Phoenix Market Growing Stonger!

How can I say that the Phoenix market is getting stronger?  After all, Sales are down this year from last, Mortgage rates are creeping up and Obtaining a mortgage is difficult.  The graph above is what gives me hope.

Please note that Q2 in of each of the past 4 years has had the greatest number of sales annually.  Look at how the dark blue bars - representing "Normal" sales - has increased while the number of Foreclosure Sales (represented by the red bars) is practically down to nothing!  This means that our market is now being "powered" by people selling their homes.  It is no longer dependent upon the banks!

This also explains why values are going up, even though total sales are down.

Next is what amounts to a political "sound bite".  It is true information, but taken without a complete understanding of the encompassing environment, it doesn't tell the whole story.

From the Cromford Report - Friday June 20 - The annual sales rate is an interesting measure because using a full year eliminates the seasonal effects and allows us to detect whether demand is growing or declining. For the major types of homes on ARMLS we see the following changes in the annual sales rate comparing Greater Phoenix for June 20, 2014 with June 20, 2013.

• single family detached - down 13% from 73,512 to 64,147
• townhouse - down 8% from 5,789 to 5,312
• apartment style - down 9% from 4,119 to 3,742
• patio home - down 11% from 1,331 to 1,191
• gemini / twin - flat at 608 both years
• mobile home - up 6% from 1,614 to 1,717

We see that attached homes have fallen less than detached homes and that mobile homes are in higher demand than last year.


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

Summer Market Outlook - Market Improving!

At the beginning of the year, people were wringing their hands with the sudden influx of homes onto the market, and an apparent lack of buyers.  Fears were that there would be another sudden downturn in the market because of overstock, and that the "buyer's market" would force prices lower as sellers were forced to compete with each other.  Given the information that we had at the time, and after having survived since 2004, it was not an unreasonable prediction.

Luckily (at least so far) those predictions have not come true, and we are getting ever closer to a "Normal Market"!

Here is a quick run-down:

• Home values are still appreciating between 5% and 15% both month-over-month and annually.  The 20% appreciation we saw in 2012 and 2013 is mediating - not crashing.
• The number of foreclosures is down to 2001 levels.  Adjusted for the population increase since then, this actually represents a number 21% below 2001 levels
• The monthly supply of homes is near 3 months from nearly 5 months earlier this year
• The number of sales is currently around 5000 fewer that 2012, and about 2500 fewer than last year.  Not surprising given that you can't buy a house you can live in for pocket change any more.
• Median sales prices are hovering around the $175,000 range.  They were a bit higher at the end of 2013 - inching over $180,000 a couple times, but all-in-all have been stable for the past 9 months.

We shall see what the rest of the summer brings - remembering that summer is a typically slack time in the sales cycle.  If housing values remain in their current range, and we have the continual flow of properties onto the market as in the past couple months, we will hopefully have an even finish to the market this year.

Solar Energy - Not So Sunny - Final Edition

Final part in this series - I wanted to make sure I got it right.

In parts 1 - 4 earlier in this blog, I have revealed pitfalls of owning Solar Electric.  Here is the last one, and maybe the most important one.

First, if you think you really need to have solar, make sure you plan for the future load that it will have to carry, and not the current load.  Remember the people with the teen aged children?

Next, if you think you really need to have solar, check to see what the requirements are to transfer it to another person.  Chances are good you will sell your house in the next 20 years.

Finally - and this is the topic of the new post - if you are leasing a system, make sure you put as little money down as possible.  Why?  Because a leased solar system is like any other leased system in your home.  It adds absolutely no value to the home!

That's right!  You are told that you "invest" in a solar lease, but you get no return!  Solar Companies, and even your friends and neighbors will use the term "invest" with reference to leasing a solar system.  Do you "invest" in a car lease?  An investment has a positive cash flow return - Solar Leases Do Not.  With a solar lease, you spend less money, but you get no return.

Leasing a solar system and pointing to the savings is the same as leasing a hybrid car and pointing to the gas mileage - you spend $30,000 saving 2 cents a mile.


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

Buyer Disclosures - What they don't tell you!

It just isn't right that Buyers don't have to disclose to Sellers items that can materially affect a sales transaction, just like Seller must make disclosures to Buyers.

Sellers deserve some security other than just the Earnest Money deposit and the promise of someone to buy their house.  Sellers put way too much on the line when they agree to sell, and relinquish nearly all control of the transaction to the lender and the buyer.  The Seller has a huge stake in the transaction, especially if they are relying on the proceeds of a transaction to own another home.

Buyers should have to disclose things like:

1. Whether or not they are in the middle of a divorce or annulment
2. Whether their job takes them out of town on a regular basis
3. Whether they have owned a home in the past
4. What their motivation is for buying the home they have made an offer on
5. If they are asking for concessions, how much do they really have in reserve
6. Do they or their spouse or children have any medical problems that can drain the reserve
7. How long they have been looking for a home
8. How long they have been with the current Realtor looking for a home
9. What their current job status is - how long have they been there, who do they work for, what do they do, can they get the time off to sign papers
10. Do they have a decent automobile
11. Do you have the entire set of documents necessary for your lender to complete your loan

These might sound dumb, but I am going to start including them as a document for the buyer to provide answers for in all of my listings.

I am getting mighty tired of hearing bunk from a lender that "everything is fine" in a transaction until the lender is finally forced to admit that they cannot fund the loan!  Or, "we can't find the (almost) ex-wife/husband to sign a quit claim deed".

Sellers have rights too!

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

Get the Government out of Lending!

#Government is at it again this year with bizarre regulations about hard-and-fast debt-to-income ratios, and with its legacy regulations about money laundering!!

I have a client who recently decided that instead of using the proceeds from the sale of a house for a down payment on a new house, he was going to use about $20,000 gifted from a member of his family for a portion of the down payment along with his own money.  You wouldn't believe the documentation required to use family funds because of the fear of money laundering!

Here is an excerpt from the letter from the lender on what he had to provide, just because he decided to get his down payment from a family member:

1.     Your signature on the attached letter explaining that your existing home is not yet sold

2.     The attached gift letter needs to be filled in and signed by you and your family member

a.     if the account their money is coming from is a joint account all family members need to sign the gift letter

b.    The line where it is asking the source of the gift funds means the account name and bank – for example:  Wells Fargo, Checking Acct #123456

3.     I am assuming the funds are being wired into your bank account – from this account we will need:

a.   Last Month's statement – all pages please

b.    An account history from the ending date of the last statement to current – we need to see the funds from your parents are now in your account

4.     From your family member we need a 30 day account history showing the gift funds coming out of their account

a.     The account history printout must show their name on it and the account number

b.    If the account history does not include name and account number please include a copy of the most recent statement (all pages) and we can connect the statement to the history.

So this make the lender a jerk - all lenders are jerks, right?   Wrong - this is all required because of government regulations!  The government is afraid of money laundering!

So let's see...  If I were a drug lord, and tried to launder $20,000 at a time through paying a portion of a down payment on a house, I would have to buy 50 houses to launder 1 million dollars.  Then, I couldn't get the money back out until the houses were sold, so then I would have to sell 50 houses to get the money back.  So if the $500 billion dollar drug trade were to use this scheme to launder money, then the drug trade would be buying 25 million homes a year!  How absurd is that?

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

Phoenix Area Among Lowest Foreclosure Areas

From The Cromford Report - Lender Processing Services has completed the transition to its new identity "Black Knight Financial Services" but I am glad to say it is still publishing the useful monthly report Mortgage Monitor.
The report for April shows the non-current percentage on homes loans in Arizona is down to 4.5% with 3.9% delinquent and 0.7% in foreclosure. The only states with a lower non-current percentage are Minnesota, Wyoming, Montana, Alaska, Colorado, South Dakota and North Dakota. Arizona's non-current loan percentage has declined by 23.1% since April 2013. This is no longer the highest decline for any state since the following have shown even greater percentage falls:

• Nevada - down 33.7%
• Florida - down 32.5%
• California - down 29.3%
• Washington - down 25.0%
• Illinois - down 24.7%

All states have shown some improvement since April 2013 with West Virginia improving the slowest at 2.6%.


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

Lenders Have Responsibilities Too!

There is a huge gap in the responsibilities handed out by the Dept. of Real Estate regarding lenders.

In the Arizona contract, the lender is supposed to supply valid pre-qualifications, provide accurate loan progress updates on a regular basis, and provide closing documentation 3 days prior to close.  HAH!

I learned a long time ago that when push comes to shove, and the lender hasn't performed - that's when you learn that lenders are only incidental parties to the contract, and they don't have to abide by what is in the contract!

In Fact, Lenders are the free spirits of the Real Estate World.  Yes, they have to comply with government regulations, but those regulations are oriented towards keeping the lenders from taking advantage of innocent and idiot buyers - not towards providing truthful information on a timely basis, or having a procedure to guarantee that transactions close on time.

In Fact, it doesn't matter when you set the close date - if the loan officer was ill and someone didn't take up the slack, if the loan officer went on vacation, if the loan officer just didn't feel like doing their job one day - your transaction will not close on time.  And there is no recourse - the lender just says "too bad, so sad", and does things on their own time.

The lender could care less that people have a truck heading for the house loaded with their belongings, and no arrangements to store them.  The lender doesn't care that you now have to find a hotel to stay in because you have moved out of one house, and cannot move into another until the first one closes.  You might get a lender's sympathy, but that won't pay for the hotel, it won't magically re-schedule the movers, and it won't make you any happier. 

Choose your lender with care - just any one will not do!  Consult with your Realtor - they will know who brought the transaction in on time.



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

PHX Market - Glass Half Full?

From the Cromford Report:   Sometimes good news and bad news cancel each other out. If you want to see the most optimistic chart I created today, take a look at the average price per square foot for pending listings (charted below). It just hit its high point for the year. On the other hand the glass-half-empty folks can enjoy the average price per square foot for monthly sales (charted below) which has dipped below $128 and is now lower than it was at the end of December.

What really happened is that a bunch of cheaper homes closed yesterday. This left behind a pool of higher priced homes still in pending status. The last working day of each month is usually a big day for closings. In May we had 876 with an average price of $123.53, quite a bit below the current trend line. At the end of April we saw slightly more (939) and a higher price ($128.98) per square foot. If the pending $/SF had stayed level or gone down this would have been a bad sign. However the increase in the pending $/SF means we have a preponderance of higher priced homes carried forward into June's closings. Overall pricing remains roughly flat and the change in mix just adds noise to the signal.


If the second half of the year behaves as normal then we will probably see a slight downward price drift between June and December. Annual $/SF appreciation has already dropped to 6.2%, almost half of what it was at the end of last month.