Phoenix, AZ is one of the Top Five metro areas that favors home ownership versus renting, according to website Trulia. Currently, buying a home in the Phoenix area makes more financial sense than renting.
Because of the principles of supply and demand, renting has become more expensive than buying in our market.
What are the other Top 4 Metro areas where it is cheaper to Buy than Rent?
Miami, Las Vegas, Arlington,TX, and Mesa,AZ.
What do they all have in common? Lots of Sunshine!
Tuesday, July 26, 2011
Friday, July 15, 2011
AZ Real Estate Update: FHA FORECLOSURE FREEZE PLAN TO HELP FEW
AZ Real Estate Update: FHA FORECLOSURE FREEZE PLAN TO HELP FEW: "FHA introduced a program last week allowing for up to twelve months of deferred house payments for those out of a job. It is called the FHA ..."
FHA FORECLOSURE FREEZE PLAN TO HELP FEW
FHA introduced a program last week allowing for up to twelve months of deferred house payments for those out of a job. It is called the FHA Foreclosure Freeze. It is for FHA LOANS ONLY. The borrower MUST BE UNEMPLOYED. NO debt is forgiven. It is a forbearance...i.e. The lender will allow you to live in the house without making payments for 3-12 months. When that grace period ends, you MUST RESUME making your payments and the missed payments will be tacked on to the back end of the loan so you will be paying for a longer period.
Please keep in mind that this is a VOLUNTEER PROGRAM for lender participation. Your lender may choose to not participate. The FHA is limiting the number of borrowers taking advantage of this program to 3,500 per month. That is a small number relative to the amount of FHA homeowners going into foreclosure across the country.
This FHA Foreclosure Freeze program may "help" a select few, but it will not have an impact on our current housing market. Those applying for this plan may be hurt by waiting for the lender's response and not acting on other viable solutions, i.e. short sale, loan modification, etc. This plan may actually increase a homeowner's debt on the loan if his/her lender chooses to penalize the homeowner for all the late payments.
It makes me angry to think of all the government money wasted on the manpower it took to create this weak program. We need an actual fix to help the housing market. This will not happen until politicians get out the lenders' back pockets and think independently. The politicians need to think more about the individual homeowner than about creating tax incentives and bonuses for the lenders.
Please keep in mind that this is a VOLUNTEER PROGRAM for lender participation. Your lender may choose to not participate. The FHA is limiting the number of borrowers taking advantage of this program to 3,500 per month. That is a small number relative to the amount of FHA homeowners going into foreclosure across the country.
This FHA Foreclosure Freeze program may "help" a select few, but it will not have an impact on our current housing market. Those applying for this plan may be hurt by waiting for the lender's response and not acting on other viable solutions, i.e. short sale, loan modification, etc. This plan may actually increase a homeowner's debt on the loan if his/her lender chooses to penalize the homeowner for all the late payments.
It makes me angry to think of all the government money wasted on the manpower it took to create this weak program. We need an actual fix to help the housing market. This will not happen until politicians get out the lenders' back pockets and think independently. The politicians need to think more about the individual homeowner than about creating tax incentives and bonuses for the lenders.
Wednesday, June 8, 2011
AZ REAL ESTATE BUYERS: BE PERSISTENT!!!
The real estate market right now for Buyers is difficult. Inventory is low. Most of the houses that you see with real estate signs hanging in front of them are under contract. Many properties are receiving multiple offers. As a Buyer, be prepared to make aggressive offers to compete with the other buyers. Many buyers are losing out on homes and having to make offers on several homes before getting under contract.
Why is inventory low? The lenders are currently foreclosing on homes and not immediately placing them all back on the market. They are "holding" homes and slowly releasing them. As a result, we have been told that Bank of America alone has approximately 14 million homes that they foreclosed on , but have not placed back on market. We call these homes "shadow inventory". The report says that 85% of these homes are in California, Nevada, Florida and Arizona. And, this is just one lender. The other big players, Wells Fargo, JP Morgan Chase, Citimortgage, etc., are also carrying shadow inventory.
Why all this shadow inventory? The banks are attempting to drive the prices upward to lessen their loss on these foreclosed homes. If the market becomes flooded with new listings, prices will be driven lower. Due to the slow trickle of these homes back to the market, we can see that our current real estate market situation will continue for a few more years. So, if your credit is not perfect now, it is time to seriously concentrate on correcting it.
How do the lenders decide which homes to place back on the market? We don't know. This makes it extremely frustrating for buyers who have their eye on a particular foreclosed home and want to know when it will be for sale.
As a result, many Buyers are now purchasing short sales. These Buyers understand the short sale time lines and are now willing to wait for the completion of the process.
Is it still a good time for Buyers? ABSOLUTELY! The prices are the lowest they have been in years and so are the interest rates. This market just requires a bit more patience. So Buyers, be realistic and persistent and you will be able to take advantage of this unique real estate scenario. And years from now, you will patting yourself on the back!
Why is inventory low? The lenders are currently foreclosing on homes and not immediately placing them all back on the market. They are "holding" homes and slowly releasing them. As a result, we have been told that Bank of America alone has approximately 14 million homes that they foreclosed on , but have not placed back on market. We call these homes "shadow inventory". The report says that 85% of these homes are in California, Nevada, Florida and Arizona. And, this is just one lender. The other big players, Wells Fargo, JP Morgan Chase, Citimortgage, etc., are also carrying shadow inventory.
Why all this shadow inventory? The banks are attempting to drive the prices upward to lessen their loss on these foreclosed homes. If the market becomes flooded with new listings, prices will be driven lower. Due to the slow trickle of these homes back to the market, we can see that our current real estate market situation will continue for a few more years. So, if your credit is not perfect now, it is time to seriously concentrate on correcting it.
How do the lenders decide which homes to place back on the market? We don't know. This makes it extremely frustrating for buyers who have their eye on a particular foreclosed home and want to know when it will be for sale.
As a result, many Buyers are now purchasing short sales. These Buyers understand the short sale time lines and are now willing to wait for the completion of the process.
Is it still a good time for Buyers? ABSOLUTELY! The prices are the lowest they have been in years and so are the interest rates. This market just requires a bit more patience. So Buyers, be realistic and persistent and you will be able to take advantage of this unique real estate scenario. And years from now, you will patting yourself on the back!
Tuesday, May 17, 2011
The NEW FHA LOAN
On April 18 FHA increased their monthly mortgage insurance, doubling to twice the monthly amount it was a year ago. Why?
FHA previously supported itself, based on the mortgage insurance premiums paid by borrowers. Therefore, the payouts for foreclosed properties have forced FHA to raise the monthly mortgage insurance premium to shore up their coffers.
Many buyers need FHA guidelines to purchase a home.
The following seven reasons are why FHA is still in the lending game:
1. Gifts. The 3.5% down payment and all closing costs can be gifted.
2. Lower credit scores. Some lenders are decreasing the requirement down to 600 (and in some cases 580)
3. Non-occupant co-borrower: Mom and Dad helping a family member by agreeing to be equally responsible for the mortgage. This is a great way to get into a home.
4. Bankruptcy: The wait is only two years after a bankruptcy, but be sure to reestablish good credit.
5. Foreclosure: The wait is 3 years, compared to conventional, which is 4 to 7 years. Plus it is the only program that will allow buyers to re-enter the housing market with limited down.
6. Short Sale: After a short sale with no mortgage lates, and a good reason, FHA may finance the next purchase immediately.
7. Own another home but can't sell or don't want to sell it? FHA will allow a purchase of a primary residence as long as the borrower can qualify for both payments. Conventional loans will allow the same but only with hefty reserves.
The guidelines above are oversimplified, because as you well know in our industry, other conditions will apply. For example, I have never seen a Short Sale close without late payments and those purchasing a house 2-3 years after a foreclosure or bankruptcy had stellar credit prior to the events. All these examples are in an ideal world where your only blip on the credit radar was the short sale, foreclosure or bankruptcy. Even though, FHA is currently the loan of choice for many Buyers.
FHA previously supported itself, based on the mortgage insurance premiums paid by borrowers. Therefore, the payouts for foreclosed properties have forced FHA to raise the monthly mortgage insurance premium to shore up their coffers.
Many buyers need FHA guidelines to purchase a home.
The following seven reasons are why FHA is still in the lending game:
1. Gifts. The 3.5% down payment and all closing costs can be gifted.
2. Lower credit scores. Some lenders are decreasing the requirement down to 600 (and in some cases 580)
3. Non-occupant co-borrower: Mom and Dad helping a family member by agreeing to be equally responsible for the mortgage. This is a great way to get into a home.
4. Bankruptcy: The wait is only two years after a bankruptcy, but be sure to reestablish good credit.
5. Foreclosure: The wait is 3 years, compared to conventional, which is 4 to 7 years. Plus it is the only program that will allow buyers to re-enter the housing market with limited down.
6. Short Sale: After a short sale with no mortgage lates, and a good reason, FHA may finance the next purchase immediately.
7. Own another home but can't sell or don't want to sell it? FHA will allow a purchase of a primary residence as long as the borrower can qualify for both payments. Conventional loans will allow the same but only with hefty reserves.
The guidelines above are oversimplified, because as you well know in our industry, other conditions will apply. For example, I have never seen a Short Sale close without late payments and those purchasing a house 2-3 years after a foreclosure or bankruptcy had stellar credit prior to the events. All these examples are in an ideal world where your only blip on the credit radar was the short sale, foreclosure or bankruptcy. Even though, FHA is currently the loan of choice for many Buyers.
Friday, May 13, 2011
BUYING A HOME?? THE INTEREST RATE IS MORE IMPORTANT THAN THE PRICE!
The biggest mistake a home buyer can make is to underestimate the impact of lower interest rates on housing costs, and the relative affordability of housing in the United States. The cost of a loaf of bread and a gallon of gas has more than tripled since 1989, and car prices have nearly doubled. While the median price of a new home has increased by 70 percent, mortgage interest rates, which stood at 10 percent back in 1989, are less than half of what they were back then. The impact of rock-bottom interest rates is that the monthly mortgage payment on a median priced home in the United States has increased by a mere $4 since 1989.
Unless a buyer is paying cash, the monthly payment tends to be a far more relevant number than the home’s actual purchase price. So for buyers who are waiting for home prices to hit the floor before buying, it’s important to point out that the possibility of a slight drop in the price of a home will have very little impact on the monthly payment, while even a slight rise in interest rates (a far more likely scenario) will have a significant impact.
Timing the market to a T is never possible and in the current market, staying on the sidelines is more likely to result in a missed opportunity than a small savings. Waiting on the lowest price while interest rates tick upwards, can cost you more in the long run.
Unless a buyer is paying cash, the monthly payment tends to be a far more relevant number than the home’s actual purchase price. So for buyers who are waiting for home prices to hit the floor before buying, it’s important to point out that the possibility of a slight drop in the price of a home will have very little impact on the monthly payment, while even a slight rise in interest rates (a far more likely scenario) will have a significant impact.
Timing the market to a T is never possible and in the current market, staying on the sidelines is more likely to result in a missed opportunity than a small savings. Waiting on the lowest price while interest rates tick upwards, can cost you more in the long run.
Wednesday, March 30, 2011
Home Prices in Phoenix down another 9.1% Since January 2010....
The S&P Case-Shiller housing report is out. It is GOOD news for Buyers and not so good news for Sellers.
"January housing numbers for Phoenix and the U.S. as a whole were not good in January, according to new S&P Case-Shiller index numbers put out Tuesday morning.
Home prices are down 9.1 percent in Phoenix since January 2010, according to the index. Phoenix had the largest year-over-year drop of the 20 metro areas in the housing index.
From December 2010 to January 2011, Phoenix home prices are down 1.5 percent. U.S. home prices are down 1 percent for the same time period.
Indicators point to Buy, Buy, Buy !!!
"January housing numbers for Phoenix and the U.S. as a whole were not good in January, according to new S&P Case-Shiller index numbers put out Tuesday morning.
Home prices are down 9.1 percent in Phoenix since January 2010, according to the index. Phoenix had the largest year-over-year drop of the 20 metro areas in the housing index.
From December 2010 to January 2011, Phoenix home prices are down 1.5 percent. U.S. home prices are down 1 percent for the same time period.
Indicators point to Buy, Buy, Buy !!!
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