Hello My Friends!
With so much crazy news in the news cycle these last few months, here’s a bit of good news….It look like U.S. home resales rose in November, reaching their highest levels in nearly 10 years! And, since you are in the Phoenix, Arizona market, according to
realtor.com you are in the Number 1 area for 2017!
What caused the home resale market across the nation and in Phoenix to rise? A big part of it has been the news of the rise in interest rates which traditionally causes all the “fence sitters” to lock in the low interest rates before they go up. Nothing like a threat of an increase in a monthly mortgage payment to get Buyers motivated huh? LOL
The NAR ( that’s National Association of Realtors to others outside the industry…) said on Wednesday existing home sales increased 0.7 percent to an annual rate of 5.61 million units last month. That was the highest sales since February 2007 back when we were in the throes of the housing crash.
October’s sales pace was updated to reflect a downward count of 5.57 million units from the previously reported 5.60 million units.
The people that know these thing (they are called economists…) had forecast slipping sales of 1.0 percent to a 5.50 million-unit pace in November but the numbers proved otherwise. Overall sales were up 15.4 percent from a year ago. Nationally they rose in the Northeast and South, but fell in the Midwest and West last month.
Since Trump’s victory on November 8th mortgage rates have surged .Trump’s proposal to increase infrastructure spending and slash taxes is seen as inflationary.
Since Trump’s victory on November 8th mortgage rates have surged .Trump’s proposal to increase infrastructure spending and slash taxes is seen as inflationary.
Since the election, the fixed 30-year mortgage rate is up 50 basis points to an average 4.16 percent, the highest level since October 2014, according to information from Freddie Mac.
We may also be seeing a further jump in mortgage rates after the Federal Reserve raised its benchmark overnight interest rate last week by 25 basis points to a range of half a percent to three quarters of a percent with the with U.S. Central bank indicating as many as three rate hikes next year. So those of you “on the fence”, it might be a good time to jump down and those of you considering a home purchase in 2017 to start the ball rolling. I can offer you information on what the impact of the increase in the mortgage rate will have on you for Phoenix home purchases. My goal is to find you the home that best fits your needs and your budget.
I have an excellent stable of Lenders who can qualify your ability to purchase. Contact me with any questions you might have.
And, as always, thanks for stopping by….
Metro Phoenix’s housing market experienced a jump in the housing market The area’s median home-sales price climbed almost $10,000 in March from February.
The median price for March was $204,500, up almost 4.9 percent compared with $195,000 in February, according to a new report from the W. P. Carey School of Business at Arizona State University.
March’s higher home prices came as part of the traditionally busy spring sales season for metro Phoenix. Increases likely will continue through May says the report.
February’s median price had been the lowest median sales price reported for the region in seven months and despite the bump in home prices in March, the number of sales is still far behind last year’s pace. Home sales were down 20 percent in March compared with the same month a year ago.
Demand for Valley homes will continue to rebound more strongly next year, but a recent drop in mortgage rates and lenders making mortgages available to more buyers could help the housing market over the next few months.
The average rate for a 30-year mortgage fell to 4.18 percent this week, according to real estate research firm Zillow. And in mid-April, the Mortgage Bankers Association’s survey indicated it was the easiest time for borrowers to get mortgages in the past three years.
Median metro Phoenix home-sale price likely will fall again during summer, when luxury, snowbird and active-adult home buyers retreat from the area’s heat.
We may still be looking at little to no annual price appreciation by the end of the year though so we will have a level market as we finish out the year.
On the horizon we see a big wave of buyers who lost homes to foreclosures and short sales during the recession should be back in the housing market starting next year, boosting demand and prices in metro Phoenix.
So stabilization is the key word for the first half of 2014 and will continue till 2015.
Stay tuned for more…
The good news for metro Phoenix is that home values are still on a steep upswing — by more than 35 percent in November, to be exact — and foreclosures and short sales continue drying up. Ironically, that leads us to the bad news, which is that the Valley may be headed toward — and I quote the words of a local expert — a “chronic supply problem.”
Michael Orr, a real estate expert at Arizona State University’s W.P. Carey School of Business, released his latest housing report on Thursday stating that last year’s surge in Valley median home prices continued through November, which also climbed by about 3.5 percent from the previous month to $162,500.
The boost, Orr said, has been gradually pushing out cash investors, who made up 27.5 percent of all Valley home sales in November. That’s still a high figure, but was nonetheless down from the August peak of about 35 percent.
Much to the relief of traditional homebuyers, who typically need financing, fewer investors could mean a less competitive market in 2013, he said. But their woes may not end there.
The price surge has been driven by an abnormally low supply of homes for sale in the Phoenix market — and Orr believes the problem may persist, or even worsen, this spring.
“We don’t see a strong flow of new listings coming onto the market,” Orr said in the report. “For example, short-sale listings are down about 70 percent compared to this same time last year. As the market improves, it seems many people may have decided to hang onto their homes in an effort to let values keep going up. I also anticipate another possible drop in supply this spring.”
In recent months, competition for the few homes for sale has grown increasingly fierce, and more often than not favors those with cash-on-hand. Ordinary buyers have thus turned to the new-home market out of frustration. While the investor trend seems to be waning, the supply problem persists, and “Unless new-home builders can start keeping up with rising demand, we may have a chronic supply problem,” Orr said.
On Dec. 1, almost 13,500 single-family homes were for sale on the Arizona Regional Multiple Listing Service, according to Orr’s report. That’s down 7 percent year-over-year, but was still 8 percent better than November and up by almost one-third from September. But supply may dip again early this year as the number of distressed properties that once flooded the market continues to dwindle.
In November, there were 34 percent less completed foreclosures year-over-year, nearly 48 percent fewer homeowners that started the foreclosure process and a whopping 43 percent drop in overall supply of distressed properties, the report said.
That means bargain deals are now increasingly harder to come by, with homes priced below $150,000 making up only 6 percent of all supply — or about 810 homes — on Dec. 1.
“As prices go up each month, price-sensitive buyers, such as investors, get a little less enthusiastic,” Orr said. “Bargain hunters haven’t got much left to pick over, which is allowing more normal buyers to jump into the market before prices rise past what they can afford.”
The next few months may be a good window to purchasing a home as investors drop off and before prices surge up.
Developers and homebuilders in metropolitan Phoenix are scrambling to buy property for dozens of new subdivisions. What a differerence a year makes!!
The Arizona Republic reports that new home building rose 71 percent in 2012 over 2011 and that the number of available lots is dwindling.
The land rush is further evidence that metro Phoenix’s homebuilding industry is recovering from its devastating six-year slump.
Homebuilders sealed nearly 100 land deals in December alone that will create thousands of sites for homes and are now buying more land in more moderately priced areas in the northwest and southwest parts of metro Phoenix as prices continue to rise in the metro area’s southeastern portion.
The number of empty lots ready for construction has shrunk to its lowest level in more than a decade, with only enough lots in hand to last builders a year.
The land purchases are mostly in communities started before the crash and in some ways echo growth in the boom years, except the developments farthest from Phoenix’s core aren’t yet attracting builder or buyer attention. Most of the land purchases are inside the outermost freeways.
Avoiding a repeat of the 60,000 houses built in the region during 2005-06 is good news. This time around, new-home construction is based on real demand from homeowners and not speculation by investors and builders. Metro Phoenix homebuilders began to see more people checking out their model homes and sales start to rise in spring 2012, six months after the resale market had begun to recover.
The number of new homes built in the Phoenix area climbed 71 percent to 11,600 in 2012. New-home sales followed the trend, with buyers closing on 10,034 new houses last year, up 41 percent from 2011. These are the biggest jumps for the new-home market since 2006. The median price of a new house climbed almost 15 percent during 2012 to reach $240,000.
“The recovery in the home market is real. It’s not about wishing and building for buyers who aren’t there or can’t afford the house,” said Arizona real-estate analyst RL Brown, co-publisher of the Phoenix Housing Market Letter.
Mike Orr, who studies real estate at Arizona State University’s W.P. Carey School of Business, believes builders must construct more houses in the Phoenix area this year to keep up with buyer demand. Another reason: The number of houses offered for resale has hovered near a record low for the past year.
“It seems many people may have decided to hang onto their homes in an effort to let values keep going up. I also anticipate another possible drop in supply this spring,” Orr said. “Unless homebuilders can start keeping up with rising demand, we may have a chronic supply problem.”
And with the competition among Buyers for Short Sales and Foreclosures, buying a new home is a relatively stress free way of purchasing… Stay tuned!
As Phoenix home values surged and foreclosures and short sales declined during the last year, homes priced at the lower end of the market have received the bulk of the attention.
But what about the luxury home market such as Scottsdale and Paradise Valley?
Real Estate Experts in those luxury markets have reported the luxury home market — which accounts for homes priced above $1 million — did not lose the same value as we have seen in the Phoenix Metro market. Additionally, values on those homes have been recovering at a slower pace than most.
The number of Phoenix-area luxury home sales peaked in 2005 at 1,563 — almost four times the sales volume reported four years earlier. Although sales gradually declined thereafter, luxury prices peaked at $404 per square foot in Dec. 2007.
But those mega-home values tumbled beginning in 2008 as the housing crisis crippled the Valley. While luxury home values continued to decline for a longer period than those of lower-priced homes, their overall peak-to-trough decline was not nearly as dramatic.
For example, luxury-home prices hit bottom in February 2012 at $277 per square foot, while the rest of market had already been rising for four months prior. Although that February figure was a significant 31 percent drop from the 2007 peak, it was still less of a blow than the whopping 59 percent decline the rest of the Valley housing market experienced from its peak.
Last year, luxury home sales — about 800 — reached the highest level since 2007. By the end of 2012, luxury home prices had also risen slightly by about 5 percent to $291 per square foot, and are expected to continue rising.
And, unlike the Valley housing market’s supply problem, the supply of luxury homes for sale was roughly in balance with demand by the end of last year.
After three consecutive years of holding strong at No. 2, Arizona’s 2.69 percent home foreclosure rate dropped to the No. 3 spot in the nation last year, according to RealtyTrac’s 2012 year-end report released late Wednesday.
Improving from second worst to third worst is hardly an improvement by most standards however, foreclosure activity throughout Arizona was still down significantly — by 33 percent from 2011 and 51 percent from 2012.
That 33 percent year-over-year decline in foreclosure activity last year was also the fourth-biggest drop in the nation, the report said.
• Arizona’s 2.69 percent foreclosure rate for 2012 means that nearly 76,500 homes statewide had a foreclosure filing — meaning a default notice, scheduled auction or bank repossession — at some point of the year. In other terms, that’s one in every 37 existing homes in Arizona that entered some stage of the foreclosure process.
• The metro Phoenix foreclosure rate was 3.09 percent, which ranked the area at No. 17 in the nation.
• Both Arizona and Phoenix have notably higher foreclosure rates than that of the nationwide figure, which fell slightly to 1.39 percent for the year.
• The foreclosure process continues to grow longer for struggling homeowners. In the final three months of 2012, the foreclosure process took an average 414 days to complete. That’s up almost 20 percent year-over-year and the longest-ever time frame since RealtyTrac began tracking that data in 2007.
• Government-backed entities of Fannie Mae, Freddie Mac and the Department of Housing and Urban Development were responsible for 26 percent of all bank-owned inventory last year. Bank of America followed in second place with 8 percent of all bank-owned inventory, Wells Fargo had 6 percent while US Bank Corp and JPMorgan Chase each had 4 percent.
Happy New Year! As we move into 2013 we going to see some specific changes throughout the real estate landscape. In this blog, I’d like to point out some important changes that will be happening with FHA loans.
FHA Home loans will have new changes going into effect on January 1st, 2013. Recently, HUD, which oversees the FHA announced their latest budget numbers and announced a slew of new methods they will use to try make the agency’s finances more balanced.
Specifically, here are the two most important parts of their announcements for someone considering get an FHA loan after January 1st.
1) FHA Mortgage Insurance annual premiums (MIP) will be moving from 1.25% to 1.35% for borrowers who make a 5% or less down payment.
2) The policy of a homeowner being able to cancel the MIP on their FHA loan after 5 years, if they are at 78% of the value of their home will be eliminated.
Now moving from 1.25% to 1.35% on an annual basis may not seem like a big deal, but is just the latest escalation of mortgage insurance premiums on FHA loans. Just three years ago, monthly mortgage insurance on FHA loans were set at .55%. That means that in the past three years as the Government has crafted programs to push down home loan interest rates, the FHA has raised the annual cost of their mortgage insurance from $91.67 per month to $225 per month on a $200,000 loan. That’s quite a jump and unfortunately, as we had warned in past articles, it doesn’t seem as there is an end in sight.
In addition, the new policy to never allow for the cancellation of this mortgage insurance will also hurt new homeowners who decide to keep FHA loans for the long term. As they will never be able to eliminate the mortgage insurance associated with it. In fact, those who have an existing FHA loan, also may be further deterred from refinancing into a new FHA loan, knowing that they will never be able eliminate the mortgage insurance associated with it.
In the end, this may not be the last changes we see with FHA loans, but it is yet again in our opinion a negative for the FHA loan going forward. However, with mortgage loan rates at all time lows and FHA loans still only requiring a 3.5% down payment, FHA loans still provide a very attractive option for buyers with a lower down payment requirement.
Now that the elections are over, one of the biggest questions facing our economy is what will happen as we approach the “fiscal cliff.” we are all hearing about? What does this mean for home loan rates?
Last week, President Obama was re-elected to a second term in office and the market’s position is that the Fed will continue its latest round of bond buying until the labor market and economy improve significantly. While recent Jobs Reports have shown modest improvement in the labor market, it is still a fragile area of our economy.
The word on Wall Street as we approach 2013 is “fiscal cliff.” What is the fiscal cliff and why is it significant? Essentially as we head into 2013, tax cuts for individuals and various tax breaks for businesses are due to expire, taxes pertaining to President Obama’s health care law will begin, spending cuts enacted by Congress as part of the debt ceiling deal of 2011 will go into effect, and long-term jobless benefits will expire. The Congressional Budget Office estimates that if all of these items occur, it could take an estimated $600 billion out of the U.S. economy in 2013, pushing the country into a recession.
What does this mean for home loan rates? The issues surrounding the “fiscal cliff” will be talked about from now until the end of 2012 and that could mean a lot of market uncertainty, which typically results in investment dollars moving from stocks into bonds, thereby improving home loan rates (which are tied to mortgage bonds). In addition, continued concerns over the debt crisis in Europe and more turmoil in Greece will likely keep investors in the safe haven of our bond markets, which will also benefit home loan rates.
However, a big issue we need to continue to monitor is inflation. One of the goals is actually to create inflation. And remember, inflation is has a negative effect on bonds (and therefore home loan rates) as it reduces the value of fixed investments like bonds. This is an important issue to watch in the weeks and months ahead.
All these factors indicate a rate increase is a good bet in the near future so the bottom line is that now is a great time to consider a home purchase or refinance, as home loan rates remain near historic lows.
So lots of you might be happy with a proposed freeze on foreclosures. This is not good news for us here in Arizona.
Data from RealtyTrac Inc. showed that the sale of properties in foreclosure has been brisk in states like Nevada, Arizona and California. Some of the cities which saw the greatest expansion during the real estate boom such as Las Vegas, Phoenix and Los Angeles have also been the same areas which have witnessed a greater percentage of sales coming from foreclosures That is, until the recent wave of foreclosure freezes began occurring all across the country.
In these areas, having foreclosures frozen is very possibly the worst thing that could have happened to markets which were already struggling as a result of the housing crisis. Data from the report showed that sales of foreclosures made up 56 percent of Nevada-based transactions, 47 percent of transactions in Arizona and 43 percent of those occurring in Southern California. This means that freezing foreclosures also means freezing new home sales.
Major lenders including J.P. Morgan Chase, Bank of America, GMAC and PNC Financial services have all halted foreclosure proceedings. What began as a series of apparently isolated incidences has now spread to all 50 states. Experts now believe that it is unclear exactly what the extent of the problem might be and how long it might take to resolve.
This slows down the clearing out process that is necessary to bring the Real Estate market back to health and prolong the protracted period of recovery. Not good news…
Here is some interesting news on the foreclosure front. Last quarter, more homeowners voluntarily defaulted on their mortgages and chose to walk away from their homes than the total number of mortgages permanently modified to date under the Administration’s year-old Home Affordable Modification Program (HAMP).
According to new data from the team of researchers at the University of Chicago and Northwestern University that first identified “strategic default” behavior last year, the number of homeowners willing to default when the value of a mortgage exceeds the value of their house, even if they can afford to pay their mortgage, has dramatically increased compared to just a year ago.
The percentage of foreclosures that were perceived to be strategic was 31 percent in March 2010, compared to 22 percent in March 2009 and the trend is getting worse.
So here is the rising trend…now we have homeowners who can afford to make the payments and are now walking away because the $400,000 home they bought a few years back is now worth $200,000 and are of the mindset that they will never get back the equity they lost.
So what is the reason for this? One likely reason for this growing trend is the increasing perception that lenders are not going after borrowers who walk away. In December 2009, the average homeowners surveyed said the probability that a lender will go after a borrower is 56 percent, as compared to 54 percent reported in March 2010.
Well imagine that! If there are no consequences or at least no “perceived” consequences, people will take an easier way out or make a strategic financial move and with more and more homeowners believing that lenders are failing to pursue those who default on their mortgages, a growing number of homeowners will walk away from their homes even if they can afford monthly payments.
So what do we make of this? I personally believe there is a huge cost in taking this road, to our country, our economy, and our neighborhoods. We will prolong the recovery process indefinitely as these trends continue but what is more disturbing to me is that the culture or social acceptance of walking away from one’s financial responsibility and the pervasive “everyone owes me” mentality has made it alright to consider these kinds of actions.
If there is a legitimate reason for one to consider a short sale or a bankruptcy they should do so, after all, the laws that make it possible were put there to help those kinds of situations and in the long run have proven the best way to maintain a healthy economy, but in the case where one has the ability and the means to make payments on the home they’re in, they should.
Is it merely a strategic move in an environment of “the bailout” and a case of cut my losses or is there a benefit in sticking it out and owning up to one’s responsibility. What do you think?
Sal Cartagine is a 23 year veteran of the Real Estate industry specializing in residential sales, rental, property management and investments.
