Metro Phoenix Real Estate News

Let me tell you a little story about my month of July.  What a crazy month it was!  I had 3 short sale deals being processed and as all three got approval, my buyer’s decided they weren’t interested in the homes.  All 3 of them!  So what did I do?  Well….I liked those homes so much that I found some other clients of mine that were looking for homes and fit them into the deal so I managed to save all 3!

Of course, one of the three ended up exploding because the lender decided to foreclose on the home even though we had an offer at the approved price.  I am now waiting on that one to come back on the market as a lender-owned property.

The other 2 are slated to close within the next 2 weeks.  Yay for me!!!

But wait…that’s not the end of the story.  One of the deals involved an owner that decided to remove the beautiful appliances in the home and replace them with some old, broken crappy appliances, probably off of Craig’s list.  Funny how that whole situation transpired.  I show up at the home for the home inspection and as I’m looking around, I notice that things don’t look right.  I check the pictures on the MLS against what I was looking at the home and see that the gas stove, and microwave were replace and 2 ceiling fans were removed.  Needless to say, we had to halt everything and get the seller to put back the stuff he took out.  You see, the contract clearly states that the buyer is buying what he sees in the home at the time the offer is written (fixtures).  They are not allowed to remove and replace nice stuff with garbage.  Let that be a warning to you buyers out there.  Take pictures of the inside of the home and keep them as reference to make sure you’re getting what you pay for.  Buyer beware.

And here’s another little sneaky thing I found out being done by some buyers.  I had a client that put an offer on a short sale but it wasn’t accepted by the lender because it came within 7 days of the foreclosure auction.  The property was previously approved by the lender to be sold as a short sale for $113,500.  The property ends up going to auction and sold for $90,000.  I find out after the fact that the buyer at auction was none other that the buyer that dropped the short sale deal 1 week before auction!  They stalled the property until the last minute and then snuck in and bought it for $23,500 less than the approved short sale price.  My clients ended up buying it from this ‘flipper’ for $111,500 so they got a little bit of a better deal.  So who loses in this game?  Obviously the bank loses over $25,000 (legal fees) but the other loser is the property owner/seller who gets their credit destroyed.  I would never suggest my clients to play this risky game not only because it harms the seller and lender, but because it is really an unethical way of doing business.  But it’s good to know what the shysters are doing out there.

Keep checking back for more news and updates coming shortly.  I will be writing about the investment real estate market and the opportunities that are out there right now.  www.CanadiansBuyArizona.com

It’s getting really hard to figure out what is going on with our housing market.  Just when it seems like we have stabilized and reached bottom, the market softens over the summer.  We had been in a pretty good groove for the last year.  By groove I mean that there seemed to be a supply/demand equilibrium that was reached in many parts of The Valley.  Now it appears as if we might be heading for a double dip.  Not so much caused by number of distressed properties, but other economic factors.

Why?  Hard to explain since our market is so depressed already, value-wise.  Only reasonable explanations are the end of the home buyer tax credit that had boosted new and existing home sales - especially at the low end of values, and the SB1070 legislation that has the Hispanic market spooked and is having a detrimental effect on our local economy.  At least temporarily.  Also I think with the severity of the recession, we’re seeing a return to ‘cocooning’.  this is a phenomenon whereby families consolidate into less housing - children move back in with their parents, parents move in with their children.  All in the interests in conserving money as family income declines.  The opposite was true earlier this decade where it seemed everyone was buying a home and the number of occupants per home was declining.  This phenomenon also has a negative impact on housing as it increases supply in a way that is difficult to gauge.  Another factor continues to be lack of financing availability.  We’ve gone from a gusher in 04-06 to a trickle currently.  The government and lenders will have to find a happy medium between those two polar opposites and something will have to be done about the decimated consumer credit that is out there right now.

I am including some links to some great housing market data from the last couple of months.  Take it all with a grain of salt.  Some of the data is upbeat while some is pessimistic. Raw data and commentary, provided by ASU:  http://wpcarey.asu.edu/realestate/upload/Press-Release-July-2010C-resale-homes.pdf

As of the end of July, total listings are up approx. 1266 from last month.  Total sales for the month of June were down approx. 1459 units over the previous month.  Please keep in mind that short sale volume as a percentage of total sales is on the rise - they represented 26% of the closed sales last month.  Given the increase in short sale  transactions and the length of time they take to come to fruition, this might be a sort of market correction that needs to compensate for more transactions in the pipeline that are taking longer to close.  We will see if that is the case in the coming months.

We currently site at a 6.1 month supply of homes Valley-wide which is high.  A stable market would be closer to 4 months supply.  94% of sales are below $400,000.

If you look at national housing and economic data, there is some positive news, so hopefully that spreads to our market sooner rather than later.

Stay on top of the market by checking my website regularly at www.CanadiansBuyArizona.com.

Hi Y’all!  Firstly I’d like to apologize for the inordinate amount of time between blog posts.  I’ve been really busy the past few weeks with a couple of larger deals involving apartment buildings, land and bulk condo purchases, but that’s no excuse!

I wanted to share with you a little bit of information I gleaned from a recent seminar I attended.  It really resonated with me and tends to make alot of sense.  In these difficult times which are like no other in history in terms of what is happening to our economy and people’s struggles to stay afloat with everything that is happening, changes will need to be made in certain areas to allow the economy to recover more quickly.  One of those areas involves credit and credit scores.

With so many homeowners and investors defaulting on their mortgage payments, the average credit score is plummeting like a stone.  As a result, it is leaving a much smaller and constantly shrinking pool of potential new home buyers to gobble up the incredible real estate deals that are out there.  Even if you have the financial ability to afford the new lower priced homes after the correction, most people cannot buy them because their credit is shot for 1-7 years.  Something will need to be done to stimulate the housing market and recovery.

I think we are going to see the government step in and take measures to adjust either hoe credit scores are calculated or credit score requirements to qualify for a mortgage loan.  It is just a matter of time until this happens, in my opinion.  The government has shown time and time again that they base their decisions on the masses (voting public) and the masses are now burdened with crappy credit.  Keep in mind that this is only my opinion, but it seems to be shared by many mortgage lenders and credit experts.

The other important consideration to this recovery is a loosening or credit and money by lenders.  Right now, too few lenders are lending and the ones that are lending are taking forever to approve and fund loans which is slowing down closings and scaring sellers from accepting offers subject to financing.  This trend must end as well.

Should these things happen, it should have very positive affects on home sales across the country which will, in turn, aid the eventual recovery.  We’ll just have to wait and see what happens.

Visit my website at www.CanadiansBuyArizona.com for the latest news and updates about the real estate market in Metro Phoenix.

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Well, I think you’ll be shocked to learn that I think that the party is reaching its conclusion in terms of the better quality investment properties out there.  The ‘A’ class properties have not really taken a tumble at all so I’ll leave those out of this analysis.  It’s the ‘B’ grade properties that are really starting to move.  I have seen and/or been involved in 3 bidding wars on investment properties in the past 2 months.  Two were apartment/condo buildings and one was an industrial condo building.  All were distressed, lender-owned sales.  In all cases, there were multiple cash offers presented to the seller that effectively bid up the value of the property - similar to what’s been happening on well priced single family homes under $120,000 in certain parts of the Valley.

Remember, these are CASH buyers.  So there is quite a bit of money finding its way into our real estate market searching for deals.  While there are many ‘C’ grade properties for sale, there is a much lower level of interest on them which is why they have plummeted in value.  The better quality buildings in better areas with more stable income are what these cash investors seem to be targeting.  And all asset classes.  I was previously of the opinion that apartments would be the first to recover followed by office/industrial/retail.  Now it’s looking more and more that they will be stabilizing together.  I still think there will be plenty of trouble, distressed assets that come up for sale because there has to be a correction in valuation of the properties based on lower income.  But I don’t feel like there will be fire sales happening with them because they will be gobbled up fairly quickly are more reasonable values.  For a firesale to happen, there would have to be a glut of properties sitting on the market for a prolonged period of time where each new listing keeps weighing down the overall values.  That does not appear to be the case.

So if your plans are to grab some smokin’ deals, I would suggest that you start taking a serious look right now or you may be left on the curbside.

Stay up to date with market data and news at www.CanadiansBuyArizona.com

We now have all the first quarter stats for the market and how the measure up to the past.  All-in-all a very promising quarter pointing to eventual recovery.

Total listings are down from April to May while total sales are up over 500 units.  Overall, sales are down about 2% compared to May 2009 probably due to lower inventories and the expiration the federal home buyer’s tax credit.  Short Sales continue to represent an increasing portion of total sales and now represents 21% of the total sales in the Valley.  We currently have a 4.4 month supply of homes across the Valley. A bit high, but a good portion of that represent the $400,000+ market that is much more stagnant.  The under $200,000 price range is turning over very quickly.  If you’d like to view some excellent graphs which show market activity, click HERE.

 Distressed property sales and volume appear to be down across the board from April to May.  New notices filed is down 500, active notices of default are down 2,500, sold to the lender at auction is down from 2,100 in April to 700 in May, and new foreclosures dropped from about 7,300 in May to 2,000 in June.  What is this telling us?  That foreclosures are down even more so, meaning that short sales are becoming the norm and more and more lenders are taking that route with distressed properties than going through the foreclosure process.  This is even more true as default rates across the US and in Arizona have gone up in the past 10-12 months.

On the commercial front, it is reported that lenders took back $10 billion in assets nationwide in the first 5 months of the year and have only disposed of $2.6 billion of them.  Analysts are further claiming that there is now $28 billion of commercial REO inventory from this market cycle.   That means that there is a huge ’shadow inventory’ as we call it, lying in wait.  We’ll have to see if this inventory is dumped on the market or more wisely, released slowly to allow effective absorption without a wholesale fire sale.  This does bode will for commercial investors lying in the wings but I can tell you that there is quite a bit of investment capital chasing what few decent investment opportunities are out there.  I know first hand as I have a few investors attempting to acquire distressed assets and we’re running into a boatload of competition - all cash buyers.

Stay abreast with market new and dat via my blog and website at www.CanadiansBuyArizona.com.