Historical Phoenix, AZ Homes Information and Links to Free MLS Searches

Phoenix, Arizona Metro Real Estate Monthly Statistics and 2010 Summary

2011-01-07T21:50:00.002-07:00

SALES Month over Month
Monthly Sales in December were 8,401, a 23.8% increase over November’s 6,786. This
complements an upward sales trend for the whole fourth quarter. The highest sales for
2010 of 9,280 occurred in June. This month over month gain coupled with the fourth
quarter trend demonstrates a metric of home sales clearly moving in the right direction, after a
pattern for 2010 characterized by a “one step forward and two steps back”
phenomenon. The December Sales figure ends the year as a 45.12% increase compared
to the January figure (5,789) at the start of the year.

SALES Year over Year
December’s 8,401 Sales total represents a 9.7% increase over 2009’s December Sales
figure of 7,657. In addition, it is the second largest November to December monthly
gain (23.8%) of the decade, just below the November to December gain (24.98%) in
2008.

NEW INVENTORY
December New Inventory (9,443) declined 13.9% or 1,526 listings from November’s
10,969. This month’s New Inventory figure follows a steady decline started in September.
This is in line with a pattern of November to December declines in New Inventory
experienced every December since 2001. New Inventory added to the market in 2010
was 148,968, 1.17% increase over the same figure for 2009, but well below the figures
for 2006, 2007 and 2008 (173,363, 165,615, and 162,181 respectively). New Inventory
added to the Total Inventory each month is an important factor in the supply and demand
balance, as greater supplies support a Buyer’s market and exert downward pressure
on pricing

TOTAL INVENTORY
Total Inventory declined 2,890 listings in December to 42,463, a 6.37% decline from November.
Total inventory remained flat during 2010 with an average of 43,088 per month.

MONTHS SUPPLY OF INVENTORY (MSI)
MSI for December declined to 5.05, representing the first drop below 6 months since
June, and a positive step toward a balanced market. A Seller’s market is typically defined
as a months supply of inventory in the 4-5 month range, while a Buyer’s market is described
as a 6 month or greater supply. While MSI is a barometer of overall market
health, it may not represent an accurate picture of inventory supply in specific market
niches. The December decline from 6.68 to 5.05 months is a drop of 1.63 months or
24.4%. While this is a very positive metric, a quick glance at the historic new listing and
sold data shows that new listings rise significantly from December to January each year,
and sales significantly fall from December to January each year. Thus next month’s inventory
rise coupled with fewer sales, could cause the MSI to rise again.

NEW LIST PRICES
Both the median and average List Prices added to the market continued downward in December.
Median List Price dropped 3.2% to $118,000 from November’s $121,900. Likewise the
average List Price declined 7.5% to $191,000 from November’s $206,400SALES PRICES
December’s Median Sales Price was $110,200, a 4.2% decline from November, and a 12.9%
decline from December 2009. The median value represents the midpoint in a market where
there are as many sales above that value as below. Great housing affordability in the Valley
was fueled by the declining median price trend line in 2010. The average Sales Price for December
rose $1,400 to $160,400, a .9% gain over November, but 9.7% decrease from December
2009.

THE ARMLS PENDING PRICE INDEX™
The ARMLS Pending Price Index is a predictive tool unique to ARMLS which forecasts Median
and Average Sales Prices for the coming three months based on the pending sales data in
the MLS. The PPI’s predictive accuracy naturally declines the further into the future it goes,
as the number of transactions in the forecast lessens. The actual Median Sales Price for December
was $110,200, which was 4.17% below the December figure predicted in November.
The Average Sales Price for December was $160,400, or 1.47% below the December Average
predicted in November. While the actual numbers may deviate from predicted values, the
forecast value for the direction of market pricing remains true.

The three month predictions for Median Sales Price for January, February and March are
$115,000, $112,000 and $110,000 respectively, indicating continuing downward pricing
pressures well into the first quarter. Likewise, Average Sales Price predictions follow a similar
downward forecast for January, February and March of $159,400, $158,200, and
$145,800 respectively.

Downward pricing pressure in the Valley is influenced by the large, steady supply of homes
(42,463) and the disproportionate percentage (69.6%) of Distressed Sales relative to the Total
Sales.

FORECLOSURES PENDING
Foreclosures Pending for December (41,485) is right below the July-November average
of 41,603. The trend line for Foreclosures Pending has remained relatively flat since July,
hovering between 41,203 and 41,958.

LENDER OWNED SALES / FORECLOSURES
Lender Owned Sales for December (4,061) increased by 1,172 sales from November, representing
the highest month over month change all year of 40.57%. December’s Lender
Owned Sales accounted for 48.3% of the total December Sales, representing the highest
percentage of total sales for all of 2010, spurred by Buyer/investor motivation to close
and lender incentive to clear inventory from their books all before January 1.

AVERAGE DAYS ON MARKET
Average DOM finished 2010 at 115, which included an additional 23 days added over the
course of the year. This was a 25% increase to DOM since January (92 days). Despite a
slight drop in April (97) and May (96), the Average DOM trend line for 2010 was upward,
a typical response of a market in over supply.

DISTRESSED SALES
December’s Distressed Sales (5,849), a composite of Lender Owned Sales and Short
Sales, accounted for 69.6% of Total Sales (8,401), and were well above 2010’s monthly
average of 4,665, or 62.18% of Total Sales. The December Short Sale component of Distressed
Sales saw a 31.3% rise in number of units sold to 1,788 over November’s 1,362.
Short Sales accounted for 21.3% of Total Sales in December. Clearly, distressed properties
continue to drive the market and exert downward pressure on pricing.

COMMENTARY
STAT reports mixed news for December. The increase in Total Sales in December along
with a drop in New Inventory is welcome news. Also, the decline in Months Supply of Inventory
to 5.05 signals a market trying to balance itself. Yet, despite these positive signs,
the negative downward pressure on pricing continues. Trend lines for both median and
average List and Sales Prices have declined since January 2010, despite an occasional upward
move during the course of the year. In addition, the average Days on Market rose
five out of the last six months to 115 days in December, and the predictions of the ARMLS
PPI indicate more downward pricing pressure coming in the first quarter.

The Valley still struggles with housing vacancies as a result of the housing bubble and effects
of immigration legislation. According to the U.S. Department of Housing, based on
a survey by the U.S. Postal Service, the Phoenix-Mesa-Glendale area shows 91,687 vacant
residential addresses, a 4.9% vacancy rate which historically has been in the 1.5%
range.**

This glut will have to be absorbed before normal supply and demand can return.
Not surprisingly, the return to a balanced market with healthier pricing trends will be slow
in coming. Two key stabilizing metrics that will reverse the downward trends are net migration
into the Valley and more jobs. Net migration into Maricopa and Pinal Counties
through October is 2,873* which is in effect negligible. However, the most recent unemployment
figure (October) is 8.48%, dropping for the fifth month in a row.*
Net migration into the Valley will be influenced by the recovery in feeder markets
throughout Arizona and the United States, which in combination have experienced the
lowest migration in sixty years. The Economic and Business Research Center, Eller College
of Management at the University of Arizona, predicts modest improvement in 2011, with
population and employment rates to grow at less than 2% annually.**

The latest National Association of REALTORS® figures show that the national Pending
Homes Sales Index rose again in November with the broad upward trend over the past
five months, indicating a gradual recovery into 2011.***

As other markets thaw and activity heats up, more potential homebuyers from feeder markets become available to take advantage of the Valley’s affordable housing, the silver lining to the downward price
pressure cloud. The underpinning of net migration and employment metrics have seen
gains, although small, in the Valley, Phoenix, Arizona Real Estate and/or nationally: leveling of foreclosures pending in Maricopa County, addition of jobs in the employment services sector, upward
trending of manufacturing healthcare and social services jobs, growth in solar and biotechnology
industries, etc. are harbingers of recovery to come.**

The year 2011 holds promise, and positive gains, however modest, will pave the way for a brighter real estate future eventually.

Contact Laura Boyajian to begin the process of buying a Phoenix, AZ home or selling your Phoenix, AZ home today.

*EBR DatabaseOnline
**http://azeconomy.eller.arizona.edu/
***http://www.realtor.org/press_room/news_releases/2010/12/pending_gradual

Real Estate Market & Interest Rates Weekly Commentary

2010-12-15T19:49:00.000-07:00

Weekly Commentary ~ December 15th, 2010

Thanks largely to the likelihood of passing a “tax deal,” interest rates have been climbing at a rapid clip and analysts have brought worries about rising future inflation back into the economic discussion. It may at first seem just another swing—from concerns about possible deflation to anxieties about rising inflation, and back again—but this time the worries may have some staying power.

The two central issues here are extensions of tax benefits—first to the unemployed, second to higher-income taxpayers. What is remarkable about these two central issues is that, taken together, they amplify a few worrisome possibilities for the economy’s future. Specifically, extending unemployment benefits expands the economy’s growth—a good thing but probably an inflationary thing. Further, foregoing receipt of higher taxes from wealthier citizens most likely means that we will have to auction ever more Treasury securities, also potentially inflationary.

Now, a strengthening economy and both of these measures should help the economy grow (in the short term, at the least) nearly always translates into higher inflation and, in anticipation of that, our interest rates will start to climb…as indeed they already have. Further, the likelihood of even more massive auctions of Treasury securities increases the near certainty that interest rates will rise (as demand for Treasury securities fails to fully cover the number of securities being auctioned; it’s a supply-and-demand equation).

The credit markets don’t wait until after something has happened; they react in advance of whatever their investors believe will happen. Investors have begun to worry about inflation already and they anticipate that the seeds of higher interest rates are being sown. So Treasury securities interest rates are already on the rise, and they may continue to rise for as long as the tax deal is in place—or until something else captures the attention of traders, investors and economists.

It is difficult to predict what, if anything, will grab the real estate markets’ attention, so it seems relatively likely that the rising interest rate trend will be with us for quite some time. However, the bond guru Bill Gross of PIMCO Securities placed a $5.5 million bet on municipal bonds a few days ago. He apparently feels bond prices have fallen quite far and are likely to recover. (Bond yields decline as bond prices rise.)

The takeaway here is that while rates are clearly on the rise and could continue to rise, the economy is still reacting to external forces; to government programs and legislation; and, not to forces inherent to the current economy itself.

Low interest rates are not enough to bring the market into full recovery

2010-12-01T09:48:00.000-07:00

Daily Real Estate News | November 24, 2010 | Jobs, Lending Key in Market Recovery
Low interest rates are not enough to bring the market into full recovery, real estate prognosticators say.Inman News, Matt Carter ~ 11/23/2010

Kenneth Rosen, chair of the Fisher Center for Real Estate at the University of California, Berkeley, points to pent-up demand and cheap loans as pluses, but would like to see the Fed help community banks get back on their feet and resume lending.
Unemployment is another enemy of a real estate recovery. Only 1.1 million of the nearly 8.5 million jobs wiped out by the recession have been added back since January, Rosen said.
James Saccacio, CEO of RealtyTrac, says foreclosures are also likely to be a big factor until 2014.

Buy a home, even in today's lending market, with NO MONEY DOWN and low interest.

Phoenix, AZ Leads the Pack - Sellers Cut Listing Prices for 48% of Homes

2010-11-17T11:57:00.000-07:00

Sellers cut listing prices for 48% of homes
Report: For-sale inventory rises 10%
By Inman News, Wednesday, November 17, 2010.

Nearly half of homes on the market had experienced a price reduction at least once in October, according to a monthly review of multiple listing service listings in 26 major markets conducted by national online brokerage ZipRealty.

Sellers had cut asking prices on 48.4 percent of listings last month, a total of 316,097 homes. The number of discounted homes fell 2.2 percent from September but rose 22.4 percent compared to October 2009. (Note: October 2009's figures include a 27th market: Sacramento). Homes had been reduced an average of two times, essentially flat from the same time last year.

Sellers discounted homes for a median $19,423, up 1.4 percent from September, but down 21.4 percent from October 2009. The median list price for homes last month was $241,309, down 1.6 percent month-to-month and 14.3 percent year-over-year.

The ratio of price-reduction amount to list price was 7.5 percent, up from 7.3 percent in September but down from 8.1 percent in October 2009.

Total for-sale inventory fell 3.3 percent month-to-month but rose 10.1 percent year-over-year to 653,811, ZipRealty reported.

In 12 out of 26 markets, more than half of sellers had slashed listing prices: Philadelphia, Pa.; Austin, Texas; Seattle, Wash.; Boston, Mass; Orange County, Calif.; Baltimore, Md.; Tucson, Ariz.; Chicago, Ill.; Orlando, Fla.; Minneapolis/St. Paul, Minn.; Jacksonville, Fla.; and Phoenix, Arizona.

By contrast, only three of 27 markets had seen more than half of their listings discounted in October 2009: Chicago, Jacksonville and Orlando.

For the first time in 2010, Phoenix led the pack last month with 56.1 percent of listings experiencing discounts. Denver, Colo. had the smallest share of discounted listings: 34 percent.

It's a great time to buy a Phoenix home, especially with interest rates at all time historic low's.

Foreclosure Fiasco - Robo-signing: Just the start of bigger problems

2010-10-31T12:35:00.000-07:00

Robo-signing is just the tip of the iceberg.
NEW YORK (CNNMoney.com)
By Tami Luhby, Senior Writer ~ October 22, 2010

The revelation that loan servicers were rapidly signing foreclosure documents without even reading them has uncovered a morass of serious paperwork problems.

These issues could potentially prevent some foreclosure cases from proceeding and allow delinquent borrowers to stay in their homes indefinitely or wrangle settlements from their servicers.

"The whole robo-signing scandal has caused many judges to mistrust what servicers are saying in foreclosure petitions," said Patricia McCoy, a law professor at the University of Connecticut, who co-authored "The Subprime Virus." "Many judges will scrutinize filings more closely."

Several major banks have halted their foreclosure proceedings while they review their process and paperwork. However, several, including Bank of America (BAC, Fortune 500), are ready to continue the cases, saying they are confident that their methods are sound.

But servicers could still hit some big paperwork potholes in answering what seems like the simplest of questions: Who owns the loan and who has the right to foreclose?
Foreclosure mess: Fake signatures, lavish gifts

First, a quick primer.

The debt taken out to buy a house is called a note, which is similar to an IOU. The mortgage pledges the property as collateral to pay off that debt.

When mortgages are bundled together into securities that are sold to investors, the notes are then transferred to a trust. The investors in that trust become the owners of the note and the holders of the mortgage.

Now for the problems.

The note: One of the most important documents in this foreclosure fiasco is the note, which gives investors the right to take action against delinquent borrowers.

The problem is that many servicers don't know where that piece of paper is. Or, they didn't transfer it properly to the trust that holds the securitized mortgages.

This could prove to be a possibly fatal problem for financial institutions.

Until now, many courts were lax about requiring servicers and investors to produce the actual note. Judges allowed the financial institutions to simply provide affidavits saying the investors owned the note.

Now that the robo-signing scandal has surfaced, more judges want to see the note.

In those cases, "the banks will have a big problem," McCoy said. "I don't see how the foreclosure can go forward."

How to buy a foreclosure in a robo-signing world

The American Securitization Forum, an industry group, said that the standard industry methods of transferring ownership of mortgage loans to securitization trusts are sufficient and appropriate.

"These concerns are without merit and our membership is confident that these methods of transfer are sound and based on a well-established body of law governing a multi-trillion dollar secondary mortgage market," said Tom Deutsch, the forum's executive director.

The mortgage: The mortgage industry is slamming into a digital wall.

State law requires that mortgages be recorded in county offices so homeowners and the general public can see that there is a debt on the property.

But as mortgage securitizations began to boom in the 1990's, servicers sought to digitize and centralize the paperwork surrounding the bundling and selling of the loans. So they created the Mortgage Electronic Registration System, known as MERS, to serve as a repository to show both the owner of the note and the home that serves as its collateral.

About 60% of the nation's residential mortgages are now recorded in MERS' name, according to Christopher Peterson, a law professor at the University of Utah who wrote a recent paper on the issue.

When a homeowner falls behind on payments, the company often brings the foreclosure suit to court on behalf of the servicer and the investors who own the debt.

This has become a problem because some judges are questioning MERS' right to represent the owners of the note.

"An increasing number of courts have begun taking a dim view of MERS-recorded mortgages and deeds of trust," wrote Peterson in his recent paper.

If judges don't recognize MERS' right to bring the foreclosure suit, they could throw out the case.

But this problem can be rectified. The trustee can bring suit on behalf of the investors, McCoy said, though this involves more time, paperwork and filing fees.

MERS said it has prevailed in previous legal challenges to its authority.

"The MERS process of tracking mortgages and holding title provides clarity, transparency and efficiency to the housing finance system," said R.K. Arnold, the company's chief executive.

Best-Worse Case Scenario for Foreclosure Freeze - Wall Street Journal

2010-10-20T17:23:00.000-07:00

Best-Worse Case Scenario for Foreclosure Freeze
The Wall Street Journal, Dawn Wotapka 10/12/2010

Gregor Watson, a principal with McKinley Partners, a development company that buys foreclosed homes, told listeners on a Citi home-builder conference call that there were three potential outcomes from the foreclosure fiasco:

· Best case: These are technical issues that can be resolved quickly so the foreclosure process can continue and the glut of foreclosed homes is cleared from the market.

· Medium case: There is significant litigation that takes years to sort out and this slows the troubled housing market even further.

· Worst case: The market grinds to a halt and title insurers refuse to insure mortgages involving foreclosed homes. “It would be devastating for the resale market if this robo-signer issue spiraled out of control,” Watson says.

Historical Phoenix, AZ Homes Information and Links to Free MLS Searches: Information from NAR regarding improper foreclosure procedures by banks - Read this before it hits the Washington Report Monday, October 11th, 2010

2010-10-08T23:57:00.000-07:00

Information from NAR regarding improper foreclosure procedures by banks - Read this before it hits the Washington Report Monday, October 11th, 2010

2010-10-08T23:55:00.000-07:00

Washington Report, Monday, October 11

Information from NAR regarding improper foreclosure procedures by banks

In September and October 2010, several lenders suspended foreclosures in two dozen states due to questions about whether foreclosures were being processed consistent with applicable state law requirements. Concerns are being raised by state and federal elected officials, as well as consumer and fair housing groups, about the validity of ownership of mortgages that have been securitized and resold. At the center of the controversy is Mortgage Electronic Registration Systems (MERS). This firm is responsible for electronically tracking the transfer of assignment of mortgages. Class-action suits are being brought against MERS alleging that the use of the system circumvents state laws.

On October 1, 2010, Fannie Mae and Freddie Mac released statements regarding servicer compliance with foreclosure processing of Fannie and Freddie loans. In the releases, both organizations reiterated that servicers must comply with applicable state laws governing foreclosures. Although nearly all of the foreclosures in question are expected to be fixed eventually, the current situation is creating difficulties and a new hurdle to the recovery of the housing and mortgage markets. NAR members are reporting that upcoming sales have been delayed indefinitely or cancelled, to the detriment of all involved. Additionally, homes on the market without clear title will make sales much more difficult. While banking executives focus their attention on this problem, it is possible that servicers may be somewhat more receptive to approving loan modifications and short sales, since they avoid the foreclosure procedural problems altogether.

NAR has also developed the following talking points that can be used when responding to queries:

There’s no way of knowing what percentage of foreclosures that were improperly processed were, in fact, inappropriate or wrongly taken. The assumption is that for most of them, this may be only a technicality and that the property ultimately would have been repossessed.

For owners who believe their home was wrongly foreclosed, they may wish to contact a real estate attorney to investigate the possibility of a property claim. However, that could prove costly and time consuming – regulations vary by state.

For banks, it may make sense to modify loans or agree to short sales to expedite disposal of inventory.

For buyers, the assumption is that listed foreclosures come with clear property title but they should discuss any necessary contract contingency with their attorney. Foreclosures in limbo are likely to be withdrawn from the market.

It’s too early to tell if there’s an impact on the market but we will be monitoring the situation.

Historical Phoenix, AZ Homes Information and Links to Free MLS Searches: THE TRUTH ABOUT SHORT SALES, STRATEGIC DEFAULTS, AND WALKING AWAY

2010-09-18T10:54:00.000-07:00

Historical Phoenix, AZ Homes Information and Links to Free MLS Searches: THE TRUTH ABOUT SHORT SALES, STRATEGIC DEFAULTS, AND WALKING AWAY

THE TRUTH ABOUT SHORT SALES, STRATEGIC DEFAULTS, AND WALKING AWAY

2010-09-18T10:52:00.000-07:00

THE TRUTH ABOUT SHORT SALES, STRATEGIC DEFAULTS, AND WALKING AWAY

These days, all sort of experts are giving advice about the merits of defaulting on your mortgage and walking away from your home because the value on your property “dropped” and it only makes “good business and economic sense” to “give the house back to the bank”. Many of these “experts” are the modification companies and/or modification attorneys who are charging a fee for their service to walk you through the process. Here are the top 4 myths and facts regarding this:

1. Myth: “I am getting even with my bank who screwed me over with this predatory mortgage. This will teach them a lesson.”

Fact: Most mortgages today are not owned by your bank but rather Fannie Mae, Freddie Mac, or FHA. Your bank who you pay every month is probably only the “sub-servicer” or servicer for Fannie Mae, Freddie Mac, or FHA. What this means is your bank receives a fee to collect payments from you on behalf of Fannie Mae, Freddie Mac or FHA. They do not, however, own your actual mortgage. When you stop paying, instead of hurting your bank, you are actually INCREASING their profits. Remember, they get paid a fee to service your mortgage no matter if you pay or not. When you default, they are allowed to collect additional fees for legal expenses, property inspections, appraisals, etc. Most banks own and profit from the companies that provide these services for them. These additional fees are reimbursed to the bank by Fannie Mae, Freddie Mac and FHA. Any loss that is incurred by foreclosing on your home is ultimately passed on to the owner of the mortgage, which in most cases is Fannie Mae, Freddie Mac, or FHA. Who is Fannie Mae, Freddie Mac or FHA? As you may or may not be aware, they are now owned by the federal government. The federal government is owned by us, the tax payers of the United States of America. While you may think you are “screwing” over your bank, in reality you are only increasing their profits. The people who you are really “screwing” over are yourself, your neighbors and your children who will eventually have to pay higher taxes to pay back the losses that the government is covering.

2. Myth: “The foreclosure down the street from my home just sold for half of what I owe on my house. My house must be worth that much as well!”

Fact: Before you begin valuing your home, you need to go out and see at least 10 foreclosures properties for sale. Many of these homes are in disgusting condition and damaged. Many are missing kitchen cabinets, have holes in the walls, copper plumbing has been stolen, furnace and air conditioners missing, and they are cockroach infested. Many of these homes are ineligible for mortgage financing due to their condition. These homes can only be sold for cash and most likely will be bought by investors who will either fix them and flip them for a profit or rent them out for cash flow. In addition, even if you can finance the home with a mortgage, many of these homes require $20,000 to $30,000 (or more) in repairs to make them “livable”. In these tough economic times, how many people realistically have the ability to pay cash for their home? Also, how many couples who are buying their first home have the ability to save for a down payment plus have an additional $20,000 to $30,000 saved up for the repairs? Not many. Therefore, the price of foreclosure properties reflects this fact. The same people who are now telling you that your home is worth $50,000 are the same ones who told you three years ago it was worth $400,000. They were wrong then and they are wrong now. While it is true that until the large inventory of foreclosures are sold and removed from the market that you may be unable to sell your house for a decent price, once they are gone, prices will bounce back rather rapidly. They will not return to 2007 levels for a very long time (maybe never in some areas) but they will not remain at 2010 prices either. So what will your home be worth in a couple of years after the backlog of foreclosure properties is sold? The answer is simple: look at the rental rates in your area. Historically (prior to the stupidity of the housing crisis) homes have sold anywhere from 15 times to 20 times the annualized rents for the same home. If the home down the street that is similar to yours is renting for $1,000 a month, your home will be worth between $180,000 and $240,000 once the foreclosure homes are sold ($1,000 multiplied by 12 multiplied by 15 or 20). During the peak of the crisis in 2007, many homes were selling at 40 times the annualized rent. Right now, you can purchase some for 5 times annualized rent. Both extremes are not realistic.

3. Myth: “I just want a fresh start with my finances. Walking away from my underwater home will help me do just that.”

Fact: The reality is that once you lose your home, in many cases your problems are just beginning. Many people are unaware that if you lose your house to foreclosure, it may trigger rather large and expensive tax bills with the IRS. If you did a “cash out” refinance on your home, the IRS may treat that amount as income and come after you for back taxes. Also, any loss the bank incurs will look like income to the government. All of these events may generate a 1099-C being sent to you and the IRS. This may further trigger a tax bill for you. Most ethical modification companies/modification attorneys will tell you that tax implications do exist and that you should consult with a tax expert. You should STRONGLY heed their advice and sit down with a CPA prior to making any decisions. The tax laws regarding foreclosures and tax liability are extremely complex and should not be taken lightly. An expert accountant or CPA can help you determine how your foreclosure may impact you for years to come. In addition to possible tax consequences, if the bank takes a loss, they can pursue a deficiency judgment against you. In other words, in many states, any loss they incur with the sale of your home can result in their pursuit of the deficiency for up to 10 years in some states. The laws regarding deficiency judgments vary from state to state and you should consult an attorney to see if they apply to you. Remember, just because a bank does not sue you immediately for the loss, in many states they retain the right to do so for up to 10 years. Five years from now you may find out that the problem you thought was done is starting up all over again.

Most people are aware that a foreclosure on their credit report will greatly impact their credit score. What most people do not realize is the other costs associated with this impact. In addition to not being able to purchase another home for five years of more, your lower credit score will also cost you in higher rates for auto loans, credit cards, and even insurance! Many insurance companies use credit scores in determining premiums for auto insurance. Also, most employers now routinely pulled credit reports on you prior to making a final hiring decision. If you are competing with another individual for the same position and you have a foreclosure on your credit and they do not, you may lose out. Think about it…who would you hire if all other factors are equal? Whatever money you save by renting a cheaper home can easily be offset by the higher costs in credit, insurance, and even your career path!

4. Myth: “If I sell my house with a short sale, my problems will be done.”

Fact: A short sale is not a cure all. While I do recommend this avenue if you have no choice due to unemployment, divorce or other hardships and will lose your home no matter what, short sales can impact you as well. A short sale is an agreement by your lender to accept a lesser amount than what is owed in order to help you sell your house. Please remember a short sale does not solve your IRS consequences with regards to deficiency relief that was discussed above. Please consult a tax professional on this matter. Furthermore, while the bank may agree to release the lien on your house for the lower payoff amount, they may continue to attempt to collect on the debt that was not entirely paid off and may pursue collection of it for up to 10 years. Every bank’s policy regarding this is different. I strongly recommend you consult an attorney to advise you regarding the bank’s rights to pursue a deficiency judgment against you after the short sale. Also, the process to get an approval for a short sale is similar to that of reapplying for a loan and can be very prolonged and difficult, taking many months to complete. Once the short sale is approved by your lender, the buyer may no longer be interested; there may be changes by the seller’s lender in their approval letter that change the contract substantially so the buyer walks; the house may not appraise by the buyer’s lender for what was offered, the buyer may find there are too many repairs to deal with and many more. If the buyer will not or cannot perform, you may end up with a rejection from your lender. This will result in eventual foreclosure at which time bankruptcy may now become an option and often results in denials and eventual foreclosure.

Please also remember that a short sale may affect your credit very similar to a foreclosure (many banks report them as foreclosures or charge-offs). As discussed previously, your credit report affects other areas of your life as well.

Willo Historical District History - Phoenix, AZ

2010-09-17T11:26:00.000-07:00

Willo Historical District History In Phoenix, Arizona

Nestled in the very heart of urban Phoenix, Willo was once the epitome of suburbia - a collection of subdivisions on the outskirts of the small, but thriving metropolis of Phoenix. The Willo neighborhood between 7th and Central Avenues can be divided into two sections. J. P. Holcomb used a Homestead Patent in 1878 to acquire and settle the southern portion of Willo between Encanto Blvd. and McDowell. Mr. Holcomb acquired the northern portion, between Thomas Rd. and Encanto Blvd. in 1886 through a Timber Culture Land Patent.

For the next 20 years or so, the land was primarily for agricultural purposes and lay on the outskirts of town. In the early 1900's, four subdivisions were platted, containing home sites with long narrow lots. In the early 1920's, Home Builders, a residential construction firm, built 41 homes in the Bungalow style. During the mid to late 1920's Phoenix, like the rest of the West, experienced tremendous growth and a building boom.

Standards were set for residential construction, and "exhibition houses" (now called model homes) were developed to market the new construction. Most of the building activity in Willo during this period occurred in the N. Kenilworth and Broadmoor subdivisions, and included a "Spanish Rancho Home" exhibition house.

During the 1930's the Period Revival movement brought tremendous variety in architectural styles, including Tudor Revival, Greek Revival, American Colonial Revival, Spanish Colonial Revival and Pueblo Revival. However, the Depression brought construction to a near standstill. The mid to late 1930's and the development of the Federal Housing Administration (FHA) brought construction back to Willo. Construction from this period and later years often featured French Provincial and Monterey styles, with an architectural design that would eventually become what we know today as the Ranch Style house. Construction was also more standardized due to the influence of the FHA and other government-imposed standards. Most of these newer homes are found in the northern section of Willo.

In all, 22 separate subdivisions were platted and developed in Willo by various entrepreneurs from the turn of the century up to the beginning of WWII. Eventually, with the growth of Phoenix over the last century, the individual subdivisions platted by early developers were forgotten and the area blended into one cohesive whole. Unfortunately, the amazing growth of the city resulted in the encroachment of commercial development on what were once quiet suburbs. In the 1980's, residents of Willo successfully lobbied for status as a special conservation district, achieving historic status and assuring that this beautiful part of Phoenix history will be preserved for the enjoyment of future generations.

Development Influences

The historic development of Willo was the result of deliberate actions that shaped and controlled the neighborhood's visual and social characteristics. Many parties, including the local and national real estate trade, prominent civic leaders and the federal government, were responsible for these actions.

Over 700 homes were constructed in Willo, making it one of Phoenix' largest historic neighborhoods. Seventeen subdivisions were platted in Willo, each indicative of the land development and architectural trends of their time. This brochure describes how the resources of public agencies, private firms and organizations were used to create the Willo community.

Home Builders

In the early 1920’s, most of the Willo area was undeveloped agricultural land on the outskirts of the city. It was difficult to attract families to build their homes in Willo because of its somewhat isolated nature. Home Builders, a speculative residential construction firm, saw great opportunity in this new area.

Through the large-scale construction of homes, the company had the opportunity to create a new community, an atmosphere that encouraged people to purchase a house. Home Builders constructed 41 residences in Willo between 1920 and 1925, each in the same architectural style. The company was also responsible for the marketing of these residences, offering an affordable time payment plan, which appealed to middle class home-buyers. Home Builders thus set the standard for the appearance of the neighborhood, the quality of buildings to be located there and the economic and social characteristics of the area's residents.

Home Builders, like other builders of that time, constructed homes in the Bungalow style. Bungalows have large porches and broad roof overhangs and are usually one story. Wood clapboard, wood shingles, and stucco or brick masonry form exterior walls. The Bungalow style easily accepts simple plan variations and emphasizes the use of common building materials such as brick and wood, making the Bungalow simple and inexpensive to construct.

The Roaring 1920's

During the mid to late 1920’s, Phoenix witnessed phenomenal growth in its population and a great expansion of its city limits. Consequently, there was a growing concern over how the City should accommodate this growth without losing its unique qualities. Civic leaders and members of the local real estate trade agreed that haphazard development would be detrimental both to the current residential population and to property values. The residential building developers of Willo used four strategies to accomplish their goal of forging an economically and socially viable community: deed restrictions and protective covenants; platting large-scale subdivisions; constructing model homes and supporting the local zoning movement. Unlike Home Builders, these early developers only sold residential lots; they did not build speculative homes.

Subdividers controlled land values by placing building restriction clauses on the lots sold. For example, a building cost restriction of $2,500 would prevent those of modest means from building there and would dictate the quality of materials chosen for the structure. Other restrictions regulated specific building materials and types of building use, such as excluding an apartment house from a subdivision. As in many parts of the nation, racial restrictions were imposed as well. These restrictions gave Willo an upper middle class identity. Many store owners; professionals and upper echelon public service employees were the initial homebuyers in Willo.

Developers also set the tone of development in Willo subdivisions with the use of "model homes." The National Association of Real Estate Boards, local real estate firms and the American Construction Council sponsored a national program of model home construction during this period. This program emphasized the American Dream of home ownership as a marketing tool. New building technology was promoted in the model home campaign as well, offering added convenience and low building costs for homebuyers.

The "Spanish Rancho Home," the first building constructed in the Broadmoor Subdivision, was an "exhibition house." The house received wide publicity during its construction and opening. The interior was decorated, and the latest electrical, plumbing and heating systems installed and brought to the attention of the visiting public. After the house had successfully attracted prospective lot buyers to the subdivision and had set the architectural standard for the area, the building was sold to a private buyer.

Most of the building activity in the late 1920's occurred in the large North Kenilworth and Broadmoor subdivisions. Both were platted in 1928. By purchasing lots in large subdivisions, prospective homeowners were assured of neighbors who would meet the same deed requirements as they did, thereby guaranteeing social homogeneity in the area. The large size of the subdivisions offered the opportunity for a creative layout of lots and streets. The curvilinear street pattern of Broadmoor was touted for its design along 11 artistic lines" in keeping with the city beautification and planning movement of the period.

While deed restrictions assured Willo residents that nearby buildings would be of a character similar to their own, there was no means by which residents could control development immediately beyond the boundaries of their subdivision. However, by the 1910’s, large cities adopted zoning ordinances which granted municipalities the authority to regulate development within their city limits. Following suit, Phoenix civic leaders recognized that a zoning ordinance was an essential feature of a modern city.

Therefore, the city hired a prominent San Francisco consultant to draft a zoning code for Phoenix. The first zoning ordinance was passed in 1930. Zoning was supported by the local Realtors for its ability to stabilize property values. William Hartranft, the first chairman of the Phoenix Planning Commission and a longtime resident of Willo galvanized their support. With the exception of a few lots zoned 11 neighborhood commercial" at major street intersections, all the Willo area was designated for single- family residential use. An exception was the provision for modest apartment buildings (such as the El Encanto Apartments) along Central Avenue, which was the historic edge of the Willo neighborhood.

Period Revival Architecture

The "Spanish Rancho Home's" design reflects the influence and popularity of the Spanish Colonial style through the mid and late 1920’s. By the early 1930’s, the Period Revival movement introduced a range of historical styles reflecting picturesque images of early American or European domestic architecture. Period Revival was the dominant style in California at the time, a factor that influenced design trends in Phoenix. The Spanish Colonial Revival style was first exhibited before the American public at the 1915 Pan-American Exposition in San Diego. Characteristics of these low, horizontal one or two story buildings include simple stucco or plaster walls and chimneys, low-pitched red tile gable roofs, arched window and door openings and modest detailing from several earlier eras of Spanish and Mexican architecture.

Tudor/Elizabethan Revival buildings have their origins in medieval England. The style, which was often described as picturesque and romantic, is characterized by its irregular shape; steep roof with sharp gables accented with half-timbering details; large chimney; cast concrete or stone-framed doors and various combinations of sheathing materials such as rough stone, stucco and brick. An interesting variation of the Tudor/ Elizabethan Revival found in Willo is the Cotswold Cottage. The style's most distinguishing feature is its curved wood shingle roof, which suggests the appearance of a historic English thatched roof.

Also found in Willo are examples of the American Colonial Revival style. Although American Colonial is the nation's most popular revival style, it is not extensively represented in Phoenix. Characteristics of the style include Greek Revival door and window surrounds; shuttered, multi-paned windows; low-to-medium pitched gabled roofs, usually with the broadside facing the street and wood clapboard or brick outer walls.

The Impact of the FHA

The worst years of the local economic depression, 1931 through 1935, are illustrated by the virtual standstill of real estate development and construction activity in the Willo neighborhood. The National Housing Act of 1934 rejuvenated residential growth in Willo. The purpose of the Act was to "improve nationwide housing standards, provide employment and stimulate industry, improve conditions with respect to home mortgage financing, and to realize a greater degree of stability in residential construction." The Act created the Federal Housing Administration (FHA) that stimulated new construction by insuring residential mortgages, thus making them easier to obtain. In return, the FHA required that housing built with insured loans meet certain design and construction standards.

The development of Willo during this period was a direct consequence of Phoenix' zoning regulations converging with the policies of the FHA. The City's zoning regulations established types of land uses in Phoenix. The FHA policies mandated a specific palette of building materials and designs, which could be used to qualify for financing programs. The program also encouraged speculative development in large subdivisions by limiting the risk of mortgage foreclosure and by increasing demand for houses based on the FHA's low interest rates. As a result of these influences, like no other time in Phoenix history, there was a uniform, coordinated and controlled vision for developing new residential areas of the city.

The FHA's directives gave developers a blueprint for the most cost efficient and marketable designs. The FHA sought uniformity in their subdivisions in hopes of creating stable, secure and attractive communities. Building components and styles were mass-produced, thereby cutting costs. Developers were able to plat and subdivide property confidently, for they were assured of financial backing from the banks.

In an effort to boost the public's awareness of their mortgage financing and to show future homeowners the advantages of the program, the FHA, with local lending institutions and building contractors, sponsored the construction of two "demonstration houses" in the Willo neighborhood. The houses, built in the summer and fall of 1936, were constructed for private owners but were opened for public inspection to demonstrate the ultra modern dwellings achieved through FHA financing." The prominent and prolific Phoenix architectural firm of Lescher and Mahoney designed both of these homes. The P.W. Westerlund House, designated the "House of Romance," was the first of three houses to be built Economy of construction and convenience were billed as the main features of the house. The "Home of Happiness" was the second FHA sponsored demonstration home in Willo. The Arizona State Fireman's Association sponsored the "Miracle" demonstration home in Willo. This home, which was endorsed by the FHA, promoted the use of fireproof construction materials such as adobe, cement, steel and asbestos.

Unlike the architecturally diverse subdivisions developed during the 1920’s, the subdivisions developed in Willo during the New Deal years are more uniform in appearance. This uniformity was a response of local developers to federal housing initiatives.

FHA era houses were constructed in two basic styles: French Provincial and Monterey. The FHA borrowed the general shape of their homes from the Period Revival styles but stripped the houses of elaborate exterior details, ornamentation and finishes. Built when the private automobile had become the dominant mode of transportation, these buildings incorporate garages or carports into their design.

The most distinctive feature of the Phoenix-FHA interpretation of the French Provincial style is its steeply pitched, hipped roof. These one-story buildings are asymmetrical in plan and have interlocking wings, giving the appearance of a rambling farmhouse. The Phoenix version of the FHA Monterey style is a forerunner of the modern Ranch style house. These are one-story structures with a low, horizontal orientation and an asymmetrical front facade. Exterior walls are covered by stucco or plaster. They have low-pitched gabled roofs usually sheathed in Spanish tile, and have adjoining garages.

Preserving Neighborhood Character

The effort to maintain the Willo neighborhood's character still continues. In 1986, Willo residents and city officials prepared the Willo Neighborhood Conservation plan, addressing such quality-of life issues as the development of high-rise office buildings in the area. In 1990, a neighborhood coalition successfully promoted designation of Willo as a local historic district. With the continuing commitment of its residents, the Willo neighborhood will remain proud of its past and preserving the neighborhood's unique qualities for the future.

Historical Phoenix, AZ Homes Information and Links to Free MLS Searches: Mortgage Rates Beat Tax-Credit Benefits

2010-09-06T20:25:00.000-07:00

Historical Phoenix, AZ Homes Information and Links to Free MLS Searches: Mortgage Rates Beat Tax-Credit Benefits

Mortgage Rates Beat Tax-Credit Benefits

2010-09-06T20:22:00.002-07:00

Mortgage rates beat tax-credit benefits
By Aldo Syaldi ~ August 25, 2010

Homebuyers today can potentially save several times more money in interest costs than buyers who took out a mortgage in early April and claimed an $8,000 homebuyer tax credit.

Yet buyers, who rushed to meet the April 30 deadline for the federal tax credits, appear much less eager to borrow at the lowest interest rates in 60 years.

Mortgage applications for home purchases are 42 percent below the pace seen in April, according to the Mortgage Bankers Association. Home resales dropped 27.2 percent in July from June, according to a report Tuesday from the National Association of Realtors.

Someone taking out a $240,000 mortgage today at a 4.42 percent interest rate could save $33,287 in interest costs over the life of a 30-year loan. That's four times the $8,000 credit used by a first-time homebuyer who financed at 5.21 percent in early April.

So why aren't more people buying now?

Timing offers one explanation. Buyers earlier this year, not knowing rates would drop, took the best deal available to them at the time.

That soaked up future demand, which more optimistic forecasts hold should return as lower rates persuade buyers to get off the fence.

Because few people stay in a home or keep a mortgage for 30 years, the time needed for monthly mortgage savings to match the $8,000 credit is another consideration, said Cameron Findlay, chief economist of LendingTree.com.

On a $240,000 mortgage, a buyer would need to stay put for almost six years for monthly mortgage-payment savings to match the upfront credit.

Studies in behavioral finance support the idea that people will go for a payout upfront versus a payout spread over a long period that is worth more.

Uncertainty leads to stagnation Given the choice between a 10-percent pay raise when inflation is 12 percent or a 4-percent raise when inflation is 2-percent, respondents almost always go for the bigger raise, even though it means they will lose ground, said Greg Salsbury, an executive vice president with Jackson National Life Distributors in Denver.

Rather than seizing opportunities, many people also tend to freeze up when there is too much uncertainty.

"Unemployment, the deficit and the overall economy are impacting people's decisions disproportionately," Salsbury said. "There are a lot of things in play."

Some mortgage brokers and bankers argue against complicated explanations about why buyers are missing in action.

"The majority of my borrowers used the $8,000 tax credit toward the down payment, and the Seller paid closing costs," said Marilyn McConnell, a mortgage adviser with Cherry Creek Mortgage.

Lower interest rates don't help those buyers who can't come up with the needed down payment or who are trapped in a home they can't sell without taking a loss.

Deflationary expectations Selling at a loss is psychologically hard, even if you realize the lower payment on the next property will make up for it over time, said Denver resident Shanti Klemm.

"We'd love to buy a new home, but we have to sell first. It's a Catch-22," said Klemm, who estimates her family will lose $25,000 by selling its condo.

Another more worrisome explanation is that consumers expect further declines in interest rates or home prices. A survey from real-estate website Zillow.com found that a third of homeowners thought home values in their area had more room to fall. If prices are headed lower, the rational thing to do is to wait for the better bargain. But deflationary expectations, like inflationary ones, become self-reinforcing. During the housing boom, people bought homes because they worried that prices would rise the longer they waited. Flip that around, and people may now be waiting to buy because they expect prices to go lower.

Realtors see how many incredible deals are out there, and, with interest rates being so low say it's a ripe time to buy.

30-year mortgage at lowest rate since 1971

2010-08-13T22:19:00.000-07:00

NEW YORK (CNNMoney.com)
By Hibah Yousuf, staff reporterAugust 12, 2010

Mortgage rates continued to decline this week, plunging to the lowest level in decades, according to surveys from Freddie Mac and Bankrate.

Freddie Mac's weekly report said the 30-year fixed rate slipped to 4.44% for the week ended Thursday, the lowest since the government-backed lender began tracking the rate in 1971. Last week's rates stood at 4.49%, and a year ago it was at 5.29%.

The 15-year fixed rate fell to 3.92% this week, the lowest since Freddie Mac began tracking it 1991, down from 3.95% last week and from 4.68% a year ago.

Adjustable-rate mortgages also declined, with the 5-year rate falling to 3.56% this week, the lowest since 2005 when the lender began tracking it.

Mortgage tracker Bankrate.com, which surveys large lenders across the country, said the average 30-year fixed loan sank to a record low for the fourth consecutive week, falling to 4.57% from 4.66% the previous week.

The 15-year fixed rate, which is a popular option for refinancing, also fell to the lowest level in the history of Bankrate's 25-year old survey, dipping to 4.06%, from 4.11% the week before.

While the 1-year adjustable-rate mortgage held steady at 4.8% for a fourth week, the 5-year adjustable rate mortgage dropped to a record low of 3.92% from 3.95% the previous week.

"Low rates are helping to heal many battered local housing markets by increasing home-purchase activity, said Frank Nothaft, chief economist at Freddie Mac.

Mortgage rate applications inched up a modest 0.6% during the week, according to the Mortgage Bankers Association. Applications for purchase rose 0.3% while refinance applications increased 0.6%.

Weekly Market Commentary

2010-07-21T15:35:00.001-07:00

Weekly Commentary
by Eddie Knoell
7/21/10

As numerous economists have argued, the $8,000 and $6,500 tax credits for home-buyers motivated people to accelerate their purchase decisions. Thus, home sales that would have shown up in the relatively near future have already occurred.

By this logic, it is easy to understand why sales volume dropped off precipitously as soon as the availability of the tax credits ceased—and, by extension, why sales figures haven’t been increasing in recent weeks. Further, it is easy to understand why the number of people applying for new purchase money mortgages has not begun once again to grow.

We are in a very difficult stretch of time economically. At this point, the recovery continues to move forward in its rather weak and stumbling fashion, and every stumble leads many analysts to worry aloud that we are actually slipping into a second stage of the recession.

It is very impressive that the annualized level of core inflation as measured by the Consumer Price Index is a mere 1% (that is, once you remove the volatile food and energy prices from the mathematics). It is even arguable that such a low rate of price appreciation is a good thing for most of us, particularly those on fixed incomes. But it isn't a harbinger of deflation; instead, it’s a reflection of how slow the economic growth is currently. Slow, but growth nonetheless.

It does raise concern that several economists have lowered their forecasts for Gross Domestic Product growth—that is, overall economic growth—in this quarter from the early 3% range to the mid-2% range. But again, that simply restates the fact that the economy is slower than expected, not falling off a cliff.

The sturdy Moody’s Economy.com view is that employment growth will become evident in early 2011 and retail sales will increase and, further, that 2011 will be a year of gradual recovery among real estate sales and values. It can’t come soon enough…but it will indeed come.

30-Year Fixed Rate Mortgage Drops Slightly to Create Another New Low

2010-07-12T12:18:00.000-07:00

McLean, VA – Freddie Mac (OTC:FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.57 percent with an average 0.7 point for the week ending July 8, 2010, down from last week when it averaged 4.58 percent. Last year at this time, the 30-year FRM averaged 5.20 percent. This rate is yet another all-time low in Freddie Mac’s 39-year survey.
The 15-year FRM this week averaged 4.07 percent with an average 0.7 point, up from last week when it averaged 4.04 percent. A year ago at this time, the 15-year FRM averaged 4.69 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.75 percent this week, with an average 0.7 point, down from last week when it averaged 3.79 percent. A year ago, the 5-year ARM averaged 4.82 percent. This rate is also an all-time low since Freddie Mac began tracking it in 2005.
The 1-year Treasury-indexed ARM averaged 3.75 percent this week with an average 0.7 point, down from last week when it averaged 3.80 percent. At this time last year, the 1-year ARM averaged 4.82 percent.
"With mortgage rates falling to historic lows, refinance activity has been strong over the past three months," said Frank Nothaft, Freddie Mac vice president and chief economist. "The Bureau of Economic Analysis reported that the effective mortgage rate of all loans outstanding was just below six percent in the first quarter of 2010, the lowest since the series began in 1977. Since the start of the second quarter, two out of three mortgage applications on average were for refinancing, according the Mortgage Bankers Association."

"Household balance sheets also improved in other ways over the first three months of the year. The Federal Reserve (Fed) reported household net worth rose by almost $1.1 trillion in the first quarter of 2010. The share of credit card loans that were 30-days or more past due fell to the lowest since first quarter of 2002, according to the American Bankers Association . Finally, the aggregate household debt burdens were at a level not seen since the third quarter of 2000, based on the Fed’s debt service ratio ."
Mortgage Rates

30 Year Fixed: 4.57%

15 Year Fixed: 4.07%

1 Year Adj: 3.75%

Weekly Real Estate Market Commentary

2010-05-26T13:37:00.001-07:00

Weekly Commentary

Let’s look at a few questions raised by this past week’s indicators.

1. The Existing Home Sales report contained an announcement that completed sales had increased in April by 7.6% month-over-month—23% above last year’s reading for April. One thing is obvious: This increase was fueled by homebuyers’ wish to take advantage of the $8,000 and $6,500 tax credit available to those who signed purchase documents by April 30 (and who close their transactions by June 30). One thing was not at all obvious: According to National Association of Realtors figures, sales varied greatly in different regions of the nation. Existing home sales (month-to-month) rose by a striking 21.1% in the Northeast, by 9.9% in the Midwest, by 8.6% in the South—but fell by 6.2% in the West.

All that can be said about this at the moment is that sales began to pick up in the West far ahead of the rest of the nation, especially sales of distress properties. Further, sales of distress properties have started to drop off in the West earlier than in the rest of the nation. And it is possible that the West is in an advanced stage of recovery, in which sales move to higher price levels and the market begins to look perhaps more “normal” than in the rest of the nation. None of this adequately explains why homebuyers didn’t rush out in large numbers to take advantage of the tax credit, however. Doubtless, we will all continue to seek an answer to this puzzle.

2. The Mortgage Applications Index surprised no one by running precisely counter to the Existing Home Sales Report. It was expected that the week in which purchase agreements had to be signed would also be the week in which loan applications would begin to fall off.

However, the 27.1% decline in the number of purchase money loans (with which homebuyers finance the purchase of their homes) was unsettling. The index figure of 192.1 is the lowest the index has reached during the whole recession. But if you look at how the index responded last fall to the assumed conclusion of the initial $8,000 tax credit program, you will find a great similarity between the moves of the index then and the moves of the index now. The shouting about a deep decline in real estate sales is overdone.

3. The week also brought us small disappointments. The number of claims for unemployment insurance rose, reversing a steady decline that had lasted for the past several weeks. And the Conference Board Index of Leading Indicators, which has been an enthusiastic indication of the recovery’s strength for months, fell for the first time in a year. Yes, it was only a 0.1% decline, but it seems to signal a slight slowing to the progress of the recovery. Moody’s Economy.com has been predicting this for some time—that the economy would slow, but continue to advance. If they prove to be correct (and they probably will), the slowing isn’t a big thing.

Phoenix Home Sales Show Promising Trends

2010-05-25T11:35:00.002-07:00

Long-Term Buyers Return
by Catherine Reagor ~ The Arizona Republic ~ May. 22, 2010

April figures for existing-home sales in metro Phoenix reveal several promising shifts for those searching for signs of a housing-market recovery.

The overall number of home sales in the region continued to hover near record levels last month.

Beneath the sales figures were other encouraging numbers:

• Foreclosures did not dominate sales of existing homes in the Valley for the first time in more than a year.

• The number of investors purchasing homes from lenders dropped.

• More buyers purchased homes with the intent of living in them.

• More buyers financed their purchases with long-term mortgages.

April sales included the last wave of first-time home buyers who rushed to buy before a federal tax credit expired. Many did not want to purchase foreclosure homes.

More than 1.8 million people nationally, most of them first-time buyers, used the tax credit to purchase homes, according to early government- and housing-industry estimates. The figures haven't been broken down by state yet, but Phoenix-area real-estate agents have seen a significant increase in first-time buyers.

The return of average buyers to the market suggests more people are buying for the long haul rather than for a quick resale. The shift away from foreclosures also means more Valley homeowners were able to sell their houses last month.

"It appears foreclosures may have finally made their downward turn," said Tom Ruff, analyst for real-estate-research firm Information Market. "The number of home sales might drop now, but prices could go up."

The uptick in first-time buyers may be temporary. But the shift from a market dominated by foreclosures and speculative buying may be more lasting.

Foreclosures and pre-foreclosures in the Valley also fell in April. So far in May, the number of bank-owned home sales is down compared with April.

Ruff calculated April's buyers and sellers through an analysis of property records. Bank-owned foreclosure homes accounted for about 33 percent of all Valley home sales last month. Foreclosures accounted for more than 50 percent of Phoenix-area home sales during 2009.

These new trends could mean there are more long-term buyers vs. short-term speculators buying homes in the Valley now, which could lead to home-price increases in the future.

Here's the breakdown of metro Phoenix's 8,955 home sales in April:

• Only 650 were new-home sales, and the median price of those houses was $213,483.

• Regular sales of existing homes totaled 5,287. The median price of these houses purchased from homeowners was $150,000.

• The remaining 3,018 home sales from the tally were bank-owned foreclosures, which had an overall median price of $106,000.

• The overall median price for all homes sales was $135,000.

• About 34 percent of all homebuyers paid cash.

• About 15 percent of all homes were purchased by investors who signed real-estate documents saying they intended to rent the property to tenants. A year ago, 20 percent of all Valley homebuyers recorded as investors. The rate was 19 percent in January of this year.

• Nearly half of the 5,953 homebuyers who financed their purchase through mortgages used Federal Housing Administration loans, which are primarily obtained by first-time buyers.

Tax credit

The federal tax credit expired April 30, so most last-minute sales for people trying to beat the deadline closed last month.

First-time homebuyers were eligible for an $8,000 credit, and existing-home owners were eligible for a $6,500 credit. Buyers had to have signed contracts by the deadline to receive the credit but have until June 30 to finalize their purchases. Those lagging home sales will show up in Valley figures for May and June.

Real-estate agents say it appears that in Phoenix, first-time buyers were the biggest group to tap the tax credit because they didn't need to sell a home to buy another. But a drop in foreclosures means regular homes will be drawing more attention from buyers. More demand for non-foreclosure homes will drive up values.

Investors

Investor purchases are dropping along with the number of inexpensive foreclosure homes for sale.

Among those investors still buying homes, some have shifted to short sales, which are recorded as regular sales and fetch higher prices than foreclosure homes, real-estate agents say.

The number of actual investors in the Valley is always higher than the number tallied on real-estate documents. Some investors fail to disclose the home is not their primary residence.

During the height of the Valley foreclosure-sales boom in April 2009, more than 60 percent of all home purchases were made by investors, according to realty industry estimates. Then, there were 8,156 home sales in the region, and the overall median price was $126,000.

Vicki Cox Golder, president of the National Association of Realtors, said there has been a change in housing-market psychology. "Buyer confidence is back, and homebuyers have long-term views," said Golder, a Tucson real-estate agent. "The typical buyer plans to stay in their home for 10 years, so we've put the flipping mentality behind us."

End of Home Buyer Tax Credit Unlikely to Deter Most Real Estate Buyers

2010-05-11T13:02:00.001-07:00

RISMEDIA, April 29, 2010

The expiration of the 2010 Home Buyer Tax Credits on April 30th is unlikely to put off Americans looking to purchase homes who believe now is a good time to buy and are confident that home prices will rise according to a survey released by Prudential Real Estate and Relocation Services, Inc., a Prudential Financial, Inc. company. The survey of 1,000 Americans between the ages of 25-64 with at least $35,000 household income was conducted during April 15-20, 2010.

More than 90% of consumers believe that the home buyer tax credits have helped both first-time home buyers and the U.S. housing market overall. Among consumers actually shopping for homes, 65% believe that the end of the tax credits will have little or no effect on their interest in purchasing a home.

While consumers remain unsure about the direction of the housing market, the survey reveals that they are optimistic about real estate values with 46% of consumers expecting real estate prices in their area to increase over the next year. Just 12% expect prices will decline. Over the next five years, 79% expect real estate prices to increase, with 20% expecting prices to increase substantially.

“The survey underscores the key role the federal home buyer tax credits played in stimulating residential real estate market activity and the U.S. economy,” said James Mallozzi, chairman and chief executive officer of Prudential Real Estate and Relocation Services, Inc. “It also shows that most consumers believe the market has hit bottom and are more optimistic about the future.”

Survey respondents identified concerns about rising mortgage interest rates and unemployment as the most important factors affecting their decision to purchase a home, along with more stringent lending criteria and fewer mortgage-backed securities purchased by the Federal Reserve. The expiration of the tax credits placed lowest on their list of concerns. Among those who have recently purchased a home, 61% cited low mortgage interest rates as “very important” to their decisions – an amount greater than either the tax credit or even cheaper prices. The 66% expecting interest rates to rise underscores potential headwinds for the market.

“The tax credits clearly helped stimulate the market when consumer confidence was low and housing inventory was high,” said Earl Lee, president, Prudential Real Estate and Relocation Services, Inc. “While the tax credit expiration is a concern for many, the bigger issues now are the availability and cost of financing as well as if they will have a job.”

Despite the significant downturn in the real estate market, the survey underscores that the dream of homeownership and the perception that owning a home is a good investment remain intact. Among current renters, 75% still believe owning their home is a better long-term choice for their needs than renting.

The majority of consumers also believe that homeownership is a better investment than individual stocks or bonds (75%), mutual funds (72%), or savings accounts (74%).

“The real estate market is precariously balanced. Consumers are clearly motivated to take advantage of the opportunities the current low interest rates and prices afford,” Lee notes. “While the market is picking up in terms of sales and confidence, and the majority still believe that owning a home is a good investment, the outlook for the market remains highly dependent upon the direction of the economy overall.”

UA forecast calls for rebound in Valley housing market this year

2010-04-20T16:18:00.001-07:00

by Peter Corbett - Apr. 15, 2010 The Arizona Republic

The Valley's new-home market is on its way to recovery, according to a University of Arizona forecast.

The UA Economic and Business Research Center report predicts that new-home permits in metro Phoenix this year will jump 54 percent from last year to 13,320. Then, permits will more than double to 28,060 next year.

That is still a long way from the Valley's peak building years of 2004-05 when close to 60,000 new homes were built in each of two straight years.

The university's forecast predicts that new-home permits will fluctuate from 35,000 to 40,000 annually from 2012-16.

That would appear to be a more sustainable number than 60,000 permits annually, especially with the Valley's expected population growth.

Cassidy Turley/BRE Commercial, in its latest Phoenix Housing Market Report, notes the metro area will grow from 4.2 million this year to more than 5 million in 2015.

Longer term, Arizona is expected to grow to 16 million by 2050. That is up from 5.1 million in the 2000 census.

Cassidy Turley's report also notes some strengths as well as concerns about the Valley market, including foreclosures, job losses and low appraisals of homes.

On the plus side is affordable housing. Six out of 10 homes sold in the fourth quarter of 2009 were affordable for families earning the Valley's median income. That is much better than in California but less affordable than in other Sun Belt markets, such as Albuquerque, Dallas and Houston.

Office market coming back
The Valley's office market is on it way to recovery, but it has a long way to go, according to a first-quarter report from CB Richard Ellis.

Office vacancies in the quarter were up nearly 3 percentage points from a year ago to 25.6 percent. That is the highest rate in 19 years.

Plus, the vacancy rate has been climbing for 11 consecutive quarters.

But for the second straight quarter, the office market has had positive net absorption, meaning that new tenants have taken more space than have been lost by tenants leaving office buildings.
Office development, meanwhile, has come to a halt.

Scottsdale vacancies high
Scottsdale's office vacancy rate is 28.4 percent, nearly 10 percentage points higher than downtown Phoenix's rate.

However, Greg Mayer, CB Richard Ellis senior associate, said Scottsdale is on the rebound.
"It's arguably the hottest submarket we have," he said. "Vacancies are high but have been falling for three quarters."

Scottsdale had net absorption of 315,570 square feet of office space in the first quarter. Only Phoenix's central business district had more absorption at 438,725 square feet.

Among the major new tenants in Scottsdale are the global shipping company APL and Yelp, an Internet site that allows consumers to review businesses.

APL took 70,000 square feet at the Max at Kierland building, 16220 N. Scottsdale Road. Yelp is leasing 28,000 square feet at the Galleria Corporate Centre, 4343 N. Scottsdale Road.
Scottsdale's average lease rate was $23.62 per square foot, slightly higher than the Valleywide rate of $23.36.

Mayer said tenants should be locking in their leases.
"You don't want to be late to the market," he said.

FHA guideline changes coming soon

2010-03-04T22:09:00.001-07:00

The Federal Housing Administration (FHA) recently announced a set of policy changes that will help strengthen the FHA’s capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities.

The up-front mortgage insurance premium (MIP) will be increased from 1.75% to 2.25%. This change will help the FHA build up capital reserves. Borrowers will still be allowed to finance the up-front MIP into their loan amount. This change will go into effect in the spring.

Allowable seller concessions will be reduced from 6% to 3%. By allowing 6% seller concessions, the FHA is exposed to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions. This change would go into effect in the early summer.

Housing-price recovery hits new milestone

2010-02-26T18:31:00.002-07:00

by J. Craig Anderson - Feb. 25, 2010
The Arizona Republic

The Valley's epic home-price slide reached another recovery milestone in January, the first month in nearly three years with a single-digit annual rate of decline, according to preliminary data from Arizona State University's Repeat Sales Index.

ASU professor Karl Guntermann said January's year-over-year decline of 9 percent continues a stabilizing trend that has been consistent for several months.

The rate was 17 percent in November, and preliminary figures indicate a 13 percent rate of decline in December, according to Guntermann.

"The slowdown in the rate of decline has been accelerating for several months," he said. "If the present trend continues, prices will level off later this spring."

An index of zero percent would mean home prices were roughly the same as they were a year earlier, Guntermann said.

That point appears to have been reached for foreclosed-home sales, based on preliminary data. Guntermann said November's annual rate of decline for foreclosed homes was 9 percent, and preliminary data show it falling to 2 percent in December and zero percent in January.

The index measures differences in the average price of selected homes that have sold multiple times. Its purpose is to provide the most accurate reflection possible of the actual market, and it is the same methodology used for the nationally popular S&P/Case-Shiller Home Price Index.

The median sale price for foreclosures continued on a steady decline that barely has budged in more than a year.

The overall median price for non-foreclosure sales in January was $155,000, compared with $160,000 in December and $166,000 in November.

The index does not correlate exactly with year-over-year price changes, Guntermann said, because there is a sort of reverse momentum built into the calculation that lowers the index if it's on the rise, and raises it if it's on the decline.

It has been dropping for a record 33 months since home prices peaked in mid-2006.

Still, Guntermann said that is likely to change within the next few months as prices bottom out and remain static or recover slightly.

Preliminary data show the median home price in January was $125,000, down from $133,000 in December and $135,000 in November.

Stocks rally on housing data

2010-02-03T09:51:00.001-07:00

Pending home sales rise. D.R. Horton posts its 1st profit in nearly 3 years. UPS sees shipments picking up in 2010.
by Elizabeth Strott on Tuesday, February 2, 2010

A better-than-expected report on pending home sales and strong results from homebuilder D.R. Horton (DHI) helped ease concerns about the housing market and lift stocks today.

The National Association of Realtors' index of pending home sales rose 1% in December after tumbling 16.4% in November. Pending sales reflect deals that have been signed but not completed. Sales were up 10.9% from the same month a year ago. The index has risen for nine out of the past 10 months as buyers work to take advantage of homebuyer tax credits extended by the government to prop up the market.

At the close, the Dow Jones Industrial Average ($INDU) was up 111 points to 10,20297. The Nasdaq Composite Index ($COMPX) had gained 19 points to 2,190, and the Standard & Poor's 500 Index ($INX) had added 14 points to 1,103.

Crude oil soared today on an improving economic outlook, rising $2.76 a barrel, or 3.7%, to $77.19. Gold continued its ascent, rising $10.50 to $1,115 an ounce. The yield on the benchmark 10-year Treasury ticked down 2 basis points to 3.63%.

D.R. Horton swings to profit

D.R. Horton's shares were up $1.27, or 10.7%, to $13.18 after the the nation's second-biggest homebuildler posted its first quarterly profit in nearly three years.

The Fort Worth, Texas, company said it swung to a profit of $192 million, a huge improvement from the net loss of $62.6 million it posted in the same quarter a year ago.

The stock was up $1.38, or 11.6%, to $13.29.

UPS sales slip, but Dow's revenue rises

Shares of United Parcel Service (UPS), the world's biggest package-delivery company, rose on an optimistic forecast for this year. The Atlanta company, a bellwether of consumer spending and business activity, forecast gains in package volume, pricing and profit for 2010.

"The numbers for Q4 were a little bit better than what they had previously guided, but the guidance for 2010 looks really good," Arthur Hatfield, a transportation analyst at investment bank Morgan Keegan, said in an interview on CNBC. "Overall, it looks like things are going to get a little better throughout 2010."

Dow Chemical (DOW) earned $87 million, or 8 cents per share, in the fourth quarter, a turnaround from a loss of $1.55 billion, or $1.68 per share, in the same period of 2008. Excluding special items, earnings were 18 cents a share, beating the Street by 7 cents.

Sales at Dow Chemical rose 15% to $12.5 billion, thanks in part to sustained growth in emerging regions. The company cautioned that growth in the United States and Europe will continue to lag amid high unemployment. Dow shares were off 76 cents, or 2.7 3%, to $27.87.

Historical Phoenix, AZ Homes Information and Links to Free MLS Searches: Mayor Phil Gordon to Discuss Historic Carbon Emission Reduction and Utility Preservation from Certified Emerald Green Phoenix Residence

2010-02-02T11:40:00.000-07:00

Historical Phoenix, AZ Homes Information and Links to Free MLS Searches: Mayor Phil Gordon to Discuss Historic Carbon Emission Reduction and Utility Preservation from Certified Emerald Green Phoenix Residence

Mayor Phil Gordon to Discuss Historic Carbon Emission Reduction and Utility Preservation from Certified Emerald Green Phoenix Residence

2010-02-01T20:03:00.002-07:00

- - FOR IMMEDIATE RELEASE - -

Mayor Gordon is committed to making Phoenix the first carbon neutral and sustainable city in America, and will discuss details of his plan during an open house event at a recently renovated Certified Emerald Green home in downtown Phoenix. Certification is by the National Association of Home Builders (NAHB.) Renovations improved the energy efficiency and reduced water use resulting in a 74-percent reduction in carbon emissions, a 60-percent reduction in annual electrical costs, and a 72-percent reduction in annual water costs.

Phoenix, Arizona (GreenStreet Development and DPR Realty, LLC) February 01, 2010 – Phoenix Mayor Phil Gordon will discuss the impact of carbon emission reduction realized through energy efficient renovations and neighborhood revitalization on Thursday, February 18th at 7:00 pm. The press conference and industry professional open house will take place at 1818 W. Turney Avenue in Phoenix, a very affordable single-family home which recently achieved the Emerald Green Certification.

This home is one of only two in the nation that have achieved the highest Green certification possible through the National Association of Home Builders (NAHB). Mayor Gordon says, "Phoenix has made significant strides toward reaching our goal of being the most sustainable city in America. This project is an incredible example of how we are truly building a Green Phoenix.”

Global Impact Begins with Local Solutions
While the U-S government and global leaders struggle to pass comprehensive climate and clean energy legislation inherited from previous administrations, Mayor Gordon is an advocate and proactive in his strong support of Green Home remodeling by Philip Beere, Founder of GreenStreet Development, who begun a series of Certified Green Home remodels along downtown Phoenix’s light rail.

In remodeling the 1818 W. Turney Avenue home, Green Street reduced the Home Energy Rating, a measure of the home's energy use, from 284 to 76. A Home Energy Rating compares a home to a specific benchmark, and the more energy efficient a home, the closer its rating is to 0.

The home's renovations also reduced its carbon footprint by 74- percent, its water usage by 72-percent and its electrical use by 60- percent.

According to the U-S Green Building Council (USGBC), “Single-family homes in the U.S. alone account for 21-percent of carbon emissions, 53-percent of U.S. electricity consumption, and 20-percent of water consumption.” Beere says, “If just a fraction of homes were remodeled to the NAHB standards, the U.S. would significantly reduce reliance on petroleum and save millions of gallons of water annually. This local Phoenix home is an example of how to begin.”

The GreenStreet remodel at 1818 W. Turney Ave. represents our commitment to improve Phoenix neighborhoods one home at a time and continue to reduce water and energy consumption of older houses. This is our effort to reduce carbon emissions and improve communities.”

Former NFL player and partner of GreenStreet Development, Don Odegard says, “GreenStreet remodels represent a manifestation of our values. We will never make top dollar on our investments. However, what we are doing has so much more value on a personal level. 1818 W. Turney Ave. represents our commitment to our values.”

Beere has teamed with local Realtor Laura Boyajian of DPR Realty, LLC to help promote awareness and education to industry professionals in the Phoenix market with the intention of raising awareness nationwide. Boyajian says, “It’s unprecedented. Green does not have to be more expensive. It is so exciting to help people save monthly and live healthier while also doing my part to help the environment. I’m seeing a strong increase in Buyers who are becoming more interested in purchasing green homes by utilizing Energy Efficient Mortgages (EEM’s) and tax breaks, especially in these challenging economic times.”

In an effort to influence policy and promote similar projects, Green Street also conducts monthly educational sessions for municipalities, contractors, builders, architects, and other green building advocates. Additional information about NAHBGreen and National Green Building certification is available at www.nahbgreen.org GreenStreet, www.greenstreetdev.com

About Laura B. DPR Realty, LLC and Philip Beere, GreenStreet Development: Laura Boyajian is a licensed Realtor with DPR Realty, LLC specializing in Historic Phoenix Homes and Green Homes. GreenStreet Development Founder, Philip Beere is recognized by The Phoenix Business Journal as one of the Valley’s Green Pioneers and is a champion of sustainability and an expert in green remodeling.

Contact:
Laura Boyajian, Licensed Realtor Representing Green Street Development
DPR Realty, LLC (602) 400-0008
http://www.HistoricCentralPhoenix.com

Philip Beere, Founder of GreenStreet Development
(602) 312-8376
http://www.greenstreetdev.com

###

Luxury condos on the road to foreclosure

2010-01-20T16:03:00.002-07:00

by Jahna Berry - Jan. 19, 2010
The Arizona Republic

Most of the units in 44 Monroe, the swank, 196-unit luxury high-rise could be headed for foreclosure. The bank has filed a notice of trustee's sale, the first step toward taking over 182 unsold condos.

The units are scheduled to be sold to the highest bidder on April 14, according to county documents. A notice of trustee's sale doesn't always end in foreclosure but it's a signal that the project has serious financial problems.

The 44 Monroe owes Corus Construction Venture, LLC $86.8 million, according to county documents. Officials at Grace Communities, the project's Scottsdale developer, declined to comment on today. The project near 1st Ave. and Monroe St. was completed in 2008.

44 Monroe's lender collapsed and was taken over last year by the FDIC, which owns a 60 percent stake in Corus Construction Venture, LLC. The rest is of the firm is owned by private equity consortium led by Starwood Capital Group.

This is the second upscale high rise in the heart of downtown Phoenix to face financial trouble in recent months. The Summit at Copper Square, a 165-unit condo complex, sought Chapter 11 protection October. The developer headed to bankruptcy court to stop its lender from foreclosing on 74 unsold units.

The Summit's bank, Scottsdale's Stearns Bank, filed a notice of trustee sale last summer.

Before the recession and the housing bust crippled the economy, Phoenix leaders hoped that affluent condo dwellers who lived in projects like 44 Monroe and the Summit would help revive downtown Phoenix.

Hanny’s Infuses Downtown Phoenix with Classic Fare in a Historic Building

2010-01-17T10:40:00.002-07:00

By Michele Laudig

Finally, something to cheer about.

In a city where preservationists have new reasons to gripe all the time — sharp mid-century homes getting razed to make way for McMansions, architecturally significant buildings being bulldozed so somebody can slap up another generic bank or strip mall — there's good news about at least one historic building. Better yet, it's right downtown.

And the icing on the cake? It's home to a new restaurant called Hanny's.

Like its stark International Style building façade, Hanny's all-day menu is streamlined, featuring just a handful of starters, pizzas, sandwiches, and salads. It's well-crafted, affordable fare that's perfect for a light lunch, an informal dinner, a happy hour snack, or a late-night nosh — not destination dining by any stretch, but considering the beautifully restored surroundings and the sheer character that this place brings to the area, it's still a Phoenix destination.

Hanny's has quite a story. It's named after businessman Vic Hanny's "Distinguished Store for Men and Women" originally located there, a place where generations of Phoenicians shopped for designer-label clothing. After the store was shuttered in the '80s, the circa 1947 Hanny's building sat vacant, occasionally getting torched by the fire department to train firefighters.

It was added to the Phoenix Historic Property Register in 2005, the same year the city negotiated with restaurateur Karl Kopp (owner of Scottsdale's AZ88, as well as spots in Milwaukee and Manhattan) to exchange it for a building he owned on Central Avenue. City officials wanted to acquire Kopp's property as part of the planned ASU Downtown Campus; Kopp was willing to bring the historic Hanny's building back to its vintage grandeur.

Three years and $5 million later, Hanny's is a well-polished modernist gem. Artist Janis Leonard — known for her cheeky, rotating installations at AZ88 — designed the spare, elegant interior, where charcoal-colored banquettes line the perimeter, chocolate leather chairs hug smooth granite-topped tables, and soft uplighting emphasizes dramatically high ceilings (high enough to have a curvy mezzanine overlooking the dining room). Everything gleams, from terrazzo floors to the bar in the middle of the space, where a bright red meat slicer sits like a candy apple behind glass.

Between the working elevator and the stairwell, Leonard has created a mini-funhouse in an empty elevator shaft, utilizing mirrors, lighting, and a see-through floor to give curious patrons something to talk about, whether they've had cocktails or not.

Upstairs, there's secluded seating along the mezzanine, and something else to kick-start conversation: the restrooms. (Not a surprise, since AZ88 has trippy toilets, too.) Usually, I don't care to comment on a restaurant's facilities, but so far, there hasn't been a single time when I've visited Hanny's and didn't hear at least one remark about them.

"Did you see the bathrooms? Oh, you have to go check out the bathrooms!"

It's that funhouse thing again — there's no signage leading you to them, you just find your way into a surreal white room with mirrors and pink lighting. At first, you'll think you're not supposed to be there, but you'll know you're in the right place when you notice the outlines of doors without handles. Just push.

Meanwhile, there's nothing confusing about the food here, a straightforward assortment of Mediterranean-inspired dishes with a few quirky flourishes. For example, instead of a side of French fries, sandwiches came with a pile of skinny, crispy fried onion strings dusted with Parmesan cheese. It was a nice twist, and just as easy to gobble up as fries.

And refreshingly, the bruschetta was not the predictable tomato-and-basil-topped version served by so many restaurants. Instead, it was geared toward olive-lovers, with chopped green and Kalamata olives, cherry tomatoes, and fresh basil tossed in lemon juice and olive oil. Red pepper flakes gave it a spicy kick.

Somebody in the kitchen really likes those red pepper flakes, which is fine with me. One of my friends speculated that the slight heat makes you thirsty for more alcohol, and I think there's something to that. Anyway, the spiciness definitely enhanced the cauliflower Calabrese appetizer, which combined grilled cauliflower, diced red and green bell pepper, mushrooms, onion, and more fried onion strings on top. It also added a tasty dimension to the cheese-smothered Blanco pizza, dotted with tomatoes and basil.

Hanny's "Roman-style" pizzas, baked in a 500-degree stone oven, satisfied a different kind of craving than most pizzas I've had, and made a good sharable snack as much as an individual serving. Rather than sinking my teeth into doughy crust, I nibbled on a crispy, ultra-thin crust that had a cracker-like appeal. It seemed to emphasize the toppings more — the sweetness of the San Marzano tomato sauce on the Margherita, the gooeyness of the cheese on the Blanco. My favorite was laden with prosciutto, tomato sauce, mozzarella, shaved Parmesan, and fresh arugula.

Salads were also huge — entrée-sized, and then some. The chopped salad was presented with individual piles of red onion, tomatoes, artichoke hearts, 'shrooms, avocado, hearts of palm, and hardboiled egg next to a heap of greens with shaved Parmesan and Dijon-balsamic vinaigrette, while the beet salad featured a mountain of arugula speckled with goat cheese, pine nuts, and red onion, surrounded by overlapping slices of red and yellow beets.

What can I call the sandwiches except decadent? Served on soft, flour-y Italian rolls, they were a real handful, with generous fillings. Salty slices of grilled prime rib were lusciously combined with a fried egg, mayo, and Nueske's bacon, with some arugula to brighten it up. The Panino had a just-thick-enough layer of prosciutto, salami, and Fontina, also with arugula. And the fantastic pork Calabrese sandwich combined hot, juicy pork loin with grilled onions, peppers, mushrooms, and, you guessed it, red pepper flakes.

The trendy item on the dessert menu was doughnuts with chocolate or strawberry sauce. Sadly, they didn't thrill me at all. Unevenly shaped, more like fritters than doughnuts, they were greasy and strangely lacking in flavor — the only sweetness came from the sauces and a sprinkle of powdered sugar. Silky chocolate wafer cake was the better choice, especially since it was teamed with a snowball-size scoop of Häagen-Dazs vanilla.

And I can't forget to mention the cocktails, because Hanny's is as much a watering hole as it is a restaurant. From the slurp-worthy Manhattan and refreshing Pimm's Cup to the delicious French martini, served in a petite glass, the drinks were just like Hanny's itself: classic.

November Home Sales Soar 7.4%

2009-12-28T16:22:00.002-07:00

By ALAN ZIBEL ~ 12.22.09

WASHINGTON ~ Home resales surged to the highest level in nearly three years, reflecting an extraordinary level of federal support that has pulled the housing market back from the worst downturn since the Great Depression.

The National Association of Realtors says sales rose 7.4 percent to a seasonally adjusted annual rate of 6.54 million in November, from a downwardly revised pace of 6.09 million in October.

Sales were 44% above last year's levels, a record jump. They had been expected to rise to an annual pace of 6.25 million, according to economists surveyed by Thomson Reuters.

The median sales price was $172,600, down 4.3% from a year earlier, and up 0.2% from October.

To purchase a home, call Laura B. at DPR Realty, LLC at 602.400.008.

Forbes Magazine rates Encanto Park among the nation's best city parks

2009-12-08T20:23:00.002-07:00

Dec. 8, 2009

Listing it alongside New York City’s Central Park, San Francisco’s Golden Gate Park and Boston Commons, Forbes Magazine has listed Phoenix’s Encanto Park as one of the nation’s 12 best city parks.

In the online article (http://www.forbes.com/2009/11/18/best-city-parks-lifestyle-travel-central-park.html) Forbes recognizes Encanto as an “"old-fashioned” park with charming attractions including boat rentals and an amusement park.

Encanto Park’s 65 acres, located in the heart of central Phoenix, boasts dozens of massive trees of numerous species. The 27 holes of the adjacent Encanto Golf Course along with the park offer residents more than 200 total acres of green space right in Phoenix’s urban core. Its fishing lagoons, stocked by Arizona Game & Fish, attract thousands of anglers each year. Visitors can rent paddle boats to set out on the park’s waterways. The park also features a sports complex with lighted basketball, handball, volleyball, tennis and racquetball courts; lighted picnic areas and grills; an exercise course; a playground; a pool; a recreation building; and restrooms. The Park also is home to Enchanted Island Amusement Park, with a host of rides for children ages 2 to 10 years old.

Encanto Park was built between 1935 and 1938 in what was then the northern part of the city. It has provided outdoor recreation for generations of Phoenicians from throughout the city of Phoenix.

The land was purchased, designed and built jointly by the federal Works Progress Administration and the city of Phoenix. For several decades in and around the 1950's, a band shell at the park hosted concerts and cultural events that would attract thousands of spectators. The park also hosted fishing derbies at its signature lagoon that attracted hundreds of area youth. Phoenix voters approved numerous bond issues over the years to expand and improve the park.*

Information is available online in the Parks link of the Phoenix Parks and Recreation Department Web site at phoenix.gov/parks or by calling 602-261-8991.

*Historical information taken from The Phoenix Area’s Parks and Preserves; Hartz, Donna and George; 2007; Arcadia Publishing.

45,000-plus Valley properties remain in foreclosure

2009-06-22T20:54:00.002-07:00

By J. Craig Anderson - Jun. 23, 2009
The Arizona Republic

Thomas Kelly explains the foreclosure process to those outside the banking industry by likening it to a tube.

"You get put in the tube when you're 90 days late, and you might come out the other end of the tube six months later," said Kelly, spokesman for JPMorgan Chase & Co.

What Kelly's analogy doesn't explain is how, for the past three years, thousands more Phoenix-area property owners have been entering the tube each month than coming out of it.

At present, the system is backed up with more than 45,000 "pending" foreclosures, up from about 2,300 in June 2006, according to a historical analysis by the Information Market, a Phoenix research firm.

Most experts expect pending foreclosures to increase even more before leveling off sometime within the next 12 months.

There has been much speculation among real-estate professionals about reasons for the apparent backlog of houses and condominiums headed toward foreclosure.

There's a widespread belief that banks are purposely limiting the flow of foreclosure homes onto the market, which helps prevent home prices from sliding even further but could prolong the market's long-term recovery.

Likewise, some say lenders are dragging their heels on repossessing and selling extravagant homes, and to a lesser extent commercial properties, including raw land, because the demand for big-ticket real estate is too low and because selling off large assets at sharply reduced prices could cause some smaller banks to fail.

Lenders have been relatively quiet about their strategies for working through pending foreclosures, which has only fueled various theories.

But Kelly said such theories give the banks too much credit.

"We've got such an enormous portfolio of homes to deal with, we don't have time to say, 'Let's do this with this one, and let's do that with that one,'" he said.

Monthly foreclosure totals have risen and fallen a number of times since the housing market peaked in 2006, although the general trend has been upward.

However, the number of pending foreclosures, properties on notice for a trustee sale but not yet sold, has increased steadily without exception since April 2006. In the past year, it has climbed by anywhere from 500 to 5,000 properties each month.

As of Friday, there were 45,709 total pending foreclosures in Maricopa County, according to the Information Market. Those are in addition to the roughly 73,000 foreclosures completed during the past three years.

Also as of Friday, the county was on track to reach 5,000 foreclosures by the end of this month, which would be the second-highest monthly total on record, having reached a high of 5,240 in February.

Even if 5,000 properties complete the foreclosure process this month, an even greater number will enter it.

As of Friday, lenders had served pre-foreclosure notices on 5,700 additional properties, a net increase of at least 700 in pending transactions for the month.

Actual foreclosures in the past three years total about 73,000, according to the data.

Some Valley foreclosures may be taking longer than the usual 91 days from notice to sale because the borrowers are attempting to work out a loan-modification or "short sale" agreement with the lender.

In Maricopa County, short sales have increased in the past year but still account for less than 5 percent of property sales.

Modifications help

Colleen Gunderson, Tempe-based Century 21 All Stars owner and designated broker, believes banks have intentionally slowed the release of foreclosure properties onto the market at the behest of the federal government, which provided many banks with bailout funds.

"There is a process in place to sort of warehouse these properties until a time when it's more beneficial to place them on the market," she said.

It's the right approach, Gunderson added, because dumping 45,000 foreclosed-on properties onto the market all at once would deliver the knockout punch to a real-estate economy already leaning against the ropes.

New, standardized loan-modification guidelines issued by the Obama administration in March appear to be doing a better job of keeping some borrowers out of foreclosure than modifications made in 2008, according to two federal bank regulators, but it's still too early to know for sure.

More than half of loan modifications negotiated before the Treasury Department launched its $75 million Making Home Affordable program in early March were back in default within six months, according to a study conducted by the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.

Those same officials said in May that the rate of re-default fell by about 12 percent among those borrowers whose monthly payments were reduced.

However, the number of loans headed toward foreclosure has risen significantly despite better modifications.

In March, the Investigative Reporting Workshop at American University in Washington, D.C., conducted a study of the nation's roughly 8,000 banks with online-news service msnbc.com and reported finding a 150 percent increase in loans at risk of foreclosure compared with a year earlier.

Kelly said job losses are one likely reason for the continued high volume of foreclosures, in addition to people walking away from mortgages even though the payments are affordable because they owe far more than the home is worth.

Commercial is next

Although most Valley foreclosures thus far have involved residential property, commercial-property owners and lenders are preparing for apartment, office and retail foreclosures to rise sky-high in the coming months.

Selling those properties back to the market could take years in some cases, analysts said, because there is little interest in new office and retail space, even at the low-rent end.

Commercial real-estate broker Craig Henig of Grubb & Ellis in Phoenix said banks aren't in any rush to foreclose on commercial real estate because it forces the lender to adjust the property's book value to today's considerably lower market price.

Significant write-downs on a few multimillion-dollar commercial loans could put a small or financially stressed bank out of business, he said.

"I don't know how they could sustain the amount of markdowns," Henig said.

However, Kelly said the holding costs associated with thousands of foreclosed-on properties outweigh any benefit the bank might realize from waiting to sell them.

He also noted that the value of commercial real estate and high-end homes is still on the decline, which means waiting is likely to cost lenders even more.

"The goal is to get that asset back earning money for you," he said.

Buy a foreclosure with NO money down. 100% financing available on select homes.

Amid Housing Bust, Phoenix Begins a New Frenzy

2009-05-27T20:23:00.002-07:00

Amid Housing Bust, Phoenix Begins a New Frenzy
By DAVID STREITFELD ~ The Wall Street Journal ~ May 24, 2009

PHOENIX — Every weekday morning, Lou Jarvis drives the sun-baked suburban streets looking for investment gold: a family that will lose its house in a foreclosure auction within a few hours.

If the property looks promising, Mr. Jarvis puts in a bid on behalf of any of his dozens of clients eager to become landlords. When he wins, he offers to let the family stay in the house and rent for much less than their mortgage payment.

With this sweltering desert city enduring one of the largest tumbles in housing prices for any urban area since the Depression, there is an unrelenting stream of foreclosures to choose from. On some days, hundreds are offered for sale at the auctions that take place on the plaza in front of the county courthouse.

There is also a large supply of foreclosed families who can no longer qualify for a loan. And that is prompting a flood of investors like Mr. Jarvis, who wants to turn as many of these people as possible into rent-paying tenants in the houses they used to own.

Real estate got just about everyone into trouble in Phoenix, and the thinking seems to be that real estate is going to get everyone out.

The low end of the real estate market here — and in some equally hard-hit places like inland California and coastal Florida — is becoming as wild as anything during the boom.

One real estate agent was showing a foreclosed house to a prospective client when a passer-by saw the open door, came in and snapped up the property. Another agent says she was having the lock changed on a bank-owned home when a man happened by, found out from the locksmith that it was available, and immediately bought it. Bidding wars are routine.

Absentee buyers, who can be either investors or individuals purchasing a vacation property, bought nearly 4 of every 10 homes sold in the Phoenix metropolitan area in April, according to the research firm MDA DataQuick. That is up 50 percent since late 2007, and is nearly the same ratio as at the 2005 peak.

Once again, just about everybody seems to be buying as many houses as they can, positive it will make them rich — or at least allow them to recoup some of their losses.

“I bought too high a few years ago,” said Jason Fischbeck, an entrepreneur who lives across the street from Mr. Jarvis and is one of his clients. “It cost $225,000. Now it’s worth $110,000. So I just paid $80,000 cash for another. ”

Mr. Jarvis, 47, the former co-owner of a wood moulding company that thrived in the boom and faltered in the crunch, also made some mistakes. Last spring, he contracted for three new homes in the distant suburb of Copper Basin, convinced that real estate was bottoming.

He was wrong. He managed to get out of two of the contracts but had to buy one of the houses, which is now substantially under water.

“You need to buy when there’s blood in the streets,” he said with a shrug. “Even if it’s your own blood.”

In January, Mr. Jarvis began working as director of investor relations for Brewer Caldwell, a property management firm that had been approached by the CBI Group, a real estate fund based in Calgary, Alberta. In its first foray into the American market, CBI is buying 175 rental houses in Phoenix.

One of them belonged to Mary Lou and Jorge Aguilar, who purchased it new for $111,000 in 1999. Three years ago, after a series of financial difficulties, they refinanced for $185,000 for reasons they no longer understand. “Our lender talked a pretty picture,” Mrs. Aguilar said bitterly.

When the couple’s mortgage payment adjusted to $1,242 a month, they fell behind and ended up in foreclosure. They now pay $1,014 in rent, which they say is bearable.

Still, their feelings are mixed. “It’s not our house anymore; it’s someone else’s,” said Mrs. Aguilar, who works for the state welfare department.

For CBI, the deal is sweet. At that rent, it would recoup the $52,000 it paid for the house in about five years. “This type of deal is absolutely not available in Canada,” said Jarrett Zielinski, a CBI executive. “No city here has fallen by 50 percent, the way Phoenix has.”

The investment group is opening a new fund this week to buy another 160 Phoenix homes.

As CBI continues to buy, it is planning investing seminars for its tenants. “Our goal is to be able to sell them their house back,” Mr. Zielinski said. “Wouldn’t that complete the circle?”

First up for Mr. Jarvis’s inspection on a recent morning is a three-bedroom on a cul-de-sac in the suburb of Gilbert. A rival investment crew is already there. “You don’t want this one,” one fellow says. “It’s no good.” Mr. Jarvis just laughs.

Once they are inside, the reason he is trying to send Mr. Jarvis away becomes clear. The house, built in 1991, is clean and well proportioned, with an opening bid of $76,000 — $200,000 less than what it sold for three years ago.

Not every property gets his nod. He considers an older condominium but deems it unlikely to appreciate. A three-bedroom seems promising until he sees the power lines looming just feet from the back fence.

In the end, he makes just one bid this day, for the three-bedroom he saw first. He offers $110,000, which is not enough. At the courthouse, it goes for $114,000. Every week, the foreclosure market is more competitive.

As the day’s auctions wind down, Mr. Jarvis goes back to the office to meet with a group that wants to put $5 million into the Phoenix housing market. A few miles away, the owner of that house with the monstrous power lines, Robert Corr, is being told his house was sold and he has five days to vacate.

Mr. Corr smiled when he heard the news, happy to be the latest of the 78,738 foreclosures in Phoenix since January 2005. He had already rented a van to take him and his family back to Alabama, where they would buy a mobile home and live on 10 acres of land.

Brewer Caldwell has bought about 125 houses this year for its clients. Only a quarter had owners who were living there already and willing to stay on as tenants. Filling up the rest, and all the other houses the company intends to buy, will depend on a steady supply of people who cannot afford to buy for themselves.

“If Phoenix loses population,” Mr. Jarvis says, “then buying houses here is a bad bet.”

As Mr. Jarvis scouts for houses, he sometimes finds a familiar one. In February, he saw a home that one of his brothers bought from a builder in 2005, camping out overnight for the opportunity. With its value now shrunk, the brother was letting it go to foreclosure.

Mr. Jarvis’s daughter Jade also bought a house at the market’s peak — in her case to live in. The other day she asked for advice: should she keep paying the mortgage on something that had declined in value by 60 percent? His conclusion: “probably not.”

“Am I teaching my kids right by letting them walk away from something they made a commitment to?” Mr. Jarvis wonders.

Pending Home Sales Jump 3.2%

2009-05-04T09:01:00.002-07:00

Buyers defy expectations with an increase in sales contracts signed during March.

By Les Christie, CNNMoney.com staff writer
Last Updated: May 4, 2009
NEW YORK (CNNMoney.com) -- Is the housing meltdown ending?

Pending home sales rose in March for the second consecutive month and are up year over year. The Pending Home Sales Index from the National Association of Realtors showed a 3.2% gain to 84.6 from February, when it was 82. The index stands 1.6% higher than a year ago.

The consensus forecast of industry experts polled by Briefing.com had predicted no increase in the index.

It may still take a while before the market gains enough momentum to firmly state that the downturn has been reversed, according to Lawrence Yun, NAR's chief economist. And, the upturn may have been boosted by the first-time homebuyers tax credit, a temporary measure that will lapse in December.

"We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around," said Yun. "This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a down payment."

The index is understood to be a forward indicator of home sales trends since it measures contracts signed, not completed sales. The up-tick may indicate that home prices have fallen low enough for buyers to get off the fence.

Feeling for the bottom

Yun is not calling a bottom yet, however, because the index is still at a relatively low level. Instead, he's looking toward the summer selling season to determine what direction the market will take. Plus, he would like the number of homes on the market to drop to a more normal level of six to seven months of supply.

"If inventory goes down - it's at just under 10 months now - to below eight months, that would mean we're on the way to a sustainable recovery," Yun said.

Anecdotal evidence indicates that trend may be happening. Realtors and other industry insiders are seeing rising open house attendance and multiple bids on some particularly desirable properties. Plus, pricing has become sharper, according to Sherry Chris, the CEO of Better Homes and Gardens Real Estate.

"Overpricing seems to be ending," she said. "Properties are coming onto the market and selling quickly."

And buyers are feeling a little more urgency, she added. In many markets, buyers have not felt any pressure to make an offer. "They said to themselves, 'I don't have to act immediately. It will still be on the market two weeks from now,'" she said.

Today, buyers are more likely to bid because they perceive the market as at or near its bottom. An April Gallup Poll reported that 71% of Americans thought it was a good time to buy a house.

They don't, however, believe there will be price increases soon; three of four buyers think prices will stabilize or even decline in their areas over the next 12 months, according to Gallup.

Pat Newport, a real estate analyst for IHS Global Insight, is putting less emphasis on pending home sales than he once did for his housing market analyses. There has been a disconnect lately, he said, between the number of properties going into contract (pending home sales) and the number that actually close (existing home sales).

He speculates that this is because buyers are making offers and signing contracts but, because of financing problems, many deals are falling through.

Regional differences

The South saw the largest gain of any region, with pending home sales jumping 8.5%. Pending sales are 7.7% higher there compared with a year ago.

The Midwest gained 3.9% from February and 1.7% year-over-year. Northeast sales fell 5.7% and are off 24.1% compared with March 2008. The West dropped 1% for the month but are up 8.2% year-over-year.

Low home prices continued to help to drive sales, although NAR's affordability index actually fell 2.3% from February, when it hit a historic high. This index is based on family income, home prices and mortgage rates.

"Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment," said NAR President Charles McMillan, in a prepared statement. "For buyers who've been on the sidelines and have good jobs, the market has never looked more favorable.

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Expert: Phoenix, AZ Housing Nearing Bottom

2009-04-14T20:35:00.003-07:00

Expert: Housing nearing low
By Marjon Rostami The Arizona Republic 03.29.09

The Valley housing market may be nearing its bottom, analyst RL Brown believes. In what he termed "a doomsday scenario," Brown said it's possible a second tsunami similar to the housing meltdown that started in 2006 could devastate the market in the next few years, bringing even more serious troubles than the current downturn.

But that won't happen if the federal government continues along the path it's undertaken, he said.

The housing economist and analyst, publisher of the "Phoenix Housing Market Letter," spoke Thursday night at Trilogy at Vistancia master-planned community. Residents there said they live in a bubble, far removed from foreclosures that are making housing values plummet.

"Your neighborhoods out here are a piece of cake," Brown said. "It's the neighborhoods in some communities that are devastated."

However disconnected from the damage, Brown reminded residents that foreclosures have a rippling effect and urged attendees to take care of their neighbors to avoid lowering property values across the board.

In February, eight foreclosed houses were sold in Vistancia. Prices ranged from $170,000 to $350,000.

"I guarantee you that those are lower prices than what you paid," Brown said. "Foreclosed prices are setting the prices on your street, and you need to be cognizant of that."

A significant part of the problem is lack of consumer confidence, which Brown said could take years to improve.

He predicted that the housing market is near the bottom, saying consumer confidence has shown signs of improvement over the past three weeks.

Jeff Mitchell, a Trilogy resident, was a home builder in Oregon for 30 years before his company "pretty much self-terminated" last year.

"People miss the impact here. If a property here has been foreclosed, you couldn't tell by driving past it," he said. "Feeling like we've really hit a bottom here is a really good sign that will help stimulate deals. Consumers need to stop sitting on their wallet and being so conservative. This is the time to buy."

Brown told the crowd not to lose sight of the fact that Arizona is in an enviable position.
"It's so easy to believe some of the stuff that is being said by economists who have never been west of the Hudson ," Brown said. "This place will continue to be one of the best housing markets in the world.

"Arizona will flourish once again."

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Reaping repo rewards - BUY FORECLOSURES WITH NO MONEY DOWN. 100% Financing is NOT Gone

2009-01-01T14:47:00.002-07:00

Reaping repo rewards

Want to brave the wild world of foreclosures? Follow this advice.
By David Whitford, editor at large - December 24, 2008

NEW YORK (Fortune) - As home prices continue to skid and foreclosure rates soar (up a further 38% since the third quarter of 2007), some investors are on the lookout for outrageous bargains. Think you're ready to jump in?

Consider paying cash
Some transactions require that you close within days. That's not enough time to get a bank loan. A so-called hard-money loan is an option, but you'll pay 15% plus points, and you can't count on refinancing right away.

Perform due diligence
Foreclosures are typically sold as is, where is, but you can inspect the property before you bid. Even after you put down a deposit, you can change your mind and get your money back. Private auctions typically offer a bigger window for deliberation than public auctions on the courthouse steps.

Hire a licensed appraiser
You don't care how much the lender has discounted the note; all that matters is how much the house is really worth. Only an appraiser can tell you that. Could cost you a few hundred dollars to find out. Could save you a few hundred thousand dollars once you know.

Buy short
Instead of foreclosure, buy what's known as a short sale - a negotiated transaction involving you, the bank, and the homeowner prior to formal foreclosure. You'll have more time to arrange financing - and since the lender has fewer costs to recover, you may get a better price. Check public NOD (notice of default) listings for prospects.

And probably the best option yet, buy a foreclosed home through a private lender who offers 100% financing wth great terms. You don't have to go through all the formal bank processes nd the transaction is ten times more simple than going through a conventional bank.

Parts of this article are contributed by Laura Boyajian.

Refi Madness & Buying a House with NO MONEY DOWN in Today's Market

2009-01-01T14:36:00.002-07:00

Refi madness - Falling interest rates are leading to a rush to get cheaper mortgages. Should you join in?

By Les Christie, CNNMoney.com staff writer ~ December 26, 2008

NEW YORK (CNNMoney.com) - Falling interest rates are fueling a mortgage refinance frenzy as homeowners rush to reduce their housing payments.

The average rate for a 30-year, fixed mortgage dropped to 5.08% last week, according to the Mortgage Bankers Association, more than a full point lower than just a month ago.

Mortgage applications were up a whopping 48% last week, according to the MBA and more than 80% were from homeowners looking to lower housing costs.

"It's snowing loans," said Steve Habetz, a Connecticut mortgage broker, "and they're all refis."

Among those were Elizabeth Mayer and Michael Keohane, who bought their Manhattan condo just a little over a year ago, financing $220,000 of the purchase price with a 30-year, fixed rate loan of 6.5%. That was affordable, with monthly payments of less than $1,400. But their new 5.25% loan will lower their payment to about $1,215, saving about $175 a month.

"It was a nice holiday gift," said Mayer.

With savings like that, it's no wonder that homeowners are coming out of the woodwork. And mortgage brokers are beating the drums too, advising their clients to let the good times roll.

Mayer said her mortgage broker had kept her informed of interest rate declines ever since she originally purchased her home. "He's been encouraging whenever opportunities arose," she said. "We missed one opportunity last spring when we just weren't able to act on it."

The real estate broker made sure they didn't miss this chance. "He e-mailed me [about it] from South Africa and called when he got back," said Mayer.

Who should refi...
Anyone with high adjustable-rate loans. Folks in this group should try to get into a low fixed rate if they can. Not only will they lower their payments immediately but it would also eliminate the possibility of future increases.

Those who would lower their rate by a percentage point or more. Borrowers who already have a reasonable fixed rate shouldn't jump into a new loan every time rates inch down, according to Orawin Velz, an economist for the Mortgage Bankers Association.

"You should have at least a percentage point difference before you even think about it," Velz said. "If you have a 6.5% loan right now, it would be a great time to refi."

Waiting for a substantial rate decrease makes sense because getting a new mortgage incurs some expenses. There are the costs of a new appraisal and origination and application fees. Plus, a title search and title insurance are usually required.

All those costs, which can add up to $2,000 or $3,000 or more for a typical $200,000 loan, are often rolled back into the mortgage, increasing the principal upon which the interest rates are applied. If that goes up so much that it offsets the interest rate drop, it doesn't make sense to refi.

Those who are planning to stay in their homes for a while. The increased balances usually take a year or two to be wiped out by lower monthly payments, so anyone planning to sell the home during the next few years probably should not refinance, unless the difference in interest rates is very substantial.

The actual rate borrowers get depends, just as with purchase mortgages, on credit scores, income and assets and the value of the home.

"If you have a high credit score and your equity is good, it's like a vanilla cream puff," said Velz. "You're going to get a great rate."

Borrowers with significant equity in their homes. Many homeowners have had much of their home values erased in the post-bubble bust, eliminating much or all of their home equity - the difference between the value of the home and the amount owed on the mortgage.

If a refi borrower's home equity has fallen below 20% of the total appraised home value, the borrower will likely have to purchase private mortgage insurance. The insurance adds a point or two to the monthly mortgage costs, which turns a 5% loan into a 6% or 7% loan, erasing any advantage of refinancing.

"That's the biggest hurdle for refinancing right now," said Velz.

Borrowers who don't think rates will decline much further. Everyone considering refis has to decide whether to wait for interest rates to go even lower, which the Mortgage Bankers Association has been forecasting.

That's only a prediction, though, not a certainty. Rates could turn higher instead.

Borrowers must weigh the advantages of gambling on rates turning around or locking in savings at the present very low rates.

Buy a foreclosed home with no money down, even in today's market. 100% financing isn't to impossible to come by if you go with private financing.

Home Buyers Turn to USDA for Mortgages

2008-12-17T09:29:00.000-07:00

Home Buyers Turn to USDA for Mortgages
Nick Timiraos by Tuesday December 16, 2008, 7:14 pm

Tightened lending standards are leaving builders and real-estate agents scrambling for new ways to move cash-strapped buyers into homes. One increasingly popular option: an obscure home-loan program offered by the U.S. Department of Agriculture.

Created in 1991 as a way to boost homeownership in rural areas, the program is being tapped by home buyers in overbuilt exurbs who are attracted to the no-money-down terms.

When Erick Moore first read about the USDA's Rural Development Guaranteed Loan program, he says he imagined it would be "restricted to some little farmhouse." Instead, the 33-year-old computer programmer moved last month into a four-bedroom, three-bath home in Fuquay-Varina, N.C., 17 miles outside Raleigh. The house sits on nearly one acre and features a brick facade, 10-foot ceilings and hardwood floors.

"I couldn't believe it until we closed," says Mr. Moore, who paid only $1,200 out of pocket to move into the $228,000 home. The seller contributed $5,000 in closing costs, and Mr. Moore rolled the 2% fee charged by the USDA into the loan. Mr. Moore, who owned a home in St. Louis before he relocated to the Raleigh area last year, says a 60% drop in his stock portfolio made it difficult to come up with a down payment. He directed his Realtor to show him only homes that were eligible for the USDA program.

Fueled by buyers like Mr. Moore, volume has nearly doubled for these USDA-backed loans. The department insured $7 billion in loans during the 2008 fiscal year, which ended Sept. 30, up from $3.6 billion the previous year. In October and November, the agency has already insured some $1.7 billion in loans.

That's relatively small when compared with the volume of business handled by the Federal Housing Administration -- which guaranteed $102 billion in new loans during fiscal 2008. But interest in the USDA's development lending program is growing rapidly in response to the nation's credit crunch and as most private lenders have stopped offering loans with no money down.

To be eligible for a USDA-backed loan, a borrower can't have income that exceeds 115% of the median county income, and the loans are restricted to areas with lower population density -- generally towns of no more than 25,000 residents. So while home buyers in big cities aren't eligible for the loans, residents of many of America's fastest-growing towns and exurbs do qualify. The loans that come through the program are made by private lenders, then insured by the government and sold to Ginnie Mae, a federal agency that sells mortgages to investors.

Home builders, many of which have overbuilt properties in these areas, are eagerly promoting the program to sell excess inventory. The USDA program accounted for 40%-50% of sales in October and November for Scottsdale, Ariz.-based home builder , says John Bargnesi, vice president for sales. "It's one of our main tools right now."

Meritage is advertising a "$500 move in" program to clear inventory in new exurban developments, including the Buckeye and Queen Creek subdivisions outside Phoenix that have been hard hit by foreclosures and falling prices. "If a builder is in one of these geographical areas, they certainly are using it," says Mr. Bargnesi. "We're all in tune with it now."

D.R. Horton Inc., the nation's largest home builder by number of houses built, is promoting the program in sales pitches for a number of new developments outside Austin, Texas. One is named Parkside Condos, a development of 144 new two- and three-bedroom condos priced at $130,000 in Pflugerville. Kastera Homes LLC, a home builder based in Boise, Idaho, is offering to pay closing costs for buyers who use a USDA loan. D.R. Horton and Kastera didn't return calls seeking comment.

The success of the USDA program comes at a time when easy home financing is getting much harder to find. Private lenders have stopped offering loans that require no money down, amid worries that borrowers without equity are more likely to let their homes fall into foreclosure. In October, Congress terminated a popular program that allowed sellers to fund down-payment "gifts" for new home loans backed by the FHA. Next year, the FHA will require a minimum 3.5% down payment on all new loans, up from 3%, and private lenders often require a minimum 5% down payment.

Such restrictions do not apply to loans backed by the USDA, which is best known as the guardian of the nation's food supply. In fact, some buyers can finance 102% of the home price, factoring in a 2% USDA insurance fee meant to cover loan losses. The loans also don't require borrowers to pay for monthly mortgage insurance. That means that USDA loans typically carry lower monthly payments than FHA loans, even in cases when the size of the loan is larger.

Sue Botelho of Northstar Mortgage Group in Destin, Fla., is promoting the USDA loans as part of a "move in with a penny down" program. "The down-payment assistance has gone away. Subprime has gone away," she says. "So now mortgage lenders are pretty aggressive in terms of making people aware of this USDA program."

One of Ms. Botelho's clients, 46-year-old insurance adjustor Alan Sammons, paid nothing to move into a new $270,000 home in the Florida Panhandle in June. He had spent more than a year trying to find a reasonable loan before beginning construction on a custom four-bedroom, 3½-bathroom home in his Crestview, Fla., subdivision, which includes a community swimming pool and lighted tennis courts.

"They're still building homes in here," Mr. Sammons says.

Julie Chapman, a Brunswick, Ga., real-estate agent, says she is listing more properties eligible for the USDA loans -- including homes in the Plantation at Golden Isles, a new subdivision adjacent to a golf course. Many of the properties are selling preconstruction. "That's something you don't see anymore in this market," she says.

New housing developments built on open land that were among the first to experience the downturn could now benefit from the USDA program. "They're showing some signs of recovering," says Michael Orr, a housing analyst based in Mesa, Ariz.

Some question the USDA's practice of allowing no-money-down purchases. "If you have to get a 102% loan, you probably shouldn't be buying a house," says U.S. Sen. Christopher Bond (R., Mo.), who adds that he supports the intent of the programs because it has traditionally been "very difficult" for rural borrowers to buy homes.

USDA officials, for their part, say that concerns about the program's 100% financing aren't warranted because the department has a strong track record and because rural areas are less prone to big increases in home prices. "We guarantee in a very controlled environment," says Philip Stetson, a USDA administrator for the lending program. Because its average loan amount is just $120,000, he says that the program is less susceptible to large-scale losses.

USDA- and FHA-backed loans aren't prone to some of the risks that faced subprime loans because the government-insurance programs offer only fixed loans and require income verification. "We have not seen any direct evidence at this point that 100% financing is leading to greater losses," Mr. Stetson says.

The default rate on USDA loans is slightly better than the rate for FHA-backed loans. Some 11.35% of USDA loans were delinquent in 2008, while 1.4% went into foreclosure, according to the department's statistics. Meanwhile, FHA loans had a 13.6% delinquency rate, while 2.3% went into foreclosure. That compares to a 4.3% delinquency rate and 1.6% foreclosure rate on prime loans, and a 20.0% delinquency rate and 12.9% foreclosure rate on subprime loans, according to the Mortgage Bankers Association.

Unlike the FHA, the USDA programs rely on a fixed appropriation from Congress, which totaled $4.1 billion in the 2008 fiscal year, and new loans can't be made once that allocation is exhausted. The program was able to make nearly $7 billion in loans this year because it received additional funding from other department sources.

But heavy demand for the loans has administrators asking for more money. Officials say that the program will run out of money next month, even though it has been funded through March. "Up until only two years ago, we weren't even using the full amount," says Mr. Stetson. "It has been rather incredible at how it has taken off."

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Car, home buyers could benefit from Fed rate cut

2008-12-17T09:19:00.000-07:00

Car, home buyers could benefit from Fed rate cut
AP News Wire 12/16/2008

WASHINGTON – Consumers trying to buy a house or finance a car loan could be the big winners as a result of the Federal Reserve's decision to slash its target interest rate to nearly zero and take other steps to battle the financial crisis and worsening recession.

But analysts caution that any upturn in the economy is still months away.

The Fed on Tuesday announced that it was reducing its target for the federal funds rate to between zero and 0.25 percent, down from 1 percent, a level that was already the lowest target rate in a half century.

And the central bank pledged to use "all available tools" to fight the current downturn. It said it was likely that rates would be kept at "exceptionally low levels" for some time to come.

"The Fed has taken some very historic steps and for the first time since this crisis began, they have gotten ahead of expectations instead of trailing behind them," said Mark Zandi, chief economist at Moody's Economy.com.

The Fed's announcement sparked a big rally Tuesday on Wall Street, with the Dow Jones industrial average jumping 360 points, or 4 percent, as investors were pleasantly surprised by the Fed's resolve to aggressively attack the country's economic woes.

In Asia, markets climbed higher Wednesday. Japan's Nikkei 225 stock average rose 44.50 points, or 0.5 percent, to 8,612.52 after initially rising 1.1 percent, and Hong Kong's Hang Seng Index rose 2.2 percent to 15,460.52.

Meanwhile, the Commerce Department on Wednesday reported that the deficit in the broadest measure of American trade fell more than expected in the third quarter as an export boom helped offset an increase in oil imports.

The current account trade deficit, which represents the amount of money the U.S. is borrowing from foreigners, fell by 3.7 percent to $174.1 billion in the July-September quarter. That was a better showing than economists expected, and the deficit is likely to continue falling as the U.S. recession lowers demand for foreign goods.

Economists cautioned that even with the Fed's bold moves it will take months for the economy to stabilize given that it is confronting the worst financial crisis since the Great Depression and a yearlong recession that is already the longest in a quarter-century.

The news on the economy is expected to get worse before it gets better. Businesses, which have already cut nearly 2 million jobs since January, keep laying off workers in the face of slumping demand.

The government reported Tuesday before the Fed rate announcement that home builders slashed production in November by 18.9 percent, the biggest drop in nearly a quarter century, pushing activity down to a record low annual rate of 625,000 units as the woes in housing, where the current economic troubles began, showed no signs of abating.

Economists were optimistic that the central bank's moves Tuesday to cut interest rates and pledge other efforts to unfreeze frozen credit markets will translate into significantly lower interest rates for consumers.

Commercial banks responded immediately to the Fed announcement by cutting their prime lending rate, the benchmark rate for millions of consumer and business loans, by three-fourths of a percentage point to 3.25 percent, pushing it to the lowest point in more than a half century.

Home mortgages, rates on consumer credit cards, auto loans and student loans were also expected to decline in the weeks ahead based on the Fed's commitment to use "all available tools" to make credit more available.

The Fed in the weeks since the credit crisis struck with force in September has rolled out a number of new programs to greatly expand its own lending programs, promising to provide up to $600 billion to purchase debt issued or guaranteed by Fannie Mae, Freddie Mac and other government-backed mortgage companies.

The Fed has also pledged to lend up to $200 billion to support securities backed by credit card loans, car loans and student loans, all in an effort to get those markets functioning more normally.

In its statement, the Fed pledged to keep working to get credit into the economy through these programs and additional programs if needed. It specifically mentioned the purchase of longer-term Treasury securities. The Fed's massive expansions of its loan programs have already pushed its balance sheet of loans from $900 billion in September to $2.2 trillion currently.

The new pledges had an immediate impact on bond markets where the possibility of heavy purchases by the central bank sent yields on Treasury securities falling sharply.

"The Fed has decided to flood the economy with money in the hopes that it will be lent and spent," said Sung Won Sohn, an economist at the Martin Smith School of Business at California State University, Channel Islands.

Sohn predicted that 30-year mortgage rates, which have already fallen a full percentage point since late October to now stand at 5.47 percent, could drop by another percentage point in coming weeks to around 4.5 percent. He predicted that rates on auto loans and credit card debt would also come down.

"The bottom line is that confidence has deteriorated to such an extent that the Fed is willing to take these extraordinary steps," Sohn said.

But Sohn and other analysts still look for the recession to last until next summer. The overall economy as measured by the gross domestic product shrank at an annual rate of 0.5 percent in the third quarter and many analysts believe it will be a much more severe downturn of around 6 percent in the current quarter with continued GDP declines in the first and second quarters of next year.

If the recession ends next June, as some economists are forecasting, it will have lasted 18 months, making it the longest downturn since the Great Depression.

Businesses cut more than a half-million jobs in November alone, pushing the unemployment rate to a 15-year high of 6.7 percent. Many analysts believe that unemployment will surpass 8 percent by late next year before an economic recovery has picked up enough steam to stabilize employment.

The weak economy is helping to keep a lid on prices. The government reported Tuesday that consumer prices fell by a record 1.7 percent in November as gasoline and other energy prices continued to plunge. The Fed noted that "inflation pressures have diminished appreciably," a development that gives the central bank maneuvering room to focus on boosting growth.

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December 10th 2008 ~ Weekly Commentary on Loans & Real Estate

2008-12-10T17:01:00.000-07:00

December 10th 2008 ~ Weekly Commentary

Thumbnail Sketch: The non-manufacturing sector ISM (Institute of Supply Management) survey fell from 44.4 to 37.3 last month. This is very much in keeping with declines in retail sales and employment and, indeed, the employment figures for October were very grim, with 533,000 lost payroll jobs (largest one-month drop since December 1974), and a spike in the unemployment rate to 6.7% (highest rate since 1993).

Looking at the plunging non-manufacturing ISM data (which indicates the rapidly declining vibrancy in the service sector), Aaron Smith of Moody’s Economy.com opined: “The survey's plunge reinforces the case that this recession will be the worst since 1981-1982.”

And that, for the most part, is the nature of the news today. Sales, employment and orders are all down dramatically, even after a relatively good post-Thanksgiving shopping day. Factory orders in October were down 5.1%. Consumer credit was down by a precipitous 3.5%. And chain store sales were down 2.7% in November, though Wal-Mart had a very good month.

So one wonders why the number of mortgage loan applications climbed so incredibly high over Thanksgiving week while the rest of the economy was busy exploring the bottom of the proverbial barrel.

The simplest answer is that available mortgage interest rates fell to extremely attractive levels. But that answer doesn’t fully satisfy—for you can reduce the cost of a mortgage to zero and people won’t act on the lower rates unless they want to buy real estate.

Look at the reality of the situation. “The contract rate for 30-year fixed rate mortgages finished at 5.47%, down 51 basis points from a week ago, down 100 basis points from four weeks ago, and down 34 basis points from a year ago” [Economy.com]. If anything, this should bring refinancers out of the woodwork. And indeed it did. Applications were up by 203.3%--which was 37.7% higher than the level of applications a year ago.

But what about applications for purchase money loans? This is where the real estate market’s pedal hits the metal. A strong spike in applications would almost certainly indicate the powerful demand for real estate currently waiting to be fulfilled. Applications were up 38% (but down 22% from their year-ago level). Surely we can conclude, at least tentatively, that the market is ready to revive itself. Just give it half a chance!

To buy a home in Phoenix, AZ, go to http://www.historiccentralphoenix.com/index.html

December 3rd 2008 - Weekly Real Estate Market & Economy Commentary

2008-12-03T18:03:00.000-07:00

December 3rd 2008 - Weekly Commentary

Thumbnail Sketch: John Templeton once suggested that the time to buy investments was at the highest point of pessimism. Have we reached that yet? It’s hard to say, but we continue to see signs that we’re starting to crawl out of the economic black hole - in spite of the massive number of analysts who assert the opposite in our daily newspapers, radio and television reports.

The economic indicators, most of them backward-looking, continue to undergird the widespread gloom. Construction spending declined 1.2% from September to October, 4.6% year-over-year. And sales of new homes dropped heavily—by 5.3%--from September to October, providing little hope for a sustainable improvement.

If we look beneath the numbers, though, we see that there are changes afoot. For example, “the Fed's new programs designed to improve the flow and terms of credit to homebuyers and consumers has had the immediate effect of dropping mortgage rates by an amount that will translate into significant improvement in affordability. Barring further intensification of economic and financial problems, declines in house prices and mortgage rates could buoy demand and lead to stabilization in sales by early next year.” [Aaron Smith, Moody’s Economy.com]

In other words, while highly visible leaders run around decrying the end of the economic world, some programs are being put into place—by the Fed, by Fannie and Freddie, by other major lenders—that should reduce the number of foreclosures and increase the sales of properties, as affordability jumps. Further, though the Treasury interest rate drops haven’t fully penetrated mortgage rates, they are bound to keep mortgage rates attractive. (Treasury rates drop when investors over the world use the securities as a safe harbor for their wealth in particularly uncertain times—as is the case presently.)

And have you filled your gas tank lately? This is a double-edged sword, of course. The hard edge is the fact that gasoline costs so much less because weaker economies mean far less demand for gasoline (though it is difficult to lament the burning of less oil). The softer edge is that consumers in most areas are paying less than half of what they paid when gas prices soared. And that has to bode well for people’s budgets.

Lastly, the jury is still out, but early reports suggest that the heavily-discounted retail sales over the Thanksgiving weekend pulled in a lot of money. And all of the above should provide us some cheer as we roll into the holiday season.

Buying real estate right now is a good idea. If we're not at bottom, we sure are close.

Historic downtown Phoenix - A 1.5 mile self-guided walking tour

2008-11-13T22:07:00.000-07:00

Historic downtown Phoenix - A 1.5 mile self-guided walking tour

Barbara Yost ~ The Arizona Republic

The Rossen House

In 1867, the U.S. General Land Office began surveying Arizona and the Salt River Valley into townships, and by 1870 the location of Phoenix was selected and named.

Early Phoenix desert was surrounded by irrigated farmland, which used a canal system (similar to prehistoric Hohokam canals) built between 1867-1885.

This canal system allowed homesteaders, businessmen, investors and promoters to reclaim the desert and transformed it into fields of alfalfa, grains, vegetables and, eventually, citrus and cotton. Because the water supply was unpredictable in 1911, Roosevelt Dam was built to ensure a consistent supply.

By the end of the first decade of the 20th century, Phoenix had railroad connections to two transcontinental lines and had become a major distribution center, not only for agriculture but for mining and manufacturing, too.

Downtown Phoenix kept its 1920's identity well into the late 1960's, when the face of the city changed with the construction of office towers in the central core. Fortunately, many of the key commercial and civic buildings from the 1920s remain.

Other attractions in the area:
1. Fry Building, northwest corner of Second and Washington streets - is the earliest known intact commercial building in Phoenix. This two-story building was built in 1885. In 1904, the north addition of the Fry Building was erected and the storefronts were remodeled in 1950.

2. Hanny's Building, 44 N. First St. - was built in 1947 by Vic Hanny, a local businessman. This store brought the International/Moderate Style influence to Phoenix and sparked a major face lift in the downtown area.

3. Professional Building, 137 N. Central Ave. - provided centrally located medical offices for the first time in Phoenix. It was built in 1931. This is the largest limestone-sheathed building in Arizona and is an Art Deco/Moderne Style skyscraper. The top story was added in 1958.

The San Carlos Hotel

4. San Carlos Hotel, 202 N. Central Ave. - inspired by the rapid growth of tourism in Phoenix, was completed in 1928. The hotel was a gathering place for residents and Hollywood movie stars. This Renaissance Revival building was one of the first hotels to have steam heat, elevators and air-cooling.

5. The Security Building, 234 N. Central Ave. - with a Renaissance Revival design , this was built in 1928.

6. Title and Trust Building, 114 W. Adams St. - when constructed in 1931, it was the largest office building in Arizona. It was designed by prominent local architects Lescher and Mahoney. The building is a Moderne style featuring travertine and marble floors and etched glass.

7. The Orpheum Theater, 203 W. Adams St. - was built by Henry Nace who arrived in Phoenix in 1910 as an acrobat with a circus. This theater is Phoenix's most architecturally intact and largest remaining theater. It is a unique example of Spanish Colonial revival architecture. It underwent a majr restoration in 1997.

8. Walker Building/Central Arizona Light and Power, 302 W. Washington St. - was constructed in 1920. Built of concrete and hollow tile; an example of Neo-Classic Revival Style. J.C. Penney's was the tenant until 1926, then it housed the offices of Central Arizona Light and Power Company until the 1940s.

9. Historic City Hall/Maricopa County Courthouse, 125 W. Washington St. - was completed in 1928. The courthouse has a combination of Art Deco, Moderne, Spanish Colonial Revival and Renaissance motifs.

The Luhrs Tower

10. Luhrs Tower, 45 W. Jefferson St. - At the time of its construction, the tower and Luhrs Building were the tallest buildings in Arizona. The buildings stand on their original site and are unaltered.

11. Luhrs Building, 13 W. Jefferson St. - was built in 1923-24 (and Luhrs Tower in 1929) by George Luhrs, a prominent Phoenix businessman. This building is an example of Second Renaissance Revival style.

12. The Rosson House/Historic Heritage Square, 115 N. Sixth St. - Designed in 1894 by Phoenix Architect A.P. Petit, this house is a Victorian style. The house, listed in the National Register of Historic Places, is part of Heritage Square, which is a downtown display of homes from the original townsite of Phoenix.

13. New Phoenix City Hall, 200 W. Washington St. - This 20-story structure was completed in 1993. It is built of colored, cast-in-place concrete, with tinted double-pane windows.

Search for a historic Phoenix home near any of these sites.

Banks must start lending: Senate panel

2008-11-13T13:52:00.000-07:00

Committee grills bankers over $700 billion bailout. Dodd: 'We want to see more progress.'

By Tami Luhby, CNNMoney.com senior writer
Last Updated: November 13, 2008

NEW YORK (CNNMoney.com) - Lawmakers pressed bank executives on Thursday to explain how they were using the billions of dollars they've received from the federal government as part of the $700 billion bailout.

Banks are failing to use public funds to make credit more available and to help troubled homeowners, said Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee. Congress did not pass the bailout plan so banks could hoard the money or use it to scoop up faltering rivals, he said.

"We want to see more progress from our friends in the financial sector, more progress in foreclosure mitigation, in affordable lending, and in curbing excessive compensation," Dodd said. "And if that progress is not forthcoming, we are prepared to legislate."

Members of Dodd's committee covered much of the same ground as they have in recent weeks, demanding that banks use the capital they are receiving from the rescue plan to help stimulate the economy through lending and assist homeowners facing foreclosure. They also renewed calls to amend the bankruptcy law to allow judges to modify loan terms on primary homes. And they voiced support for Federal Deposit Insurance Corp. Chairman Sheila Bair's plan to help homeowners by having the government backstop a portion of the modified loan.

Bank executives once again pointed to their efforts to increase lending and to work with delinquent homeowners.

JPMorgan Chase, for instance, is lending billions to consumers, businesses, non-profits and municipalities, said Barry Zubrow, executive vice president at JPMorgan Chase (JPM, Fortune 500). In addition, since early 2007, Chase has helped about 250,000 families avoid foreclosure, and a new program announced last month will aid another 400,000 people. The bank plans to open 24 regional counseling centers to provide borrowers with face-to-face help in areas with high delinquency.

"The [Capital Purchase Program] enhances our ability to lend to consumers and businesses, large and small," he said. "In short, we have been and continue to be open to new business."

That said, JPMorgan Chase will maintain prudent underwriting standards, since irresponsible lending is a main reason America is in its current situation, Zubrow said.

Bank of America (BAC, Fortune 500), meanwhile, originated more than $50 billion in mortgage loans and more than $6 billion home equity loans in the third quarter, said Anne Finucane, the institution's global marketing and corporate affairs executive.

Overall, the funding of new loan commitments has increased by 6% this year over previous year, Finucane said. The bank is also actively buying mortgage-backed securities, adding liquidity to this market that's crucial to funding new loans.

At Wells Fargo (WFC, Fortune 500), commercial loans made to mid-sized company are up 24% since a year ago, while consumer loans are up almost 9% in the third quarter compared to a year ago, said Jon Campbell, Wells' regional banking president.

Addressing the 9,000 daily foreclosure filings Senators also heard from consumer advocates who said that banks' foreclosure mitigation efforts haven't done enough. Dodd noted that 9,000 homes a day are still going into foreclosure.

"Voluntary efforts haven't worked," said Nancy Zirkin, public policy director, Leadership Conference on Civil Rights.

Bank executives defended their modification programs and said they are working with investors of securitized mortgages to get their approval to change loan terms.

But they roundly opposed allowing bankruptcy judges to modify loans on primary homes, a measure many Democrats support. Such a change would further drive away investors, who are already skittish about putting money into the mortgage-backed securities market.

"While we need to find a way to stimulate the housing market, do we want to put at risk that market by taking that step," Campbell said.

Addressing lawmakers' anger over lofty executive compensation levels, witnesses also said bonuses and payment packages will be skimpier this year as the economy and corporate performance weaken.

"Compensation also will be down very significantly this year across the firm, particularly at senior levels," said Gregory Palm, general counsel at Goldman Sachs (GS, Fortune 500). "We get it."

Lawmakers on both sides of the aisle have been critical of the Treasury Department's implementation of the bailout of the financial sector.

Democrats are concerned that banks are not increasing their lending, despite getting capital infusions from the government. They also want to move faster to help the homeowner.

On Thursday, lawmakers pressed bank executives on whether they intend to use the bailout funds to pay dividends to shareholders or to acquire healthy banks. They answered no to both.

Republicans, meanwhile, want more disclosure on how the Treasury Department is carrying out the plan.

"Real transparency and accountability are critical to the success of the economic rescue plan, and taxpayers have every right to know how the federal government is allocating tax dollars as part of the program," House Republican Leader John Boehner, R-Ohio., said in a statement Wednesday.

Treasury Secretary Henry Paulson said Wednesday that the government would broaden the reach of the plan to support non-bank financial institutions that provide consumer credit, such as credit cards and auto loans.

In this second stage of the bailout, officials also hope to attract private capital, possibly through matching investments, to give the government's injections more heft.

Paulson also said the government is no longer planning to buy troubled mortgage assets, the original goal of the plan. Therefore, it must come up with new ways to help homeowners and slow the tide of foreclosures, which it had hoped to do once it owned the troubled loans.

Don't wait for the bank and the government to loan you money. Check out how t0 get 100% financing in Phoenix, AZ with a private lender on foreclosures & close quickly with GREAT rates! You won't regret looking if you want to buy a home.

Weekly Commentary on Loans & Mortgages

2008-11-13T11:17:00.000-07:00

Weekly Commentary - November 12th, 2008

Thumbnail Sketch: Interest rates bounce like jumping beans, without any trend other than continuing volatility. The reason? Most likely, the investment community is not persuaded that the economy’s continuing problems will do anything but continue, bail-out programs notwithstanding.

Next year, meanwhile, remains a guessing game. The Office of Federal Housing Enterprise Oversight (OFHEO) recently added some areas to its list of expensive-housing markets, meaning they will qualify for the largest “expanded jumbo” loans. At the same time, though, some areas were demoted.

The important change to remain aware of is that the areas qualifying for this year’s $729,850 maximum “expanded jumbo” and FHA loans will slip back to a $625,500 maximum on January 1, 2009. Buyers wanting to take advantage of the higher ceiling should do so as soon as possible, before it falls.

In spite of buyers’ needs to act on the maximum ceiling for mortgages, the mortgage applications index to the left showed a marked decline in the week ending October 31 (before the presidential election, and therefore based less on politics than on economic conditions). Taken together, all applications for mortgages were down by a stunning 20.3%, with refis plummeting 28.3%. To pour salt in the wound, consider the fact that tough lending requirements mean a good percentage of these applications will end up on the “cutting room floor.”

This suggests, quite plainly, that the lending process has not received much of a boost from the attempted bail-outs. Lending is still a very strict process; few investors are interested in putting their money into the resulting loans and mortgage-backed investments; and the financial giants themselves appear to be more mindful at this point of engineering favorable mergers with ailing financial institutions (given the new tax advantage in doing so) than of re-entering the lending game, though there are some who are paying laudable attention to the continuing needs of distressed borrowers.

One suspects that we will see far stricter treatment by the federal government in the near future, with stronger programs designed to help those facing foreclosure and stronger requirements on lenders to make mortgages from the infusions of taxpayer-funded capital they are receiving. If it is correct that there are many reasons for the real estate market to continue improving—as we believe there are, though they are fragile—then such purposeful programs may result in (1) favorable responses in the investment markets and (2) a faster strengthening of the real estate market. It may be good to prepare for these possible eventualities.

Buying a foreclosure (REO), lender or bank owned property is the way to go. FEW lenders will do 100% fnancing anymore. ZERO down loans are a thing of the past, but there is ONE lender still allowing it. They are a private lender lending at stellar rates as long as you can prove you can afford the monthly payment. For more information, go to 100% financing. Zero down mortgages.

You may also contact Laura Boyajian with DPR Realty, LLC directly at 602-400-0008 and visit her award-winning website at www.HistoricCentralPhoenix.com.

November 12, 2008

KEY INDICATORS

Gold $731.20/ounce [down]
Crude Oil (Brent) $55.77/brl
[down]
U.S. Dollar to…
Euro .7968 [up]
Japanese Yen 97.76 [down]
6-mo Treasury Bill Yield 0.91%
10-yr Treasury Note Yield 3.74%
[6-mo down 16 bps, 10-yr down 16 bps]
11th Dist Cost of Funds: 2.769%
30-yr Fixed-rate Mortgage 6.74%
15-yr Fixed-rate Mortgage 6.38%
1-yr ARM 6.26%
[HSH averages rates: 30-yr down 39 bps, 15-yr down 32 bps; 1-yr ARM up 8 bps]

Mortgage Bankers Association Mortgage Applications Index
week ending 10/31
Overall
379.9 (down 20.3%; up 16.8%
the week prior)
Purchase Money Loans
260.9 (down 13.9%; up 8.5%
the week prior)
Refinancing Loans
1075.4 (down 27.8%; up 28.5%
the week prior)

Weekly Jobless Claims 11/1 481,000 first computation –
485,000 prior week (with 6,000 upward revision)

Employment Report Oct
Payrolls down 240,000 (tenth consecutive monthly decline) – unemployment rate jumped to 6.5%

Consumer Credit Sept
Up 3.2% - revolving up 1.2% - non-revolving up 4.5%

Why Is Now a Great Time To Buy Phoenix Real Estate?

2008-11-01T13:38:00.000-07:00

Why buying real estate now is incredible timing
October 29th, 2008

The data, especially for real estate, are teasing us at this point. Home prices continue to decline and sales numbers are rising in many areas, on-market inventory is easing, but consumer confidence has plunged.

The headline for MSNBC.com was: “Home prices fall by sharpest annual rate ever.” “Ever,” here, means that the Case-Shiller 10-city index fell a bit more than it ever has in its 21 years of existence. In other words, no, we’re not in Depression-era territory here. Meantime, the Case-Shiller index of homes in 20 cities produced a 16.6% decline, as against the 16.3% fall in July. As Aaron Smith and Ryan Sweet comment in Moody’s Economy.com, “Although the year-over-year rate of decline in home prices grew larger, there are signs that the pace could soon moderate. Over the last three months, the year-over-year rate of change has fallen 0.9 percentage points.”

Meantime, the month-over-month price declines have about been cut in half. “With home sales set to weaken and the financial crisis deepening, though, the chance that prices will fall more quickly cannot be discounted, even if mortgage rates are lower.”

Though the news media continues to report on the real estate market with the assumption that prices will continue to fall for several more months and the market won't recover in the foreseeable future, the signs of gradual improvement continue to appear. Yes, there are investors picking up bargain-basement foreclosure properties--but yes, that's what needs to happen at this point. And the fact that there are buyers, sometimes multiple offers, for foreclosure properties suggests that we're nearing a floor upon which the future real estate market can be constructed.

Another indication that we're reaching that floor was the number of professionals who went to the recent California Association of Realtors convention, and the fact that there was such a positive buzz in the air. This has in the past proven to be an accurate early indicator of an improving market, as it almost certainly will again today.

It is very likely a great time to be buying properties, which is why seasoned investors are doing so, and a great time to be preparing for an improving, firming market. We will watch the developments closely. So far, they're running very true to form, despite the fact that this slowdown has been so unusual in so many ways.

Buying bank owned and lender owned properties is the way to go. The bargains are out there, even at 100% financing with certain, private lenders.

Check out HistoricCentralPhoenix.com for some homes for sale with 100% financing. That's right...ZERO down, even in today's lending market. Just take a look and see how it's done.

Reasons to Buy Phoenix, AZ Real Estate NOW

2008-11-01T13:21:00.001-07:00

Reasons to Buy Phoenix, AZ Real Estate NOW
November 1st, 2008

As the market continues to adjust to the changing economy, a number of factors are coming together in the housing market to provide unique opportunities for homebuyers and investors. For those looking to take advantage of falling interest rates, excess inventory and government incentives, there’s no time like the present.

Increasing Down-Payment Requirements

One factor that’s leading many buyers to act now is the pending increase in minimum down payments required for HUD loans. On January 1st, 2009, the minimum down payment will jump from 3% to 3.5%. A half of a percentage point may not seem like much, but this change will add an average of $1,000 to the down payment on a new home.*

Increasing Rent

As more people move out of their homes and more potential homebuyers decide to wait, renters are facing higher prices and more competition for leases and apartments. As the costs of maintenance, repairs and utilities continue to rise, property owners, rental agencies and apartment complexes must raise their rates to stay aoat. As the cost of renting or leasing climbs, the stability of a xed mortgage payment becomes more appealing for many homebuyers.

Low Interest Rates

Despite the turmoil, interest rates remain steady at near-record lows. Compared to rates at the height of the real estate boom, this can mean substantially lower mortgage payments for those who buy now. Of course, lending standards are tighter now than they were a few years ago, but that means that lenders today are even more eager to work with buyers with good credit. As a result, new homebuyers can lock in at substantially lower rates now than they could have a few years ago, and existing owners can move up to a bigger and better home with little or no change in their monthly payment.

Competitive Home Prices

As the number of potential homebuyers declines, many homebuilders are facing a surplus of inventory homes. Throughout major markets and growth areas, average home prices rose faster than at any time in history. In many of these places, prices reach levels that the average buyer was unable or unwilling to pay, and home values began to drop.

As everyone adjusts to the current market conditions and builders compete for remaining buyers, these prices are returning to normal levels.

Great Selection

Another result of market growth and decline is the incredible selection of homes available. As new communities and developments cropped up throughout major growth areas, innovative floor plans, features and designs helped many builders differentiate themselves from the market. Today, many of those communities are filled with spec, models and a wide range of inventory homes, offering buyers a great opportunity to find the perfect home.

*Based on average home price of $200,000

Call Laura B. today, Downtown Phoenix Homes Specialist and Historic Phoenix Homes Specialist to purchase a Phoenix or Phoenix-Metro home, and, to purchase a lender owned home with ZERO DOWN. 100% Financing!

Investors are Flocking to Bargain Homes In Phoenix, AZ

2008-10-21T20:41:00.000-07:00

Investors are flocking to bargain homes in Phoenix
Oct. 10, 2008 ~ Special for The Republic

The Phoenix area is hosting a wave of real estate investors like we haven't seen since 2005.

Unlike the novices who came here during the boom, these are experienced landlords. They're here now because lender-owned homes are selling for bargain-basement prices.
They're not alone. Savvy home-buyers are scooping up bargains, too, especially first-time homeowners. Interest rates are still attractive, even if the homes themselves are less appealing.

Interestingly, over the last couple of weeks, many of the lowest priced homes have seemed to evaporate. I'm guessing that October is going to be a banner month for closed transactions.

Yes, most of these will be foreclosed homes, but buyers are performing the liquidator function, restoring the value of underperforming assets.

With so many homes selling, are we nearing a bottom in the metro Phoenix market? It's plausible, if the number of sales meets or exceeds the number of newly listed homes to be sold.

But, even now, around 7,500 homes a month are entering the foreclosure process.
It could be a long time before that inventory is absorbed. And if it comes onto the market faster than buyers can snap it up, prices will continue to decline.

Visualize the real estate market as a pipeline. The home that gets a foreclosure notice today won't hit the lender-owned market for three to six months.

Are there enough investors and other buyers to snap up record numbers of homes, month-after-month, for the next two years ... or longer?

The answer to that question is yes ... if the price is right.

If the demand for low-priced homes already exceeds the supply in the pipeline, prices will stabilize or even start to rise. If not, lenders will be forced to cut prices until buyers find them impossible to resist.

It's an awful time if you have lost your home, and it's not great if you are living in a home you cannot sell profitably.

But if you have cash or can qualify for a mortgage, this is an ideal time to snag a bargain-priced home in the Valley.

To purchase a lender owned home in Phoenix ot the Phoenix-Metro area, visit a listi of REO's For Sale or Lender's Homes For Sale website.

Call Laura B. TODAY at 602.400.0008 to find out how you cn STILL buy a home with NO MONEY DOWN! That's ZERO down and next to impossible in this market. Call for details and click this site:

ZERO DOW FINANCING IN 2008

ZERO DOWN HOMES & Stock Market Update 10/09/08

2008-10-12T15:27:00.000-07:00

"THOSE WHO CAN SOAR TO THE HIGHEST HEIGHTS CAN ALSO PLUNGE TO THE DEEPEST DEPTHS." Lucy Maud Montgomery.

Despite all of the government's efforts, markets here and around the world plunged this week as the financial crisis continues to grow.

On Tuesday, the Fed and Treasury Department announced plans to purchase short-term commercial paper that many companies rely on to finance their day-to-day operations, to help businesses with their short-term credit and funding needs. The government hoped this announcement would help ease uncertainty, restore confidence, and give Stocks a boost. They hoped for a similar result on Wednesday when the Federal Reserve cut the Fed Funds Rate by 50 basis points, and coordinated an emergency global interest rate cut with the European Central Bank, Canada, the UK, Switzerland and Sweden. The Central Banks in Asia followed suit and cut their benchmark interest rates overnight as welll.

However, on Thursday, Stocks plummeted nearly 700 points to a five-year low, and on Friday Stocks ended the day another 126 points lower (after plunging 500 points three times throughout the day). Bonds and home loan rates also worsened sharply in the second part of the week, as Bonds dropped below several important floors of support, and home loan rates ended the week .50% higher than where they began.

From a historical perspective, we are in the midst of a brutal bear market that began on October 9th 2007. Remember that a decline of 20% constitutes a bear market...and a 10% decline is a "correction." The last bear market occurred between March 24th of 2000 and October 9th 2002 saw a 49% drop. Overall, the average bear market lasts for 12.3 months, with the average decline being 32%. The current bear market is right in line with the average historical time frames, and the extent of the decline is worse than previous bear market averages, but still slightly better than the bottom made in 2002. So the historical data might suggest that we could be nearing a bottom. I will continue to monitor this situation closely, and let you know how this will impact home loan rates in the weeks and months ahead. One bright spot is that oil prices are also plunging, falling from a high of $147 per barrel last July to around $80 per barrel Friday morning...which at least makes a tr ip to fill up at the gas station slightly less painful.

Forecast for the Week

Last week was a volatile one despite the lack of scheduled economic reports, and this week several big pending reports could add to the volatility...even with the markets being closed on Monday in observance of Columbus Day. Wednesday will bring the wholesale inflation measuring Producer Price Index and the Retail Sales report for September. The Retail Sales report is a measure of the total receipts of retail stores, and changes in these numbers are closely followed as a timely indicator of broad consumer spending patterns. It will be especially important to see what kind of impact the financial crisis has had on recent spending trends.

More inflation news will follow on Thursday, as September's Consumer Price Index (CPI) report, which gives a read on inflation at the consumer level, will be released. CPI tells us how much more expensive goods and services are this month over last month, and this widely watched inflation indicator will definitely make headlines. And given what's been happening in the markets, it will be important to note what's happening in the housing sector, which Friday's Housing Starts and Building Permits Report for September will reveal.

Remember when Bond prices move higher, home loan rates move lower...and vice versa. As you can see in the chart below, Bonds and home loan rates worsened this week, due to a variety of factors. I will be watching closely to see if Bonds and home loan rates can change direction.

Buying Real Estate now, however, has begun to once again improve in certain areas of Phoenix.

Look for a Phoenix area home or a Historic Phoenix home by going to http://www.historiccentralphoenix.com/

Look for a Phonix - Phoenix Metro Home with 100% Financing & GREAT terms. ZERO DOWN HOMES completely REMODELED & gorgeous! Click HERE!

June pending home sales tick up 5.3%

2008-08-13T12:10:00.000-07:00

Realtors group says index of homes under contract rose in June compared to May, but is still well below June 2007 levels.

By Lara Moscrip, CNNMoney.com
August 7, 2008

NEW YORK (CNNMoney.com) -- The number of pending homes for sale rose in June, a rebound from the previous month, according to a report released Thursday.

The National Association of Realtors' Pending Home Sales Index rose 5.3% in June to 89 from a downwardly revised reading of 84.5 in May.

The index remains 12.3% below its level in June 2007, when it stood at 101.4, but it's at its highest point since October 2007, when it was at 89.9.

The number of homes under contract for sale fell more than expected in May, after a surprising spike in April.

However, this month's report isn't necessarily good news for the average home seller. That's because many of the pending home sales are for foreclosed properties being sold at a steep discount by lenders, according to Mike Larson, a real estate analyst at Weiss Research.

"It's bad news if you're a regular home seller because you're competing against institutions that are willing to undercut you - in some cases, by a large margin," Larson said in a statement.

The report shows that housing markets picked up in every U.S. region.

The pending home sales index for the West coast climbed 4.6% in June. "You're seeing some sort of rebound in California. Not only are sales picking up, but permit numbers are leveling off, meaning we may see a bottom for housing starts in the west," said Patrick Newport, an economist at Global Insight.

In the South, the index jumped 9.3%, while it increased by 3.4% in the Northeast, and by 1.3% in the Midwest.

Home sales may get a boost in 2009 thanks to the government's housing stimulus bill.

"With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009," said Lawrence Yun, NAR chief economist.

Indeed, NAR raised its existing-home sales outlook for 2009 by 7%, saying it now expects sales of 5.51 million next year, up from an expected total of 5.15 million this year.

Additionally, NAR projected that existing home prices will rise by 4.4% in 2009 to $215,800, according to a spokesman.

However, new-home sales in 2009 are forecast to drop 8.8% to $464,000, down from $509,000 this year.

The trade group launched the Pending Home Sales index in 2001, and a reading of 100 is equal to results that first year.

The index is considered a more forward-looking indicator of home sales than the NAR's closely watched existing home sales report. Unlike existing home sales estimates, pending home sales are usually counted a month or two before a closing contract is signed.

Phoenix, Arizona is also on the rebound right behind California. It's a great time to buy while interest rates are low and home prices have been down for a long-term period.

FEDERAL RESERVE PRESS RELEASE 8/5/2008

2008-08-05T13:36:00.000-07:00

Release Date: August 5, 2008
For Immediate Release

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.

Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Voting against was Richard W. Fisher, who preferred an increase in the target for the federal funds rate at this meeting.

It's an incredible time to buy real estate while interest rates are still historically low and home prices are down. Contact Laura B. today to begin your Historic Phoenix home search.

Fannie, Freddie jump in pre-market trading

2008-07-28T08:58:00.000-07:00

Shares of the mortgage finance giants climb after Senate approves housing rescue bill.

By Aaron Smith, CNNMoney.com
July 28, 2008

NEW YORK (CNNMoney.com) - The battered stocks for Fannie Mae and Freddie Mac climbed in pre-market trading Monday, lifted by a housing rescue plan the Senate passed over the weekend.

Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) were each up at least 8% in pre-market trading.

The Senate approved a bill on Saturday that could establish a rescue plan for the two mortgage giants and provide up to $300 billion in loans for troubled homeowners.

The House passed the bill on Wednesday, and President Bush is expected to sign it soon.

The stock prices for Fannie and Freddie have fallen more than 40% in July. The companies, which together own or back about half the nation's mortgage debt, have been hard-hit by the imploding housing market.

On Friday, Standard & Poor's put some of Fannie and Freddie's ratings on watch for possible downgrade.

Buying real estate has never been cheaper. To look for a home of your dreams in the Phoenix-Phoenix-Metro area, visit an award-winning website at http://www.historiccentralphoenix.com/.

How Housing Rescue Bill Can Help You

2008-07-27T09:51:00.000-07:00

How housing rescue bill can help you

The legislation - likely to be enacted soon - devotes $300 billion to helping troubled homeowners avoid foreclosure. See if you qualify.

By Les Christie, CNNMoney.com staff writer
July 26, 2008

NEW YORK (CNNMoney.com) ~ The Senate on Saturday passed a $300 billion housing rescue bill aimed at helping troubled homeowners avoid foreclosure and supporting mortgage giants Fannie Mae and Freddie Mac.

President Bush is likely to sign the bill into law within days. After the law kicks in on Oct. 1, thousands of at-risk borrowers will be able to refinance their unaffordable old mortgages into new low-cost fixed-rate loans insured by the Federal Housing Administration (FHA).

The Congressional Budget Office estimates that 400,000 borrowers with $68 billion in loans may benefit from the program - but the bill allows foras many as 1 million or 2million borrowers to participate in the program.

Here's what homeowners need to know.

Who's eligible?
Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must be spending at least 31% of their gross monthly income on mortgage debt to be eligible for the program.

They can be up to date on their existing mortgage or in default, but either way borrowers must prove that they will not be able to keep paying their existing mortgage - and attest that they are not deliberately defaulting just to obtain lower payments.

Before homeowners can get FHA-backed mortgages, they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years, unless it's to pay for necessary upkeep on the home.

To get a new home equity loan, borrowers will need approval from the FHA, and total debt cannot exceed 95% of the home's appraised value at the time.

How can I apply?
Borrowers can contact their current mortgage servicer or go directly to an FHA-approved lender for help. These lenders can be found on the Website of the Department of Housing and Urban Development.

How does the refinancing process work?
This is a voluntary program, so lenders holding the original mortgage have to agree to rework a given loan before things can get started. The bill requires lenders to make major concessions, writing down the value of the loan to 90% of the home's current value. In areas where prices have plummeted by as much as 20%, that will mean a substantial loss for the lender.

But lenders won't sign off on a workout unless they think that they'll lose less money on that than they would by allowing a home to go through the costly foreclosure process.

Each loan will have to be underwritten by an FHA lender on a case-by-case basis. That means the banks will do a new appraisal to determine the home's current value, as well as examine and verify income statements, bank accounts, job histories and credit scores.

Based on that new appraised home value, the FHA lender must determine how much the original lender has to reduce the original mortgage, so that it will reflect 90% of the home's market value.

If the original lender agrees to the writedown, the new lender buys the old loan and takes over the reworked mortgage.

As part of the deal, the old lender writes off any fees and penalties on the original mortgage, including prepayment penalties, and accepts the proceeds from the new loan on a paid-in-full basis. Additionally, it pays the FHA an up-front premium equal to 3% of the mortgage principal.

What does it cost?
There should be little up-front costs for borrowers to bear. Loan origination fees will vary by lender, but these can usually be paid by the borrower over the life of the loan in the form of a slightly higher interest rate.

However, the refinanced loans do come with many strings. For one thing, borrowers are responsible for paying an insurance premium to the FHA guaranteeing the loan, which will be 1.5% of the principal annually.

Borrowers also agree to share any profits from future home-price appreciation with the FHA. To do that, they'll pay a "3% exit fee" of the mortgage principal to the FHA when they resell or refinance.

Plus, they'll agree to pay the FHA 100% of any profits they realize from higher home prices if they sell or refinance within a year. So if the original loan principal is $200,000 and the home sells for $250,000, the borrower will owe the FHA $50,000, minus costs.

After a year, borrowers will share 90% of the profits with the FHA. The percentage keeps dropping in 10% increments to 50% after the fifth year, where it stays.

What will I save?
Savings depend on what borrowers are paying for their present loan and where they live, but for most people it will be substantial, even after factoring in the FHA fees.

In areas that have sustained huge price drops, such as Sacramento, Calif., where prices have fallen by about 30% over the past year, some loans might be reduced by more than 40%.

Additionally, the FHA loans carry reasonable interest rates, which are fixed for the life of the loan, as opposed to a subprime adjustable-rate mortgage that can jump higher every six months.

To get pre-qualified for an FHA loan, contact Laura Boyaian today. You may also visit her award winning website at http://www.historiccentralphoenix.com/index.html

Process of Buying a Historic Phoenix Home

2008-07-07T08:38:00.000-07:00

Process of Buying a Historic Phoenix Home
by Laura Boyajian - Historic Real Estate Specialist

Once you find the house you want, you need to move quickly to make your bid. If you're working with a Buyer's Broker, then get advice from him or her on an initial offer. If you're working with a Seller's Agent, you're involving yourself in what's called a "dual representation" or a "limited dual representation". Be careful that the agent handling this transaction is being fair to you as a Buyer.

Your agent needs to line up data on at least three houses that have sold recently in the neighborhood. They'll calculate the difference between the original list price and the final price of the homes sold.

If the average difference is, say, 5% below the asking price, then you know you can make an offer 8% to 10% below, leaving yourself a little room to negotiate. If you really want the house, don't lowball. The seller may give up in disgust.

Another factor to consider in determining your bid is whether the trend in recent home sales is up or down over the past year. For instance, if houses a year ago were selling at list, and recent ones are going at 3% below, then you might want to sharpen your pencil for your opening bid to just 5 to 8% below list.

There's no foolproof system for negotiating a fair price. In general, don't let the other side begin to believe you are negotiating in bad faith or being deceptive. Any deal you eventually reach has to involve trust on both sides and you better make darn well sure that your agent is representing this important fact.

Be creative about finding ways to satisfy the Seller's needs. For instance, ask if the Seller would throw in kitchen and laundry appliances if you meet his price, or, take them away in exchange for a lower price. Remember, too, that your leverage depends on the pace of the market. In a slow market, you've got muscle. In a hot market, you may have none at all.

Once you reach a mutually acceptable price, your Real Estate agent will draw up an offer to purchase that includes an estimated closing date (usually 30 - 45 days from acceptance of the offer).

Even though there are set contractual laws within the Purchase Contract, have your Real Estate Agent write this document to make sure the deal is contingent upon:

1. your obtaining a mortgage;

2. a home inspection that shows no significant defects (make sure you're clear on the definition of "significant");

3. a guarantee that you may conduct a walk-through inspection 24 hours before closing. This last clause allows you to check the home after the sellers have moved out, just in case the movers cause any damage, or that big living room sofa was hiding a hole in the floor.

You also need to make a good-faith deposit which is usually 1% to 4% of the purchase price that will be deposited into an escrow account. This money will be put toward your down payment and closing costs in order to close your deal. If the deal falls through, you will get the money back only if you or the home failed any of the contingency clauses.

Now call your mortgage broker or lender and move quickly to agree on terms, if you have not already done so, which I highly recommend you do before you even start house shopping. Read Financially Preparing Yourself To Buy a Home and Top 10 things to know and to do when buying a home. This is when you decide whether to go with the fixed rate or adjustable rate mortgage and whether to pay points. You may have to pay your appraisal fee upfront and will have to pay your home inspection fee upfront but most other fees will be due at the closing.

If you don't already have one, the lender funding your home loan will require a homeowner's insurance policy before they'll approve your loan. Ask for recommendations from friends, your lawyer or your real estate agent.

In addition to the appraisal that the mortgage lender will make of your home, you should hire your own home inspector. Again, ask for referrals, or check with the American Society of Home Inspectors, a trade group. An inspection costs about $300, on average, and up to $1,000 for a really big job and takes two hours or more, usually 4-6 hours in a historic property. When buying a historic Phoenix home, you'll want to get an inspector who specializes in historical structures. I have several on my team who do specialize in historic properties. They are a little more costly than a non-experienced historic home inspector, but well worth the nominal extra cost.

Ask to be present during the inspection, because you will learn a lot about your house, including its overall condition, construction materials, wiring, and heating. If the inspector turns up major problems, like a roof that needs to be replaced, then ask your agent to discuss it with the seller. You will either want the seller to fix the problem before you move in, or deduct the cost of the repair from the final price. If the seller won't agree to either remedy you may decide to walk away from the deal, which you can do without penalty if you have that contingency written into the contract, which is automatic as long as you're within your 10-day inspection period.

About two days before the actual closing, you will receive a final HUD Settlement Statement from your lender that lists all the charges you can expect to pay at closing.

Review it carefully. It will include things like the cost of title insurance that protects you and the lender from any claims someone may make regarding ownership of your property. The cost of title insurance varies greatly from state to state but usually comes in at less than 1% of the home's price.

The lender might also require you to establish an escrow account, which it can tap if you fall behind on your mortgage or property tax payments. Lenders can require deposits of up to two months' worth of payments.

After all this due diligence, the actual closing is often somewhat uneventful, though perhaps still nerve-racking. It's a process that your real estate agent, if experienced enough, should guide you through and have your back during the ENTIRE process. Be sure to ask your agent how involved they get with your loan, with Title & Escrow, with your Home Inspector and all other parties involved in the transaction. You'd be surprised how many agents walk away after your contract is accepted and don't follow through on anything out of sheer greed, laziness and lack of knowledge and experience. This is a nightmare for so many clients. I hear it every day from buyers. DON'T LET IT HAPPEN TO YOU!

If you want that agent, you're at her blog. Now, check out her award winning Historic Phoenix Homes website. Contact me today and I'll SHOW you!

4 Critical Factors In Choosing A Phoenix Historic Homes Realtor

2008-07-07T08:32:00.000-07:00

4 Critical Factors In Choosing A Phoenix Historic Homes Realtor
by Laura Boyajian

If you're in the market to buy a Phoenix historic home and are ready to do your free MLS Historic Phoenix search, here are 4 very important factors to consider (for starters) when choosing your Historic Phoenix Homes Real Estate Agent. Don't forget to check out our Buyer's Services and Seller's Services sections, too.

1. Do they have the right Home Inspector for historical structures? How about a Structural Engineer who specializes in historic buildings?

2. Do they have an appraiser that specializes in historic homes and their districts? (This is more important than you may realize).

3. Do they have the resources and the will to assist you before, during AND after your purchase in anything from remodeling to restoring a historical home?

And probably one of the most important things to consider when choosing a Phoenix Historic District Homes Agent to represent you in a historical home purchase:

4. What is THEIR personal experience and knowledge in historical homeownership?

I offer services for free on this site without any obligation. Why? Because I want to be YOUR trusted, professional Real Estate partner. Not all Agents are the same, and no website can show that. That's why I encourage you to call me or email me today so I can SHOW you how I'm different.

Whether you’re buying, selling or investing in Historic Phoenix or Phoenix Metro area home, if you're looking for an honest, hard-working agent who will have YOUR best interest in representation at heart, call me, Laura B. today at 602.400.0008. You WILL NOT be disappointed.

Definition & Clarification of REO Properties

2008-07-07T08:23:00.000-07:00

Real Estate Owned

Property owned by a lender, usually a bank, after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most foreclosure auctions equal the outstanding loan amount, the accrued interest and any fees associated with the foreclosure sale.

If the property is real estate owned, the bank will then go through the process of trying to sell the property on its own. It will try to remove some of the liens and other expenses on the home, and then try to sell it on the market. Real estate investors will often go after these properties as banks are not in the business of owning homes and, in some cases, the house can be bought at a discount to its market value.

If you are interested in buying an REO piece of real estate, contact Laura Boyajian today. You may also visit her award winning website at http://www.historiccentralphoenix.com/.

Arizona homeowners could avoid tax increase

2008-06-29T11:46:00.000-07:00

Arizona homeowners could avoid tax increase
Reported by: Katrina Wessman
Last Update: 3/27/08 2:03 pm

The Arizona House passed a bill on Tuesday that would permanently repeals the statewide property tax on Tuesday.

The bill would help ensure homeowners in the state avoid a $250 million tax increase.

The Legislature previously suspended the property tax for three years.

The tax will reappear if there is no action taken this year.

"While this bill helps our struggling economy by eliminating the tax on businesses, it is also for the small guy - by keeping Arizona families in their homes," said House Speaker Jim Weiers. "I do not want to see our homeowners burdened by this massive tax increase."

“Without action, property owners will see the tax return in January. At a time when foreclosures in Arizona are skyrocketing, this bill brings a little relief,” Weiers said.

Gov. Janet Napolitano and other opponents call the move ill-advised and ill-timed when the state has big budget problems.

The bill now goes to the Senate.

http://www.historiccentralphoenix.com/index.html

Homebuyer beware, seller could hide flaws in your dream home

2008-06-29T10:48:00.000-07:00

Homebuyer beware, seller could hide flaws in your dream home
Last Update: 4/08

We've all heard it's a home buyer's market, but that could mean the home seller is desperate.

They may go as far as hiding flaws in the house, so how do you make sure you're not buying damaged goods?

Homebuyers need to know how to ask the smart questions in this Home Smart consumer alert.

Home sellers are required by law to 'tell all' when selling their home, but you and your real estate agent will want to have a licensed, bonded professional look for chinks in the armor from rooftop to foundation.

Buyers want to check there is no settling or cracking in the foundation, no 'waving' of carpets, or cracks in walls.

The inspector will check the air conditioning system, hot water heater and plumbing and electrical systems.

But there is a limit to what the seller has to divulge, such as whether a crime has been committed in the house or if a sex offender had lived there.

So before signing on the bottom line, make sure you have checked every nook and cranny so you don't get burned.

Historic Phoenix homes Specialist, Laura Boyajian has become an expert in this field. She knows what to look for and how to look for it. She has worked extensively with Structural Engineers, Architects and Contractors and Builders gaining an extraordinary knowledge. Contact her today for more information and to have her help you find a solid historic home in downtown Phoenix.

First Valley fissure maps completed to help homebuyers

2008-06-29T10:43:00.001-07:00

First Valley fissure maps completed to help homebuyers
Reported by: ABC15.com staff
4/2008

Homebuyers in the Valley are getting some help in locating areas where fissures are a problem.

Fissures are cracks in the ground that can cause structural damage.

The Arizona Geological Survey has completed detailed maps of two areas that have lots of fissures.

The new maps of Chandler Heights near Queen Creek and Apache Junction are the first step in AGZS' effort to map fissures statewide.

The project was mandated by 2006 legislation that came in response to homeowners concerned about fissures.

There are 20 more Arizona areas to map.

www.historiccentralphoenix.com

Some Valley home prices go up despite down real estate market

2008-06-29T10:02:00.000-07:00

Some Valley home prices go up despite down real estate market
by Anne Yeager

4/11/2008

Everywhere you look in the Valley, homes are for sale.

And while they may be gorgeous inside, in many cases they're not worth what the sellers originally paid for them.

"As they say, whatever goes up must come down to some extent," said Joe Propati, chief appraiser at the Maricopa County Assessor's Office.

"Some areas held their values a little better than others, while most went down," Propati said.

According to the Assessor, the average residential property value dropped 13 percent from last year.

The general rule is the further to the outskirts, the more values went down.

John Halvorsen put a lot into his West Valley home, which is now worth about a $100,000 less than he paid.

He lives in zip code 85355, out near the White Tank Mountains, an area with beautiful views but values down 24 percent.

"It's my life actually," Halvorsen said. "It's hard to swallow, but there's really nothing we can do about it."

Now for the good news, we take you to one of the few parts of the Valley where values actually went up, zip code 85004.

Beverly Moodey has lived in the East Alvarado Historic District for nearly two decades.

"It's a good neighborhood," Moodey said. "It has the virtues of downtown."

His zip code is so attractive that values there are up 23 percent.

"It's all a function of location and demand within a specific area," Propati said.

And a lot of that demand now comes from high-rise downtown condos, which is driving up everything around it.

But the Assessor's Office believes other parts of the Valley will turn back up in the near future.

"No one should panic at this point. It's all cyclical," Propati said.

"Buying a home in historic Phoenix is still a wonderful idea. The locations are ripe for a profitable future," says Laura Boyajian of DPR Realty, LLC who specializes in downtown Phoenix historic properties. "There are many parts of downtown Phoenix homes which have gone up in value as opposed to taking losses. It's a incredible time to buy, especially since the bottom has been in effect for some time and, that rates are beginning to rise again."

Tempe Butte steps closer to historic register - MSNBC.com

2008-06-28T21:25:00.000-07:00

Tempe Butte steps closer to historic register

Mesa, Arizona - Tempe Butte is composed of volcanic rock, desert vegetation and history.

Through centuries, the geographic feature also known as Hayden Butte has held significance among three communities: Tempe residents, Arizona State University and local American Indians.

This is why, city officials believe, Tempe Butte belongs on the Tempe Historic Property Register.

Following the Tempe Historic Preservation Commission's unanimous vote supporting the designation on Thursday night, there are only a few more steps to go before the butte is placed at No. 34 on the register. The City Council will have the final say at its Aug. 7 meeting

Such a designation, city preservation officials take pains to note, will not change how the butte is used. People can still hike or bike the trail to the top, Christmas decorations will be erected every winter and ASU students can still paint the giant "A" - as long as they have the proper permit.

In 1961, the City Council changed the mountain's name to Hayden Butte, honoring Tempe's founder and his son, former U.S. Sen. Carl Hayden. However, the city never takes up the change with the U.S. Geological Survey, leading to the two names.

Actually, not all of Tempe Butte will be placed on the register; ASU owns the eastern half, with the divider being a chain-link fence that roughly follows College Avenue north. Because the state owns that land, the city cannot apply on its behalf.

The first citizens of Tempe Butte were the Hohokam, who lived on the mountain while tending their crops which were irrigated by canals stemming from the adjacent Salt River. Even today, hikers can see the ancient people's petroglyphs carved into the rocks.

The Hohokam vanished, but their descendents now comprise the Salt River Pima-Maricopa Indian Community. In the recent past, the Salt River community has helped pay for archaeological research on the mountain.

In the 1870's, city founder Charles Trumbull Hayden thought the butte was a fine place to open a flour mill and blacksmith shop. Soon, Hayden's Ferry was one of the Valley's preeminent crossing points on the Salt River.

In the following years, the milestones piled up:

1887 - Quarries open on the butte's north and south sides. Much of the rock is used to build railroad beds throughout the region, but some stone is made into the trim of ASU's Old Main building.

1902 - Tempe starts up its first waterworks with a storage reservoir on the mountain.

1918 - ASU's predecessor, Tempe Normal School, places a giant "N" on the rocks. Twelve years later, the letter is changed to "T" for Tempe State Teachers College. The "A" comes in 1938 to recognize Arizona State Teacher's College.

1958 - ASU's Sun Devil Stadium is constructed in the butte's saddle.

Tempe Butte rises 346 feet above the desert floor, with its peak elevation just short of 1,500 feet above sea level.

To buy a historic home in Tempe, AZ or any home in Tempe, AZ, call Laura Boyajian today at 602.400.0008. You may also visit her award wining website at: www.HistoricCentralPhoenix.com

May Existing-Home Sales Show Modest Gain

2008-06-27T09:47:00.000-07:00

May Existing-Home Sales Show Modest Gain
Thursday, June 26, 2008

WASHINGTON, D.C. - Existing-homes sales increased in May with buyers responding to lower home prices, according to the National Association of Realtors®.

Existing-home sales including single-family, townhomes, condominiums and co-ops increased 2.0 percent to a seasonally adjusted annual rate of 4.99 million units in May from a level of 4.89 million in April, but are 15.9 percent below the 5.93 million-unit pace in May 2007.

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said buyers are seeing value in the current housing market. “Home buyers are starting to get off the fence and into the market, drawn by drops in home prices in many areas and armed with greater access to affordable mortgages,” he said. “Today’s buyer plans to stay in a home for 10 years, which is a good strategy for building long-term wealth.”

The national median existing-home price for all housing types was $208,600 in May, down 6.3 percent from a year ago when the median was $222,700.

Lawrence Yun, NAR chief economist, said there’s still a lot of inventory in the market. “The large supply of homes on the market clearly favors buyers, and it should take several months to draw the inventory down,” he said. “Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets. Foreclosures and short sales appear to be a larger part of the market, particularly in California, and are creating a drag on current home prices.”

Total housing inventory at the end of May fell 1.4 percent to 4.49 million existing homes available for sale, which represents a 10.8-month supply at the current sales pace, down from a 11.2-month supply in April.

Although conditions remain mixed around the country, unpublished snapshot data shows a number of areas are experiencing much higher sales activity than May 2007, including Sacramento, the San Fernando Valley and Monterey County in California; Sarasota, Fla.; and Battle Creek, Mich.

“Keep in mind that the volume of home sales is the primary driver of economic activity that is tied to housing,” Yun said. “It’d be premature to say the improvement marks a turnaround. The market is fragile, so a first-time home buyer tax credit and a permanent raise in loan limits would be important steps to get the housing engine humming.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.04 percent in May from 5.92 percent in April; the rate was 6.26 percent in May 2007.

Single-family home sales rose 1.6 percent to a seasonally adjusted annual rate of 4.41 million in May from 4.34 million in April, but are 14.5 percent below the 5.16 million-unit pace in May 2007. The median existing single-family home price was $206,700 in May, which is 6.8 percent below a year ago.

Existing condominium and co-op sales increased 5.5 percent to a seasonally adjusted annual rate of 580,000 units in May from 550,000 in April, but are 24.6 percent lower than the 769,000-unit level a year ago. The median existing condo price was $223,400 in May, down 2.1 percent from May 2007.

Regionally, existing-home sales in the Midwest rose 5.5 percent in May to a pace of 1.16 million but are 16.5 percent lower than a year ago. The median price in the Midwest was $165,300, which is 0.7 percent below May 2007.

In the Northeast, existing-home sales rose 4.6 percent to an annual rate of 910,000 in May, but are 15.0 percent below May 2007. The median price in the Northeast was $278,000, down 2.4 percent from a year ago.

Existing-home sales in the West increased 2.0 percent to an annual pace of 1.02 million in May, but are 12.8 percent below a year ago. The median price in the West was $286,600, which is 16.0 percent lower than May 2007.

In the South, existing-home sales slipped 0.5 percent to an annual rate of 1.91 million in May, and are 17.0 percent below May 2007. The median price in the South was $175,000, down 4.3 percent from May 2007.

To buy a home in Downtown Phoenix, AZ or a Historic Phoenix Home, contact Laura B. today at 602.400.0008. You may also visit her award winning website at www.HistoricCentralPhoenix.com

Real Estate in Phoenix: Ready to Rebound?

2008-06-20T12:03:00.000-07:00

Real Estate in Phoenix: Ready to Rebound?
Experts anticipate a more stable market after Phoenix housing price correction
Published on: Tuesday, May 20, 2008
Written by: Melana Yanos

Real estate in Phoenix has been hurt badly by the housing crisis, and since the turmoil began a dark cloud has loomed over the Valley of the Sun. But is there a silver lining in sight? Although local experts can’t say for certain, it is presumed—if nothing else—that the worst is almost over.

“Those who are waiting for the bottom of the market may be surprised to discover that it has already occurred in a few areas,” Chuck Willman, a real estate agent for Gentry Realty and founder of AZVest.com, said in an e-mail interview. “Whereas the market decline can be prolonged, the rebound can be quite quick.”

The city of Phoenix is larger than Los Angeles and has an accordingly complex property marketInvestors should keep in mind that the Phoenix real estate market is vast. The city alone is geographically larger than Los Angeles, occupying an area of 517 square miles, according to the City of Phoenix government website. As a result, specific parts of the property sector that show potential for upward growth may be easily buried in collective market trends.

“You have to take those numbers with a grain of salt because Phoenix is so big and spread out,” Jay Thompson, broker and owner for Thompsons Realty and blog author of PhoenixRealEstateGuy.com, said. “There are houses here from tiny, older homes that are about $100,000 dollars, all the way up to multi-million dollar homes.”

And as prices fall, affordable opportunities for investment are becoming increasingly abundant.

“It’s a buyer’s market—there’s no question about that,” Thompson said.

For investors who are interested in capturing the potential for growth in a recovering market, real estate in Phoenix might be worth further investigation.

A short history

Phoenix real estate prices began to skyrocket in the winter of 2004 and continued for “two solid years of incredible surges in value,” Greg Swann, designated broker for BloodHoundRealty.com, said. In the fourth quarter of 2003, the median home price in the Phoenix metro area was $155,000, according to the NAHB/Wells Fargo Housing Opportunity Index. Two years later, the median home price peaked at $264,000—an increase of 70 percent. Speculation flooded the market.

Map data ©2008 Tele Atlas - Terms of UseMap of Phoenix-Scottsdale-Mesa MSA Investor activity, however, quickly became a “fool’s parade,” according to Swann. Investors snapped up properties in hopes that they could reap significant profits based on appreciation alone, regardless of the property’s cash flow potential. Nevertheless, sellers who got out of the market when the “music stopped” easily doubled their money, Swann said.

But investors who stayed late or bought late in the game found themselves in a great deal of trouble.

“When the correction hit, many of the less savvy investors who had overextended themselves discovered that they couldn’t find renters to cover their expenses,” Willman said. “We’re currently seeing the fallout of the investor scramble.”

“There’s a lot of people who are upside down in their mortgages, and there’s a lot of short sales and a lot of foreclosures on the market right now,” Thompson said.

The overall inventory of homes has grown at an exponential rate. 3,400 homes were on the books for the Phoenix metro area as of January 2005; today, the supply of homes for sale numbers 45,000, according to Thompson. In addition, metropolitan Phoenix has an estimated 13.7 months’ supply of inventory, according to the most recent quarterly survey of housing conditions of major U.S. metro areas by The Wall Street Journal.

Urban sprawl abutting the mountains in Phoenix

Phoenix was also ranked as one of NuWire’s Top 5 Overbuilt Markets of 2007.

Total home sales have plummeted, compounding the overall detriment to the market. In 2005, annual home sales numbered 178,410; by the end of 2007, that number had plunged to 95,085, according to research by Arizona State University Realty Studies. Although quarterly sales continue to experience a slowdown across the board, existing homes sales have modestly increased, from 10,180 sales in the fourth quarter of 2007 to 11,390 in the first quarter of 2008.

Housing prices have dropped quarter after quarter, probably as a result of decreased buyer activity and the plethora of homes for sale. For the first quarter of 2008, median home price had fallen to $220,000—a decrease of more than 15 percent from the first quarter of 2007, according to a report by The Phoenix Business Journal earlier this month.

The Phoenix real estate market may be troubled, but positive economic trends hold the key to a healthy recovery. As of March 2008, Phoenix had an unemployment rate of 3.5 percent, the third lowest of all large metro areas in the U.S., according to the Bureau of Labor statistics.

Furthermore, Phoenix is one of the fastest-growing metro areas in the U.S., consistently adding more than 100,000 people to its population each year for the past eight years. The “pure growth factor” should have a positive long-term effect on the area, according to Willman.

Arizona is also viewed as a “business-friendly” state, especially when compared to highly-taxed and highly-regulated states such as California, Swann said. A number of tech companies have established a presence in Phoenix. Its geographical location is an ideal place for server farms, because there is little risk of “cataclysmic events,” such as hurricanes or earthquakes, “that [would] result in massive loss of data,” Swann said.

Overall, “given the fact that Phoenix has good population growth, good jobs, low unemployment—all those economic indicators [suggest] that when we hit bottom, it won’t last very long,” Thompson said.

Opportunities for investment

Phoenix is no longer a flipping market, but local experts have observed growing interest among investors returning the region.

“There’s a lot of investors and even speculators that think Phoenix is probably close to returning to a moderate appreciation rate, and that appeals to [them],” Thompson said. “The days of buying and selling it three months later for 20 percent profit are gone...but if you can buy and hold, there [are] still a lot of opportunities here.”

Phoenix's population growth and strong job market may bring quick recovery from the downturnThe recent upsurge of real estate owned (REO) properties, for instance, is “getting snapped up like crazy,” according to Swann. Foreclosure actions have bombarded the Phoenix market in record numbers, with the greater Maricopa County documenting 4,421 notices of trustee sales in April 2008, a 331 percent increase from April 2007, according to a report by The Phoenix Business Journal earlier this month.

“I think this is an excellent time for investors to be in this market, especially if they’re willing to put in the sweat equity, either directly or by contractor, to take these lender-owned homes and whip them into shape,” Swann said. Rehabilitated homes can then be sold or turned into rental properties.

Because it is a buyer’s market, investors can “pit sellers against each other” by making simultaneous offers on several REO properties at once, according to Swann. However, it is important for investors to bear in mind that these are often distressed properties and require thorough inspection on the part of the buyer. Furthermore, REO properties seldom sell for much less than market value. For more information about REO property considerations, read our previous article, Investing in REO Properties: Deal or No Deal?

The outlook for investment properties is heavily dependent on the outlook for individual neighborhoods within the Phoenix metro area. Subdivisions with unique amenities, such as golf course communities, appear to hold their value better than properties in “typical suburbia,” Thompson said.

Destination places such as Scottsdale, which “has a hint of luxury to its name,” are also more resistant to real estate market fluctuations, according to Willman.

Smart investors should scout specific areas for solid investment opportunities, such as properties with positive cash flow potential.

“When it rents for more than it sells for, that’s when you know that you have an undervalued property,” Willman said. “There’s a little bit of math [involved], but there’s a whole lot of [need to know] the neighborhoods.”

Homes within walking or driving distance of Arizona State University, for instance, can show great potential for cash flow because of the demand created by students in need of housing. A growing elderly population may also be attracted to the amenities available near colleges.

“If you look at the number of days on the market and pricing at homes near major universities, you’ll see that these areas have great potential,” Willman said.

Bargains on new homes can be found, especially among homes that have been constructed by large, publicly-traded builders. These builders “tend to more aggressively price their homes,” Willman said. New homes also come with warranties, presenting an additional advantage to buyers.

Arizona's climate, economy and scenery will continue to attract tourists and new residentsInvestors may want to keep their eye on homes closer to the center of Phoenix, which seem to show better price performance than homes in outlying areas. Arizona has traditionally been a commuter state, and people were amenable to driving a greater distance if it meant they could get “more house for their money,” Willman said. However, rising gas prices have lowered the cost effectiveness of commuting to work.

As a result, “homes in the far flung sections of the valley are going to continue to face pricing pressures. There is room for prices to continue to fall,” Willman said. “Meanwhile, existing homes in the heart of the valley...those closest to Phoenix are beginning to see better activity.”

Properties in greater Phoenix, however, are not necessarily a loser’s game. These properties may appeal to retirees, who are not as concerned with the commute, according to Thompson. “[Phoenix] is appealing to a very large senior community,” especially for those who are searching for a warmer climate to retire, he said.

It is also anticipated that baby boomers will flock to Phoenix as they reach retirement age, according to Swann.

Lastly, the opportunity to purchase land in Phoenix is the “biggest speculative area right now,” Willman said. Acquiring land at bargain prices is generally easier for those who have cash and time on their hands; those who need to borrow money will discover that banks have difficulty valuing land without tenants or without a commercial purpose.

“Although there are many bargains out there as some cash-strapped people are selling off property...land near fast growing cities, and highways—current and planned—are becoming harder to find at a low price,” Willman said.

The collective market numbers may seem discouraging, but a wide range of solid real estate investment opportunities in Phoenix can be easily overlooked. Investors who are interested in buying real estate in Phoenix, however, need to take an educated approach in order to increase their likelihood of success.

“If you are]going to invest in today’s Phoenix real estate market, it’s pretty important to know what you’re doing...to know what you’re getting into, and to have realistic expectations,” Thompson said.

Call expert Real Estate Agent Laura Boyajian if you want proper guidance, counsel and knowledge. You may also visit her award winning website at www.HistoricCentralPhoenix.com.

Pending home sales move higher in April

2008-06-20T11:57:00.000-07:00

Pending home sales move higher in April
Associated Press ~ June 9, 2008 08:27 AM
http://www.historiccentralphoenix.com/

NEW YORK - Pending home sales unexpectedly increased in April to the highest reading since October, an industry group said Monday, but they remain more than 13 percent below a year ago.

The National Association of Realtors' seasonally adjusted index of pending sales for existing homes rose to 88.2 from a March reading of 83.0, the lowest since the index was started in 2001. The index stood at 101.5 in April 2007.

Wall Street economists polled by Thomson/IFR had predicted the index would remain steady at 83.

A reading of 100 is equal to the average level of sales activity in 2001.

The April index in the West climbed 8.3 percent from March and is 4 percent higher than a year ago. In the Midwest, the index jumped 13 percent, but is still lower than in 2007. The South posted a 4.6 percent gain, while the Northeast index declined 1.9 percent.

NAR Chief Economist Lawrence Yun noted that pending sales contracts have ticked up in areas with the largest price declines such as Detroit and Las Vegas.

"Bargain hunters have entered the market en masse," he said. "Sharp price reductions are leading to a quicker discovery of price equilibrium points."

Yun forecasts that the median price of an existing home will drop 8.4 percent in the first half of the year before stabilizing. In 2009, prices will rise 4.4 percent to $213,900, he predicts.

Existing home sales this year are expected to total 5.40 million and then increase to 5.74 million next year, Yun said.

www.HistoricCentralPhoenix.com

Canadian investors snapping up Valley homes

2008-06-20T08:48:00.000-07:00

Canadian investors snapping up Valley homesCatherine Reagor ~ The Arizona Republic April 9, 2008

Canadian investor Trevor Matheson has taken an interest in metro Phoenix's real-estate market. So much so that he plans to buy six homes in the area over the next year.

"There are definitely deals to be found in Phoenix," said Matheson, who plans to hold onto the properties for at least three to five years.

Matheson is among a growing group of investors from north of the border converging on the Valley's real-estate market to take advantage of falling home prices and a weak dollar.

Last year, 752 Canadian buyers purchased Valley homes, according to the real-estate data firm Information Market. That's almost double the number in 2006 and even in the boom years of 2004-05. Though Canadians account for only small part of the Valley's total housing market, their interest is growing, and that's giving home sales a boost. Through mid-March of this year, 381 buyers from Canada invested in metro Phoenix homes.

Valley real-estate agents, who have seen home sales fall dramatically during the past few years, are abuzz about all the calls and visits they are getting from Canadian clients.

"I am working with five different Canadian buyers now," out of the Scottsdale office of Realty Executives. "Many Canadians are seeing the weak dollar and what a great long-term investment Arizona real estate is going to be."

Short-sale bargains

Matheson purchased his first Valley home in January. Watson found him a house in north Phoenix's Kierland area that sold for $785,000 in 2006. The owners were facing foreclosure, and Matheson got it through a short sale for $470,000. Short sales let sellers avoid foreclosure, but a lender has to first agree to the price, which is less than what is owed on the home.

Matheson is looking to sell six homes in Edmonton, Alberta, to buy homes here. He is selling at the peak of the market in Edmonton, where the oil industry is big and the economy is booming as a result of record-high gas prices.

Canadian buyers are helping the Valley's sagging housing market, said Amy Swaney, vice president of Artisan Lending of Phoenix.

But they aren't typically getting financing through local lenders because U.S. lenders have pulled back on all types of investment loans as part of the mortgage meltdown.

Matheson is using a Canadian line of credit to buy his Valley properties to protect himself against fluctuations between the U.S. dollar and the Canadian dollar, known as the loonie. The loonie was worth about 70 cents to the dollar five years ago, but it's now almost equal.

Lowballing is risky

Last month, Canadian attorney Jeffrey Slopen took advantage of the low value of the dollar to pay $14 million in cash for a Paradise Valley estate. It's the priciest Arizona home sale to date.

Bob Hassett of the Paradise Valley office of Russ Lyon Realty said he is getting calls about luxury homes from many Canadians and some Europeans. Florida and East Coast cities are attracting more European buyers, while Arizona is seeing more Canadian investors looking for bargains. The state has long attracted Canadian visitors during the winter. Arizona is second only to Florida for Canadian tourists.

But some potential investors are losing out by lowballing the market.

Watson was recently working with a Canadian couple who were interested in a home that had been foreclosed on in north Scottsdale, where comparables sales were in the mid-$500,000s.

"This home was well-maintained and was listed in the mid $400,000s - a great buy," Watson said. "My advice was to come in with at least a $375,000 offer. However, they decided to offer $250,000."

She said the couple had heard property was selling for 50 cents on the dollar in metro Phoenix. So no matter what, they weren't going to offer more than 50 percent of the asking price, she said, and the bank turned the offer down.

"The buyers wound up getting back on a plane to Canada without having purchased anything," Watson said. "They could have had a great buy if they had just been realistic about the market."

Contact Laura Boyajian today at 602-400-0008. She is an expert in short sales and can guide you to a phenomenal bargain.

You may also visit her website at http://www.historiccentralphoenix.com/index.html

Lenders pledge speedy response on loan help

2008-06-20T08:41:00.000-07:00

Lenders pledge speedy response on loan help
Associated Press ~ June 17, 2008

WASHINGTON - Mortgage companies are pledging to let troubled borrowers know whether they're approved for help within 45 days of receiving a homeowner's application.

The promise is expected to be announced Tuesday by the Hope Now Alliance, a Bush administration-backed industry group. The new efforts come as the industry draws fire for not doing enough to alleviate the housing crisis.

The changes, outlined in a copy of mortgage industry guidelines obtained by the Associated Press, are designed to clarify the mortgage assistance process for borrowers and the industry alike.

The mortgage industry is also trying to alleviate a major stumbling block: the reluctance of companies that hold second mortgages, such as home equity loans, to agree to such modifications.

Statistics released last month by Hope Now showed that nearly 183,000 borrowers received some form of loan workout in April, the highest monthly number since the effort started last summer.

Lawmakers in Congress and consumer advocates, however, call the industry's efforts inadequate. They are pushing for a new $300 billion program to allow the government to back new loans for struggling homeowners.

The Hope Now group also was criticized last week by a federal bank regulator, who questioned the accuracy of trade groups' mortgage assistance data. The regulator, Comptroller of the Currency John Dugan called them "responses to surveys that produced aggregate, unverified results from individual firms."

Foreclosure filings last month were up nearly 50 percent compared with a year earlier. Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 percent from 176,137 in the same month last year and up 7 percent from April, foreclosure listing service RealtyTrac Inc. said Friday.

Members of Hope Now include Bank of America Corp., Citigroup Inc., Washington Mutual Inc. and Wells Fargo & Co.

To get free counsel on buying a home and/or loans, contact Laura Boyajian today at 602.400.0008. You may also visit her website at: http://www.historiccentralphoenix.com/index.html.

Housing Market Key Indicator Alert - A Few Bits of Better News

2008-06-07T21:34:00.000-07:00

Housing Market Key Indicator Alert
By: Hanley Wood

A Few Bits of Better News
Housing data in April provided some unexpected signs of hope that the housing market may be stabilizing. While still premature to declare that ‘the bottom has been reached,’ we may be getting close. Positive permits and housing starts data was followed by a rare up-tick for new home sales in April. While April was the first time in over a year that single-family building permits posted a monthly gain, it was also the first time since October 2007 that new home sales posted an increase. However, the gain could be attributed to aggressive price cuts by builders in an attempt to undercut the resale market.

We continue to see positive fundamental changes in the new homes market like declining inventory levels and improved affordability levels. It will important for this kind of progress to continue as this year’s home-buying season is more important than ever.

Equities swung back and forth during the past week as the market tried to digest record-high crude prices, concerns about inflation, but relatively positive economic data. Leading indicators suggested that economic growth may have bottomed out as the index posted a slight increase in April. Revised GDP also showed that the economy grew at a slightly faster pace than the advance report had shown. And while crude ended the week trading at over $127/barrel, it reached a new all-time high earlier in the week. Sustained high crude prices will continue to hurt consumer discretionary spending along with igniting concerns of inflation going forward. If price pressures begin to increase, it will not be surprising for the Fed to raise rates before the end of the year.

The Economy
Preliminary estimates for first quarter gross domestic product were revised slightly higher to 0.9% from the advance figure of 0.6%. Many had expected the economy to contract during the first quarter due to the credit crunch and the continued troubles in the financial and housing markets. It is still widely expected that growth will remain weak going into the second quarter. The economy grew at a 0.6% clip during the previous quarter and the first quarter of last year. Revisions that showed a sharp drop in imports helped to improve growth estimates for the quarter.

Leading indicators in April increased slightly for the second straight month. The leading index now stands at 102.0, up from a March figure of 101.90. The index is also down from its levels six months ago when it was 103.20. Seven out of the ten components showed a month over month increase from March levels.

Consumer confidence in May fell for the fifth straight month to its lowest levels since October 1992. The consumer confidence index declined to 57.2 in May from an upwardly revised 62.8 in April which represents a 5.6 point drop from the previous month. Both the present situation and expectations index reported monthly declines as well.

Housing Market
New and existing home sales moved in opposite directions in April. New home sales posted a rare 3.3% increase in April to a seasonally-adjusted 526,000 homes, up from a revised March figure of 509,000. This is the first time since October 2007 in which seasonally-adjusted annualized sales have posted a monthly increase. Sales for the previous three months, however, were revised lower by 30,000 units. At the current sales pace, there are 10.6 months of new homes supply on the market. The number of new homes for sale continued to decline as builders continue to scale back production. New home inventory declined to 454,000 which is the lowest it has been since May 2005. In April, median new home prices rebounded from its lowest levels since September 2006 in March to $246,100 in April. It was also the first time since November that median new home prices recorded a year-over-year gain.

Annualized sales of total existing homes declined 1.0% in April to 4.89 million units. Sales of existing homes are down 17.5% from the 5.93 million units in April 2007. Median existing home prices in April increased for the second straight month to $202,300 from a revised $200,100 in March. The number of existing homes for sale increased jumped 10.5% to 4.552 million units in April. At the current sales pace, there are 11.2 months of existing homes supply on the market. Existing home affordability declined slightly in March due to the increase in median existing home prices.

National average mortgage rates increased to 6.08% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on May 29th. This is the highest rates have been since mid-March. In the week ending May 23rd, the MBA’s seasonally-adjusted Purchase Index increased slightly to 352.7 from 352.5 in the previous week. The latest figure reflects a 0.06 percent increase from last week but a 17.40 percent drop from the same period last year.

About the Author
Hanley Wood: Hanley Wood Market Intelligence is the housing industry’s leading independent real estate research firm providing residential construction information and analysis for real estate development and new-home construction. Builders, developers, lenders, and manufacturers turn to Market Intelligence products and services to fuel their strategic decisions. The Key Indicator newsletter is a free publication to over 25,000 industry professionals and provides an overview of recent economic trends and analysis.

Buy a house while the market is at the bottom.

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2008-05-19T08:50:00.001-07:00

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2008-05-19T08:31:00.000-07:00

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2008-05-19T08:21:00.001-07:00

City buying land around Sky Harbor

2008-05-09T14:55:00.000-07:00

City buying land around Sky Harbor
By Jahna Berry The Arizona Republic 04.14.08

Arizona 's largest airport is on a multimillion-dollar real-estate shopping spree.

Through two programs, Phoenix is buying hundreds of properties in neighborhoods near Phoenix Sky Harbor International Airport.

On the west side of the airport, Phoenix is relocating families who are tired of sometimes-deafening aircraft noise. On the north end, the city is buying property so that the nation's eighth-busiest airport can grow in the future.

So far, the city has bought 389 of the 1,473 eligible properties. It plans to buy about 1,100 more during the next four years.

When all are acquired, the airport's land will include a vast patchwork of properties in neighborhoods from Seventh Street to 44th Street and from Washington Street to University Drive.

This fiscal year, the city has set aside more than $32 million for the relocation program, which is bankrolled by Federal Aviation Administration grant money and passenger facilities charges, which are fees tacked on to airline tickets. To date, $104 million has been spent.

From the perspective of city officials, the 5-year-old campaign is a success: Today, 533 families are in better, quieter homes. Plus, the airport has participated in community events in the relocation zone, they say.

"It's providing a good quality of life, and it's good for the neighborhood," said City Councilman Michael Johnson, who represents the area.

But the campaign also has created some perplexing problems, locals say. While the city and community are putting energy into the exodus, there are signs that people are still moving into the area. On a few blocks, new houses are going up. And one elementary school is bursting at the seams.

Meanwhile, the program has dramatically changed the fabric of the neighborhood. The relocations have created a surreal landscape of occupied houses, dirt lots and boarded-up buildings, residents say.

That has led to other problems, like illegal dumping, rodents and homeless squatters in vacant houses, an activist says.

People leave noise behind

The relocation program began buying properties in Nuestro Barrio, the south-central part of Phoenix , around 2003, a year after the City Council approved the program.

Ronnie Valenzuela, 37, remembers growing up on a tight-knit block of Latino families. Most had lived in the Valley for generations.

"We knew all of the neighbors," said Valenzuela, who moved before the relocations began. He now works at a body shop on the same block he grew up on. Today, there are no children playing outside. The city bought and tore down Valenzuela's old house.

The neighborhood group for Nuestro Barrio disbanded after all of its members were relocated.

It's understandable that the relocations would change the area, said Maria Bears, a Phoenix employee who manages the relocation program.

"The footprint of the neighborhoods is not 100 percent like it was a few years ago and mostly because of the demolitions on the land that we purchased," Bears said.

Hundreds of families who were fed up with airport noise jumped at the chance to pack up and move.

It's not easy. The long series of bureaucratic hoops to relocate can take more than a year. But the payoff is evident.

"A lot of people realize that it's a good deal," Bears said.

Most families move into houses that are newer and in better shape than the ones they left, she added.

Once the house is bought, it's boarded up and later razed. Historic buildings are boarded up and fenced off.

About 200 people in the relocation zones are on the waiting list, and the program has been expanded to include vacant lots and rental properties, Bears said.

Nieves Morquecho, 93, isn't sure if he will go.

"Not yet," said Morquecho, who has lived in his house since 1936. "Maybe in a few years."

Arrivals bring problems

The airport has no firm plans to develop the land that the city is buying. Even if the airport had future plans, such as building a fourth runway, airport projects can take a decade to clear federal and local hurdles.

That uncertainty has led to confusion in the neighborhood, local leaders say. While millions are being spent to get people out of the neighborhood, new people - renters, recent immigrants and other families - are moving in. Newly built homes and apartments even dot a few blocks.

City leaders say that they can't stop people from building in the area. Some of the recent homes were built by developers who are trying to take advantage of residents who are unaware of the relocation push, said Councilman Johnson.

"My concern is that someone pays so much for a house and finds out it's not worth what they thought its value was," he said.

Under city rules, any new homes in the area must have soundproofing on the roof, windows and doors. The people who bought in the area after 1998 are not eligible for relocation benefits. Property owners are also required to inform buyers that the land is in a relocation zone, he said.

New homes aren't the only sign the neighborhood is hanging on. At least one area school is looking for more space.

The Phoenix Elementary School District board closed Ann Ott School in 2005 after 150 families left the area a few years after the relocation program began. The remaining Ott students transferred to nearby Silvestre S. Herrera School , and the board expected enrollment to sink there, too, said Kenneth Baca, a district assistant superintendent.

Instead, Herrera is crowded. The 550-student school jumped to 766 after Ott closed. Last year, it had 775 students, and early figures show it has about 765 kids this year.

Herrera uses space at Wesley Community Center for its arts and physical-education classes. The school is operating at 97 percent of its capacity, Baca said.

Meanwhile, the community center, which feared it would lose its youth programs, has a full summer program with 110 children, said the center's executive director, Betty Mathis.

Airport officials say Herrera isn't full because of a population surge; it's because the school has an acclaimed arts program that attracts families from outside the neighborhood. The district says that only 25 percent of Herrera's children come from open enrollment, families who live outside of the neighborhood.

In contrast to the signs of stability are the rising number of empty lots and vacant buildings that can cause other issues, Mathis said.

It can take up to a year for a home to be demolished after the city buys it, so the homeless often take shelter in them, she said. Empty lots are trash-strewn, and rodent problems are on the rise for the neighbors left behind.

The city started a program called Connect and set up a hotline for neighbors in the relocation zone to help with problems such as illegal dumping on city property, Bears said.

"We're changing the neighborhood, and we want to make sure that we are as responsive as possible," Bears said.

Future remains uncertain

It's anyone's guess as to what the future holds.

The city plans to own most of the residential properties in the relocation areas within four years, but that depends on the budget, city officials say.

The city gets roughly one call a week from those interested in the city-acquired land. The city tells them that they have no plans to sell.

Meanwhile, observers watch the neighborhood evolve.

"The neighborhood could stabilize," said school-board member Ruth Ann Marston. "It's close to downtown. It's desirable in terms of job opportunities nearby, opportunities at the airport itself and because of the airport-related businesses.

"So we are just waiting to see what happens."

Buy a home in Phoenix, AZ and look at Real Estate in Phoenix, AZ and its Historic Phoenix Districts.

Fed cuts rates again and hints at pause

2008-05-09T14:50:00.000-07:00

Fed cuts rates again and hints at pause
By Chris Isidore CNMoney.com 04.30.08

NEW YORK -- The Federal Reserve cut its key interest rate by a quarter percentage point Wednesday, but the central bank's statement signaled it may be the last rate cut for at least a while.

The cut took the federal funds rate, the key overnight rate at which banks loan money to one another, to 2%. It had been at 5.25% as recently as September, when the Fed started slashing rates in an effort to spur the economy and keep the nation out of recession.

The fed funds rate, as it is more commonly known, is a benchmark for home equity lines of credit, credit cards and other consumer loans as well as the prime rate used for short-term business loans.

The Fed's statement repeated earlier ones about how rate cuts up to this point should help to spur the economy and lessen the risk of a downturn. But the central bank removed the following language form the current statement: "downside risks to growth remain."

The absence of that phrase, along with the new comment in the statement that "uncertainty about the inflation outlook remains high" led some experts to believe the central bank is signaling it is ready to pause on rates for some time.

Pause seen...but for how long?

"They haven't closed the door to further cuts, but they've shut it part way," said Mark Zandi, chief economist for Moody's Economy.com. "They're saying they believe they've done enough."

Stocks initially surged following the Fed announcement but wound up giving up all their gains and finished the day lower, a possible sign that investors are still worried about the weak economic environment. The government reported earlier Wednesday that the economy grew by just 0.6% in the first quarter.

Fed policymakers are not set to meet again until June 24 and 25, the longest gap in its calendar of meetings this year.

Zandi said he believes a pause is the proper policy for the Fed to take at this point.

"I think they've done a lot," he said. "They sense the financial system is on firmer footing. The economy is still weak, but the pace of decline doesn't seem like it's accelerating."

But Keith Hembre, chief economist for First American Funds, believes further weakening of the U.S. economy could cause the central bank to start cutting once again later this year or early in 2009.

"The Fed has certainly done a lot so far," he said. "But I think six months down the road we'll find that the economy is not rebounding as we've anticipated and the Fed will have to move rates lower."

That is what happened during the last period of Fed rate cuts, when it lowered rates throughout 2001, taking the fed funds rate down to 1.75%.

Then it kept rates on hold through most of 2002, before cutting again in November of that year and once more in June 2003. Rates were at 1% following that cut.

Fed may need to raise rates to fight inflation

Rich Yamarone, director of economic research at Argus Research, doesn't think rates will get to that level again. In fact, he believes the Fed's next move will be to raise rates to combat building inflationary pressures. He points out that the real fed funds rate, which is the fed funds rate minus the inflation rate, is now negative 1.27%.

"Policymakers know all too well that when real rates are negative for an extended period of time, inflation pressures rise swiftly and dramatically," said Yamarone, who added that the Fed might start raising rates as soon as December.

There have been growing complaints that the Fed's aggressive rate cuts this year have been a key to why food and oil prices have skyrocketed lately. The fact that the Fed has cut rates while central banks in Europe and Asia have mostly kept rates steady has led to a weakening of the dollar. That, in turn, has driven up commodity prices.

"The Fed will be reluctant to cut any further, because inflation remains elevated, and they do not want inflationary expectations to increase," said Arun Raha, senior economist for Swiss Re.

Once again, two of the presidents of Fed district banks who sit on the rate-setting Federal Open Market Committee -- Richard Fisher of Dallas and Charles Plosser of Philadelphia -- voted against the rate cut, as they did at the March 18 meeting when the Fed cut rates by a half-point.

The statement said those two members preferred no change in rates. But the two of them joined other members in voting for a quarter-point cut in the discount rate, the rate at which the Fed lends money to commercial banks.

http://www.historiccentralphoenix.com

The Housing Crisis is Over -- Wall Street Journal 5/2008

2008-05-09T14:42:00.000-07:00

The Housing Crisis is Over -- Wall Street Journal

Wall Street Journal, By Cyril Moulle-Berteaux
May 6, 2008

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.

Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005.

New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50%, and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.

The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.

The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.

In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.
The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high -- but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.

Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.

Inventories will drop even faster to 400,000 -- or seven months of supply -- by the end of 2008.

This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.

Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.

Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages.

And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.

This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.

When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.

More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.

A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year.

Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to sub-trend growth for a couple of years.

Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.

Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.

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