Sunday, December 6, 2009

How is the Rental Market in Arizona?

How is the Rental Market in Arizona?
December 6 2009
Arizona Property Management and Investments
PAYAM RAOUF, Owner/ Associate Broker


Rents are going up specially in most areas of the central valley. There is a bidding war going on out there! There is about 25% less single family residential rental homes on the market than a year ago but apartment rentals are still suffering so are the condos. Rent for homes in the outskirt of Phoenix Metro have not changed much either.

Banks are foreclosing on properties much faster, "you don't pay in three months, you better find a place to live quickly" policy. With the dollar value falling so rapidly against most major currencies, Dubai maybe forced to sell off 20% of London Stock Exchange and credit card defaults being on the rise, a lot of banks have to cash out quicly to pay off their debts or they will go under.

Loan modification aren't happening like they used to either. According to a loan modification officer in Arizona,"It is getting tougher. Some national banks like Chase used to be a lot easier but not any more".

Fannie Mae "deed-for-lease" program is already falling apart. Chase and some other major financial institutions were also considering it but it doesn't seem they are moving forward with it. 90% of homeowners don't qualify, they have hefty second and third mortgages and the ones that do, don't want to go through with it. It's more in favor of the banks than homeowners.

On the other hand, some smaller banks that guaranteed the notes, have no choice but to hang onto their homes untill the market turns, meanwhile, they have to rent them but they have much restricted guidelines.

Several troubled financial institutions are turning and burning their foreclosed inventory at the court steps at fire sale prices. Investors are making a killing in the process by putting them back on the market for a hefty profit and surprisingly they appraise! The $8000 tax credit has also been extended for six more month and interest rates should remain low for a while longer. We should see home prices continue to rise through first half of 2010 and so should the rents. But Zandi, lead economist at ecomony.com predicts home prices going down or at least going side ways in the second half of 2010 in Arizona, Nevada and florida.

With the Fed printing money 24/7, we should see the real inflation kicking in sooner than later, increasing home values substantially in a few years. Meanwhile, Rents will continue to rise, maybe you will have a good residual income to retire on or pay for your kids college or etc. In my opinion, anything is better than keeping your cash in the bank or investing in securities right now. Dow at 10500 is 2500 points below what it was 10 years ago! With real estate, you are always in charge of your own finances, not a market maker or a fund manager gambling with your future.

THIS IS A GREAT TIME TO BUY. You will have positive cash flow going in and hedging against inflation at the same time. Hasn't real estate been the the safest bet throughout the history? What did you pay for your house 20 years ago? What is it worth now? I rest my case. Any other Ideas?

LONG LIVE CAPITALISM AND HAPPY HOLIDAYS.

This is just my opinion, you should do your own research when making any investment decision.

Monday, November 9, 2009

Fannie Mae Announces Deed for Lease™ Program

Fannie Mae Announces Deed for Lease™ Program

WASHINGTON, DC -- Fannie Mae (FNM/NYSE) is implementing the Deed for Lease™ Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender.

"The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications," said Jay Ryan, Vice President of Fannie Mae. "This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities."

The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.

Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer.

For additional information about the Deed for Lease Program, including full details on program eligibility, please review the Guide Announcement on www.efanniemae.com.

Thursday, October 29, 2009

Home values could soon turn consistently positive

RISMEDIA, October 26, 2009—Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of Realtors®. Existing-home sales–including single-family, townhomes, condominiums and co-ops–jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August, and are 9.2% higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in over two years, since it hit 5.73 million in July 2007.

Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”

Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy. Without a firm foundation for middle-class wealth recovery, the post-recession economic growth likely will be one of the weakest in U.S. history.”

Early information from a large annual consumer study to be released November 13, the 2009 National Association of Realtors® Profile of Home Buyers and Sellers, shows that first-time home buyers accounted for more than 45% of home sales during the past year. A separate practitioner survey shows that distressed homes accounted for 29% of transactions in September.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said affordability conditions remain historically high. “Potential first-time buyers can take heart in that affordability conditions this year are the highest on record dating back to 1970, but with the first-time buyer tax credit scheduled to expire at the end of next month, people could hold back from entering the market,” he said. “Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country, and the home price-to-income ratio has fallen below the historical average,” McMillan said.

Total housing inventory at the end of September fell 7.5% to 3.63 million existing homes available for sale, which represents an 7.8-month supply at the current sales pace, down from an 9.3-month supply in August. Unsold inventory totals are 15.0% below a year ago.

“The current housing supply is the lowest we’ve seen in two and a half years,” Yun said. “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.06% in September from 5.19% in August; the rate was 6.04% in September 2008. The national median existing-home price for all housing types was $174,900 in September, which is 8.5% lower than September 2008. Distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area.

Single-family home sales rose 9.4% to a seasonally adjusted annual rate of 4.89 million in September from a pace of 4.47 million in August, and are 7.7% above the 4.54 million-unit level in September 2008. The median existing single-family home price was $174,900 in September, which is 8.1% below a year ago. Existing condominium and co-op sales jumped 9.7% to a seasonally adjusted annual rate of 680,000 units in September from 620,000 in August, and are 9.7% above the 561,000-unit pace a year ago. The median existing condo price was $175,100 in September, down 11.7% from September 2008.

Northeast
Regionally, existing-home sales in the Northeast increased 4.4% to an annual level of 950,000 in September, and are 11.8% higher than September 2008. The median price in the Northeast was $234,700, down 7.0% from a year ago.

Midwest
Existing-home sales in the Midwest jumped 9.6% in September to a pace of 1.25 million and are 7.8% above a year ago. The median price in the Midwest was $147,600, which is 1.0% below September 2008.

South
In the South, existing-home sales rose 9.0% to an annual level of 2.06 million in September and are 10.8% higher than September 2008. The median price in the South was $153,500, down 7.6% from a year ago.

West
Existing-home sales in the West surged 13.0% to an annual rate of 1.30 million in September and are 5.7% above a year ago. The median price in the West was $219,000, which is 15.0% below September 2008.

Friday, October 2, 2009

Rental Market in Arizona Sept. 2009

Rental Market in Arizona Sept. 2009

Speeches of Federal Reserve Officials


Federal Reserve Banks objective is let the market correct itself going forward. Financial institutions are liquidating their inventories rapidly and as the result tons of foreclosures are coming into the market daily. Government has done all it can to stimulate the economy. It is do or die time.

In the past two weeks ( Sept 15 to 30 ) we have been bombarded with phone calls for rentals. These are mostly very stable families losing their homes to foreclosure. There is a betting war for rental inventories in good neighborhoods with good schools.

Due to our massive marketing efforts, advertising on over 40 web sites, we have rented most of our invesntory or have a waiting list for our new ones. Should your tenants move out, we have an immediate replacement for them.

Stock market has not been able to cope with the rapid rate of inflation, Dollar is losing its value fast, Gold is over $1000 an ounce, Silver is pushing $16, there is a T-Bond Bubble and forget about CDs. Where do you invest these day? This is an easy answer, Real Estate in Arizona where you can buy 30% below builder's cost! Rent it. It should yield 6% for the next five years then sell it at almost twice as much! Let me know if I can be of any help. Payam Raouf, Sr. Investment Advisor. payam@azezrentals.com or 888-777-6664 ext 110.
I am not an economist...this is my opinion only. You must do your own Due Deligence.

Friday, September 18, 2009

Arizona Rental Investing

Investing in real estate in Arizona, much like any state, comes down to certain vital aspects such as location, convenience, amenities and the earning potential of the property. When considering any property make sure that you run through a checklist to ensure that the property in question will fulfill all of your requirements as an investor and the needs of your potential renters. The first thing that a smart investor should consider in a rental property is location.

The statement that real estate is all about location was made for good reason. The location of a rental property has a huge impact on the financial viability of an investment. If the home is located in a largely rural area it will not be as easy to rent on an ongoing basis as a property that is centrally located in a city or town. Also consider other major drawing points such as schools and colleges and major business centers. Try to keep your rental investments to areas where there is a big call for rental suites or homes in order to ensure that you are never without tenants, or income.

Earning potential of any property should be foremost in an investor’s mind. After all this is the whole point of the investment. Home quality is a big part of a home’s earning potential. Run-down homes that don’t offer much in terms of living quality may be easily rented; but at what cost? Try to keep in mind that the quality of a rental property will figure largely into the quality of renters. Good quality homes attract good quality long-term renters.

Finally, amenities that are included both in the home and by the community where the property is are important factors in the rental of a home. While things like laundry access, internet and cable and dishwashers speak volumes about the quality of the home, access to public transit, shopping and entertainment, education and recreation are the community aspects that draw renters in.

Payam Raouf is a REALTOR:® specializing in Phoenix residential real estate investment. Payam has extensive knowledge in the world of real estate investment and is dedicated to providing you with an elite level of service and information. For more info on Arizona homes and investment properties contact Payam at Payam@azezrentals.com or call 623-776-5774.

Wednesday, September 16, 2009

Valley resales, foreclosures down

Valley resales, foreclosures down
Numbers dropped from July to August, ASU figures show
by J. Craig Anderson - Sept. 15, 2009 12:00 AM
The Arizona Republic

The Phoenix-area housing market downshifted in August, with both home resales and foreclosures decreasing considerably compared with the previous month, according to a report from Arizona State University. Sales of existing single-family homes dipped to 5,995 in August from 7,300 in July.

Foreclosures also decreased to 3,085 from 4,200 the previous month. Still, August home resales were up from the 4,210 transactions recorded in August 2008.Foreclosure activity decreased by more than 200 from a year earlier, when there were 3,295 foreclosures recorded.

As expected, the median sale price for existing single-family homes was down significantly, about 29 percent, from a year earlier. The median price was $138,000, compared with $194,000 in August 2008. ASU realty studies Director Jay Butler said the year-over-year numbers indicate movement in the right direction.

However, with one foreclosure happening for every two home resales, Butler said, it's too early to say how significant those changes are. "A recovery cannot really be established until foreclosure activity drops to historical levels, which would be about one foreclosure for every 20 regular home sales," he said.

Butler added that real-estate investment is still the driving force propelling the housing market forward. That needs to change, too, before the housing market returns to anything resembling normal activity.

"The fundamental question is whether sales will stay strong, driven by the foreclosure-related market, or start to move down, which is traditional for the end of the year," he said. "If the latter occurs, it could represent a preliminary signal that the market is returning to normalcy."

Wednesday, September 2, 2009

Rental Market Condition in Arizona

Rental Market Condition in Arizona

By Payam Raouf

In August, residential rental units showing as “Active”, meaning that they are still available, have almost doubled in the valley from around 5,000 to 9,500 on Multiple Listing Services (MLS) and less than 300 show in the “Pending” status, meaning they are under contract. In addition to that, out of the available 200,000 apartment units almost 10,000 rentals are sitting vacant valley wide.

There are thousands of homes in the process of foreclosure where banks are allowing homeowners to live in their own home free of charge for long periods of time and so many others are in the process of re-modifying their loans.

Many first time home buyers have taken advantage of the huge buying incentives and have already moved out of their rentals and into their own homes.

Investors have purchased over 15,000 homes in the past few months and are putting them up for rent as soon as they finish remodeling them.

Apartment managers have been struggling for the past few months competing with investors' single family homes and are offering deals to prospective renter that are unheard of. They are practically taking a breath test and if renters fog the mirror, they will get to move in for free for months with no deposits, pets and all.

Going forward I see a gulch of rentals in the market both in single and multi family units valley wide.

Fortunately for us we have been renting our single family units in less than 15 days! In an effort to stay ahead of the market and rent our inventory quickly, we have signed multiple agreements with major on line rental marketing companies such as Rentals.com, Rentahouses.com, Buyrenter.com and nearly 40 other paid marketing websites.

We recommend if you are renting your house, make it market ready, price it competitively and work with your prospective renters on the terms and conditions.
4 bedrooms in centrally located areas with pool and extra amenities are renting faster and for more. Older units with 3 bedrooms are dime a dozen. You need to get aggressive on those.

In the following article you will learn more about the rental market condition. Please call me direct at 623-776-5774 or e mail me at info@azezrentals.com if you have any question.


Deals abound for bargain-hungry renters.
by J. Craig Anderson -

The Arizona Republic
Job losses and an explosion of foreclosure homes on the rental market have caused serious losses for Phoenix-area apartment communities, according to a new study.
Apartment complexes suffered severe declines in both occupancy rates and lease rates during the past year, with the average rent for all types of apartment and townhouse units declining by nearly 6 percent in 2008.

Those numbers don't account for concessions offered to new tenants, which experts say have cut renters' actual costs even more.

The occupancy rate declined by more than 2 percent from the previous year, with more than 2,000 apartments going vacant. Those losses were on top of the nearly 3,000 units vacated in 2007, according to the study by RealFacts, a rental-market analysis firm based in Novato, Calif.

Analysts and apartment-community managers said they don't expect a rebound this year unless layoffs, work furloughs and home foreclosures decrease.

"What drives it down, of course, is supply and demand," said Robert Hicks, Southwest regional vice president of Alliance Residential, a Phoenix-based property-management company. "That's the problem: We've got huge supply and very little demand."

Because it takes years of planning to build an apartment complex, there were units being built as late as 2008 despite declines in occupancy rates and average rent.
Almost 1,900 new apartment or townhome units came online in 2008, while nearly 2,200 new and previously occupied units went vacant, according to the study.

No segment of the rental business has suffered more than high-end apartment communities, according to Caroline Latham, RealFacts' co-founder and chief executive officer.

"It seems today's renter is looking for a bargain," Latham said in a news release. "There aren't enough high-income renters with good credit to commit to premium rents prevalent in high-end markets."

Hicks said bargains are exactly what apartment managers are offering. He has seen deals of up to four months' free rent for a long-term lease.

But it's unclear whether prospective tenants are more likely to respond favorably to upfront discounts or to guarantees that the rent won't go up in a year, he said.
"People want to know what their fixed costs are going to be," he said, adding that some communities are offering leases of unprecedented lengths, up to three years.
Competition for renters is as fierce as it has ever been in the Phoenix area, local experts said. Each month, thousands more foreclosure homes are bought and converted into rental properties.

The cities with the biggest declines in occupancy from June 2008 to June 2009 were Glendale (down 3.9 percent), Phoenix (down 2.7 percent) and Tempe (down 2.1 percent).
Still, Tempe had the highest overall occupancy rate in the Valley as of June and was the only city in which more than 90 percent of apartment and townhouse units were occupied.

The lowest occupancy rate of any Valley municipality covered by the RealFacts study was Peoria, where it was slightly more than 83 percent in June.
Hicks said it has been difficult for managers of the Phoenix area's nearly 200,000 apartment and townhome units to compete with foreclosure-home rentals because, in most cases, property owners simply continue to lower their asking prices until they get a bite.

In contrast, apartment and townhome communities have fixed costs that must be exceeded by rental income to stay in business.

Other challenges include more renters doubling or tripling up in the same house or apartment and recent college graduates staying or moving back into their parents' homes rather than striking out on their own.

The latter trend in particular has hurt management companies that specialize in trendy communities for young professionals, Hicks said.
Job losses and work furloughs also have contributed to the growing apartment-vacancy rate, RealFacts concluded.

Hicks said Sunday's news that the Bashas' grocery-store chain was in bankruptcy and closing 10 locations was just one more reason for apartment managers not to be too optimistic about the near future.
"Those (employees) are the renters of the world," he said

Thursday, August 20, 2009

Valley home prices holding steady

Valley home prices holding steady

3-month trend indicates 27-month freefall may have come to an end, ASU expert says
25 commentsby J. Craig Anderson - Aug. 20, 2009 12:00 AM

The Arizona Republic

After a record-breaking 27 months of decline in the Valley's median home price, some of the most influential local real-estate analysts predict that home values finally have hit the bottom of the slide.

Arizona State University Professor Karl Guntermann reported Wednesday that the median price has held steady long enough to cautiously predict a coming period of relative price stability.

That doesn't mean all home prices will start to increase in the near future. Some houses, particularly the more expensive ones, should continue to decrease in value gradually, while less-expensive homes could hold steady or see moderate gains in value, Guntermann and other experts said.

Nor does it mean recent sellers are feeling any better about the amount they got for their homes. One couple who moved to Anthem recently liked the bargain they got here but still lamented the loss they took on a home in Washington state. Many sellers in the Valley felt the same pain.

"I lost $300,000 in equity on that home," 68-year-old Steve Trover said. "I got a great deal (on the Anthem home), but I'm not going to forget that $300,000."

Still, the overall rate of decline tracked by Guntermann's ASU Repeat Sales Index is finally showing improvement rather than deterioration.

"Clearly, the rate of decline has bottomed out and appears to be moving in the right direction," he said.

Caution is the guiding principle behind Guntermann's research. He doesn't call a trend a trend unless it has repeated itself at least three months in a row.

The positive trend first emerged in April and has remained consistent since, he said.

Guntermann tracks a sampling of homes that have sold multiple times in recent years, and he compares repeat sales of each home for changes in price.

In April, the median repeat home-sale price was 35 percent lower than it had been a year earlier. In May, the year-over-year difference decreased to 33 percent, and it has narrowed by an additional 2 percentage points each month since.

The actual median sale price has bobbed up and down slightly since April but has shown no major changes since then, Guntermann said. The median was $117,500 in April, and preliminary data show it was $119,000 in July, he added.

The median home prices peaked at $266,523 in June 2006, according to Phoenix-based Information Market.

Calling the bottom has been a subject of intense interest in metro Phoenix because much of the economy is tied to population growth and the building that springs from it.

Analyst Tom Ruff of Information Market said the ASU report validates a pronouncement he and colleague Mike Orr had made in April that home prices had hit bottom. "Lately, the news and the forecasts from leading economists have been much more positive, just as we said they would," Ruff said.

Still, he and Orr said the housing market entered a new, less encouraging phase in July. The number of foreclosures hit a new all-time high of about 5,300, and the median home price slipped a bit.

"July was unlike the first six months of the year," Orr said in his latest analysis. "We are now in a period of more uncertainty, with some more mixed signals coming from the data."

In Guntermann's preliminary data for June and July, the median price reached $120,000 in June and then decreased by $1,000 the following month.

Another issue on the horizon that could trigger a dip in home prices is an expected increase in home foreclosures in the coming months, according to leading auctioneers of bank-owned homes.

All of the local analysts interviewed said they expect the median home price to fall slightly in the coming months.

But housing analyst RL Brown and others noted that the Valley housing market always lags during the latter half of the year, and they advised homeowners not to panic.

Overall, Brown said he continues to be optimistic about the Valley's long-term prospects, even though he recognizes that economic factors such as employment and the availability of credit will have a significant influence.

One big improvement from a year ago, he said, is that home builders have sold off much of the excess inventory they had been saddled with when scores of prospective buyers canceled their new-home contracts.

Brown pointed out that despite all the economic hurdles, fears and past mistakes, nearly 10,000 homes have been sold each month in Maricopa County for the past three months.

"The economy is fraught with problems," he said, "but the fundamentals of this market are, by any reasonable definition, strong."

Thursday, July 30, 2009

Recovery Signs in Housing Market Stir Some Hope

Recovery Signs in Housing Market Stir Some Hope
by David Streitfeld
Thursday, July 30, 2009

After a plunge lasting three years, houses have finally become cheap enough to lure buyers. That, in turn, is stabilizing prices, generating hope that the real estate market is beginning to recover.

Eight cities, including Chicago, Cleveland, Denver and San Francisco, showed price increases in May, up from four in April and one in March, according to data released Tuesday. Two other cities, Charlotte, N.C., and New York, were flat.


For the first time since early 2007, a composite index of 20 major cities was virtually flat, instead of down.

"We've found the bottom," said Mark Fleming, chief economist for First American CoreLogic, a data firm.

The release of the surprisingly strong Case-Shiller Price Index, compiled by Standard & Poor's, followed earlier reports that sales of existing homes rose last month for the third consecutive time, while sales of new homes rose in June by the largest percentage in eight years.

All of these improvements are tentative, and come after a relentless decline that knocked more than half the value off houses in the worst-hit cities.

Some skeptics say they believe the market is merely pausing before it resumes falling and that much of the life in the market is coming from speculators. Even the most enthusiastic analysts acknowledge that rising unemployment, another leap in foreclosures or a significant jump in interest rates could snuff out progress.

Still, hope is growing in some quarters that the worst has passed.

"Recession is over, economy is recovering — let's look forward and stop the backward-looking focus," John E. Silvia, the Wells Fargo chief economist, wrote Tuesday in a research note.

Kirit Shah decided to look forward a few weeks ago. A retired forensic chemist for the New York Police Department, he closed on a house in Royal Palm Beach, Fla.

Mr. Shah was not dissuaded when the salesman at K. Hovnanian Homes told him the five-bedroom place had been empty since it was finished three years ago. "It was waiting for me," said Mr. Shah, 64. "I'm on a lakefront. I never dreamed I would be on a lakefront. I'm within walking distance of a swimming pool."

But the thing he likes best is this: he paid $260,000 for the five-bedroom house, half of what that model was fetching during the boom. "An excellent deal," he said. "Plus I got a good rate on my mortgage, under 5 percent."

Turning markets are full of uncertainty. If Mr. Shah was one reason new home sales were up 11 percent in June from May, it is unclear just how many others like him are out there.

Brad Hunter, chief economist for Metrostudy, a research firm, said the new home numbers appeared to illustrate less a return of buyers like Mr. Shah and more a resurgence of investors and speculators. Metrostudy's own data showed that the number of buyers during the second quarter who actually moved into their new house declined 2.6 percent.

"Investors are turning right around and putting the houses on the market for sale or for rent," Mr. Hunter said. "What appears to have been an absorption of excess inventory can be just a changing of ownership of that inventory."

The good news in the Case-Shiller index, the most widely watched source of price information about the housing market, is equally provisionary. Tracking only large urban areas, the monthly index does not represent the country as a whole.

The Case-Shiller figures released Tuesday showed May prices were down 17.1 compared with May 2008. As bad as that may sound, it was the fourth consecutive month that price declines slowed — a step in the right direction, but perhaps not cause for widespread celebration.

More attention was focused on the news that, when May was compared with April, the price index for 20 major cities showed a half-percent gain. It was the first month-over-month increase in the index in 34 months.

"It is very possible that years from now we will say that April 2009 was the trough in home prices," said Maureen Maitland, vice president for index services at Standard & Poor's.

When the numbers were adjusted for seasonal factors, however — the usual way housing figures are presented — the slight gain disappeared and the index was essentially flat. Half of the cities showed continued declines.

One reason the market is perking up in some places, real estate agents say, is the encouragement offered by such measures as the first time buyer's tax credit of
$8,000.

All the more reason, said the National Association of Realtors, to not only extend the credit but expand it. The association is lobbying for the current credit, which expires in December, to be replaced with a $15,000 credit for all buyers.

"This is a relatively low-cost way to keep the housing market moving forward," said Paul Bishop, the association's managing director of research.

Another reason for the market's resurgence is the prevalence of foreclosures, which make up about a third of all existing home sales. In some troubled regions, agents say they cannot remember the last transaction that did not involve a bank disposing of a property.

These communities are not yet showing any improvement in prices. Las Vegas was the worst-performing city in the May Case-Shiller index, falling 2.6 percent. Prices have fallen there by a third in the last year.

"The mom and pop that work at the Hilton can now afford a home here again," said Justin Pechonis, a Las Vegas real estate agent. "Las Vegas is a great place to buy now." But not from him. Sickened by seeing so many clients foreclosed on, he is getting out of the business. He now drives a taxi.

All this uncertainty breeds a hesitancy that seems to show up in nearly every sale, especially at the higher end of the market. When Margot and Pascal Lalonde decided in April to sell their two-bedroom condominium in the North End of Boston, they methodically quizzed six experienced agents about a good price.

List it for under $500,000 unless you want to be here for months, said one agent. Two others said they should demand $675,000. The other three were in between.

"In a market with so few sales, no one knows what to do," said Ms. Lalonde, a consultant.

After 80 days on the market and two small price reductions, the condo is now under contract for $550,000. The buyers examined the apartment six times. The Lalondes, who are moving to Short Hills, N.J., expect to be no less careful when they buy.

Wednesday, July 29, 2009

Housing Starts Are Up

July 2009
Housing Starts Are Up Again


The most bearish of Wall Street economic analysts have made the same point for the past 18 months. There's no recovery or rebound in the housing market, they said, until home builders start building again.

"Show us positive numbers on new home starts for a few months," they say, "and then we will we agree that the housing market has finally turned around."

Hey there bears, here are the numbers you asked for: The end of last month, the Commerce Department reported an unexpectedly large increase in new single family home starts during May - up by seven and a half percent.

That was the third consecutive monthly gain in single family starts. Total starts, including multifamily apartment starts and condos, were up by 17 and a half percent/

Not only were starts up a lot, but so were other key indicators of future home building activity: single family permits, which surged by about 8 percent. That was the second straight monthly gain in permits - and points to at least moderately higher starts in the coming six months to a year.

On top of the good news about new construction, which has clearly been the weakest segment of the housing market since 2007, we also got some other positive reports last week:

Consumer confidence, which is extremely important for home buying, was up again for the fourth consecutive month, according to the University of Michigan's consumer sentiment survey.

Even retail sales were up slightly -- and that's an important sign that people are slowly coming out of the shell they've been in since last Fall, and are now starting to spend money again.

The latest inflation readings -- both the Consumer Price Index and the Producer Price Index -- were down slightly in May. Despite rising gas price, a dollar bought a little more in goods and services last month than the month before. That's good.

The National Association of Home Builders now projects that the current recession will end in the second half of 2009, with a one point five percent growth rate in the overall economy between July and December.

Finally, mortgage rates took a slight dip after several weeks of increases. Fixed thirty year rates averaged about 5.5 percent last week, according to the Mortgage Bankers Association, after climbing to 5.6 percent the previous week.

Many lenders had actually been quoting much higher rates - all the way to 6 percent - because of inflation fears in the bond market.

We've definitely got to keep our eye on mortgage rates, but otherwise the rebound appears to be underway.

Home Prices Rise Across U.S.

Wall Street Journal JULY 29, 2009

Bargain Hunting, Low Rates Drive First Gain in 3 Years; Double Dip Still Possible

By NICK TIMIRAOS and KELLY EVANS
Home prices in major U.S. cities registered the first monthly gain in nearly three years, according to a new report that provided fresh evidence that the severe U.S. housing downturn could be easing.

Standard & Poor's Case-Shiller index, which tracks home prices in 20 metropolitan areas, rose 0.5% for the three-month period ending in May, compared with the three months ending in April. It marked the index's first increase after 34 straight months of decline, and came after a variety of housing indicators has shown glimmers of hope for the past several months.

Home prices remained down about 17% from a year earlier, according to the index. According to S&P/Case-Schiller's seasonally adjusted numbers, which it began reporting only earlier this year, prices in May posted a 0.2% decline.
But most Wall Street economists who discussed the survey focused on the April-to-May rise, saying it represents a significant change in direction. Home prices in 15 of the 20 areas in the survey rose or remained stable.

The results were also consistent with other recent housing data, these economists said. Sales of new and existing homes rose for three consecutive months through June. Housing starts were up in June, and an index of builder sentiment rose in July, though both remained at low levels.

May's uptick came in part as home prices in some areas fell enough for investors and first-time buyers to begin competing for bargains, helping to ease the backlog of unsold homes.

Other likely sales spurs included mortgage rates that fell to 50-year lows, an $8,000 federal-tax credit for first-time homebuyers and the ability of buyers to secure mortgages from the Federal Housing Administration with as little as 3.5% down.
The latest readings don't necessarily herald a full-blown recovery for the housing market or broader economy. Consumer confidence remains near record lows. The U.S. unemployment rate, at 9.5% in June, is expected to hit double digits before year end, making swift growth and an expanding labor force unlikely anytime soon.
The home-sale numbers surprised Robert Shiller, the Yale University economist who helped create the Case-Shiller indexes. "The change in momentum here is very significant," he said. Last month, Mr. Shiller forecast sustained home-price declines into the next few years, which he said now looks less plausible. He said he expects home prices to remain near current levels for the next five years.
U.S. home prices have fallen by about one-third since their peak in the second quarter of 2006, according to S&P, and are roughly back at 2003 levels.
Some analysts warn that the home-price uptick could reverse as rising unemployment causes more Americans to fall behind on their mortgage payments and end up in foreclosure.

One factor that apparently drove the March-through-May uptick was a falling share of homes sold at distressed prices, through foreclosure and so-called short sales. Distressed sales accounted for 33% of existing home sales in May and 31% in June, down from a high of nearly 50% earlier this year, according to the National Association of Realtors.

The drop in foreclosure sales was likely the product of U.S. banks' moratorium on home foreclosures, which they undertook as the government launched a round of programs to modify and refinance loans for at-risk borrowers. Most banks ended their foreclosure moratoria in March.Interest rates also hovered at or below 5% for most of the March-May period, before rising in June.

"Were it not for those rate reductions and the moratorium, you'd see prices down right now," says Ronald Temple, co-Director of Research at Lazard Asset Management. He expects the index to stabilize or increase in the short-term, but forecasts another 12-15% decline in prices thereafter.

Regardless, a combination of still-low interest rates and eager sellers continues to fuel competition for heavily discounted properties. Some buyers are finding that investors with all-cash offers are consistently beating them in bidding wars.
Stacy Watson, a 39-year-old human-resources manager in the Riverside, Calif., area, says she has made losing bids on at least eight homes since mid-June. On Tuesday, she says, she decided to increase her offer for a five-bedroom home in Perris, Calif., to $198,000, nearly $20,000 more than the asking price.

Ms. Watson and her real-estate agent say the bank-owned home has drawn more than 10 offers in less than a week on the market. "Everyone says it's such a great housing market for buyers," she says. "No. This is hard."

Would-be homeowners have benefited from government programs, including one that allows buyers of properties owned by Fannie Mae to receive mortgages from the government-controlled mortgage-finance company with down payments as low as 3%.
When Nelly Whiteman and her husband recently bought a house out of foreclosure from Fannie Mae, she figures they competed against at least two other buyers. The 27-year-old administrative assistant says they snagged their three-bedroom home in Orangevale, Calif., for $176,000, or about $5,000 more than the asking price. They now pay about $1,080 a month in mortgage payments, insurance and taxes.
"It's an extra bedroom for around what we were paying for rent," she says.
The budding housing recovery isn't being felt across the country. Prices increased in 13 of 20 surveyed markets, with the strongest gains coming in Cleveland, up 4.1% from April; Dallas, up 1.9%; and Boston, up 1.6%.

Home prices were flat in the New York and Tampa, Fla., areas. The survey doesn't track condominium or cooperative apartment sales, so it doesn't take into account the majority of housing stock in New York City.

Prices continue to fall in some markets, particularly overbuilt Sunbelt cities. Prices in Las Vegas declined 2.6% in May from April and were down 32% from a year ago, according to S&P/Case-Shiller. Phoenix prices declined 0.9% from April and were down 34% from May 2008. San Francisco, Miami and Detroit also continued to see year-on-year declines of about 25%.

"Is this just a spring bounce that was partly related to the drop in distressed sales?" asks Thomas Lawler, an independent housing economist based in Leesburg, Va. One key question, he says, is whether another wave of foreclosures could come along to offset the home-inventory decline that has boosted many markets.

In many of the hardest-hit cities, banks appear to be slow to put foreclosed homes on the market. In Las Vegas, for example, banks had taken title to 13,200 homes as of June. That surpassed the total number of homes listed for sale in Las Vegas last month, according to SalesTraq, which monitors inventory in Las Vegas. "Are the banks are intentionally holding back inventory? That's a question a lot of us have," says Larry Murphy, president of SalesTraq.

Some housing analysts say they expect falling prices on mid-to high-end homes to weigh on the Case-Shiller index. The supply of these homes has swelled in recent months as borrowers struggle to obtain financing.

Borrowers of "jumbo" mortgages, which are too big for government backing, face higher rates. Banks are also requiring bigger down-payments at a time when traditional "trade-up" buyers are finding that the equity in their homes has fallen.
"We think [the sales index] will look like a 'W,' where prices go up until the foreclosures at the higher end translate into another leg lower," says Ivy Zelman, chief executive of Zelman & Associates, a housing-research firm.

The improvement in housing likely gave a small boost to U.S. gross domestic product in the second quarter, economists said. After data showed construction of new homes was stronger than expected in June and was revised higher in April and May, Macroeconomic Advisers, a St. Louis-based forecasting group, ratcheted up its estimate of second-quarter economic growth. It now sees output shrinking at just a 0.5% annual rate in the second quarter, compared with declines of 6.3% and 5.5% in the previous two quarters.

Thursday, June 25, 2009

Low Appraisals Threaten U.S. Property Rebound by Cutting Prices - Bloomberg.com

By Dan Levy

June 24 (Bloomberg) -- There may be another culprit scuttling a U.S. housing recovery: low home appraisals.

Flawed appraisals are derailing real estate sales and depressing values across the U.S., the National Association of Realtors said yesterday as it reported that existing home prices declined 17 percent in May from a year earlier.

“It’s pointing to thousands of delayed or canceled transactions,” Lawrence Yun, chief economist of the Chicago- based Realtors group, said in an interview. “We’ve had a massive inundation from members saying this is a big problem.”

Appraisal rules that went into effect on May 1 require lenders that sell loans to Fannie Mae or Freddie Mac to set up a firewall between appraisers and loan officers to prevent improper influence. The rules are the result of an agreement between the mortgage buyers and New York Attorney General Andrew Cuomo, who said an investigation found appraisers inflated values under pressure from lenders.

The agreement mandates that banks order a second appraisal on 10 percent of the loans they sell to Fannie Mae and Freddie Mac, and warns against accepting the higher of any two valuations. The guidelines have led to more conservative valuations by many appraisers and a “chill” in lending, according to John Brennan, research director at the Appraisal Foundation, a Washington-based trade group.

‘Unintended Consequences’

“Sometimes policy can lead to unintended consequences,” Yun said.

Cuomo said in December when the appraisal agreement was reached that the deal “preserves the core goals of ensuring appraiser independence and eliminating systemic conflicts of interest.”

Alex Detrick, a spokesman for Cuomo, didn’t immediately respond yesterday to a request for comment.

When home values come in below the sales price, that’s not the appraiser’s fault, it’s a reflection of the market, the Appraisal Institute, a Chicago-based professional group that represents more than 25,000 appraisers, said in a statement yesterday.

“We take offense with the notion that an appraisal is only good if it happens to come in at the sales price,” the group said. “That mentality helped cause the mortgage meltdown to begin with.”

More deals are falling apart in a housing market that needs transactions to recover from a three-year slump that has dragged the U.S. into a recession. Low appraisals join a list of suspected obstacles standing in the way of a rebound that includes rising interest rates, a glut of foreclosed properties, and the highest unemployment rate since 1983.

Sales Fall

Sales in May were 3.6 percent lower than a year earlier, the Realtors said yesterday. U.S. home prices fell 6.8 percent in April from a year earlier, the Federal Housing Finance Agency said yesterday in Washington.

The number of houses on the market dropped 3.5 percent to 3.8 million in May, NAR said. At the current sales pace, it would take 9.6 months to sell those homes, compared with 10.1 months in April.

Real estate broker Vince Saragosa had a $185,000 offer in April for a three-bedroom home in Royal Oaks, Michigan. An appraiser valued the property at $128,000 and the deal fell through.

“It’s almost like appraisers are interfering with the market,” Saragosa, owner of World Showcase Realty in Shelby Township, a Detroit suburb, said in an interview.

Deal Collapses

California real estate investor Bruce Norris renovated a three-bedroom home in the Riverside-San Bernardino metropolitan area in January and found two buyers willing to pay $165,000. An appraiser put the value 15 percent lower. The prospective purchasers walked away and now he’s renting the house instead.

Low appraisals that lead to a sale reduce comparable prices in a neighborhood and make it “impossible for another group of people to refinance,” Norris said.

“Appraisers provide lenders with objective information and value opinions that help protect them from making questionable loans and investments and help them minimize risk,” the Appraisal Institute said in its statement. “However, that should not suggest a bias toward lower valuation. Appraisers reflect the market, and sometimes the markets don’t act like we want them to or hope they will.”

Cuomo, a Democrat elected three years ago, sued title company First American Corp. in November 2007, accusing its appraisal unit of inflating home values under pressure from Washington Mutual Inc. JPMorgan Chase & Co. bought WaMu’s deposits and branches in September after the Federal Deposit Insurance Corp. took over the company.

Cuomo Probe

The lawsuit followed an investigation that Cuomo said showed conflicts of interest between appraisers, credit rating companies, lenders and investment banks.

Artificially high appraisals contributed to record foreclosures because borrowers ended up owing more than their houses were worth. Now, critics say, low appraisals are hindering sales.

“When prices are down, appraisers tend to depress values because they don’t want to look bad in front of the lenders who are ultimately hiring them,” said Ron D’Vari, chief executive officer of NewOak Capital LLC in New York, an investment advisory firm specializing in fixed income and real estate. “They over-extrapolate the current psychology.”

Trade groups including the Mortgage Bankers Association and the Appraisal Institute opposed the agreement with Cuomo because they say it was written without industry input and harms relationships between “reputable and ethical” mortgage brokers and appraisers.

Flawed Guidelines?

The U.S. Office of Thrift Supervision last May called the deal “flawed” and said it should be reconsidered. The Federal Reserve said it should be scrapped in a June 2008 letter to the Office of Federal Housing Enterprise Oversight, now called the Federal Housing Finance Agency, that oversees Fannie Mae and Freddie Mac.

In the first quarter, loans eligible for purchase by Fannie or Freddie account for 70 percent of all lending, according to newsletter Bethesda, Maryland-based Inside Mortgage Finance.

“Just as the lack of careful regulation led to inflated prices, the return to regulation is reinforcing the downturn,” said Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School in Philadelphia. “It’s making the cycle worse.”

To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net

Last Updated: June 24, 2009 00:01 EDT

Friday, June 12, 2009

Investors not flipping houses, but renting

by J. Craig Anderson - Jun. 12, 2009 12:00 AM
The Arizona Republic

Real-estate investors have returned to the Valley in a big way, prompting concerns that the housing market is becoming too speculative to sustain the recent buyer activity.

The lure of once-in-a-lifetime deals on bank-owned homes is driving investor purchases, which experts say account for 50 to 70 percent of recent home-buying transactions. Still, it's the ability to generate revenue by renting the homes to tenants - in some cases, previous owners - that makes the properties such attractive investments.

The Phoenix-area housing market has been flooded with homes for rent in recent months, raising concerns about whether there will be enough tenants to keep the Valley's estimated 130,000-and-growing rental properties out of financial jeopardy.

Even some longtime supporters of the home-investment market say they've noticed a disturbing return of the can't-lose mentality that got so many speculators and house-flippers into trouble a few years ago.

"Investors are starting to look at the market from a speculative standpoint," said Alan Langston, who runs the Arizona Real Estate Investors Association. "We could end up with an oversaturated rental market."

Although the demand for rental homes is still strong, Langston said, speculators seeking big returns could be in for an unpleasant surprise, especially if they don't treat rental-home ownership as a business that requires time, effort and cash reserves.

Dealing with tenants also requires legal knowledge, he added. "You need to have a good lease, and you need to know how to enforce it," he said.

Langston has created a second organization, the Arizona Rental Property Owners and Landlords Association, to provide resources such as proper lease agreements, market data and legal advice in exchange for an annual fee of $129.

Rental-home owners who lack a full understanding of the financial risks and recommended precautions could find the homes they purchased from lenders right back on the market, which would be bad for investors, tenants and the area's economic recovery.

Home foreclosures have created an atypically high demand for rental properties, but that demand is not unlimited, and rental investments are not immune to financial risks such as tenants losing their jobs or continued decline in rental rates as supply increases. The glut of single-family homes for rent, overbuilding of apartments and failed condominium projects have created a difficult and highly competitive market for rental-property owners.

Many apartment managers have responded by boosting incentives such as lower rents, waived or reduced fees and complimentary services.

Many rental-home investors have purchased the properties with cash, which means there is little chance of those homes going into foreclosure. Of the estimated 131,000 rental homes in the Phoenix area, only about 5,000 are currently in the foreclosure process, according to Valley market-research firm NetValueCentral Inc.

Langston said it's likely that many of the houses in foreclosure are owned by what he calls "reluctant landlords," people who were forced to leave their homes and rent them to tenants because of financial problems.

But whenever there is a perceived opportunity for investment gains, he said, it will attract what Langston calls "stupid money." Stupid money was flowing like water during the housing boom, he added.

"The idea is that you could make money even if you didn't do anything right," he said.

Chaz Smith, senior vice president of the LandSource Group at Colliers International in Phoenix, said first-time buyers in the current market are all too aware of the investor presence.

"Young people looking for a starter home, they get outbid by investors," Smith said.

Still, Smith and Langston see real-estate investment as a positive. The competition that's causing frustration for other buyers is keeping prices from falling further, they said. Starter-home buyers alone would not create enough demand to absorb the supply of bank-owned homes coming on to the market each month, they said.

Investors have fixed up many dilapidated or trashed homes and prevented the Valley from having neighborhoods littered with abandoned properties.

"Homes are being bought, neighborhoods are recovering," Langston said. "Imagine this market today without investor activity."

However, he said, there is a big difference between an investor and a speculator.

"Investors follow solid investment practices. They add value to the transaction," Langston said. "Speculators are looking for a very quick turnaround and a very large return."

Despite the economic benefits of investor participation in the market, some observers say, the return of investors - even responsible ones - has disturbing moral implications.

Jim LaVanway, vice president of Homeowners Financial Group in Phoenix, is among those who blame the investment community for creating a bubble in the first place.

"That's the irony of it," he said. "Now, we're waiting for those same guys to come back and buy those same homes at a lower price."

Too many rentals?
Investors' rush to purchase bank-owned homes and turn them into rentals has sparked a number of concerns, including:


• Too much supply: Rental properties would put many apartment and rental-home owners out of business.


• Future concerns: The failure of rental investments would lead to future foreclosures and displacement of families. Also, a high number of rental-investment failures would scare away other potential investors and decrease home sales.


• Homeowner appeal: Neighborhoods overrun with rental properties would be undesirable to prospective homeowner-occupants.

Monday, May 25, 2009

Amid Housing Bust, Phoenix Begins a New Frenzy

Amid Housing Bust, Phoenix Begins a New Frenzy


By DAVID STREITFELD
Published: May 23, 2009
PHOENIX — Every weekday morning, Lou Jarvis drives the sun-baked suburban streets looking for investment gold: a family that will lose its house in a foreclosure auction within a few hours. If the property looks promising, Mr. Jarvis puts in a bid on behalf of any of his dozens of clients eager to become landlords. When he wins, he offers to let the family stay in the house and rent for much less than their mortgage payment With this sweltering desert city enduring one of the largest tumbles in housing prices for any urban area since the Depression, there is an unrelenting stream of foreclosures to choose from. On some days, hundreds are offered for sale at the auctions that take place on the plaza in front of the county courthouse.
There is also a large supply of foreclosed families who can no longer qualify for a loan. And that is prompting a flood of investors like Mr. Jarvis, who wants to turn as many of these people as possible into rent-paying tenants in the houses they used to own.
Real estate got just about everyone into trouble in Phoenix, and the thinking seems to be that real estate is going to get everyone out.
The low end of the real estate market here — and in some equally hard-hit places like inland California and coastal Florida — is becoming as wild as anything during the boom.
One real estate agent was showing a foreclosed house to a prospective client when a passer-by saw the open door, came in and snapped up the property. Another agent says she was having the lock changed on a bank-owned home when a man happened by, found out from the locksmith that it was available, and immediately bought it. Bidding wars are routine.
Absentee buyers, who can be either investors or individuals purchasing a vacation property, bought nearly 4 of every 10 homes sold in the Phoenix metropolitan area in April, according to the research firm MDA DataQuick. That is up 50 percent since late 2007, and is nearly the same ratio as at the 2005 peak.
Once again, just about everybody seems to be buying as many houses as they can, positive it will make them rich — or at least allow them to recoup some of their losses.
“I bought too high a few years ago,” said Jason Fischbeck, an entrepreneur who lives across the street from Mr. Jarvis and is one of his clients. “It cost $225,000. Now it’s worth $110,000. So I just paid $80,000 cash for another. ”
Mr. Jarvis, 47, the former co-owner of a wood moulding company that thrived in the boom and faltered in the crunch, also made some mistakes. Last spring, he contracted for three new homes in the distant suburb of Copper Basin, convinced that real estate was bottoming.
He was wrong. He managed to get out of two of the contracts but had to buy one of the houses, which is now substantially under water.
“You need to buy when there’s blood in the streets,” he said with a shrug. “Even if it’s your own blood.”
In January, Mr. Jarvis began working as director of investor relations for Brewer Caldwell, a property management firm that had been approached by the CBI Group, a real estate fund based in Calgary, Alberta. In its first foray into the American market, CBI is buying 175 rental houses in Phoenix.
One of them belonged to Mary Lou and Jorge Aguilar, who purchased it new for $111,000 in 1999. Three years ago, after a series of financial difficulties, they refinanced for $185,000 for reasons they no longer understand. “Our lender talked a pretty picture,” Mrs. Aguilar said bitterly.
When the couple’s mortgage payment adjusted to $1,242 a month, they fell behind and ended up in foreclosure. They now pay $1,014 in rent, which they say is bearable.
Still, their feelings are mixed. “It’s not our house anymore; it’s someone else’s,” said Mrs. Aguilar, who works for the state welfare department.
For CBI, the deal is sweet. At that rent, it would recoup the $52,000 it paid for the house in about five years. “This type of deal is absolutely not available in Canada,” said Jarrett Zielinski, a CBI executive. “No city here has fallen by 50 percent, the way Phoenix has.”
The investment group is opening a new fund this week to buy another 160 Phoenix homes.
As CBI continues to buy, it is planning investing seminars for its tenants. “Our goal is to be able to sell them their house back,” Mr. Zielinski said. “Wouldn’t that complete the circle?”
First up for Mr. Jarvis’s inspection on a recent morning is a three-bedroom on a cul-de-sac in the suburb of Gilbert. A rival investment crew is already there. “You don’t want this one,” one fellow says. “It’s no good.” Mr. Jarvis just laughs.
Once they are inside, the reason he is trying to send Mr. Jarvis away becomes clear. The house, built in 1991, is clean and well proportioned, with an opening bid of $76,000 — $200,000 less than what it sold for three years ago.
Not every property gets his nod. He considers an older condominium but deems it unlikely to appreciate. A three-bedroom seems promising until he sees the power lines looming just feet from the back fence.
In the end, he makes just one bid this day, for the three-bedroom he saw first. He offers $110,000, which is not enough. At the courthouse, it goes for $114,000. Every week, the foreclosure market is more competitive.
As the day’s auctions wind down, Mr. Jarvis goes back to the office to meet with a group that wants to put $5 million into the Phoenix housing market. A few miles away, the owner of that house with the monstrous power lines, Robert Corr, is being told his house was sold and he has five days to vacate.
Mr. Corr smiled when he heard the news, happy to be the latest of the 78,738 foreclosures in Phoenix since January 2005. He had already rented a van to take him and his family back to Alabama, where they would buy a mobile home and live on 10 acres of land.
Brewer Caldwell has bought about 125 houses this year for its clients. Only a quarter had owners who were living there already and willing to stay on as tenants. Filling up the rest, and all the other houses the company intends to buy, will depend on a steady supply of people who cannot afford to buy for themselves.
“If Phoenix loses population,” Mr. Jarvis says, “then buying houses here is a bad bet.”
As Mr. Jarvis scouts for houses, he sometimes finds a familiar one. In February, he saw a home that one of his brothers bought from a builder in 2005, camping out overnight for the opportunity. With its value now shrunk, the brother was letting it go to foreclosure.
Mr. Jarvis’s daughter Jade also bought a house at the market’s peak — in her case to live in. The other day she asked for advice: should she keep paying the mortgage on something that had declined in value by 60 percent? His conclusion: “probably not.”
“Am I teaching my kids right by letting them walk away from something they made a commitment to?” Mr. Jarvis wonders.

Wednesday, April 22, 2009

U.S. home prices rose 0.7 percent in February from January

April 22 (Bloomberg) -- U.S. home prices rose 0.7 percent in February from January, the first consecutive monthly gain in two years, a sign that low interest rates may be moderating declines in real estate values.

Prices fell 6.5 percent in February from a year earlier, the second-smallest drop in six months, led by a 19 percent decrease in the region that includes California, the most populous U.S. state, the Federal Housing Finance Agency in Washington said today. The gain in February from a month earlier matched the average of 10 estimates in a Bloomberg survey.

Mortgage rates have tumbled 1.6 percentage points in six months, making houses and condominiums more affordable. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan increased 5.3 percent last week as Americans took advantage of interest rates near record lows. Home sales rose 5.1 percent in February from a month earlier, the National Association of Realtors said March 23.

“As demand firms, and once inventories of houses and a broad range of goods are brought into line with sales, economic activity should begin to stabilize,” Federal Reserve Vice Chairman Donald Kohn said in an April 20 speech in Delaware.

The inventory of properties on the market fell to a 9.7 month supply in February at the current sales pace, down from April’s high of 11.3 months, and sales rose 5.1 percent from a month earlier, the Realtors group said.

The number of Americans signing contracts to buy previously owned homes rose 2.1 percent in February, led by a 14.5 percent jump in the Midwest and a 10.6 percent increase in the Northeast, the National Association of Realtors said in an April 1 report.

Mortgage Rates

The FHFA’s February house price index is down 9.5 percent from its peak in April 2007. The Mountain region of the U.S., including Arizona and Nevada, had the second-biggest decline in home prices from a year ago, dropping 9.2 percent, the FHFA said in today’s report. The South Atlantic area, including Florida, fell 8 percent.

The average U.S. rate for a 30-year fixed home loan dropped to 4.82 percent last week from 4.87 percent a week earlier, according to Freddie Mac, the McLean, Virginia-based mortgage buyer. The rate has averaged 5.02 percent this year, compared with 6.21 percent during the five-year housing boom that ended in 2005.

The difference between 30-year mortgage rates and 10-year Treasury yields has narrowed to about 2.2 percent from 3.1 percent in December, which was the widest since 1986. The spread remains almost 0.7 percentage point above the average of the past decade, data compiled by Bloomberg show. Rates for 15-year mortgages are about 1.8 percent above 10-year Treasury yields, compared with an average 1.4 percent since 1999.

‘Glut of Homes’

U.S. banks owned $11.5 billion of foreclosed homes in the fourth quarter, up from $6.7 billion a year earlier, according to the Federal Deposit Insurance Corp. in Washington. California and Florida metropolitan areas led the U.S. in foreclosures in the first quarter as unemployment and falling property values deepened the housing recession, according to RealtyTrac Inc., based in Irvine, California.

“Whatever damage has been done in California is only going to get worse because there is a glut of homes owned by lenders that aren’t yet on the market,” said Bruce Norris, a principal with the Norris Group, a Riverside, California-based real estate investment firm. “These homes are like a shadow inventory that is likely to drag down prices further when they come onto the market.”

Price Forecast

Freddie Mac, along with larger rival, Washington-based Fannie Mae and banks including New York-based Citigroup Inc., have slowed or delayed foreclosures using various moratorium plans in the hopes that homeowners in default will be able to modify their loans.

U.S. home prices probably will fall 5.1 percent this year to $188,500, less than the 9.3 percent plunge in 2008, according to the real estate group. Home resales probably will rise 1 percent to 4.96 million after a 13 percent drop last year, NAR said in a forecast posted on its Web site.

The housing market may be buoyed by improvements in the banking sector. Treasury Secretary Timothy Geithner said yesterday in testimony to a congressional oversight panel that most banks now have “more capital than they need.” Geithner also said there were signs of “thawing” in credit markets.

The U.S. has pumped more than $590 billion of public money into troubled financial institutions over the last six months through the $700 billion Troubled Asset Relief Program. Geithner said in a letter to the oversight committee yesterday that $109.6 billion remains of the funds authorized by the Emergency Economic Stabilization Act last year.

Saturday, April 18, 2009

Welcome to the bottom of the Phoenix Real Estate Market.

Buyers are taking advantage of foreclosure deals, especially in the outlying Phoenix metro area. As predicted, areas hardest hit by the foreclosure market are rebounding.

In a recent trip with investors to Buckeye and Maricopa we found several great investment opportunities on the golf course under $80,000. However, every one of them was in a multiple offer situation. Multiple offers that drove the prices up. This is likely to lead to higher prices in these areas. We ended up getting two offers accepted at steal prices!

Prices are showing signs of leveling off as foreclosures decline in some areas. Home sales soared in March, surpassing March of 2005 sales (the height of the sales boom).

However, sales in Scottsdale and Paradise Valley aren’t seeing the same buying frenzy and prices there are likely to continue to fall. In Paradise Valley there are currently about 550 homes for sale with only about 6 sales on average per month. At that rate it would take over 7 years to sell every home compared to about one years worth of inventory in other parts of the Valley.

In March, pending home sales in the Valley hit 7,550 which was a 70% increase over last year at this time. Pending sales are the major indicator of the housing market. Interestingly, about 2/3 of all Valley home sales are foreclosure properties which is causing those foreclosure deals to evaporate.

When the foreclosure deals are gone, it will be great news for home sellers…not so great news for home investors trying to catch the bargains they’ve heard about.

Foreclosure homes are selling twice as fast as they did last fall. Today a foreclosure sale is taking about 117 days compared to 227 days in November. There were 3,377 foreclosure homes active on MLS in March compared to over 5,000 in February.

The average price per square foot of a foreclosure investment homes in the the outskirt of the Valley is $40. $80 less than what they were only two and half years ago. But they are now going back up daily.

The Valley’s overall average price per square foot fell from $89 in February to $83 in March. Median home prices fell from $136,000 to $129,000. However, with our shrinking inventory, that number is likely to stabilize and even begin to rise. April is likely to be the turning point.

Welcome to the bottom of the Phoenix Real Estate Market. It’s good to be here.

We sell and Manage Investment properties Valley wide. Please feel free to give us a call for a free consultation and a tour of of most popular investment properties! Thank you.


Payam H Raouf
Lead Investment Advisor
Arizona Property Management and Investments
www.azezrentals.com
5723 West Glendale Ave
Glendale AZ 85301
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Saturday, April 11, 2009

Investment Homes are flying off the shelves in Arizona.

Arizona Property Management and Investments
AzEzRentals.com April 11, 2009
Investment Homes are flying off the shelves in Arizona.
Lead Investment Advisor: Payam Raouf

This is the best market we have seen since the middle of 2006. Multiple offers 10 to 20 percent over the banks asking prices are being turned down! Bad inventory is gone. Good stuff is flying off the shelves. According to MLS, SFR for sale is down 25% since last year in April from 54000 units to 34000.

We dominate Phoenix metro real estate investment opportunity (REO) market. We have investors from all around the world, Canada, England, Germany, Italy, France, Spain, Belgium, China, Hong Kong and Japan.

Recently we are noticing a large number of investors are also coming from Hollywood and South Orange County in California, Seattle Washington, Boston, Massachuset, Rhode Island, New York, Minnesota, Ohio and Virginia.

These are not your 2005-07 speculators. They know the game, know what they want and they already have a large portfolio of residential investment properties across the country.

What are they buying?
http://azezrentals.com/investmenthomes.htm

SFR 2000 sq ft and up, 4 bed, 3 bath, 2000 and newer in certain pockets of new home developments.

Where are they buying?

The school is moving from the west to the east side of the valley as the inventory is diminishing and prices increasing in the west.

What price range?

$70,000 to $120,000, cash flows well, 6% to 8% net.

How long is the hold?

Between 3 to 5 years. They hope to triple their investment portfolio value.

How do they pay for it?

Mostly cash.

Who is leasing and managing it for them?

We do. We are a full service Property Management company with the most advanced computerized system and well trained and experienced staff. 3 regions, 7 districts valleywide.

Please visit us at: www.azezrentals.com or call us toll free 888-777-6664 for more information.

Lead investment advisor: Payam Raouf 623-435-6633 ext: 110