The Fiscal Cliff is casting a Shadow (Inventory)...

In real estate. shadow inventory refers to the inventory of homes not yet for sale that will eventually come on the market sometime in the near future. Although most people believe shadow inventory to be the group of distressed homes in some phase of foreclosure, shadow inventory actually includes three categories of homes: 1. Properties already foreclosed on, but not yet on the market for sale 2. Houses currently in the foreclosure process 3. Properties where the homeowners are at least 90 days delinquent on their mortgage payment Because of the number of lenders and the numerous homeowners, the exact total of homes in the shadow inventory is an ever changing number. Studies indicate that 95 percent of those homeowners who fall 90 days behind on their mortgage obligation never catch up and their home eventually comes on the market as a short sale or foreclosure. Those who catch up on their mortgage payments are referred to as the “cure rate.” From 2000-2006, the cure rate was 45 percent, while from 2007 to the present, the cure rate is less than 5 percent. As shadow inventory comes on the market, the total supply (inventory) of homes increases. The increase of shadow inventory homes, however, does not result in an increase in more equity home listings, but an increase in distressed property listings (REOs, short sales, foreclosures) that typically will force the price of existing home listings downward. However, recently, the lenders have been pricing their short sales and foreclosures at market value and are attempting to drive pricing up. We are not certain at this time if lenders are holding back on releasing their foreclosed properties on to the market because they are waiting to hear the results of the new government budget plans. We do know that several important real estate issues are certain to be addressed in the new year. One issue is the tax credit for mortgage interest and the other is the tax on the deficiencies in short sales and foreclosures. Both issues will affect the number of homes sold in 2013 and the future. To see a list of houses that have foreclosed and are currently for sale, visit my website at www.MaryDrefs.com and search on Homes for Sale.

The November 2012 Real Estate Market results are in. While total sales in the Phoenix Area market declined slightly, the number of homes for sale increased 2.3% and now over 18,000 homes are for sale in the Arizona Regional MLS. The median price of those homes sold rose 3.3% over October's prices. The number of homes facing foreclosure fell again in November. Now 11,973 properties are pending foreclosure compared with the peak of 50,568 homes pending foreclosure in November 2009. The number of Lender Owned Homes and Short sales selling rose to make up 36.1% of all total sales in November.. In September of 2010 Lender owned homes and short sales made were 74.1% of the total sales. In November '12 876 lender owned homes sold and 1,583 short sales closed escrow. So the ratio of short sales to lender owned properties selling is approx. 2 to 1. Economists are predicting that the housing construction industry in Arizona will rise in 2013. They are expecting to increase the construction workforce by 13,100 workers. Overall, economists are predicting that at our current pace, it will take Arizona 2-3 years to consider our state economically recovered. Good news for all as we move into the new year. If we can help you or your friends with any real estate need, just give us a call. We are here and ready to help!

Which Lender is refinancing the most mortgages for distressed AZ homeowners?

JP Morgan Chase is leading the way in refinancing the most Arizona mortgages for distressed residential AZ homeowners since the beginning of the year. However, Chase's rate reduction averaged only 1.85% off the mortgage interest rate while the other banks averaged a 2.05% rate reduction. Arizona Mortgage Refinances Chase 57% Wells Fargo 30% Citibank 11% Bank of America 1.5% Ally Bank 1% Bank of America's performance in refinancing for distressed AZ homeowners is pitiful. HOwever, Bank of America is leading the way in creating efficient short sale procedures for distressed homeowners. The face of short sales is soon to change as the Mortgage Debt Relief Act of 2007 fades away on December 31, 2012. This act allowed many homeowners who conducted a short sale before 12/31/2012 to not have to pay taxes on their deficiencies. With no follow up governmental policies at this time, AZ homeowners may not feel the benefit of a short sale outweighs the benefit of a foreclosure. With the short sale, homeowners do need to prove a hardship so they do need to submit numerous documents to their lender and then moves out toward the end of the transaction. With a foreclosure, the homeowner just quietly moves out of the house with no additional effort needed. And with AZ being an anti-deficiency state, homeowners know their deficiency in a foreclosure is usually forgiven, but their taxes on a deficiency are not. Currently the number of foreclosures in AZ has declined. This is largely due to the number of homeowners choosing to do short sales versus a foreclosure. I do think we will see a turnaround in these numbers in the first quarter of 2013 unless congress steps in and creates more benefits for short sale sellers.

Housing will never return to pre-crisis levels because baby boomers are aging and the next generation lacks the population numbers to support the credit and homeownership expansion that occurred in the decades leading up to the credit meltdown. The U.S. economy since the 1980s managed to subsidize spending in other areas by leaning on housing. Home equity loans were a major problem in the meltdown of the housing industry. The population growth after the boom basically drove consumption, and we had this remarkable increase in demand for housing. Now that the boomers are heading into retirement, future populations are smaller and it is unlikely housing will ever get back to the peak levels experienced before the 2008 financial crisis. We are not going to have the degree of credit availability that we had back in 2005. Despite housing still facing a great deal of uncertainty, Brian Montgomery, chairman of the Collingwood Group, told the same crowd that the nation can “expect mild to moderate improvement in the housing market.” Home prices are already ticking up, especially in AZ, he noted. But Montgomery conceded that rules drafted to fix housing, including the qualified mortgage rule, are still going to have a dramatic impact on the market. "Unwinding legislation is extremely difficult,” he said. “It’s almost impossible to unwind the CFPB (Consumer Financial Protection Bureau), but it doesn’t mean you can’t try to soften what they are trying to do. We need to make it easier for buyers to obtain loans before we will see a big improvement in the market.”

Another Real Estate Meltdown Not Likely..........

Housing will never return to pre-crisis levels because baby boomers are aging and the next generation lacks the population numbers to support the credit and homeownership expansion that occurred in the decades leading up to the credit meltdown. The U.S. economy since the 1980s managed to subsidize spending in other areas by leaning on housing. Home equity loans were a major problem in the meltdown of the housing industry. The population growth after the boom basically drove consumption, and we had this remarkable increase in demand for housing. Now that the boomers are heading into retirement, future populations are smaller and it is unlikely housing will ever get back to the peak levels experienced before the 2008 financial crisis. Credit availability is the second factor, We are not going to have the degree of credit availability that we had back in 2005. The nation can expect mild to moderate improvement in the housing market. Home prices are already ticking up, especially in AZ. But Montgomery conceded that rules drafted to fix housing, including the qualified mortgage rule, are still going to have a dramatic impact on the market. We need to make it easier for buyers to obtain loans before we will see a big improvement in the market.

Boulevard, Drive, Street ??? Which Name Gets More $$ ??

Which house would cost more...the one on Wisteria Lane or the one on Sesame Street? The name of the road could play a factor. As it turns out, homes on “boulevard” ($117) are the most expensive while the cheapest are those on “street” ($86) – that’s a 36% price difference! Although saying you live on “Whatchamacallit Road” may not sound that fancy, at $109 per square foot, homes located there are actually the third most expensive of any suffix type. In fact, the median home on a “road” is respectively 8% and 9% more expensive than those located on seemingly more upscale-sounding “court” and “circle.” Why is “boulevard” the most expensive address suffix? Well, while the word does have a sophisticated French origin, it actually might have more to do with the mix of the homes located there. Approximately, 37% of homes on “boulevards” are in multi-unit buildings, such as apartments and condos. In contrast, these types of homes make up no more than 16% of homes on every other address suffix. A greater concentration of multi-unit buildings could drive up costs as they are often located in denser, urban areas where space is at a premium. “Boulevard” may be the most expensive suffix but with only a 2% share of total listings, it’s certainly not the most prevalent one. In contrast, 22% of listings are located on a “drive.” That’s even more popular than “street” (19%), “road” (16%), and “avenue” (15%). Now back to our original question (in the title of this post) about Wisteria Lane and Sesame Street. So where are homes more expensive? Based on our analysis above, the price per square foot of Cookie Monster’s home could be 17% cheaper than Susan Mayer’s. Good thing – more leftover cash for cookies! Cookies!! Cookies!!!

$41 Million to go to Worthy AZ Homeowners for Foreclosure and Loan Restitution

The AZ Attorney's General Office has announce that $41 million dollars will be given to homeowners to help keep them in their houses and to provide restitution for borrowers who were treated unfairly by lenders. The plan says they will offer short-term cash assistance, loans and principal reductions for those who qualify. The money is coming from the major banks as part of a national $25 billion lender settlement resulting from foreclosures. The Attorney General is still seeking the right agency to administer the efforts. The Attorney General did say that they plan on "helping homeowners who acted responsibly and did not make bad homebuying decisions that left others paying for irresponsible behavior. " Consumers who believe they have been victims of mortgage schemes in Arizona are advised to call 602-542-1797, email mortgagefraud@azag.gov or go to azag.gov/consumer/foreclosure/settlement.html. Eligible homeowners will be contacted after they are identified by the plan's new administrator. The attorney general will handle enforcement and legal services. They are expecting these efforts to take up to three years. Arizona had been allotted nearly $98 million from the national lender settlement, but the state Legislature plans to take $50 million of the funding to offset the state's budget deficit. A lawsuit challenging that allocation has been file by AZ housing advocacy groups.

Like A Phoenix, Real Estate Values Are Rising From the Ashes !!! By Mary Drefs, GRI, CRS, CDPE Like a Phoenix, the Valley Area Real Estate Market is rising from the ashes. The Phoenix Area is leading the way in the rising real estate values and in the number of homes sold in the past 3 months compared to other major US cities. I assure you that your property has increased in value as well... unless, of course, your property has recently been plagued by a natural disaster such as a fire or flood. If you would like to learn of your PROPERTY'S CURRENT VALUE, visit www.MaryDrefs.com and fill out the Home Value Request form or click on the Home Value Request Button below. I promise to use the same parameters as an appraiser when sending you comparable properties. If you have recently learned that your family is slipping financially and your mortgage is burdensome, you may be a candidate for a short sale. We are successfully closing many short sales and some lenders have even streamlined the short sale process. To learn more about short sales, visit Click HERE and then contact Mary Drefs at 623-694-0354 . Mary will help you evaluate your situation and help you see if the time is right. You may be one of the lucky ones whose property is worth more than you thought and you might be able to conduct a traditional sale and walk away from your property with no credit repercussions. Keep thinking positive thoughts and as you walk through your house keep repeating, "You are rising in value. You are rising in value." Have a great September !!

How Will the Election Affect Real Estate Values?

Lately we have been getting questions about how the November election may affect the housing industry. With all the campaign ads we have been seeing and reading, we are constantly being reminded that the election may have a big impact on our economy. I can tell you that currently, foreclosures in Maricopa County, compared to one year ago, are down. This may be because owners are now better educated about their options and are seeking out more modifications and short sales instead of letting their homes foreclose. It may also be the result of the mortgage companies allowing property owners to miss more payments before recording the Notice of Trustee Sales and setting an auction date. It could also be the result of the slow down in the mass exodus from the state. Those homeowners who chose to leave the state due to the downturn in the economy have already done so and their homes have already been processed through the system. In the meantime, real estate values in the west valley are continuing to tick upward. If you took advantage of the market and purchased while prices are low, but kept your previous home until prices rose again, you may want to consider now selling it. I am seeing many owners putting their previous homes up on the market. The homes are selling very quickly and most still have multiple offers. It is difficult to say how real estate prices will be affected by the election because, at this point, we are not sure who will be elected. And once elected, will the Senate and the House cooperate with the sitting President's plan? As we get closer and the candidates solidify and advance their plans, we will have a better estimation as to real estate future values. If you want to learn the current value of your property, give Mary Drefs a call at 623-694-0354. If you did have a short sale a few years ago and want to see if you can buy again, give Mike Drefs a call at 623-693-1505. Or visit OUR WEBSITE. They both want to see you get the most out of your real estate investments.

Short Sale Sellers-- Team Up with Your Agent and Take On Wells Fargo

We do a lot of short sales here in our office. At times, some lenders seem to change their short sale policies for the worse. Take Wells Fargo.... recently they decided to not waive borrower's deficiency in the majority of their short sale approval letters. Did Wells Fargo not consider that in state's with anti-deficiency statutes, this makes foreclosure more attractive to borrowers? If the same short sale was approved just 2 months ago, no doubt the deficiency would have been waived. Is that discrimination? Short sale borrowers should fight for their rights with Wells Fargo and prove to them what a inane blanket policy they instated. Borrowers will get quicker, better results if they call in to fight with Wells directly. Real Estate agents and other third parties have limited representation in the eyes of the lenders. Passionate borrowers seem to be getting the best results. Make sure when doing a short sale you participate with your agent and act as a team. Together with owners, we have been able to pull off remarkable fetes...such as gettting Wells Fargo to waive the deficiency on a recent short sale approval letter. We need the full participation of the borrowers to reach the ultimate success.

Summer Forecast,-- The Real Estate Market Looks Great

Real estate values have increased in the Phoenix area. In fact, Phoenix was rated the #1 real estate rebound market in the US. Yoohoo! I sincerely believe this is because the Phoenix market is one that has lead the way in Short Sale Transactions. Many of the top Short Sale agents from the Phoenix market have helped shape more efficient short sale procedures at the major lending institutions. Thousands of families in the Phx area have been saved from foreclosure. We have had another wave of investors purchasing properties here in Maricopa County. Some of the investors have purchased with the intent of flipping the properties. Others have invested to hold the properties as rentals. Currently, the values have risen to the point where flippers are not able to purchase properties, fix them up, resell them and create a healthy profit. Even at the home auctions, many of the foreclosed properties are being bid up to fair market value and above. I do anticipate that soon these flippers will be moving on to other up and coming markets. It is very common currently to have multiple offers on properties. Tuesday I listed a property and 2 days later I now have 6 cash offers on it and 3 of them are up and over list price. And this property is not a cream puff. The house does not even have flooring in the kitchen and all the carpet has paint stains that cannot be removed. Buyers are so glad to be selected in our busy market, that they have relxed their usual standards. Currently, the inventory of available homes for sale in Maricopa County is low. In some areas of the county, we have less than a 2 month supply of available homes. Buyers need to align themselves and stay loyal to their hard working agents who can use their inside knowledge to secure them a property. For now, this market should continue through the fall. If you have equity in your house it is an excellent time to sell. My listings now are 50% traditional sales and 50% are short sales. This is very different from a year ago when 100% of my listings were short sales. So, in summary, the market here is great! The hot weather in the other states is making Phx look more and more desirable. Want to join us? Give me a call!

INVESTORS--WELCOME TO AZ !!

Good News! We are seeing a bit of a shift in the Phoenix area real estate market due to the influx of investors. We are seeing many investors purchasing properties through short sales, auctions and foreclosures and remodeling them. Consequently, we are seeing a positive effect on the conditions of the property and the average pricing in these neighborhoods.

Currently we are experiencing a low volume of homes for sale in the Phoenix market. Because our prices had plummeted, many investors and second home buyers have entered the market and are attemping to purchase properties. There is a lot of competition amongst buyers and most properties receive multiple offers to purchase. We are seeing investors now willing to pay market value for homes. Consequently, it is very difficult now for buyers obtaining FHA loans and buyers asking for closing cost assistance to get under contract on a home. The market value cash buyer is now king. In many cases, it is the buyer who is willing to pay OVER list price that ends up owning the home.

As long as our pricing continues to increase incrementally and sanely, our real estate market will continue to mend itself. Ironically,investors helped drive up the market to insane values in 2008 and 2009 and investors may be the group that corrects our current real estate market. Let's roll out the red carpet and welcome the influx of money to our state. For many families, the investors are providing stable homes. Let's welcome the investors with open arms.

Investment Time is NOW !!!!

With low housing prices and low mortgage rates, NOW is the time to purchase investment property in Arizona. Many of our clients have established sizable positive cash flow by investing in rental properties. Several of our clients have purchased property with an eye on retiring to the property in several years. In the meantime, they are renting the property out. Hoards of foreign investors are purchasing investment property in AZ. When taking a look at the US stock market, one can see why. Since 1959, our stock market has had 11 years of negative appreciation and that depreciation has averaged 38%.
Since 1959, the US housing market has had 3 years of negative appreciation and the maximum depreciation was 13%.

Because of our distressed housing market, the total number of renters is high. Consequently, rents are up in the residential market. This is resulting in wonderful passive income for investors.

One does not need to be wealthy to invest. Most of our investors live comfortably and are good at saving. They are far from being millionaires today. 29% of properties being sold in the US are being purchased as investments. That number is much higher in Arizona because of our low prices.

Don't sit on the sideline and let the parade pass you by. Take a serious look at your savings and your financial goals and give Mike Drefs a call at 623-693-1505. He will be able to help you create a plan that is right for you.

Making Offers on Multiple Properties Can Force Families Into Foreclosure

As a short sale listing agent, I am growing weary of learning that a buyer has been instructed by their agent to make purchase offers on multiple properties with the intention of purchasing one. Twice this month a buyer's selfish antics have forced good families into foreclosure.

I understand it is a tough market for buyers in the Phoenix area and that many times a buyer will need to bid on 5-10 properties to be able to purchase just one. But, please buyers, make these bids one at a time. If your intention is to purchase one property and you are under contract on several at the same time, you are defrauding the seller and the seller's lender.

Frequently, short sale sellers receive approval letters 30 days or less from their auction/foreclosure date. Typically when a buyer receives notice of an approval letter, is the time the buyer cancels the deal. This leaves the seller's family less than 30 days to find another buyer and close the deal. This is impossible unless a cash buyer can be found quickly. In many cases, the seller's lender will not postpone the auction date and the seller is then forced into foreclosure.

So buyers, when you cancel, take a look in the rear view mirror as you drive away. You will see a family left in tears because of your fraud.