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Foreclosures

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Predictions for the Greater Phoenix Real Estate Market

This is a portion of an article written by our broker, Jim Sexton in the Arizona Journal of Real Estate and Business for December.   The first half of the article deals with variables to be resolved post election by the president.   Jim’s predictions follow:

 “2012 will have around 90,000 sales reported by ARMLS, which will be a 10-12% drop from 2011 numbers, but the overall dollar volume of those sales will be up almost 6% from 2011.  The average price per square foot will be up over 13% for 2012.  Using these trends, I believe that the number of sales in 2013 will remain around 90,000, although if I could give a range it would be 85,000-95,000 sales for the year.  I think prices will continue to bounce back.  I don’t expect another 13% increase, but I see a price improvement in the 5-8% range.  I expect active inventory to rise from the current less than 3 month supply to the more balanced 3-4 month supply.  Both short sales and REOs

will continue to decrease.  Distressed properties made up 70% of the market 2 years ago, 65% 1 year ago and currently are at 41%.  Look for that downward trend to continue to under 30%, with REOs below 10% and short sales dropping to around 20%.  Also expect to seeArizona’s population continue to grow and the building industry inPhoenix‘rise from the ashes’.  Both will continue the positive steps we’ve seen to our economic recovery for the region.”

 Based on Jim’s experience, knowledge and his great batting average we are expecting that 2013 will be a successful and positive year for real estate in our Valley of the Sun.

 

 

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So you want to buy on the Courthouse Steps?

colorful road curve

We just attended a class dealing with Trustee Sales in Arizona, given by a real estate attorney specializing in this portion of the law and a Realtor who is on the steps every day.

We took away a lot of information, but facts that directly apply to you as a buyer are what we will mention here. First the purchase money: you will need a certified check for $10,000.00. That will be verified as you sign up to bid. You will need to make the balance of payment for the property within one business day ! If you fail to make the payment by the end of the following business day after the auction, you lose your $10,000.00 earnest money.

This eliminates all bidders with loans, unless you are to be an investor non-owner occupant and want to deal with one of the unlicensed short term “hard money” lenders at up around 18% with 20-30% down.

The starting bid is stated and it is usually the amount of the first mortgage plus $1.00, but it can change up to the moment of the actual auction. Bids are usually increased by $100 each bid.

Next most important is that you are buying the property totally and completely “as is”. That is the physical as well as the legal condition. You do not get title insurance with the purchase, you may have to evict the current residents. You may have additional liens on the property. You may not have legal title to the property. You may not be able to inspect the property. It may be pristine or it may be destroyed.

There will be bidders representing investors or investment groups who are buying 5 to 100 homes at a time! Definitely the big league.

Incidentally the current (Jan-May 2012) sales numbers show that the winning bids are an average of 31% above the opening bid and 64% of the original loan amount. 80% of the sales are postponed from their original sale date and 60% additionally are postponed on the day of auction! Of those 40% remaining, 56% are purchased by 3rd party buyers.

Our conclusion is that everyone should visit the Courthouse Steps once, just to get a feel for the pace and intricacies of the auction. BUT that to participate as a buyer or as an agent of a buyer is a mistake and could be an expensive mistake. There are Realtors whose only activity is to bid on those steps every day. They have entire teams of professionals working for them, checking bank records, checking with not 1 but 2 title companies, doing Comparable Market Analyses on the property, estimating repairs and establishing a top bid. It is definitely one of those things that we are accepting as “out of our area of expertise” and we will be happy to connect you with confidence with a Realtor whose entire business is centered around Trustee Sales.

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Market Update – May

Talk Fusion Studio UTC.
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If you read the real estate news in your newspaper, any day now you will be reading that the real estate market has turned!   UP for a change. 

The right numbers are positive and the right numbers are negative….what I mean is the Sales prices are up.

 Really good news is that the percent of sales to list price is  98.3%.    The “make a low ball offer” period is over.  The lender owned homes are selling with multiple offers, almost to the point of bidding wars.   The number of “conventional seller owned” homes are up.

The right negative numbers are for inventory. The number of lender owned and distressed properties is way down.   Our inventory is very low, actually 47% lower than it was first quarter last year! With a total number close to 13,000.  April’s closings were 8400 The month supply is rated at about 1.5 months !    There are 20,500 sales shown as pending and Active with Contingencies. 

The Active Adult 55+ market presently has 2131 homes for sale with 898 sold in April, another 920 pending  and a current supply of 2.3 months.

These numbers are being repeated in select cities across the country, not just the Phoenix Valley of the Sun. 

To make things even better in the real estate world, the interest rates for the conventional 30 year mortgage  are hovering around the 4% level.

 

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Why isn’t the bank doing a short sale?

I had a great question asked this week. The person asked me about a house in their neighborhood. It had been vacant for a while and they were interested in the stats and possibly purchasing it. I looked up the house and found out the property was scheduled for foreclosure in less than a month.

The question: “Why isn’t the bank doing a short sale?”

The consideration for a short sale is requested by the owner of the home. It may be in the owner’s best interest to do a Bankruptcy, and let the property foreclose. If the owners had consulted with a tax attorney, they may have been advised to move forward in the manner they were.

Doing a short sale is not the choice of the bank. They (the bank) cannot opt to sell the property, as they do not own it. The current owner could at the last minute pay the bank the fees owed, renegotiate their loan and get out of default. The foreclosure process allows the owner to get out of trouble if they can.

The bank is not at liberty to do anything until they have ownership of the property.

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Foreclosures in the Active Adult Communities

With today days real estate market I get asked about foreclosures all the time. Specifically about foreclosures in the adult communities. As people are looking thru the listings from our website (Active Adult Communities in Arizona) they don’t see many foreclosures. I am not hiding them, or keeping them from the selection available, I promise.

It is the nature of the buyer in Adult Communities. They are much more conservative. Many if not most, purchase with cash. If they require a loan, the amount down is usually greater than 10 or even 20% and the loans are all fixed rate loans. Only investors in those communities purchased with interest only, adjustable loans. And most new build communities did not sell to investors.

So we don’t see many home foreclosures in the adult communities. When they do come on the market, many times was an investor that got in over their heads, or some major personal issue, or the property passed on to the family and they couldn’t handle paying the additional mortgage.

The result, the housing prices in the adult communities have not been affected by foreclosures like the all aged communities. Instead, the conservativeness of the buyers, and the balance of retirement accounts has kept the buyers away, bringing the prices down in those communities.

In conclusion, the adult communities see far fewer foreclosures, and though the prices have come down with the real estate crisis, they prices have not come down as much as the all aged communities.

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REO/Short Sale/Normal – What’s really selling in the Phoenix area housing market

I was looking through the charts and statistics and came across these 2.  They offer an interesting view on what homes are selling, and how much of our housing market is really about the foreclosures.

From the chart below you can see that steadily for the past 6 months the REO (bank owned properties) are about 15% of the active listings. The Short is for short sale listings running at about 35% and Normal, is a regular buyer and seller no bank involved is still 50% of the homes on the market.

active-listings

Compare the above chart with this one and you can see REO (bank owned property) sales dominate. Currently about 45%, down from 55% of all the sales are REO’s.

Normal transactions having 35% of the sales (back in Nov what was thought to be the end of the home buyer tax credit and people were looking to make the home purchase happen and not mess with the banks)

The Short Sales have increased from 15 to 23%.

monthly-sales

What does all that tell me, a few things?

1.       Bank owned homes sill offer the best value

2.        Banks are starting to approve short sales.  (it sure has taken a long time)

3.       With more short sale approvals, fewer homes are going to foreclosure

4.       And there is nothing like a home that has been loved and taken care of