My New Blog

…some part of a real estate transaction goes so darn well! In this case, I am referring to something as simple as the signing of the documents by the purchaser… This week, it was a first time buyer, minimal down payment with an FHA loan, buying a bank repo condo near the medical school he is set to attend starting next week. Pretty normal right? Except that he had to come from Tucson to sign docs, and the title company was in far north PHX. We elected to have a courtesy signing done at one of the branches closer to this end of town (SE Valley)… Many times, courtesy signings are an imposition on the office doing them. Takes someone away from their own tall stack of files to work on. We expected the “hurry up and sign this” from the newest (least experienced) member of the office staff. Enter, right here, the nicest, most patient gal I’ve met for a signing in ages! Carolyn Hubbard, of Great American Title, not only spent the time needed to explain every page of the document package, she did it with joy, humor, and honesty. The buyer had every question answered, even the questions he did not know he had! Great American Title is to be commended for Carolyn’s dedication to her job.

Proving that the earth is flat, and hell has frozen over, a local homebuilder recently (January 09) called a buyer who was about ready to close on his new home, and asked him to re-sign papers, as they’d had a price increase, and wanted him to pay the new higher price. Incredible? You bet… Except it did not happen quite that way…

In reality, the homebuilder had lowered the price they were offering new customers, and were asking the buyer already under contract to sign papers to reflect the lower price… And this happened AFTER the final walk-thru, AFTER the loan docs were signed, AFTER the buyer had his funds deposited, and just a day or two before the keys were to be delivered… This price change was $13,500 on a $240,000 sales price…

Could the homebuilder have just kept quiet? Sure… There was $13,500 in it for them to do nothing. Was taking this action the right thing to do? Probably… Buyers talk, at the pool, the mailbox, etc., and word gets around…

Take home lesson? In challenging times, some find it easy to compromise their ethics. Here was a builder who chose to do the right thing, seemingly without even looking for publicity. They have not asked me to promote them, but I will. When so many builders operate without a shred of conscience, hiding behind bankruptcy laws when it suits them, re-emerging with a slightly changed name, ready to have their way with the next group of buyers, it is a pleasure to find a builder who stands tall, takes responsibility for their actions, and does the right thing… Oh yes… the builder? K Hovnanian Homes, one of the largest builders in the country. They get it…

From a high water mark of over 90 homes ON THE MARKET in early June of this year, Val Vista Lakes activity is moderating a bit… Several homes (10+) went UNDER CONTRACT between late June and mid July. This is a good pace, if the market can keep it up. (Insert Viagra joke here…)

We now have just (just!) 74 homes ON the market now, plus a few FSBO homes. That number is more in line with prior years, if we leave 2004 and 2005 OUT of the survey. The down number is SOLDS, with just 36 recorded in the MLS so far this year, plus a few more that were not entered into the MLS when sold. Very down number.

So, what are the causes of the local market being the way it is? It’s just one person’s opinion, but I believe that the media, with it’s constant drumbeat of “Buyers! Wait a little longer to buy – the prices will be lower!” has a HUGE impact. Set aside the fact that there may be a grain of truth to the idea of prices lower, later, this mindset can be self-fulfilling. Buyers might be staying put (wherever that is) and trying to time the bottom of the market curve. This is hard for industry insiders to do, and even harder for the casual participant to pull off. Markets can turn quickly, leaving would-be buyers with time left on a lease, or otherwise not fully able to jump in. The main question for owner-occupant buyers should be “What can I afford to buy right now?” Investor buyers, those not featured on an HGTV show, can afford a bit more leeway in trying to time the market. Unfortunately, that group is shell-shocked right now from their poor timing & bad loan choices of 2004-05. If we know just one thing about markets, it is that they operate in cycles. The times are great right now for buyers, and in time, the market will smile broadly on sellers, again. Always has, always will.

Another factor looming large on the horizon (or directly over us, as in storm cloud style), is the short-sale / repo market. Checking with title companies reveals this tidbit… A large chunk of the sales that are happening are distressed properties. Homes that have loans higher than their market value, or are empty with little effort being put forth to get them occupied, or have already been “taken back” by the banks. You can spot these as you drive the streets in your neighborhood. Look for weeds, dead grass, piles of newspapers in the driveway, and on occasion, a Trustee’s Notice taped to the front door. For some buyers, these look like gems just waiting to be polished. Some are, but many are not, for various reasons. From my own experience, most are not. Still, the seminar circuit is in full swing, with many followers.

FHA has been relegated to the “kid’s table” at the loan banquet for 15+ years. This is about to change. Look for Maricopa County FHA Loan Limits to increase to over 400k. They have promised to be easier to work with, as well. Let’s hope so! As a reminder to those new to the loan world, FHA refers to the “rulebook” that lenders play by if they wish to re-sell their mortgages as FHA-backed loans. The same lenders will still do loans, just that soon, they’ll be able to do FHA loans. Minor difference, but really no more than another product on the shelf at the local money store. I used to help loads of buyers with FHA loans, so I certainly welcome this improvement. The timing is right.

Time to head to San Diego. The “other Phoenix” in July & August. I seriously have run into quite a number of local folks over there, at the beach, at the amusement parks, in the restaurants, and of course, on the roads – tons of Arizona plates on cars there!

Til next time!

Well, we’re into the third quarter of the year… Time flies, doesn't it? In what many pundits have given to call a “bad year”, how is 2007 actually stacking up? Well, first let’s define “bad”… If you are a seller, especially one who bought your home in 2004 or 2005, and you wish to sell it now, you might call this market “bad”. If you are a buyer, especially one looking for a home to live in, you’re in “tall cotton”. Rates are reasonably low, and there is a huge supply of homes to choose from. The only rub for buyers is if they need the now-extinct 100% financing. Those loans are gone, and in their wake are a slew of would-be buyers / longer-term renters. (This would be a good time to own a few rentals, as rent rates are headed up.)

In the entire Phoenix area, there are roughly 54,000 homes on the market. In Gilbert, we have around 2600 homes for sale. For that part of Gilbert east of Gilbert Rd., the number is around 1500, and of those, 1400 are single family (detached) homes. All of these numbers are higher than they have ever been. And, in a somewhat disturbing note, almost half of these homes are VACANT. Other statistics that point to the health of any market: the Days On Market (DOM), and the ListPrice to SalesPrice ratio (LP:SP). For the DOM, we find that telling little stat to be be up over 120 this summer. And for the LP:SP ratio, that one is down to about 92 (meaning that of the homes that sold, they did so at a point about 8% lower than their initial List Price). I tracked the initial list price for this survey, for the simple reason that Over-Pricing still seems to be a problem. With the large number of foreclosures & new builds competing with resale homes for the few buyers there are, over-pricing is a very preventable handicap.

To this line-up of homes, we should add another group – the afore-mentioned new builds that are available through the builders. Many are listed in the MLS computer, but a large number are not. Estimates are that the area builders are holding onto roughly 10,000 homes in some phase of construction. For obvious reasons, this number is much harder to accurately track. Builders also are un-emotional sellers, and have the ability to drop prices down to near “cost”, and in some cases, even below cost. Anyone owning stock with the big national builders knows what a jam they are in! Profit margins have gone negative – just 2 years after these same builders had folks lining up to over-pay for their product. Many builders have closed shop, and more will in the coming year or two. Not a pleasant time to be a builder…

This author reads a wide variety of publications & on-line journals to (try to, anyway!) stay on top of the market, the changes, the trends, and what is happening. There are many different viewpoints on where the market IS, and where it is GOING. A survey can be released to the media, and covered in completely different “tone” based on who is reporting… Case in point:

The National Association of Home Builders Chief Economist, David Seiders, reports that the while the housing downturn has been underway roughly two years, most indicators point toward further deterioration in 2007, with only a slight improvement in 2008.

Read the Full Story At: http://realtytimes.com/rtapages/20070711_massivedownshift.htm

And then the other side of the story:

Economists at the National Association of Realtors are a little more optimistic than David Seiders of the National Association of Home Builders that 2007. According to NAR's senior economist Lawrence Yun, a "good' buyers market has evolved. Does that mean that consumers are actually buying something?

Read the Full Story At: http://realtytimes.com/rtapages/20070712_naryun.htm

Both of these stories are right out of Blanche Evans’ wonderful online newsletter at www.RealtyTimes.com (should be required daily reading for all Realtors).

More examples abound, and not just for the housing industry, although housing does get a larger share of the “poison ink” dished out by newspapers & other print media.

Locally, in the metro Phoenix real estate market, we are seeing a few signs that the “bottom” may be upon us in summer ’07. We will know for sure by the end of the year if the “turn” has taken place. If so, those folks who bought in 2007 will enjoy the gentle slope upward in the home’s value. When the turn does happen, there will be a few quarters of “sweet bargain-hunting” underway. As inventory dips, and the builders sell off their specs, prices will rise. These are historical facts on how a market recovers – the only question we have is when it actually begins. I’m hoping it is right now!