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.
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…
In today’s tough economic climate, people are getting creative with ways to generate income. One of them unfortunately is the good old American lawsuit.
Most lawsuits in real estate transactions, are the result of buyers feeling that the seller did not tell them all they knew about the house, before they bought it. Don’t think Buyers find out about things once they move in? Guess again!
When it comes to disclosing things you are aware of about your home or neighborhood, noise problems or other nuisances, don’t be shy about letting the Buyer know.
If you don’t disclose that the area has problems with airport noises, or garbage odors from a nearby dump for example, not only would the new owners of the house will find that out within days of moving in, your friendly neighbors, the “welcome wagon” will spill the beans just as they greet the new owners with a courtesy visit to welcome them into the area.
Here’s an actual case.
The previous owners had disclosed to a Buyer that the house has had a problem with the foundation when it was being built… 35 years before! The result of that problem was that the foundation was reinforced better than any other home in the area, and in the previous owner nor The Seller never had a problem while they lived there. The buyer, however, sued him for non disclosure.
After 2 years of depositions, thousands of dollars in lawyer’s fees, and countless sleepless nights, the arbitrator awarded the buyers $120,000 which they used to upgrade the entire house, because there was nothing wrong with the foundation. The legal fees for both parties were paid by the home seller.
But how did the new owner know? The neighbor across the street came to greet the new owners, and as they unloaded their belongings, she told them the history of the house, and how the foundation gave way, and how it was fixed. The new buyers felt they should have been told, consulted an attorney who made a case and got some money from the seller.
As you can see, you do not have to necessarily do anything wrong, all you have to do to get into legal trouble is to not pay attention when filling out The Real Estate Disclosure Statements.
Most home sellers have no idea how easy it is to land in court with their home buyer. A few steps outlined here can help, if followed properly.
When selling a home, by law, the home sellers have a very serious obligation of disclosing in writing to the home buyer any and all defects that they know about the property.
Your Realtor will provide you the right forms, it is up to you to fill them out, completely, truthfully and seriously. If you want to keep your money and stay out of court, follow these simple steps with care:
- Spend time looking over the Seller Property Disclosure Statement and make sure you understand every question before you answer it. The questions in these forms are geared towards making sure you don’t miss anything important. Keep in mind that there will be a lot of people reading what you wrote: the home buyers, the Realtors, attorneys… even the judge!
- Do not allow anyone to fill them out for you, not the Realtor, or your children or anyone else who is not on title. These are legal documents, treat them with care. Even if you know the buyer is a “friend” who you think you know. You still be treated as a “defendant” if your friend sues you.
- Tell the buyer everything you know about the house, specially if you are the typical DIY (Do It Yourself) type of guy/gal. The rule is simple: “If in doubt, disclose it.” A disclosure should be written in a clear and specific way: “… In 1997 there was a leak under the kitchen. We called ABC Plumbing and they fixed it” or “… around 2002 during El Nino rains, the basement flooded, a sump pump was installed by a plumber“
- If you did not take permits for any additions or structural modifications you made to the house, disclose that very clearly. These types of additions or modifications without permits is what puts the new occupants of the house at risk if they do not know.
Times are tighter than ever so protect yourself and don’t let the same “Welcome Wagon” that said hello to you years back, be a potential source of misery after you’ve gone.
Sal Cartagine is an award winning Real Estatet Broker with 23 years experience specializing in residential, relocation, rentals, investments and property management. Sal can be reached directly at (602) 818-3886
True story. A close friend of mine walks into a bank ( I won’t mention the name but the initials are W-e-l-l-s-F-a-r-g-o) to put an equity line of credit on one of his homes. He has an 840 credit score, no debt, owns three pieces of property that are paid for, and almost $750,000 in liquid assets.
Slam dunk huh?….
He gets rejected!!
Amazingly, I have seen many people who would have been “slam dunks” for financing in 2006 get completely shut out of the capital markets in 2010.
And it doesn’t matter whether we are talking about commercial or residential, the factors which determine who gets money from commercial banks (or any institution for that matter) is pretty consistent for all property types. Here are some of the guidelines banks are requiring to get a home loan today:
• 720+ FICO score
• Verifiable and sustainable employment or self employment for
the last two years
• 12+ months of mortgage payments in an immediately
liquid account
• A minimum of 25% in reserves if planning on purchasing an
investment property
• 2 years experience as a landlord/property manager,
if purchasing an investment
• No late payments or foreclosures on real estate debts
These are the basic requirements needed which the lending world wants.
Obviously there is market need for reasonable financing. I had a meeting yesterday morning with a couple of business partners and we were discussing ways to bring capital to the market that didn’t require you show you could change water into wine in order to qualify.
Private investors are looking for ways to make a decent return on their investments and although the Real Estate market has been difficult for the last few years, it remains a solid option for investors to lend money if those of us of the creative mind can package deals and offer investors a good return and create a win-win situation.
I predict a trend of this nature where a good portion of the financing will come from private investors as Fannie Mae guidelines get more stringent and the commercial banks continue to be overly tight.
You will see and hear a lot of this very soon so stay tuned. What are your thoughts?
Sal Cartagine is an award winning Real Estate Broker with 23 years experience specializing in residential, relocation, rentals, investments and property management. Sal can be reached directly at (602) 818-3886
If you don’t disclose that the area has problems with airport noises, or garbage odors from a nearby dump for example, not only would the new owners of the house will find that out within days of moving in, your friendly neighbors, the “welcome wagon” will spill the beans just as they greet the new owners with a courtesy visit to welcome them into the area.
Here’s an actual case.
The previous owners had disclosed to a Buyer that the house has had a problem with the foundation when it was being built… 35 years before! The result of that problem was that the foundation was reinforced better than any other home in the area, and in the previous owner nor The Seller never had a problem while they lived there. The buyer, however, sued him for non disclosure.
After 2 years of depositions, thousands of dollars in lawyer’s fees, and countless sleepless nights, the arbitrator awarded the buyers $120,000 which they used to upgrade the entire house, because there was nothing wrong with the foundation. The legal fees for both parties were paid by the home seller.
But how did the new owner know? The neighbor across the street came to greet the new owners, and as they unloaded their belongings, she told them the history of the house, and how the foundation gave way, and how it was fixed. The new buyers felt they should have been told, consulted an attorney who made a case and got some money from the seller.
As you can see, you do not have to necessarily do anything wrong, all you have to do to get into legal trouble is to not pay attention when filling out The Real Estate Disclosure Statements.
Most home sellers have no idea how easy it is to land in court with their home buyer. A few steps outlined here can help, if followed properly.
When selling a home, by law, the home sellers have a very serious obligation of disclosing in writing to the home buyer any and all defects that they know about the property.
Your Realtor will provide you the right forms, it is up to you to fill them out, completely, truthfully and seriously. If you want to keep your money and stay out of court, follow these simple steps with care:
