There are many variables that can effect what seems to be our continuing ascension from what appeared to be the bottom, such as, “strategic default” by Alt-A borrowers; the expiration of the home buyer tax credits; and any other economic news that could cause buyers to have lack of confidence; however, setting the crystal ball aside and evaluating data for today, it would appear that with the exception of the luxury market, all other areas of the Valley are seeing improvement over this same time period last year.

Days of available inventory and days on market have decreased 20% over the past year, and although appreciation has been bouncing around over the past few weeks (as high as almost 10% and as low as 5%) this week Valley wide appreciation is at 7.4%.

Please view the two columns below to see the year over year appreciation by major city:

2009 2010

Cave Creek -22.6% -3.7%

Chandler -23.1% -0.8%

Fountain Hills -24.8% -5.9%

Gilbert -19.9% -4.1%

Glendale -44.8% 12.2%

Paradise Valley -13.2% -21%

Peoria -26.1% -2%

Phoenix -51.8% 23.1%

Scottsdale -21.9% -11.6%

Current Conditions in the Phoenix Market:

There are 26,374 single family detached homes actively on the market in MLS. That is an increase of 152 listings for the week and the second week in a row that we’ve observed an inventory increase during a time period when we would normally see decrease.
There are 33,489 active listings in MLS, which includes patio homes, town homes, condos and loft properties.

Related posts:

1. The Phoenix Real Estate Weekly 4/16/2010 Courtesy of Barb Savoy-Pacella, ABR, CNRS, CHMS Director Business &...
2. The Phoenix Real Estate Weekly 4/2/2010 Courtesy of Barb Savoy-Pacella, ABR, CNRS, CHMS ~ Director Business...
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note: I received this in an email, and thought it was worth sharing:

• First, from the Realtor’s perspective, there isn’t much of an option.  Since REOs and short sales account for 59% of homes sold in April, Realtors must be willing to take these listings.  That percentage is expected to increase since there is a huge shadow inventory of homes that will be hitting the market in the next few months as lenders have stopped their moratorium on foreclosures after the beginning of the year.  JPMorgan Chase Warns Investors about Strategic Defaults. 
• Short sales becoming more socially and ethically acceptable to homeowners because of government programs like HAMP and HAFA that have legitimized this option.
•  For homeowners that face a potential deficiency liability, a short sale gives another opportunity to get a release from that liability.  If the lender will not allow the language necessary for this release, a short sale may still reduce the amount of that liability as opposed to a trustee sale.
• If a homeowner knows there will be tax implications as a result of exiting a home, that liability may be reduced through a short sale as opposed to trustee sale that will typically fetch a lower price.
• More and more homeowners are deciding to exit their property compared to a year ago when most were trying to keep their home through a loan modification.  The reality that loan mods are a failed exercise and that lenders are not doing as promised has seemed to reach consumers.  Here are 8 reasons that loan mods fail.

1.  
   1. Lenders make promises and later deny or retract loan mod offers.
   2. Temporary mods are often required but 3 to 5 months later they are told they do not qualify for a permanent mod.
   3. Lenders continually request updated financial records.  This is not just a nuisance but is a method used by lenders to extract further payments from the homeowner and try to determine available assets for lawsuits.
   4. After following the lender’s instructions to make reduced payments as part of a temporary mod, when the lender later rejects that loan mod that borrower is now in default and the lender can file for trustee sale.
   5. Most loan mods are only a forbearance under which the missed payments, penalties and interest are added as a balloon to the end of the loan, further increasing the homeowner’s negative equity.
   6. Failure to disclose the investor and their NPV (Net Present Value) calculations to the homeowner make the decisions of the banks seem unreasonable and counter to financial logic.
   7. “Permanent” mods are not typically permanent.  In most cases the lower interest rates are only fixed for 3 to 5 years.
   8. If a borrower decides to exit the property after receiving a permanent loan mod, it may be too late to receive the benefit of the Mortgage Debt Forgiveness Act (through 2012) creating a tax obligation that the borrower may not have faced, if they made their decision earlier.

• Short Sale Decision Tree
• Stay or Go Calculator

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The Phoenix market certainly has it’s ups and downs, but one thing has been VERY consistent over the past year. Properties listed over $400,000 only account for 7% of what has been selling for the past year. In the month of April, 73% of all properties sold were listed under $200,000; and approximately 20% of what sold was in the mid-range between $200,000-$400,000.

Has the market hit bottom? The median sales price has fallen 52% from the market high of June 2006, however, it is up 10% over this same time period last year.

Equity sales held 40% of the inventory that closed in March, matching the 40% held by REO sales, while short sales made up 20% of the market.

The absorption rate (the number of pending listings versus the amount of available inventory) is 27.7% Valley wide, which is very promising when the historical percentage over the past two years is reviewed.

Current Conditions in the Phoenix Market:

There are 25,935 single family detached homes actively on the market in MLS. That is an increase of 370 listings for the week.
There are 32,034 active listings in MLS, which includes patio homes, town homes, condos and loft properties.

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Advising Short Sale and Deed-in-Lieu Clients 2010

 If you are working with a client who has had a short sale or a deed-in-lieu in their past…or you are listing a home and your sellers may have the same issues…Fannie announced new waiting periods, as of July 1, 2010, before being eligible for another loan.  The waiting period is defined as “from the date of the pre-foreclosure to the date of application”.

• Fannie defines ALL Pre – foreclosure events as any one of the following:
• Deed-in-Lieu
• Preforeclosure Sale
• Short Sale
                                                                                   
• Full Foreclosure retains a 5 yr waiting period

 New Waiting Periods Effective July 1, 2010

For extenuating circumstances, for all 3 event scenarios, it’s a 2-year waiting time and 90% LTV.

Rebecca Roberts    Mortgage Banker
The Lending Company, Inc.
6910 E. Chauncey Ln. Ste. 220 Phoenix, AZ 85054
Phone: 602-791-6262                Fax: 866-559-9097
License: NMLS #231543 – BK0909441
rroberts@thelendingco.com
www.thelendingco.com
                                                         

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The good

The absorption rate Valley wide in all price ranges is 28.4%.
In the price ranges under $175,000 the absorption rate is 30-40%
Valley wide there is a 4.5 month supply of inventory (seller’s market)

The bad

The absorption rate drops into the teens at the $375,000 threshold
The absorption rate drops to single digits at the $800,000 threshold
In the luxury price ranges ($1,000,000 and over) there is a 17.2 month supply of inventory

The ?

Appreciation is down from 9.4% two weeks ago to 5.9% today. That may seem discouraging at first glance, but is much healthier than a steep incline that could be followed by a steep decline as we’ve seen historically.
Alt-A loans (borrowers who had good credit but chose stated income loans) that originated during the peak of the market just began re-setting in the fourth quarter of 2009. It is unknown how many of those borrowers 1). over stated their income at loan origination, 2). how many are still earning the same amount of income, and 3) how many who are able to afford the homes they purchased will strategically default.
Inventory is continuing to decrease, but appreciation is declining, which defies the law of supply and demand.

Current Conditions in the Phoenix Market:

There are 25,568 single family detached homes actively on the market in MLS. That is a decrease of 1405 listings for the week.
There are 32,645 active listings in MLS, which includes patio homes, town homes, condos and loft properties.

Courtesy of Barb Savoy-Pacella, ABR, CNRS, CHMS
Director Business & Career Development
Keller Williams Arizona Realty
www.PacellaGroup.com
(480) 767-3009

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I hate to sound like a broken record (if you are under the age of 35, records were vynil discs that were used to store music prior to CDs, i-pods or MP3 players, and they sometimes became broken or scratched and repeated the same lyric over and over), but distress is playing a major factor in the inventory and movement of our market. Areas that have already experienced a high level of distress and are now moving through their inventory are beginning to see appreciation, while those who have not experienced a high level of distress are not. To illustrate, please note the percentage of distress and resulting appreciation in the following major cities:

percentage distress –  annual appreciation
Chandler 67% -0.5%
Gilbert 64% -4.9%
Glendale 63% 8.4%
Mesa 75% 5.3%
Phoenix 67% 20%
Scottsdale 24% -3.1%
Surprise 74% 8.3%
Tempe 41% -6.6%

Valley wide, the price ranges under $350,000 are experiencing a seller’s market and have less than 5 months of inventory. The price ranges under $200,000 have less than 3 months of inventory.

Current Conditions in the Phoenix Market.
There are 26,169 single family detached homes actively on the market in MLS. That is a decrease of 804 listings for the week.
There are 33,415 active listings in MLS, which includes patio homes, town homes, condos and loft properties.

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2. The Phoenix Real Estate Weekly 4/2/2010 Courtesy of Barb Savoy-Pacella, ABR, CNRS, CHMS ~ Director Business...
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The Market Optimism May be Contagious!

As reported by Peter Corbett in the Arizona Republic on April 15th, according to a University of Arizona forecast, the Valley’s new-home market is on its way to recovery.

The UofA Economic & Business Research Center report predicts that new-home permits in metro phoenix will jump 54% over last year and that permits will more than double next year.

Also on the plus side is affordable housing. Data shows that six out of ten homes sold in the fourth quarter of 2009 were affordable for families earning the Valley’s median income.

Valley-wide, residential re-sale appreciation is hovering at 9.4%, up from -41.7% at this time last year.

Valley-wide active inventory:

17% are foreclosures

43% are short sales

40% are equity sellers

Valley-wide monthly sold inventory:

51% are foreclosures

17% are short sales

31% are equity sellers

Scottsdale active inventory:

7% are foreclosures

24% are short sales

69% are equity sellers

Scottsdale monthly sold inventory:

24% are foreclosures

16% are short sales

60% are equity sellers

Current Conditions in the Phoenix Market:

There are 26,973 single family detached homes actively on the market in MLS. That is a decrease of 374 listings for the week.
There are 33,940 active listings in MLS, which includes patio homes, town homes, condos and loft properties.

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Purchase a New Home with only a 1% Down Payment*

• Up to a 2.5% gift
• Gift to be used for a down payment by homebuyers utilizing an FHA 1st mortgage. 
• Down payment requirements as low as 1%
• Seller can contribute up to 6% for closing costs and pre-paids
• Expanded Income Limits based on county.
• Competitive interest rates.
• Flexible loan approval guidelines.
• Not just for first time home buyers.
• Applies to ANY FHA-Approved Property in AZ!

 This program is ideal for low to moderate income individuals and families looking to obtain quality affordable housing with only 1% down.  And the better news is the 1% down payment can be a gift from a family member!

The Arizona Home Buyer Solutions Program is offered exclusively through The Lending Company, a direct endorsed U.S. Housing and Urban Development lender.

* Plus, the Down Payment can be a Gift from a Family Member!

The Lending Company is a Direct Endorsed H.U.D. Lender. The 1% down payment program is a qualified gift program. It is available statewide in ARIZONA to qualified homebuyers. The minimum down for FHA financing is 3.5%. The gift is available up to 2.5%. Example for illustration purposes only: $100,000 sales price. $1,000 down (1%) PLUS closing costs. 6.0%/6.684 APR. 30 year fixed rate. Subject to income and credit qualifications. Rates and fees subject to change without notice. Call your representative for current low rates and further details.

*Must be Owner Occupied.

Rebecca Roberts Mortgage Banker The Lending Company, Inc. Phone: 602-791-6262 Fax: 866-559-9097 License: NMLS #231543 – BK0909441 rroberts@thelendingco.com http://www.thelendingco.com/

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That said, the home is “always” available even after receiving a “seller accepted offer” because of the unknown status of whether or not a potential buyer (the first-position offer) will still be around by the time the bank makes their decision concerning the eligibility of the seller and the worthiness of the buyer’s offer.

The seller typically wants to have a couple of backup offers in place so that the best one can become the first-position offer if the current one has rescinded or gets rejected by the seller’s bank.

This happens very often, because buyer’s oftentimes make multiple offers on many different homes until one of them gets “approved”. Once they have an accepted, approved contract, they rescind all the other offers they put out – even first-position ones, because they probably only need one house!

It is purely a numbers game. The more offers the buyers put out, the more likely - and quicker – they will have a new home.

Even though a short sale home has a first-position offer being considered right now by the seller’s bank, it will usually whole-heartedly welcome strong back-up offers. It is a very smart thing to do if you really like that house.

* Approval time of 3 to 10 months is from the Seller’s perspective.  A shorter duration is possible from the Buyer’s perspective if the property you are offering on has already had a first-position offer approved, but the buyer rescinded/ walked away because of the scenario I pointed out above.  In this case, it is very possible you could close in less time if your Offer is similar to the earlier offer that was already approved by the seller’s bank.  If your offer is very different though, the approval process might have to be restarted all over again!

Tony Pomykala, REALTOR, ePro
602-290-6217
Sunrise Investments
http://www.HomeListingsArizona.com
http://www.BuyingHomesAZ.com

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