money is flowing well to the jumbo mortgage market and, as a result, 2013 was easily the best year since 2006 for the luxury home market.

Another possible positive change in demand would be increased household formation and home buying among those aged 25-35. At the moment this age group is placing stronger demand on rental supply and home purchases seem to be occurring to a lesser extent than for earlier generations.

The foregoing was supplied by the Cromford Report.


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