House Construction Down, Rental Prices UP!

From the Cromford Report:

The Census Bureau has just released its permit counts for March and they tell us a lot about what is going on with new home construction.
The single family permits totalled 1,003, breaking down as follows:

• Maricopa County = 862, down 14% from 997 in March 2013
• Pinal County = 141, down 37% from 223 in March 2013

Clearly the developers are cutting back on production in the light of reduced demand compared with last year. Since very few investors buy new homes, the numbers illustrate that the fall in demand cannot be explained away as purely because of the departure of a large number of investors. The 12 month rolling average is falling now, and currently stands at 12,480 single family permits per year. It has been at or close to this mark throughout the last year. Single family permits are only at one third of the rate we saw in 2002.
The multi-family numbers are going crazy. In March alone there were 1,586 single family units that obtained permits. This is highest monthly total in the last 13 years apart from February and November 2007. The monthly numbers are quite volatile, but the 12 month moving average is now up to 6,660 units. We can justifiably claim that this rate is fully recovered to the level of 2002.
The multi-family developments permitted over the last 12 months have been in:

• Scottsdale = 2,075
• Phoenix = 1,750
• Tempe = 1,400
• Chandler = 965
• everywhere else = 499 (includes Gilbert, Glendale, Goodyear, Mesa, Surprise, Cave Creek, Apache Junction, Maricopa, unincorporated Pinal)

These multi-family developments are very concentrated in a small area and relatively expensive. The average construction cost is $129,605 per unit. This is almost double the average construction cost reported in the same period 10 years ago.
The developers are depending on strong demand from affluent renters.

Average renters are seeing very little built to satisfy their price point and the supply of single family rentals is starting to drop again. They are down to the lowest supply level we have measured in recent history. Average rents are starting to increase too.


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

Solar Power - Not So Sunny - Part 2

Part 2 in a series of blogs examining the effects of #SolarPower on the selling of a home.

Meet Mr. and Mrs. Smith (not their real name) who retired to their oasis in the Valley of the Sun.  Abhorring the idea of paying more than they have to for anything, they decided to install #solar power on their 2000 sq ft single level home with a pool.  Upon meeting them to list their property, I discovered that they had a very nice lease payment - $60/month.  After speaking to them for a while, it was eventually revealed that they had made a $7000 up-front payment on the lease of the solar equipment.  That is enough to pay for about 4 years worth of electricity bills at their house.  Now, after having the equipment in for less than 3 years, they want to move again.

The representative from their solar company says that they can move all their equipment for $1000.  That is not very much money.  In their lease, it says that they can only move the equipment if: 1) They are in the same utility district 2) They have to pay the costs of all new permits,  3) They have to deliver an easement to allow the installation of the system.  It also doesn't say that the company will move it for $1000.

In addition, any person who wants to buy their house also has to qualify for the lease.  If they don't qualify, then the Smiths have to pay off the lease and have the option of transferring the warranty to the new owner.

At this point, the Smiths have paid about $8,830 for electricity over a period of 2 1/2 years.  That is about $295 for every month that they have owned the system - Winter, Summer, Fall and Spring. About 30% more than they would have without the solar.  If the average cost for a house like theirs is $200/month, it will take 7 years just to break even and that is only if the system completely replaces all the energy supplied by their electric company which is not the case.  They still make monthly payments to the electric company as well.

So, the new owner will get a sweet deal - he won't have the $7000 up front, and will spend less for his electricity right up front.  By deciding to lease a solar system, the Smiths are effectively giving the new owner $7000 off the purchase price.

There is more to this story - did you know that solar panels degrade, and produce less electricity as time goes on?  More on that later.


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

The Sellers are Making A Comeback!

From the Cromford Report:

Things are starting to look up for sellers in a few more areas now. We see 18 cities showing an increase in the CMI from last week with 1 unchanged and 10 decreasing.
However we still note the cities that are improving tend to be the smaller ones and several of the largest cities like Phoenix, Scottsdale, Gilbert and Glendale are mostly flat to lower.
The largest improvements are to be seen in:

• Apache Junction
• El Mirage
• Tolleson
• Gold Canyon
• Sun Lakes
• Fountain Hills
• Avondale
• Sun City
• Tempe
• Sun City West
• Arizona City

The largest deteriorations were in:

• Litchfield Park
• Gilbert
• Scottsdale
• Goodyear
• Glendale

Underwriters - The people we Love to Hate

Underwriters are a natural portion of the loan process.  However, there should be a series on TV for "Underwriters gone Mad".

I have a client selling a home in a rural area.  The owner has lived in the home for the past 20 years.  Inside the home is neat and clean, and outside it is obvious that the home has been cared for.  The home was built in 1942, and the buyer for the property said that they would take the property "as is".  The home appraised for the agreed-on price, the inspection turned up a couple of items that did not cause the buyer any heartburn.

Enter the Underwriter.  From his lofty perch, the underwriter has decreed that despite the fact that the buyer has decided to take the property as-is, and has the ability to make any necessary repairs, there must be a roof certification done saying that the roof will last another two years, and some random holes in the ceiling of a basement room repaired.

The roof has been maintained by the owner for the past 20 years, and has never had a leak.  The holes in the basement ceiling have no structural nature to them.  To another underwriter these items would never come up.

However, we must dance to the tune that this underwriter plays, just days before we are to close.

What an abuse of power!


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

Return of Alternative Financing Methods

Last year at this time, there were virtually no "alternative" types of financing being offered on the MLS.  Now we have:

Seller Carry - 660 Listings
Lease/Option - 199 Listings
Lease/Purchase - 253 Listings
Wrap - 52 Listings

Let me know if you are curious about any of these types of financing.


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

Phoenix Market Foreclosures No Longer Hot Topic

From the Cromford news line:

April 1 - Foreclosures are not a hot topic anymore, but continue to happen in good times as well as bad.
In March we had a slight increase in the number of new Notices of Trustee Sale in Maricopa County from 923 to 965 (up 4.5%). We also had a very slight rise in Trustee Deeds from 572 to 575 (up 0.5%). However this is misleading because March had a 10.5% increase in the number of days that the trustees were working, up from 19 to 21.

If we look at the number of notices per working day, we declined from 49 to 46 (a drop of 5.8%).

If we look at trustee deeds per working day, we declined from 30 to 27 (a drop of 10%).

This is the most accurate way to measure foreclosures. Looking at the monthly counts is very popular and common, but of no use at all if you are trying to detect small changes. This is because the change in the number of working days in each month is much greater than the change in the foreclosure numbers, so the noise is larger than the signal. April has 22 working days, so even though it is a shorter month than March it should have 4.8% more foreclosures than March if foreclosures have reached a stable level. At the moment we have not reached stability and the declining trends in foreclosure starts and foreclosure completions are still intact.

There are currently only 2,980 lender owned properties in Maricopa County. There are only 4,494 pending foreclosures (active notices). To put these into context we counted 16,342 lender owned properties and 45,173 pending foreclosures at the beginning of April 2010.

Residential numbers are about 92% to 94% of the totals. Some 6% to 8% are commercial or other non-residential.


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

Why Your Realtor Needs to Talk to your Lender

If you look like the guy in this picture when your Realtor asks you for the contact information for your #Mortgage #Lender, you wouldn't be alone.

Many people don't understand that their Realtor needs to talk to their lender.  Here are many of the reasons why:

• Offers must come with a pre-qualification, or they will not be answered.  Put yourself in the Seller's shoes: If you have one offer with a pre-qualification from a lender, and another offer without any assurances of being able to have funds to buy your house, which will you choose?
• Realtors must know the type of loan that you will be getting.  Sellers can refuse to accept offers with a particular type of loan.  For example, if a Seller knows that a house will not pass an FHA appraisal, they can say that they will only accept Cash or Conventional loans.  This is not discrimination, it is a business decision made by the Seller.  Why look at homes that you are excluded from buying?
• If you have a very low down payment because you have a small cash reserve, the Realtor and Lender can often come up with a plan to help you get a particular home.  By coming up with a mix of Lender paid, Seller Paid and Realtor Paid closing costs, they can come up with a winning offer at no cost to you!
• If you are planning a huge down payment, a discussion between the Realtor and Lender can often save you cash out of pocket to use for things for the home, or just to keep for a rainy day.
• A Lender can give a Realtor tips that will help the Realtor save you money.  For example, it may be that if you have a 7 week escrow instead of a 4 week escrow, you can save another 1/8th of a point in interest due to a credit score change or a DTI change!
• Lenders will have suggestions as to how to implement a transaction to be able to take best advantage of your financial situation, especially if you need to be near your maximum borrowing power.  They can tell your Realtor what the maximum taxes and HOA fees can be for your situation.
• The biggest reason that a Realtor needs to speak with you Lender, is to be sure that you are seeing homes in the right price range.  There is no bigger heartbreak than to look for weeks and get your hopes set on a house, only to discover that you cannot make an offer because it is out of your price range.  The flip side to that is to discover that you are looking far below your price range, and that you could have easily have had that home with the pool and the 3 car garage.  Why spend time, use up the energy and live through the emotional turmoil of buying a new home, only to find that you should be in a different neighborhood?

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