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!
Wednesday, June 8, 2011
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 !!!
Tuesday, February 1, 2011
TOP TEN REASONS PHOENIX WILL PROSPER IN 2011
Enjoy this Top Ten List borrowed from Diane Gerdes of The Mortgage Advantage.
Phoenix has withstood additional blows with negative press, but all in all 2010 showed small signs of recovery for our great state.
2011 will be even better, here are the top ten reasons Phoenix will have a prosperous 2011:
10. Phoenix's unemployment rate dropped below the National average to 8.5% in December, 2010 and is expected to slowly decline. Technology and resort-leisure jobs are still the go-to jobs in Arizona, unless you open a pawnshop.
9. Arizonan's love to shop. Wal-Mart is Arizona's largest employer employing over 30,000 people.
8. Arizona is all grown up by implementing their very own stock index called The L&D Arizona Composite Index. It is compiled of companies headquartered in Arizona and publicly traded on the NYSE and NASDAQ.
7. We are not depending on the 5 C's that have defined our state for decades: Citrus, Cattle, Cotton, Copper, and Climate. History Lesson: All five are incorporated on our state symbol.
6. Green is the word! Solar and Algae are the buzz words for fuel sources in the 21st Century. Both industries are continuing to anchor themselves in our state. If oil prices continue to rise, and stay high, we may finally be forced to mass-produce cleaner and more effective alternatives to our oil addiction. Segway's are not the answer if you wear high heels and worry about your toupee.
5. China's inflation may be the U.S.'s windfall: the cost of our goods will become competitive. The Chinese don't want to buy goods labeled "made in China."
4. Our border state geography is a benefit for legal exports and imports from Mexico, Arizona's largest trading partner. According to azcentral.com, exports to Mexico topped $5.9 billion and imports $5.2 billion in 2008. That is a lot of Chihuahuas.
3. The Phoenix metro-plex offers the most affordable housing in the U. S. With rock bottom prices and low interest rates (stop whining, no, they're not at 4% but still pretty darn low) make for an unbeatable combination. Also, families who lost their homes in 2007 and 2008 may be able to re-enter the mortgage market this year.
2. We have the Grand Canyon. Air traffic through Sky Harbor increased in 2010 over 2009.
1. Arizona is not Green Bay or Pittsburg. With the brutal winter in many parts of the U.S. and Canada, pictures of our sunshine will continue to entice people to visit and stay awhile.
No matter what the circumstances of our economy, it will be up to us to energize 2011 and help make it a great year.
Phoenix has withstood additional blows with negative press, but all in all 2010 showed small signs of recovery for our great state.
2011 will be even better, here are the top ten reasons Phoenix will have a prosperous 2011:
10. Phoenix's unemployment rate dropped below the National average to 8.5% in December, 2010 and is expected to slowly decline. Technology and resort-leisure jobs are still the go-to jobs in Arizona, unless you open a pawnshop.
9. Arizonan's love to shop. Wal-Mart is Arizona's largest employer employing over 30,000 people.
8. Arizona is all grown up by implementing their very own stock index called The L&D Arizona Composite Index. It is compiled of companies headquartered in Arizona and publicly traded on the NYSE and NASDAQ.
7. We are not depending on the 5 C's that have defined our state for decades: Citrus, Cattle, Cotton, Copper, and Climate. History Lesson: All five are incorporated on our state symbol.
6. Green is the word! Solar and Algae are the buzz words for fuel sources in the 21st Century. Both industries are continuing to anchor themselves in our state. If oil prices continue to rise, and stay high, we may finally be forced to mass-produce cleaner and more effective alternatives to our oil addiction. Segway's are not the answer if you wear high heels and worry about your toupee.
5. China's inflation may be the U.S.'s windfall: the cost of our goods will become competitive. The Chinese don't want to buy goods labeled "made in China."
4. Our border state geography is a benefit for legal exports and imports from Mexico, Arizona's largest trading partner. According to azcentral.com, exports to Mexico topped $5.9 billion and imports $5.2 billion in 2008. That is a lot of Chihuahuas.
3. The Phoenix metro-plex offers the most affordable housing in the U. S. With rock bottom prices and low interest rates (stop whining, no, they're not at 4% but still pretty darn low) make for an unbeatable combination. Also, families who lost their homes in 2007 and 2008 may be able to re-enter the mortgage market this year.
2. We have the Grand Canyon. Air traffic through Sky Harbor increased in 2010 over 2009.
1. Arizona is not Green Bay or Pittsburg. With the brutal winter in many parts of the U.S. and Canada, pictures of our sunshine will continue to entice people to visit and stay awhile.
No matter what the circumstances of our economy, it will be up to us to energize 2011 and help make it a great year.
MAKE 2011 YOUR YEAR!!
In the last 2 weeks we have seen less than positive news regarding the Real Estate Market in the Phoenix area. Luncheons and meetings have been held where people pay hundreds of dollars to hear experts speak on where the Phoenix market is headed. The general concensus is that it may takes us a bit longer to recover.
In every market, however, there are positives. For Buyers, this is one of the best markets ever. Our Phoenix area prices are down. Coupled with low interest rates, this is one of the best times ever to purchase a home in the Valley of the Sun.
For Renters, there is a larger, more upgraded inventory of rental homes. Investors are purchasing homes in quantity and are turning these homes into rental properties. I have seen many homeowners short sale their home and move into bigger, nicer rental properties.
The key to surviving in Real Estate is to move and adapt to the market.
Consequently, our short sale inventory is way up and we have many buyers purchasing "investment properties" that their "children" will live in while the children reestablish their credit. This market, like any market, is an opportunity for both buyers and sellers. Buyers can purchase low priced homes at excellent rates and Sellers can get out from under a mortgage that will otherwise drag them under financially for years to come. The key is simply to be knowledgeable about the market and to react to its ebbs and tides with your future in sight.
If you need help, just let us know. 623-694-0354.
In every market, however, there are positives. For Buyers, this is one of the best markets ever. Our Phoenix area prices are down. Coupled with low interest rates, this is one of the best times ever to purchase a home in the Valley of the Sun.
For Renters, there is a larger, more upgraded inventory of rental homes. Investors are purchasing homes in quantity and are turning these homes into rental properties. I have seen many homeowners short sale their home and move into bigger, nicer rental properties.
The key to surviving in Real Estate is to move and adapt to the market.
Consequently, our short sale inventory is way up and we have many buyers purchasing "investment properties" that their "children" will live in while the children reestablish their credit. This market, like any market, is an opportunity for both buyers and sellers. Buyers can purchase low priced homes at excellent rates and Sellers can get out from under a mortgage that will otherwise drag them under financially for years to come. The key is simply to be knowledgeable about the market and to react to its ebbs and tides with your future in sight.
If you need help, just let us know. 623-694-0354.
Saturday, January 1, 2011
Real Estate and the New Year Prediction
Happy New Year!! I wanted to share with you the latest predictions for 2011 from the Association of Realtors for our region, Region 2..
Region Two
Phoenix, West Maricopa County Regional
Region Two, consisting of Phoenix and the West Valley up to and including Wickenburg, has had a tough year. We are still moving through a large amount of REO properties, and the market has been top heavy with short sales. Once the tax credit expired, the market calmed for a month or two but seems to be coming back. The buyers are still buying, especially investors. First-time homebuyers are, once again, having difficulty getting an accepted contract due to bidding wars on lesser-priced properties. This will be reflected in price stabilization in certain neighborhoods. We are hoping to see some of these areas switch into more of a buyer’s market after the first of the year. We have experienced a year similar to the one described in the summary. There is a lot of competition for low priced and exceptional homes. Short Sales are still running the market, followed closely by REO (lender owned properties). We still will have a steady stream of foreclosure and short sale inventory thru 2011 based on the number of Notice of Trustee Sale notices that are being recorded at the county offices.
Buyers are capitalizing on the low prices and low interest rates. If you are thinking of upsizing or downsizing, 2011 is the year to do it. If you are experiencing financial distress, please call us. We will be able to go over your options with you so you can make the choice that is best for your family.
Greet the New Year with a hopeful heart and be confident that you will make 2011 your best year yet.
Happy New Year!
Mary & Mike Drefs
Keller Williams Realty Professional Partners
623-694-0354 Mary
marydrefs@cox.net
623-693-1505 Mike
mikedrefs@cox.net
Top Agent 2001, 2002, 2003 & 2004
Top Team 2005, 2006, 2007 & 2008!!
Region Two
Phoenix, West Maricopa County Regional
Region Two, consisting of Phoenix and the West Valley up to and including Wickenburg, has had a tough year. We are still moving through a large amount of REO properties, and the market has been top heavy with short sales. Once the tax credit expired, the market calmed for a month or two but seems to be coming back. The buyers are still buying, especially investors. First-time homebuyers are, once again, having difficulty getting an accepted contract due to bidding wars on lesser-priced properties. This will be reflected in price stabilization in certain neighborhoods. We are hoping to see some of these areas switch into more of a buyer’s market after the first of the year. We have experienced a year similar to the one described in the summary. There is a lot of competition for low priced and exceptional homes. Short Sales are still running the market, followed closely by REO (lender owned properties). We still will have a steady stream of foreclosure and short sale inventory thru 2011 based on the number of Notice of Trustee Sale notices that are being recorded at the county offices.
Buyers are capitalizing on the low prices and low interest rates. If you are thinking of upsizing or downsizing, 2011 is the year to do it. If you are experiencing financial distress, please call us. We will be able to go over your options with you so you can make the choice that is best for your family.
Greet the New Year with a hopeful heart and be confident that you will make 2011 your best year yet.
Happy New Year!
Mary & Mike Drefs
Keller Williams Realty Professional Partners
623-694-0354 Mary
marydrefs@cox.net
623-693-1505 Mike
mikedrefs@cox.net
Top Agent 2001, 2002, 2003 & 2004
Top Team 2005, 2006, 2007 & 2008!!
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