Thursday, December 22, 2011

10 Cities Where List Prices Soared Last Month

10 Cities Where List Prices Soared Last Month
Daily Real Estate News | Thursday, December 22, 2011

Median list prices nationwide have risen 4.05 percent on a year-over-year basis, according to November housing data of 146 metro areas from Realtor.com. Fewer cities are reporting year-over-year list price declines, “suggesting a growing optimism on the part of sellers about 2012 market conditions,” according to Realtor.com.

So where have prices risen the most in the last month? The following are the 10 cities that saw the largest median list price increases from October to November.

1. Central Fla.-Regional Statistical Area

Month-to-month median increase: 5.63 percent

Year-over-year increase: 14.27 percent

Median list price: $169,000
2. Phoenix-Mesa, Ariz.

Month-to-month increase: 4.46 percent

Year-over-year increase: 10.54 percent

Median list price: $164,700

3. Miami, Fla.

Month-to-month increase: 3.60 percent

Year-over-year increase: 29.50 percent

Median list price: $259,000
4. Tampa-St. Petersburg-Clearwater, Fla.

Month-to-month increase: 3 percent

Year-over-year decrease: -2.50 percent

Median list price: $144,200
5. New York, N.Y.

Month-to-month increase: 2.71 percent

Year-over-year decrease: -2.57 percent

Median list price: $379,000
6. Fort Myers-Cape Coral, Fla.

Month-to-month increase: 2.69 percent

Year-over-year increase: 21.63 percent

Median list price: $224,900
7. Iowa City, Iowa

Month-to-month increase: 2.50 percent

Year-over-year increase: 3.02 percent

Median list price: $204,900
8. Tucson, Ariz.

Month-to-month increase: 2.41 percent

Year-over-year increase: 2.41 percent

Median list price: $174,000
9. Sarasota-Bradenton, Fla.

Month-to-month increase: 2.13 percent

Year-over-year increase: 16.56 percent

Median list price: $240,000
10. West Palm Beach-Boca Raton, Fla.

Month-to-month increase: 1.86 percent

Year-over-year increase: 15.26 percent

Median list price: $219,000

By Melissa Dittmann Tracey for REALTOR® Magazine’s Daily News

Arizona Property Management and Investments
If you are interested in purchasing investment properties or receiving a free quote for our property management services, please call us at (888)777.6664 for immediate assistance.

Tuesday, December 13, 2011

BofA developing foreclosure rental programs to deal with distressed properties

BofA developing foreclosure rental programs to deal with distressed properties
by JON PRIOR
Housing Wire
Friday, December 9th, 2011, 3:35 pm

Bank of America is looking at a new program to rent a home back to the borrower after foreclosure.

"There are programs that we are quite interested in," said Ron Sturzenegger, who leads the bank's legacy asset servicing division, in an interview with HousingWire. "We are talking with investors that would come in and buy these houses and would lease them back to who would now be the now tenant."

In February, BofA formed the division to handle the servicing for delinquent mortgages, loans no longer being written, and to sort out outstanding representation and warranty claims. Currently, more than 35,000 employees at the bank are sorting through 1.1 million loans 60 days delinquent or worse, according to its third-quarter financial statement.

The Federal Housing Finance Agency is working on an REO rental program for Fannie Mae and Freddie Mac. It received more than 4,000 ideas on how to do it.

But private banks own $50.4 billion worth of REO properties, too, according to the Federal Deposit Insurance Corp., and millions of these homes are sitting vacant.

Sturzenegger described how their idea would work.

"We are looking at programs where you can capture somebody before the REO process and offer a deed-for-lease. We would go to the customer and say, 'We'll do a short sale. Will you be interested in leasing your property back? We're still going to sell the property. You will no longer be the owner. But you can be a tenant now in that same property and save you from moving on,'" he said.

Sturzenegger stressed the bank would still sell the REO as before in areas where there is a market for them and they can still get reasonable bids. But some areas are so saturated with inventory, there isn't enough investor or homebuyer demand and properties can sit for years uninhabited.

Rick Sharga, the executive vice president at Carrington Mortgage Holdings, said in an interview that many firms, including Carrington are preparing to participate.

"We already have the infrastructure and assets in place to participate effectively," he said. "Everyone is waiting on final direction from the FHFA."

Sturzenegger stressed the private program at BofA is in its infancy.

"It's in the very early stages," he said.

Jacob Gaffney contributed to this report.

Arizona Property Management and Investments
If you are interested in purchasing investment properties or receiving a free quote for our property management services, please call us at (888)777.6664 for immediate assistance.

Monday, December 12, 2011

After drop, home prices on the rise in Valley

After drop, home prices on the rise in Valley
by Catherine Reagor - Dec. 9, 2011 04:04 PM
The Arizona Republic

In August, as metro Phoenix home prices dipped to another new low, some real-estate analysts predicted the area's home values would keep falling. Other analysts disagreed, saying all the indicators, besides home prices, were heading in the right direction for values to climb before year's end.

The median price for an existing Phoenix-area home climbed to $119,900 in November, according to a new report from the Information Market. It's the region's highest median home price since November 2010.

In October, Phoenix's median home price was $115,000, which is where it had hovered most of the first half of this year. But when it fell to $112,000 in August, some market watchers thought it would drop all the way down to $100,000 by the end of this year. Of course, some panic ensued.

But the housing analysts who were watching foreclosures fall, sales climb ahead of last year's pace and listings plummet, stood firm in their opinion that home prices would begin to rise again.

During the past few months, not only short-sale prices but the prices for foreclosure resales known as REOs, or real-estate owned, have been steadily climbing. In some areas of metro Phoenix, REOs are now selling for more than houses sold through lender-approved short-sale deals. In 2008 and 2009, REOs were dragging down the area's home values as lenders took back houses through foreclosure and then resold them quickly for bargain prices to get the properties off their books.

Home prices are also climbing at foreclosure auctions, also known as trustee sales, held daily in front of the Maricopa County Courthouse. The auctions are Arizona's method for lenders to foreclose.

In 2008, when foreclosures started to climb, few properties sold at these trustee auctions. Back then, lenders weren't lowering prices beyond what was owed on a house, so investors weren't interested in purchasing a house for at least twice what it was actually worth. But once lenders started lowering prices to much less than what they were owed, bidding picked up quickly.

Competition is also driving up prices at the trustee auctions. Each month this year, more than 1,000 foreclosure homes have been bought at Maricopa County trustee auctions. That compares with 100 per month at the beginning of the crash.

Arizona Property Management and Investments
If you are interested in purchasing investment properties or receiving a free quote for our property management services, please call us at (888)777.6664 for immediate assistance.

Thursday, December 8, 2011

Phoenix: Good Time to Buy?

Good Time to Buy? Housing Cheaper to Own vs. Rent in 12 U.S. Metro Areas: WSJ
By Peter Gorenstein | Daily Ticker – Mon, Nov 28, 2011 12:30 PM EST

Five years after the market peaked, the housing market remains depressed. October new home sales, released this morning, totaled 307,000, slightly below estimates. Meanwhile, prices rose slightly.

But, as your real estate broker will happily mention - 'Now is a great time to buy!' Unlike 2007, when that obviously was not the case for most, now it might actually be true. Ironically, the reluctance for many to buy a home is what makes it a good (relatively) time to purchase.

As Aaron and Henry discuss in the accompanying clip, owning a home is now more affordable than any time in the last 15 years, based on a new Wall Street Journal survey. In fact -- with the average price of a home $242,300 -- it is now cheaper to own than rent in 12 metro areas including Atlanta, Chicago, Detroit, Las Vegas, Miami, Orlando and Phoenix.

As the WSJ article points out, the discrepancy between buying and renting can be extreme in some areas:

"In Atlanta, which had the most favorable values for owning versus renting, the monthly payment on the average home was $539 assuming a 20% down payment during the third quarter. By contrast, the average asking rent stood at $840."

Sagging prices and sub-4% interest on a 30-year fixed mortgage are the biggest drivers behind the trend of record housing affordability. However, unlike the glory days when buying a home merely took a pulse, securing a loan today is much tougher. And, flipping property is a dead game.

Arizona Property Management and Investments
If you are interested in purchasing investment properties or receiving a free quote for our property management services, please call us at (888)777.6664 for immediate assistance.

Thursday, December 1, 2011

Second Half Of The Financial Crisis Is Approaching Soon.

Payam Raouf
Owner/Associate Broker
Arizona Property Management and Investments
Toll Free: (888)777.6664
If you are interested in receiving a free quote for our property management services,
please CONTACT US.

Investors,

We are approaching the second half of the storm (financial crisis). We have been in the eye of the storm for a year now making everyone feeling good. We are ¾ over, approaching the second half. If you missed the first half, this is your chance to pick up some nice properties in more established areas at a very reasonable price.

1/3 of variable mortgages has or is coming due soon in areas where prices have yet to come down another 10 to 20 percent such as in Scottsdale, N Peoria, Cave Creek, Chandler, Ahwatukee and Gilbert.

Institutional investors are yet to consider these areas. They hover more and less in the 80k to 120k range where there are already too many rentals in the market.

If you are looking for some solid investment properties, it is time to keep an eye on the areas I mentioned above.

If you have any questions, call 888-777-6664 and ask for Payam Raouf.

Saturday, November 19, 2011

A third option, offering foreclosed homes in rent-to-own deals.

Real Estate: Why Home Prices Won't Bottom Out
By John Wasik | Reuters – Fri, Nov 18, 2011 1:10 PM EST

Watching the U.S. home market struggle to rebound is like listening to children in the back of a car. No, we're not there yet.

The National Association of Realtors reported that ten real estate markets are "leading the nation toward a general recovery and stability of the housing sector," but myriad problems are going to weigh down the housing market for months to come.

The lingering malaise in the economy has triggered a new wave of defaults and foreclosures. After five straight quarterly drops, foreclosures nationwide shot up 14 percent from the second to third quarter this year, according to data released by Realtytrac, the foreclosure information service, in October.

While RealtyTrac doesn't foresee that the latest foreclosure wave will equal the severity of the 2007-2010 pattern -- in which three million borrowers lost their homes -- it's going to slam on the brakes where areas are getting hit the hardest.

In theory, it should be a good time to buy a home. In the worst-hit areas, properties have lost more than half their value.

Yet as the average 30-year mortgage rate has slipped below 4 percent, the combination of employment insecurity and unusually tight standards for lending are discouraging buyers en masse. Lenders are asking for extensive income verification and tax returns. One lender I contacted for refinancing even wanted me to get an accountant to certify that I wasn't lying to the IRS.

Here are some of the biggest roadblocks:

--Even in bruised cities where price appreciation is evident, unemployment is still too high. Six out of 10 of the "top turnaround towns" listed by Realtor.com for the third quarter had jobless rates above 10 percent. People can't buy homes if they're not working or soon to lose their jobs. Those cities, which include four of the largest cities in Florida, still have a long way to go to recover from the housing bust.

--Although at a record low, the home mortgage rate may still be high relative to home prices. This may sound counterintuitive, but research from the Leuthold Group in their November newsletter shows that a "real" mortgage rate -- which factors in the falling market value of the home prices -- is 8 percent. Leuthold says that real cost of buying must include the 4 percent interest rate and the 3.9 percent average home prices decline over the past 12 months. That cost is still scaring away buyers.

--The combination of unemployment, high housing inventory and foreclosures is hurting places where there wasn't an excessive price run-up. Realtor.com found that the largest year-over year median listing price decreases through October were in cities like Chicago, Detroit and Atlanta. This three-punch combination will continue to ravage markets where there's a sluggish economy

Possible solutions to the housing blockage range from the radical to the necessary. A group called Remortgage America is calling for the government to loan Americans mortgages at 1 percent to finance a new or existing residence.

Others would like to see Fannie Mae and Freddie Mac take the foreclosed homes they own and either auction them off or offer them in a huge fire sale.

The seized mortgage agencies account for up to one-third of foreclosed homes -- about 250,000. American taxpayers are pouring tens of billions into propping up these two wards of the state, which were taken over by the U.S. Treasury in late 2008. The Obama Administration has yet to announce what it wants to do with the companies. Will they be restructured, liquidated or privatized?

A third option, which may have the least impact on a battered market, is to offer foreclosed homes in rent-to-own deals. Prospective homeowners get a place to live under reasonable leases and can build equity toward a purchase.

It's estimated that some 3.4 million foreclosed homes will be on the books of banks and mortgage companies by the end of this year. As regulators, banks, mortgage companies and state attorneys general move sheepishly to unblock mortgage modifications, refinancings and resales, only one certainty prevails: The open market will not be able to properly price every property until all government restrictions are lifted on their sales and re-financing.

Arizona Property Management and Investments
Toll Free: (888)777.6664
If you are interested in receiving a free quote for our property management services,
please CONTACT US.

Tuesday, November 1, 2011

Renters are running out of cash reserve to rent homes.

Payam Raouf
Owner/Associate Broker
Arizona Property Management and Investments
Toll Free: (888)777.6664
If you are interested in receiving a free quote for our property management services,
please CONTACT US.


Renters are running out of cash reserve to rent homes.

In the past few months we have seen an increasing number of potential rental applicants having difficulty coming up with required deposits to rent a single-family home.

Traditionally when you rent a single family home, owners require an amount equal to the first month’s rent as the security deposit. In some cases when potential rental applicants have less than prefect credit, owners could ask for up to one and a half times of that amount.

In addition to the security deposit, some homeowners may require additional upfront fees for pets, cleaning and re-keying of the property.

Also, leasing agencies require an up front application fee which could run up to $50 per adult applicant to offset their cost of finding a qualified tenant for their clients. Potential tenants must meet certain guidelines set by the homeowners to be considered, which may include, running nationwide credit, criminal, eviction, sex offender and FBI most wanted searches, and the verification of their employments and rental history.

To defray the cost of lease administration, conducting tenant's orientation and setting up tenant's account, leasing agencies charges tenants between a $100 to $300 non refundable up front lease administration fee. In the past this cost was paid by the homeowner, but as more rental agencies have entered the market in the past twelve-month competing for homeowners’ business, this charge has been passed on to the tenants.

The following is an example of what a married couple with less than perfect credit with two children and one pet has to come up with to lease a home renting for $1,000.

Credit Application fee: $45X2= $90
First month’s rent: $1,000
Security Deposit: $1,500
Pet Deposit: $250
Cleaning Deposit: $300
Re-key fee: $100
Lease Administration fee: $200
TOTAL: $3,440
Average Moving Cost: $1,000
Total Cost: $4,440.

Now let’s review the situation. Most applicants in this situation make somewhere between $3000 to $4000 per month. They have already depleted most of their cash/credit reserve and are either losing their own home to foreclosure, or the one they are renting is being foreclosed on. They have to move, but don’t have the money to rent a new place. What are their options?

Many are moving in with the other family members to save money to eventually rent their own. Some are moving into apartments where they do not require as much deposits. Many others settle for a home in less desirable areas where homeowners are willing to take less deposits. Others, who cannot afford facing the consequences of, for example, taking their children out of schools in the middle of the school year, may borrow the money. Some take “cash for keys”, and others stay in the property for as long as permitted by law. However, they can exercise other options which will be elaborated on throughout this article.

Landlord

There are ten types of landlords in the market, but not necessarily in this order as the market keeps changing:

1) Owners who are upside down in their mortgages. There are 4 groups:
a) Owners with good jobs and income who can afford to keep their property long enough to sell it when the market turns around,
b) Business owners who need to maintain their good credit rating for their suppliers,
c) Owners facing near-term foreclosures who are unable to hang on to their property much longer, hoping for the best by renting it out.
d) Those moving out of the area.

2) Small to mid size speculators taking advantage of historically lower home prices in Arizona, hedging against inflation and hoping to cash out with substantial gains in 5 to 10 years.

3) Foreign investors, such as Canadians and Australians taking advantage of week weak dollar, low home prices and higher rent in Arizona who have been buying thousands of homes in the valley for the past three years. This group is also fading away from the market as the dollar is strengthening.

4) Institutional investors entered the market more aggressively about a year ago and since have purchased thousands of single-family rental homes at the trustee auctions resulting in a substantial artificial increase in home prices. Many now are directly negotiating with financial institutions, buying them in bulk. Fannie Mae is planning to liquidate most of their toxic assets through this process.

5) Individuals self-managing their own IRAs. A new group of investors has recently emerged as the result of the stock market volatility and are buying rental homes instead.

6) Out of state retirees who are planning to retire soon and want to move to Arizona. They pay end-user prices and rent them for less than the market value to well qualified tenants who are going to take a better care of their property till they decide to move into it themselves.

7) Fannie Mae has also recently joined the group of landlords by renting back to tenants whose rental houses have gone to foreclosure. They do not require any deposits, but the tenants are in danger of getting booted out when the house is sold.

8) Investors buying to flip to end users are stuck with some of their purchases and are now putting them on the market for rent hoping to sell them to another investor with a tenant in place.

9) Handyman and contractors who bought at the height of the market competing with institutional investors at the trustee auctions are forced to rent them out to pay off their high interest loans. The number of e-flyers sent to Realtors has increased ten folds recently offering such properties for rent at a higher percentage commission rates.

10) Slumlords: Investors buying older run-down houses in less desirable areas to rent them to less qualified renters at a much higher than average prices or leasing them to them with an option to buy, thereby avoiding much required repairs.

Rental Inventory

The 5,000 single family homes advertised monthly on Realtor Multiple Listing Services (MLS) is a fraction of what is really available for rent in the valley. It could be as high as three times that amount. Not every rental agency advertises their homes on MLS. Additionally there are thousands of apartments for rent valley-wide at any given time.

In addition to MLS, a good look at Rentals.com, Rent.com, Craigslist and Rental Agencies’ own web sites would provide a better indication of how many homes are for rent in the valley.

Leasing Agents

It used to be a common practice that a leasing agent would list and rent a house for 6% of the gross lease amount or an amount equal to one months rent. As the cost of marketing has increased along with demand for better customer service leasing agencies have centralized their efforts and are now listing the homes for rent themselves and are hiring either their own leasing agents or paying a referral fee to other agents to lease them out for them. This reduces the cost of marketing as well as a huge liability for the homeowners. As a result, leasing agents make less money when leasing a house now than in the traditional way.

Renters demand to be treated like buyers. They want to evaluate all their options before making a move. It is not easy to move every year. They want to make sure they find the home they really like and that it suits all their wants and needs at an affordable price. At the same time, they want to deal with a reputable leasing agency that will still be in business to take care of them while they are are there.

on the other hand, finding a qualified applicant that homeowners approve is a tedious, time consuming and at times a frustrating job for the leasing agents. Quite often, prospective tenants fall in love with a home they may not qualify for. At times it takes several weeks to find a home they would approve and qualify for. Leasing agents invest an enormous amount of time and money in the process.

Conclusion:


Times are tough for everyone including Landlords, tenants and leasing agents. Homeowners must realize that not everyone has perfect credit or has a ton of surplus cash to give them for deposits. Tenants must put themselves in place of the homeowners and ask themselves this question: If I were the homeowner, would I rent this house to a tenant with my credit and background history, employment and financial situation?

There are solutions, where a prospective tenant with less than perfect credit who does not have all the deposits can rent a home they like. Your leasing agent must prepare an offer along with a complete credit application and a good letter of explanation to present it to the homeowner. Just like as if you were applying for a loan and making an offer to purchase a house. Most often owners will come to terms with the prospective tenant provided they earn their confidence.

One way to negotiate a lower deposit is to offer a higher monthly rent amount equal to or a slightly greater than the deficiency in deposit for a period of twelve months. If the tenants have a pets and the owner requires a pet deposit, they can offer $25/$50 more per month which is less expensive than boarding pet in a pet motel for a single night.

Tenants, who are working with a leasing agent who has been working hard for them should give them a chance if they find a home on their own. 2/3 of the rental homes on the market are not listed on MLS, so your agent has no way of knowing if that property is available for rent. If you give them the information, they can represent and make the offer for you.

Leasing agencies must make it more affordable for tenants to submit an application for rent and be open to offers submitted by prospective tenants. If the tenants can not afford the lease administration fee, either ask the owners to pay for it or split it with the homeowners.

In conclusion, the housing market has changed. Accepting that, is like piloting a sailing vessel at sea. When the winds change, you have to adjust your sails to stay on course and ensure all personnel and cargo on board have a safe and enjoyable trip so that they to achieve their goals upon arrival to at their charted destination.

Arizona Property Management & Investments is a leader, highly renowned and recognized as a Real Estate Industry Benchmark; with recent confirmation coming in the form of being awarded the highly coveted and prestigious Best of Phoenix Award, in the Property Management category, by the United States Commerce Association. Our primary focus and specialization is in Residential Real Estate Acquisitions, Sales, Property Management and Leasing of single family properties throughout the valleys and Phoenix Metropolitan areas; serving our clients professionally and conveniently from our three locations.

If you are interested in receiving a free quote for our property management services,
please CONTACT US.

Sunday, October 9, 2011

Phoenix-area home prices remain too cheap

Arizona Property Management and Investments
www.AZEZRentals.com
Toll Free: 888-777-6664 ext 111
Fax: 888-777-3711
Glendale: 5723 W Glendale Ave. Glendale AZ 85301
Mesa: 4856 E Baseline RD suite 104 Mesa AZ 85206
Sun City: 13211 N 103rd Ave. Suite 2 Sun City AZ 85351

Phoenix-area home prices remain too cheap


by J. Craig Anderson, Ryan Konig and Matthew Dempsey - Oct. 8, 2011 08:35 PM
The Arizona Republic

The Phoenix-area housing market has seen significant improvement in a number of fundamental areas thus far in 2011, including decreases in housing supply, the number of monthly bank foreclosures and the length of time it takes to sell a home. Still, these promising changes in the market have given rise to a question that has confounded many sellers, lenders, real-estate agents and brokers:

If the fundamentals have improved, why haven't home prices increased?

"Normally, the laws of supply and demand would kick in, and it would affect the price, just like you learn in economics class," said Matt Widdows, president and CEO of Phoenix-based residential-real-estate brokerage HomeSmart International.

The supply of available homes has shrunk dramatically during the past year, while buyer demand - particularly among investors - remains strong.

But an Arizona Republic analysis of Valley Home Values data provided by Glendale-based Information Market from Jan. 1 through Aug. 31 shows that home prices continued to drop from 2010 to 2011 in all but a handful of Phoenix-area communities.

In metro Phoenix, just three communities - Carefree, Litchfield Park and Rio Verde - experienced positive growth in the median home price from 2010 to 2011.

Wittmann had zero growth in its median home price, and all other communities had negative growth.

Overall, the Phoenix area's median price fell to a 10-year low of $116,500 through the year.

The laws of supply and demand, it would seem, have been suspended. Why?

Appraisal issues


The first thing to understand, investment homebuyer Jeff Hale said, is that home prices are not driven entirely by supply and demand.

There is an intervening force that affects the sale price of every home purchased with a mortgage: the appraisal.

Hale, purchasing coordinator for Phoenix-based AZ Equity, said the appraisal places an artificial cap on the amount a home's seller can charge, because lenders will not allow the buyer's mortgage to exceed a home's appraised value.

Appraisers look at a home's size, quality, age, condition and location, along with recent sales of comparable homes in the same general area, to determine an appraised value.

Those comparable sales, or "comps," are where the problem often lies when an appraisal comes in unreasonably low, Hale said.

"They can choose whichever comps they want," he said, such as the sale of a bank-owned home in which the kitchen had been ripped out. "That becomes a really difficult thing to overcome."

Sue Miller, president of the Appraisal Institute's Phoenix chapter and a certified residential appraiser, said appraisers have been doing their best to match homes they are hired to evaluate with relevant comps.

Miller, of Phoenix-based Miller Pipher Inc., said appraisals merely reflect the local housing market's many ongoing problems.

"As appraisers, we have to look at the data," she said. "In some of the areas we're appraising, 80 percent of the sales are foreclosures."

When the housing market crashed, appraisers became easy targets for blame and criticism for the way they had evaluated home values during the bubble years, when home prices were inflated to an unsustainable level.

Their reaction has been to err on the low side, Hale said, to steel themselves against further accusations of overvaluing properties.

Widdows said another problem is that appraisers sometimes don't have enough available information to determine the appropriateness of certain comps.

"The Number 1 complaint that we hear from our agents is low appraisals," he said. "There is a little bit of confusion in the marketplace, because you're comparing bad apples with good apples."

Miller agreed that lack of information can be a problem, particularly if the comparable sale occurred at auction or if the buyer was an investment firm.

In some cases, she said, the appraiser simply doesn't do a very good job.

"There are a lot of appraisers that aren't doing as thorough a job as they should," Miller said.

Investment homes

The explosion of demand for single-family rental properties in the Phoenix area also has affected home values in various ways, according to investors, agents and brokers.

Most significantly, it has set the optimal price point at the low end of the market, they said, because investors can minimize their financial risk and turn a profit more quickly on a rental home if the purchase price is low.

Many investment firms that amass large portfolios of rental homes have connections within the housing and lending industries that allow them to buy homes at well below market price, Miller said.

Those bargain purchases contribute to the overall downward pressure on home prices, she said.

"Investment firms can buy homes cheaper because they know who to go to," Miller said.

Sometimes, mortgage lenders anxious to unload a large quantity of foreclosure homes will slash their asking prices in order to sell them in bulk to investment firms.

Phil Mahr, an investment homebuyer and real-estate agent with Glendale-based Arizona Property Management and Investments, said one of the biggest contributors to low prices is the unending flood of homes coming up for auction at trustee sales, where lenders attempt to avoid repossession of foreclosure homes by allowing third parties to bid on the properties.

Most of the homes up for bid at trustee-sale auctions are being purchased for significantly less than market value, because they are sold as is, with no warranty against damage or defect.

The typical buyer is a rental-home investor, although Mahr said that trend has begun to shift as consumers have gotten more comfortable with the idea of competing with investment buyers on the courthouse steps.

"It's become popular now, so we're actually seeing prices rise here at the trustee's sale auctions," he said.

As home prices in most areas continue to decline, Miller said, some investors are questioning whether they should hold back until the market stabilizes.

"A lot of these investors are saying, 'Whoa, whoa, whoa - let's wait,' " she said.

Lack of confidence

Rental-home investors aren't the only prospective buyers feeling trepidation about future home-price declines, said Kristie Austin, a Scottsdale-based investment buyer of foreclosure homes.

"I think everybody is still scared to buy a home," including consumers, Austin said. "It's still a big financial risk."

Jim Sexton, owner and designated broker of Phoenix-based residential-real-estate brokerage John Hall & Associates Inc., said lack of consumer confidence continues to plague the housing market and is one of the biggest factors dragging down home prices.

With a non-stop barrage of depressing or contradictory statistics about the housing market presented to the public, many eligible homebuyers have decided not to buy until they see clearer evidence of an economic recovery on the horizon.

Sexton said there are two serious problems with the way housing-market trends are being reported by the news media.

The first problem is timeliness, he said. By the time home-price analyses reach consumers, the data upon which they are based can be anywhere from 1 to 3 months old.

That means consumers are using information about the past to make decisions about future buying behavior, which Sexton said perpetuates the housing market's downward cycle.

The second problem is that most of the housing-market data reported by the media is too general, he said, lumping together hundreds of discrete submarkets and localized pricing trends into a single, useless statistic.

"Grouping Maricopa County into all sales doesn't tell you much about the market," Sexton said.

Economic woes


Still, most housing-market experts agreed that low prices aren't just the result of a perception problem.

There's a serious reality problem to contend with, too.

High unemployment, consumer credit woes, lender losses and other broad economic factors have contributed to the prolonged home-values slump.

"A big part of it is just the stagnant economy," Miller said.

Arizona is expected to gain jobs within the coming year, but it will be fewer than earlier forecasts had projected, state economists said last week.

By the end of 2011, Arizona should have gained about 15,500 non-farm jobs since December 2010, and by the end of 2012 it is expected to have gained an additional 14,400 jobs.

Those figures are lower than the gains state economists had projected in April.

Arizona unemployment in August was 9.3 percent, slightly above the national jobless rate of 9.1 percent.

Phoenix-area home price changes vary greatly

Arizona Property Management and Investments
www.AZEZRentals.com
Toll Free: 888-777-6664 ext 111
Fax: 888-777-3711
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Phoenix-area home price changes vary greatly


by J. Craig Anderson, Ryan Konig and Matthew Dempsey - Oct. 8, 2011 08:40 PM
The Arizona Republic

Home prices continued to drop from 2010 to 2011 in all but a handful of metro Phoenix communities, according to an Arizona Republic analysis of Valley Home Values data provided by Glendale-based Information Market.

In metro Phoenix, just three communities - Carefree, Litchfield Park and Rio Verde - experienced positive growth in the median home price from Dec. 31, 2010, to Aug. 31, 2011.

Wittmann had zero growth in its median home price, and all other communities had negative growth.

im Sexton, owner and designated broker of Phoenix-based residential real-estate brokerage John Hall & Associates Inc., said it isn't unusual to see such wild swings in housing-market performance.

He said metro Phoenix is filled with distinct "pockets" of housing activity, some showing a healthy rebound while others continue to stagnate.

"Phoenix has always been a pocket market," Sexton said.

The biggest positive home-price growth among communities was in Carefree, in the northeast Valley. Carefree's median home price increased 9.4 percent to $625,000.

The biggest negative growth was in Tonopah, far in the West Valley, where the median home price fell 18.5 percent to $55,000.

Overall, the Phoenix area's median price fell to a 10-year low of $116,500 in September.

At the ZIP code level, the biggest positive median-price growth was in central Scottsdale's 85262, where the median increased 12.7 percent to $620,000.

The biggest negative growth was in ZIP code 85051 in northwest Phoenix, where the median fell 25.4 percent to $55,000.

The community with the highest overall median home price was Paradise Valley, with a median of about $1.1 million. Tonopah had the lowest median price ($55,000).

At the ZIP code level, the highest median home price was in Paradise Valley's 85253 ($1.1 million), followed by 85377 in Carefree ($625,000).

The ZIP code with the lowest overall median price was 85009 in west-central Phoenix ($26,000), followed by the nearby 85017, also in Phoenix ($35,000).

In terms of home-sales volume by community, Phoenix was the leader by a huge margin from January through August, with more than three times the sales volume of runner-up Mesa. Phoenix had 15,992 home sales, and Mesa had 5,058 sales. The difference was commensurate with the population gap between Phoenix, which has about 1.4 million residents, and Mesa, which has about 439,000 residents, according to 2010 U.S. Census Bureau data.

The single ZIP code with the highest sales volume was 85326 in Buckeye, which had 1,186 home sales. It was followed by 85339 in Laveen, with 1,066 sales.

On the home-foreclosure front, Tonopah fared the worst of all Phoenix-area communities, with foreclosures accounting for 53.6 percent of all home-sale transactions. Sun City West had the lowest foreclosure rate in metro Phoenix, with home foreclosures representing 4.4 percent of all sale transactions.

Sue Miller, co-owner of Phoenix-based appraisal firm Miller Pipher Inc., said the traditional laws of real estate still apply in a depressed housing market.

"It's all about location, location, location," she said.

Phoenix-area real estate collapse echoed troubles

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Phoenix-area real estate collapse echoed troubles
Foreclosure wave's path marks how economy fell
by Catherine Reagor, Matt Dempsey and Ryan Konig - Oct. 9, 2011 12:00 AM
The Arizona Republic

A look at metro Phoenix's foreclosure crisis over the past five years shows an economic crash moving through time and space.

The collapse started in new-housing areas on the fringes and then swept inward, hitting more established areas as the unemployment rate climbed. Now, as the stock market struggles and speculation swirls about another recession, foreclosures are flaring in the Valley's luxury-home neighborhoods.

A new Arizona Republic analysis, which maps out every home in default in the region over the past five years, is the first comprehensive look at the wave of foreclosures that has swept the Valley since the market began its steep decline in 2007.

The analysis, based on data from Phoenix foreclosure-information service AZ Bidder, plots individual foreclosures and overall trends by year.

It shows how the Valley's foreclosure crisis was more than one crisis. Foreclosures arose in waves, driven first by problematic mortgages, then by the job woes of the recession and now by lingering economic effects being felt in expensive neighborhoods.

The data also hints at where some homeowners may see the long-declining values of their homes begin to rise.

Some areas already are seeing their annual number of foreclosures decline. With that, a few now see slight increases in home prices, or at least much smaller decreases. In other areas, foreclosures persist, lingering chapters in the ongoing story of the crash.

"In most cases, all you have to do is follow the foreclosures in the Phoenix area to understand where the area's housing and subsequent economic problems began and then how far-reaching the problem is now," said Arizona economist Elliott Pollack. "It started in 2007-08 with people on the peripheries who bought homes they couldn't afford, and then, as the unemployment rate climbed, the foreclosure problem spread."

Sub-prime woes

Communities on metro Phoenix's edges sprawled outward during the first half of the past decade, adding swaths of new homes as prices soared. To own these homes, many buyers used subprime mortgages and loans with small down payments.

In some cases, these buyers were aspiring homeowners who didn't have enough income to buy the houses through traditional loans. In other cases, buyers were investors, who simply wanted to snare a profit on rising home values while putting little money down.

The high-risk loans came with adjustable interest rates, and rates began to climb about the same time home sales and prices began to fall. Homeowners couldn't sell or refinance because they already owed more than their now-declining home values. Foreclosures ensued.

Many investors walked away from their mortgages because they had put only a few thousand dollars down. Many of the homes in these new neighborhoods were never occupied before they went into foreclosure.

An analysis of foreclosures shows a sudden spike in late 2007 and early 2008, concentrated in fringe areas: far north Phoenix, the far southeast Valley at the edge of Pinal County, and far western areas including Peoria, Surprise and Buckeye. A few affordable areas closer in also saw foreclosures spike, including Maryvale in west Phoenix, where borrowers also took out high-risk loans.

Four years later, in some of those areas, foreclosures are falling and home prices are beginning to stabilize or even climb.

"Many of the outer edges of the Phoenix area have quietly been recovering," said Tom Ruff, analyst with the Information Market, a Phoenix real-estate data firm. "Foreclosures started first in those areas, and now either homeowners or investors have purchased the houses for prices that will allow them to hold on for a while."

Rising joblessness


As Phoenix's foreclosure crisis crept inward from the fringes during late 2008, it was being driven not just by subprime lending but also by the economy at large.

The state and the nation had fallen into a recession. Hundreds of thousands of jobs, many in the construction industry, were lost in Arizona.

As metro Phoenix's unemployment rate climbed, so did foreclosures. The number of borrowers losing Phoenix-area houses to lenders hit a record in 2009.

Foreclosures began to affect communities closer in, where less speculation and new building had taken place. Chandler, Gilbert and Glendale, as well as central and north Phoenix, began to see foreclosures climb and home values fall.

"There are too many homeowners in many of the Valley's older neighborhoods who had been making their payments for many years, ignored the housing boom but now can't afford their mortgage because one of the breadwinners has lost their job," said Michael Trailor, director of the Arizona Housing Department. "These are some of the saddest foreclosures."

Households that needed two incomes to pay their mortgages began to struggle as one person lost a job.

High-end gets hit


Areas with the priciest houses have been some of the last to see the big increases in foreclosures. It has taken longer for the economy to catch up with most of these homebuyers, through job losses, disappearing bonuses or stock-market plunges. Some homebuyers in high-end neighborhoods, including in Paradise Valley, also stretched and took out risky loans to buy more house than they could afford. But unlike on the fringes, these loans took longer to go into foreclosure.

Mortgages for very large amounts - above a varying threshold that has never been higher than $500,000 in metro Phoenix - aren't insured by Fannie Mae and Freddie Mac. With these large loans, rather than simply passing along their losses to the federal mortgage agencies, lenders suffer the losses themselves. So lenders have been slower to foreclose on these high-end homes.

Foreclosures did not begin a serious climb in metro Phoenix's priciest neighborhoods until late 2009.

"The luxury market has been last to be hurt by foreclosures," said Paradise Valley real-estate agent Walt Danley. He said in some cases homeowners with multimillion-dollar mortgages haven't made their loan payments for many months but lenders have acted more slowly, focusing on lower-priced homes first.

Foreclosure future

Metro Phoenix foreclosures have been declining slowly since early 2010.

When foreclosures slow, an area's home prices should start to rebound or at least stabilize, real-estate analysts say. Some metro Phoenix neighborhoods are starting to see signs of a recovery.

The housing market is too big to follow just one trend, and the location of the neighborhood has at least as big an effect on prices as does the foreclosure rate. So not all areas are seeing the foreclosure decline translate into higher home prices.

Still, "the age of the foreclosure is starting to come to an end," said Michael Orr, publisher of the Cromford Report, an online daily real-estate analysis publication. The region's overall median price, he said, "will almost certainly rise as a result" in the next year.

Metro Phoenix foreclosures fell in September after climbing for the first time this year in August. The median price of a resale home in the region fell to $112,200 in August, its lowest level in more than a decade. But in September, the median price showed signs of rebounding and climbed back to $116,500, its second-highest level this year.

"I think we are about 80 percent through this foreclosure mess," Ruff said. "Some parts of the Valley are definitely farther ahead in the recovery process than others. . . . The worst of foreclosures should be behind metro Phoenix."

Saturday, October 1, 2011

Reality TV taps Phoenix-area foreclosures.

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Reality TV taps Phoenix-area foreclosures.

By: CATHERINE REAGOR | 09/19/11 4:01 AM
The Arizona Republic

Alaska has a reality show about ice truckers trying to survive deadly hauls. New York has Donald Trump's cutthroat competition to be his apprentice. And Georgia has Billy the Exterminator, who battles rodents and alligators.

Soon, Phoenix will be the setting for a new reality show about one of the region's most competitive and heart-racing activities — bidding on foreclosure homes.

Agents who work at Maricopa County's foreclosure auctions are in negotiations to appear on the show, which is planned to start airing on the Discovery Channel next year.

Filming for "Betting the House" is expected to begin in the next few weeks.

New York-based Sharp Entertainment, producer of the show, also created "Punkin Chunkin" for the Discovery Channel, "Man vs. Food" for the Travel Channel and "Extreme Couponing" for TLC.

Now, cameras will be filming outside the county courthouse in downtown Phoenix.

Although the company did not comment on the details of the show it is planning, the daily auction scene is one of colorful characters and sometimes intense bidding on the region's foreclosure homes.

As many as three auctioneers may be taking bids at once, and the agents and buyers who try to land good deals rush from auction to auction, placing offers, talking to their offices by cellphone and trying to make sure they don't miss a deal in the process.

At its heart, the attraction of the auction scene is the promise of a house - to be a home, a rental or just a quick investment — for an amazing deal.

Sharp picked three veteran bidders at Phoenix's foreclosure auctions to follow: Doug Hopkins of Posted Properties; John Ray of Bid AZ Foreclosures and Lou Amoroso of Easy Investments.

"It's a little nerve-racking to think about seeing yourself do your job on TV, but at least it's not summer and I won't be sweating," said Hopkins, president of Posted Properties. "The foreclosure-auction market is more competitive than it's ever been. It's definitely entertaining to watch."

He said that final contracts with the Discovery Channel are being negotiated this week and that filming is expected to start within four weeks.

Lenders have been selling a record number of Phoenix-area homes at the foreclosure auctions known as trustee sales. In August, 1,500 foreclosure homes sold at auction.

"I have been on the fence about this reality show," Amoroso said. "The producers want drama, and they will get it at foreclosure auctions now. But I don't want this to be one of those crappy shows everyone makes fun of and that draws too many more bidders to an already crazy market."

Sharp confirmed the show is in the works but didn't give any specifics.

The three main characters have worked together to bid on foreclosure homes in the past but now are "friendly competitors" at the auctions.

They work as agents, identifying properties their clients want to buy and bidding in an effort to get their clients the best prices.

Hopkins won't actually be at the courthouse. He works out of his office and has two to three bidders in the field.

At the courthouse, the TV cameras are likely to capture a scene of what has effectively become the trading floor for the region's hottest commodity: foreclosure houses.

There, bidders are ready to jump a fence or run to another table when another auction starts. The regulars act like co-workers, with nicknames for one another.

A decade ago, when there were only about 50 foreclosures a month in metro Phoenix, only a handful of bidders regularly showed up at the trustee-sale auctions. The three men in the reality show made up most of the crowd then.

Since the housing market crashed, the growing number of foreclosures has drawn more bargain hunters and bidding services.

By Arizona law, when a homeowner falls behind on a mortgage, a lender must try to sell the home through a trustee sale. The trustee, usually an attorney, alerts the borrower and sets a date for the auction.

To bid at an Arizona trustee sale, potential buyers must bring a certified check for $10,000 and have a photo ID.

The money is used as a deposit on the house if a bidder is successful. The full amount of the bid must be paid in cash the next day.

Dan Mayes of AZ Bidder launched a real-time foreclosure-auction service for Phoenix in January. He was contacted by Sharp to be part of the show but decided not to pursue the opportunity.

"The characters and stories typically involved in reality shows like these are mostly dramatic, goofy or get-rich-quick in nature," he said. "Our customers are pretty straight-laced folks."

Trustee sales at the courthouse used to start at noon, but there are so many houses that lenders are trying to sell that the auctions have been moved up to 11 a.m. or earlier and still often go to 5 p.m.

But the frenzy can't last much longer.

Already, competition has driven bidding prices up too high for some investors. At the same time, foreclosures have been falling this year.

Notices-of-trustee sales, or pre-foreclosures, are half of what they were a year ago. The number of pending foreclosures in Maricopa County is down to 19,000, half of what it was two years ago.

"I doubt reality TV will shine a positive light on our housing market, although it should be entertaining," said Tom Ruff, real-estate analyst with Information Market.

His firm tracks foreclosures daily. "There are definitely some colorful personalities chasing foreclosure properties. Expect them to further Arizona's image as the Wild West."

Sunday, September 18, 2011

Uncle Sam stuck with 248,000 homes

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Uncle Sam stuck with 248,000 homes

This article was reported by Lorraine Woellert and Clea Benson for Bloomberg Businessweek.
September 14 2011

Thanks to soaring defaults on federally backed mortgages, the US government is swamped with repossessions. Its challenge: Unload them without driving down prices.

For sale or rent by distressed owner: 248,000 homes. That's how many residential properties the U.S. government now has in its possession, the result of record numbers of people defaulting on government-backed mortgages. Washington is sitting on nearly a third of the nation's 800,000 repossessed houses, making the U.S. taxpayer the largest owner of foreclosed properties.

With even more homes moving toward default, Fannie Mae, Freddie Mac and the Federal Housing Administration are looking for a way to unload them without swamping the already depressed real-estate market.

Trouble is, they haven't figured out how to do that. The government admitted as much in August, when Fannie, Freddie and the FHA issued a joint plea to the public for ideas about how to solve the problem.

"They're stuck," says Karen Shaw Petrou, a managing partner of Federal Financial Analytics, a Washington, D.C., consulting company that advises banks and other clients on government policy. "They don't know what to do."
Since the 2008 financial collapse, the government has spent billions of dollars trying to extricate borrowers from high-cost loans, aid delinquent homeowners and stabilize neighborhoods. The results have been disappointing.

The Obama administration's signature loan-modification program has helped about 657,000 homeowners -- far short of its goal of 3 million to 4 million. The program was a victim of its complexity and its inability to cope with overwhelming demand. Many families hit hardest by the housing downturn are concentrated in states that are having the most difficulty recovering from the recession, including Florida, Ohio and Nevada.

The government's call for ideas is a sign it is deluged with repossessions, commonly known as real-estate-owned properties, or REOs. "It's almost like having the captain of the Titanic go on the public address system and say, 'Does anybody have an idea?'" says Mark Wiseman, a former director of Cleveland's foreclosure-prevention program. "It's not a confidence builder."

Fannie Mae, Freddie Mac and the FHA made progress in the first half of this year, reducing their combined backlog from 295,000 single-family homes in December to about 248,000 in June, according to the Housing and Urban Development Department. The nation's total number of repossessions also fell during that period, from nearly 981,000 to about 817,500. The government's share has remained steady at around 30%.

In coming months, however, as lenders and the courts clear up the "robo-signing" scandal that slowed new disclosures, the number of government-owned properties will likely grow. More than a fifth of the 3.65 million homes for sale at the end of July were foreclosures, according to RealtyTrac, a housing-data provider.

"It isn't necessarily our preference that FHA is going to itself continue to hold these properties," says FHA acting Commissioner Carol Galante. "We want to move homes through the system so we can recover."
The agency has to be careful as it goes about it, Galante says. "If you're putting too much through that system, you are helping to drive down prices." That's especially true in regions congested with government properties.

Shielding the market from a flood of government homes might be good for property values and the economy. It's not such a great deal for taxpayers, who bear the costs when government-guaranteed loans go bad and who pay for maintenance on vacant homes the feds take over. One idea the administration is exploring: allowing Fannie, Freddie and the FHA to keep an ownership stake in the properties by converting them to rentals in partnership with private investors. When the market recovered, the government would sell the homes for more than it could get now and not risk glutting the market. Structured properly, such joint ventures could reduce the impact of foreclosures on struggling neighborhoods.
It's not at all clear whether that would work on a large scale. The government would have to spend money to bring the rental properties -- many of them old and dilapidated -- to code, pay still more to insure the rentals and build a bureaucracy to manage and maintain them. Even if it does all that, there might not be people willing to move in. In parts of Cleveland and Detroit, for example, some houses are stripped and vandalized the minute they're vacant.

"Some of the neighborhoods, you can't move into,'' Wiseman says. "There are so many empty houses, it's just not safe."

In places like that, it's sometimes difficult to persuade people to stay in their houses. Freddie Mac allows occupants of foreclosed homes to remain on month-to-month leases until the homes are sold. Few do, spokesman Brad German says. "People prefer to take cash for keys and move on."

This article was reported by Lorraine Woellert and Clea Benson for Bloomberg Businessweek.

Friday, September 2, 2011

Cashing in on rental property

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By Jeff Wallach @Money September 2, 2011: 6:07 AM ET

(MONEY Magazine) -- Most of the news lately about real estate has been dismal: Home prices are swooning, foreclosures ballooning.

There is, however, one bright spot: the rental market, where demand is up and rents are rising. That's partly because those foreclosures have turned more than 4 million former homeowners into renters, but also because many other prospective homeowners, worried about losing their jobs or housing prices falling a lot further still, are reluctant to buy now.

As with many investments, the best time to get in is when most others are sitting on the sidelines. To figure out whether you can benefit by investing in rental property, here's what you need to know.

THE CASE FOR BUYING NOW

Many factors make this a great time to invest. Mortgage rates are at a 40-year low, and homes in many areas are ultra-cheap. Meanwhile, demand for rentals has risen in more than 500 cities, according to recent Census data. That, in turn, has enabled landlords to charge more. Hotpads.com, a real estate research firm, reports that rents nationwide jumped 11.6% in 2010, to $1,320 a month.

You'll need that rental income to tide you over until home prices bounce back; in fact, the typical investor today plans to hold for 10 years, according to a survey by the National Association of Realtors.

Send The Help Desk your real estate questions.

If you can hang on that long, you've got a good shot at solid gains, especially if you're financing the home purchase. "Whereas leverage is dangerous when buying stocks, it can be a good long-term strategy with real estate," notes real estate investor and Columbia University adjunct finance professor Marshall Sonenshine.

The big catch: "Can you afford to hold the property that long and not need the equity for your kid's college fund?" says Sonenshine. Or whatever other pressing need might crop up.

You'll also face some tough financing rules. Most banks now require a down payment of at least 20% to 25% and evidence you have enough cash to cover six months' worth of mortgage, tax, and insurance payments.

HOW TO FIND A GOOD DEAL

Investment real estate is like produce: It's best bought locally. "Buy something you can get to in 10 minutes," says Seattle real estate investor Bill Snyder.

Familiarity with the neighborhood also limits nasty surprises like a noisy bar or a nearby development competing for renters.

Work with a local realtor who has experience with rentals and can help you assess how attractive a given home will be to tenants.
10 Best cities to buy a rental property

And while prices on multifamily dwellings haven't dropped as much as they have on single-family homes, don't ignore plexes: Intake from a few rents instead of just one will boost your cash flow; a single vacancy won't hurt as much; and you could benefit from economies of scale for things like appliances and painting. But stick to buildings with four units or fewer to avoid stricter financing requirements, such as a bigger down payment and higher mortgage rates.

Once you've identified candidates, crunch the numbers. The goal: to make sure your rental income will at least cover your loan payments, plus a 20% cushion to handle repairs, vacancies, and property management.

To figure out what you'll garner in rent, ask sellers for recent leases, says Snyder, and double-check their numbers by perusing sites like Rentometer and Craigslist for similar rentals in the neighborhood.

Assume your mortgage rate will be at least a half-point higher than rates on owner-occupied properties. Factor in insurance and property taxes, and bank on a 5% vacancy rate. Otherwise, "one empty month can kill you," says Ellie Berlin, a broker with Houlihan Lawrence in Larchmont, N.Y.

KNOW WHAT YOU'RE IN FOR

Brush up on your people skills: Owning rentals also means responding to tenant complaints, like the 2 a.m. phone call about a broken toilet. Want to palm off the grunt work? You can hire a handyman (around $45 an hour) or a management company (8% to 10% of monthly income plus a half-month's rent for filling vacancies), but the luxury will eat into cash flow.

To find your own tenants, creative ads on Craigslist are your best bet. Run credit and reference checks. And invest in small touches to make your place stand out, such as cool lighting fixtures or antique door hardware. Those will pay off when it's time to sell too.

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Monday, August 29, 2011

Feds want foreclosures sold in bulk to be rentals

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Feds want foreclosures sold in bulk to be rentals

by Catherine Reagor, columnist - Aug. 24, 2011 12:00 AM
The Arizona Republic

The federal government would like to sell some of its huge portfolio of foreclosure homes to investors who will rent them out.

These are houses with loans backed by Fannie Mae, Freddie Mac and the Federal Housing Administration that lenders and investors have foreclosed on and handed back to these federally owned agencies to take the losses on.

Last week, the U.S. Treasury Department and U.S. Department of Housing and Urban Development requested proposals from groups to buy the homes and turn them into rentals. The federal agencies didn't mention a discount for buying the houses in bulk, but most investors will expect one.

The federal agencies say they want to pool the homes in portfolios, because the houses are selling too slowly on an individual basis.

What happened to the federal housing plan to help people modify their mortgages and keep their homes instead of losing them to foreclosure? An investor renting out the property likely will pay much less than what was owed on the mortgage.

Arizona is one of several states that received federal money last year to help homeowners modify their loans and keep their houses. Part of the deal with the $268 million Arizona received is that lenders have to match principal reductions for a loan modification to work. For example, homeowners eligible for a loan modification from the Arizona Housing Department can receive up to $50,000 in federal funds to reduce their principal. But the lender must agree to provide matching funds. So a metro Phoenix homeowner facing foreclosure who owes $250,000 on a house valued at $175,000 could have the mortgage knocked down to $150,000 and not only be able to afford the monthly payment but be enticed to stay in the house because the homeowner owes less.

But here's the big glitch in the program: Neither Fannie Mae or Freddie Mac, which were taken over by the government during the housing crash, will agree to loan modifications that include principal reductions.

The Arizona Housing Department has been working with Bank of America and other lenders trying to spend its money to help homeowners with loan modifications. But Fannie Mae and Freddie Mac, which own a lot of the state's mortgages in foreclosure, have refused to participate in the principal-reduction program approved by the Treasury Department.

Reginald Givens of the Arizona Housing Department said the recent creative response by Fannie Mae and Freddie Mac to excessive foreclosures "gives us hope that in time, similar creativity will be applied to the handling of their delinquent loans leading to principal-reduction mortgage modifications."

The Housing Department started taking applications for its federally backed loan-modification program that involves principal reductions in September 2010. So far, the state agency has completed five modifications. BofA, which earlier this year committed to working more closely with Arizona on its principal-reduction loan program, hasn't completed one of the deals in Arizona.

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Metro Phoenix housing market confusing

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Metro Phoenix housing market confusing - During June 2011, there were just over 11,000 home sales in metro Phoenix:
- 3,684 were regular resales between a homeowner and a buyer.
- 540 were new-home purchases.
- 1,350 homes sold at foreclosure auctions.
- 1,255 houses were sold by lenders that foreclosed on them.
- 2,183 houses were sold by Fannie Mae and Freddie Mac.
- 1,822 homes were sold in short sales.
- 401 homes were sold by the federal departments of Veterans Affairs and Housing and Urban


by Catherine Reagor - Aug. 28, 2011 12:00 AM
The Arizona Republic

Recent reports say foreclosures are declining in metro Phoenix and large numbers of homes are selling.
But many homeowners feel trapped in houses they can't sell.
Some real-estate agents can't find enough new listings to keep up with demand from buyers.

But others say there aren't enough buyers, and homes are selling too slowly.
The housing market in metro Phoenix may never have been as confusing as it is today.
Nearly five years after the beginning of the housing crash, the region's market has fractured into countless different niches.
Each niche is defined by who's selling, what kind of home is for sale and where the home is located.

And each niche has become a market of its own.

Some - such as the market for small central Phoenix foreclosure homes being sold at auction - are booming, with prices rising and a huge demand from buyers.
Others - for example, traditional resales of newer large family homes in some neighborhoods in the far west or southeast Valley - have ground to a halt, where homes seemingly won't sell at any price.

Location is one traditional factor in a home's value that still holds true. But in this market, its effect can be extreme. A seller in one neighborhood might receive 10 offers, while the owner of a similar house 5 miles away won't receive any.
In a market this splintered, once-reliable measurements just don't provide enough information for buyers or sellers.

One reliable measure of real-estate activity was the number of homes for sale. Traditionally, 20,000 to 25,000 homes on the market at any given time was considered normal. More than that meant an oversupply, and sellers might have trouble attracting buyers. Fewer meant a limited supply, a seller's market with rising prices.

As the housing market crashed, too many homes had been built. The region's inventory soared to more than 60,000 homes for sale in 2007, and prices plunged.
Today, according to the online real- estate publication the Cromford Report, listings in metro Phoenix are at 27,400 and falling - traditionally, a sure sign of rising demand and rising prices to follow.

But agents and analysts see the same thing many homeowners feel. While some homes are selling easily, others simply won't.

"Phoenix's housing market is a mixed bag now," said Marcus Fleming, manager with the real-estate brokerage Redfin Phoenix. "There's a new normal for the market, but it's a weird one."

Who's selling
One factor that has a big effect on home sales is the nature of the seller.
To understand, consider just how much things have changed in the past decade.
In June 2001, there were about 10,000 home sales, according to the Information Market, a Phoenix firm that analyzes real-estate data. Of that total:
- 7,300 were regular resales between a homeowner and a buyer.
- 2,700 were new-home purchases.
- 82 houses sold at foreclosure auctions.
- One home was sold by Fannie Mae, the federal mortgage giant that backs lenders and takes over those homes when borrowers default.
Ten years later, during June 2011, there were just over 11,000 home sales in metro Phoenix. But the variety of sales was far wider:
- 3,684 were regular resales between a homeowner and a buyer.
- 540 were new-home purchases.
- 1,350 homes sold at foreclosure auctions on the Maricopa County courthouse steps.
- 1,255 houses were sold by lenders that foreclosed on them.
- 2,183 houses were sold by Fannie Mae and Freddie Mac.
- 1,822 homes were sold in short sales, in which lenders agree to let a homeowner sell for less than what is owed on the loan.
- 401 homes were sold by the federal departments of Veterans Affairs and Housing and Urban Development.
Because all of these kinds of home sales work in different ways, the market overall becomes more complicated.

Different categories
The different splinters in the market have each begun to work in their own ways, real-estate market watchers say. Some parts see a lot of sales but low prices; others, the opposite.

- Traditional resales: Fewer of these happen because of competition from cheaper foreclosures and short sales. The ones that sell best are in popular neighborhoods with good schools, near freeways and shopping centers. But the percentage of foreclosure homes listed for sale in metro Phoenix has dropped by 5 percent in the past year, so regular sellers have less competition and might soon find it more easy to sell.

- New-home sales: Homebuilding has slowed to a crawl in metro Phoenix as the market continues to sell the many houses built on speculation during the boom years. Even with low land prices, it's still hard for homebuilders to compete with the prices of foreclosure houses that were built less than five years ago.

- Foreclosure auctions: These have become very popular, and a large volume of homes sell at metro Phoenix trustee auction each month. But homes sell at auction for lower prices, and that makes the market's overall average sales price lower.

- Fannie Mae and Freddie Mac: Homes owned by these entities now dominate the metro area's market. But the agencies often change their policies on appraising, maintaining, renting and selling their houses, so some buyers and real-estate agents steer clear of the hassles of these deals.
"The government's role in the housing market is making things more confusing and bringing down prices," said Mary Gomez, a real-estate agent with RE/MAX Renaissance Realty.

- Short sales: This type of sale was rare a decade ago. Banks were reluctant to agree to them in the early part of the crash, but they have now become common. Because they're not a foreclosure sale, but also are not a traditional sale, the value of a short-sale transaction skews the overall market in ways that are hard to measure.

The bottom line: Today's market is complicated and can't be summed up as simply as in years past.
"Everyone is trying to figure out Phoenix's housing market now, but there's no one set of data that truly tells the story. All the regular models for tracking the market are broken now," said Tom Ruff of the Information Market. "There is not just one market in metro Phoenix anymore."
The effects
That confusion makes it especially hard for homeowners and homesellers to know what their houses are worth.

Traditionally, a home's value could be estimated from its "comps," comparable sales of nearby homes. Those offered an idea of the going price in a neighborhood and the price per square foot.

Today, a regular home sells for $112 a square foot. A house sold through short sale goes for an average of $72 a square foot. A bank-owned, Freddie Mac or Fannie Mae home sells for $61.50 a square foot. And foreclosure homes selling at auction are averaging $57 a square foot.

"Comps for properties are inconsistent and can be confusing," said Jennifer Hillier, an agent with the Scottsdale office of West USA Realty. "People just don't know what to believe anymore."

Measures of the overall market are harder to trust, too. Currently, metro Phoenix's overall median sales price is $124,000. But because many of the homes sold are foreclosure auctions - in which low-priced homes are common - that number could be seen as low. Other homes may be worth far more. But few of those homes are selling, so they're not represented in the median price.

"Home sales activity is still very concentrated at the bottom end of the market," said housing analyst Mike Orr, who publishes the Cromford Report.

What's selling now
"Homes in central Phoenix area priced under $100,000 are moving like gangbusters with very few homes remaining on the market for long," Hillier said. "I believe this is because of the location to jobs and public transportation" and because the low prices mean investors get a reasonable return, in the form of rent, on their cash investment.

Market watchers also say three- to four-bedroom homes in suburban neighborhoods with good schools are also selling fast to both regular homeowners and investors who want to rent them out, often to families who have lost similar homes to foreclosure.

The region's less-expensive neighborhoods experienced the crash first, and now high-end housing areas are feeling more pain because there are fewer buyers who can afford those houses.
Sales of homes in the million-dollar range have definitely slowed, said Walt Danley of the Phoenix office of Christies' International Real Estate. He said there are cash buyers looking for deals in Paradise Valley and north Scottsdale, but those deals bring prices down.

Some million-dollar homes also go to foreclosure auctions. Recently, a house in Paradise Valley that sold for $3.5 million in 2005 sold at auction for about $1 million.

But there are still homes in Paradise Valley and other high-end neighborhoods selling for prices just 20 percent lower than they sold during the market's peak. Other neighborhoods are also beginning to see homes sell for pre-boom prices from 2003-04, despite the fact the metro area's median home price is back to 1999's level.

"The one indicator we can still count on is location," Ruff said. "Homes in the right areas will continue to sell for the highest prices."

CONTACT US TO MANAGE YOUR PROPERTY

Saturday, August 20, 2011

Rents have gone up by as much as 15% in some areas and down by as much as 5% in others!

CONTACT US TO MANAGE YOUR PROPERTY

There is a lot of competition for the most desirable rentals, e.g., 4 bed room homes in areas with good school districts in the $1600 to $2000 a month range, in Mesa, Gilbert, Chandler, Peoria, Scottsdale just to name a few areas.

Buckeye, Queen Creek, El Mirage, Tolleson and Laveen are among the toughest rentals these days. They rent but they require additional incentives and extensive marketing.

Surprise, Glendale, Avondale and Goodyear North of I-10 and Litchfield Park are holding steady. They have had a 5% increase in rent since January 2011 and are still going for more and less the same. However, going forward, one must think of an exit strategy since so many investors have bought in these areas.

What we are noticing is rentals in the $1200 to $1400 range are getting tougher to rent. It seems to be high for low to average income renters and not good enough for the folks with higher income.

With all that has been going on in the financial market these days, so many investors close to retirement have been self managing their own IRAs, buying rental properties in Phoenix Metro driving prices up through the roof in some areas.

Phoenix is spread 60 miles across from east to west and 20 miles from north to south with hundreds of new and old subdivisions in between. One must be very careful where and what to buy to get the best return on his/her investment.

Not every Realtor is an investment specialist, but we are. We have years of experience working with investors at every level from single family homes to 100 unit multi-family properties.

Call us toll free at 888-777-6664. Ask for Payam Raouf, ext 111 or Jack Zohar at ext 120. If there is an opportunity out there we can help you find it.

CONTACT US TO MANAGE YOUR PROPERTY

Wednesday, August 10, 2011

Fannie Mae Announces National REO Rental Policy

News Release

January 13, 2009

Fannie Mae Announces National REO Rental Policy

Renters in Fannie Mae-Owned Foreclosed Properties
Eligible to Stay in Their Homes


WASHINGTON, DC -- Fannie Mae (FNM/NYSE) today announced the establishment of a new National Real Estate Owned (REO) Rental Policy that will allow qualified renters in Fannie Mae-owned foreclosed properties to stay in their homes. The company currently has an eviction suspension in place through the end of January which will allow for the new policy to be fully operationalized prior to the suspension concluding.

"Renters in foreclosed properties have often been a casualty of the foreclosure crisis the country is facing," said Michael Williams, chief operating officer of Fannie Mae. "This policy will allow qualified renters to remain in Fannie Mae-owned properties should they choose to do so, mitigate the disruption of personal lives that foreclosures can cause, and help bring a measure of stability to communities impacted by high foreclosure rates."

The new policy applies to renters occupying foreclosed properties at the time Fannie Mae acquires the property. Renters occupying any type of single-family property will be eligible including residents of two- to four-unit properties, condos, co-ops, single-family detached homes and manufactured housing. Eligible renters will be offered a new month-to-month lease with Fannie Mae or financial assistance for their transition to new housing should they choose to vacate the property. The properties must meet state laws and local code requirements for a rental property.

While the company markets the properties for sale, Fannie Mae will manage the properties through a real estate broker or a property management company. The company will not require security deposits to be posted in connection with this program.


Renters in the foreclosed properties will be asked to pay market rate rent under the new leases. Rates may be determined by reviewing local comparable rents, conducting a neighborhood survey, or through other relevant indicators. Rates will also be subject to any legal rent control restrictions. The company will review each instance where the market rate may require a tenant to pay additional rent and will work to reach an equitable resolution.

On behalf of the company, property managers are contacting renters in Fannie Mae-owned foreclosed properties to notify them of their options.


Friday, August 5, 2011

BUY ARIZONA GOLD (REAL ESTATE ) UPGRADED

Payam Raouf
President, Associate Broker
888-777-6664
info@azezrentals.com

It is Ugly out there. The good news is Arizona Gold ( Real Estate ) is selling like hot cake. There is NO INVENTORY FOLKS. Rents are going up in the most desirable areas and down in the outskirts. Prices are up 15% since January. Offshore cash buyers are literally raping the market buying anything and everything under the Arizona sun, Residential, Multi-units and Commercial. Adjusted to inflation, Real Estate has always done really good. Buying at 30% below builders cost is crazy if you ask me. So, whether you are an investor or an end user, take advantage of this market while you can. Opportunities like this happen once in a life time. My staff is standing by to help you. We buy bank owned properties at the open market or trustee sales, lease and manage them under one roof. Currently we have three offices in Glendale, Surprise and Mesa and the fourth one in Scottsdale is in the process of opening. Please click on one of these links below and let us know what we can do to help. Thank you.

CLICK HERE TO BUY INVESTMENT PROPERTIES

CLICK HERE TO INQUIRE ABOUT OUR PROPERTY MANAGEMENT SERVICES

CLICK HERE IF YOU ARE A FIRST TIME HOME BUYER

CLICK HERE TO RENT ONE OF OUR PROPERTIES


___________________________________________________________________________
by Catherine Reagor, columnist -
Aug. 3, 2011 12:00 AM
The Arizona Republic

Foreclosures continue to drop in metro Phoenix, a trend signaling the housing market is slowly getting in position for a recovery, according to many real-estate analysts.

In July, lenders foreclosed on 3,176 Phoenix-area homes, according to the Information Market. That compares with 3,887 in June. The last time Valley foreclosures, or trustee-sale numbers, were this low was in December, when major lenders, including Bank of America, had foreclosure moratoriums in place to check out accusations of robo-signing.

Pre-foreclosures, or notices of trustee sales, fell to 4,015 in July from 4,262 in June. In the previous July, lenders sent out notices that they were beginning foreclosure proceedings on 7,802 metro-Phoenix homeowners.

The number of pending foreclosures for the area dipped to 23,300 last month, compared with 25,300 in June. A year earlier, there were more than 40,000 pending foreclosures in metro Phoenix. The number is down because of fewer new foreclosures and more trustee sales going through, particularly on the Maricopa County courthouse steps.

What continues to concern some market watchers is Phoenix's "shadow inventory," which includes homes on which borrowers are behind on their payments but that lenders haven't started to foreclose on yet. Also, the shadow inventory includes houses that lenders have foreclosed on but aren't yet listing for resale.

After a lender has taken back a house, it's considered a real-estate-owned property.

According to Information Market, there are 15,850 REOs either for sale or being held by lenders for future sale in metro Phoenix.

The number of REOs in the region has been steadily dropping every month this year.

Saturday, July 30, 2011

As home prices declined over the past year, rental rates rose 9%.

A COUPLE NOTES HERE, HOME PRICES HAVE GONE DOWN AND RENTS UP. THAT MEANS, MORE MONEY IN YOUR POCKET. I READ IN ANOTHER ARTICLE THAT MULTI-FAMILY SALE IN PHOENIX METRO AREA EXCEEDED $240,000,000 IN THE PAST SIX MONTHS. WE KNOW IT FIRST HAND AS WE HAVE BEEN RECEIVING MORE CALLS TO MANAGE THEM. SMART INVESTORS SHOULD BE ENCOURAGED TO BUY MORE. AS MOST ANALYSTS PREDICT, WE HAVE TWO MORE YEARS OF THIS TO TAKE ADVANTAGE OF AND PRICES WILL GO BACK UP AS SHADOW INVENTORY MELTS AWAY.

AS A RESULT WE HAVE BEEFED UP OUR STAFF TO HELP MORE INVESTORS AND CUT OUR LEASING AND PROPERTY MANAGEMENT RATES ALMOST IN HALF TO PUT EVEN MORE MONEY IN THEIR POCKETS.

CLICK ON THIS LINK TO CONTACT US. WE DO IT ALL. JUST SIT BACK, RELAX AND COLLECT YOUR MONEY.


Stuck in Phoenix, the Epicenter of Housing Crisis
by Barry Wood
Thursday, July 28, 2011

Commentary: It may take years for housing to bloom again in desert
In metropolitan Phoenix, two-thirds of all residential mortgages are underwater. Of these, some 200,000 are 50% larger than the current market value of the properties. Many homeowners have come to doubt whether they'll ever retrieve their lost equity.

In this city of 4 million, the 14th largest in the United States, the median home price is down 53% since the bubble peaked in 2006 to just over $120,000. Only smaller cities such as Las Vegas and Orlando have witnessed equally catastrophic drops.

Paul Hickman, the head of the Arizona Bankers Association, says for Arizona the current recession is worse than the Great Depression of the 1930s. "Then," he told Cronkite News of Arizona State University, "our economy was young and we were just barely a state." Now, he says, Arizona is suffering because it became excessively dependent on a "one-dimensional housing economy."

Phoenix is no stranger to booms and busts. Home prices here fell in the late 1980s after the savings-and-loan debacle brought down several local developers, including the notorious Charles Keating of Keating Five fame. Now 88, Keating lives quietly in Phoenix, having served a 4½-year prison term for fraud after his Lincoln Savings and Loan collapsed in 1989.
The scope and severity of the current crisis easily eclipses that of the '80s and '90s. Phoenix's population is now 45% larger and, as new suburbs encroached ever farther into the desert, residents have been squeezed by long commutes and the sharp run up in gas prices. Housing economist and retired ASU professor Jay Butler says of the current downturn, "nobody thought it could get this bad." He foresees no significant recovery for two more years.

Some local realtors dispute that pessimistic assessment. They point to strong existing home sales in June, up 22% according to the National Association of Realtors. It was the second consecutive month of strong sales, with the June figure the strongest recorded since December 2006.
But while sales may be up, prices are not. The NAR report says the median price of a home sold in the Phoenix area in June was down 13% from the same month in 2010. Realtor Robert Holt expects prices to remain weak because distressed properties are accounting for 64% of sales. With Phoenix having an inventory of over 120,000 empty or foreclosed homes, Holt expects "a tidal wave of foreclosures" will soon hit the market. He says with "overall mortgage delinquencies double and foreclosures eight times higher than historical norms, there is not going to be any easy or quick fix to the housing crisis."

Laurie Goodman, the respected mortgage market analyst at Amherst Securities, sees a similar problem nationally. Alarmed at what she believes is a 30-month supply of distressed properties overhanging the market, she told an American Enterprise Institute conference recently, "we're not making enough progress in liquidating bad loans."
Saying that only 30% of troubled loans have been resolved, she predicts that over the next six years as many as one out of every five mortgage holders in the country could lose their homes. With the number of distressed properties coming to market not keeping pace with a mounting inventory of troubled mortgages, and prospective buyers finding it hard to get credit, Goodman says the normal supply/demand function in housing is broken.

The result, she argues, is a likely boom in rental housing as strategic defaulters and evictees gravitate to cheaper rental homes. "Rental rates are rising," she says, "because renting is the only way to absorb the overhang."

In Phoenix, that is already happening. As home prices declined over the past year, rental rates rose 9%. Nearly half of the distressed homes sold over the past year have been turned into rentals. Michael Trailor, the director of the Arizona Housing Department, says "the shift from home ownership to rentals in the Valley will continue as home ownership shrinks more."

Ironically perhaps, the shift to rentals is occurring while home affordability has improved. With home prices way down and mortgage interest rates very low, this is the best time in at least 20 years to buy. In Phoenix prices have slid back to the levels that prevailed in 1998 or 2000.

Adam Stankus, a hotel manager in Tempe, and his schoolteacher wife are in the enviable position of being prospective buyers in a buyers' market. They hope to purchase the home they currently rent in the suburb of Buckeye for under $50,000. Lucky to have savings equal to a 20% down payment, Stankus believes their monthly mortgage payment will be well below their $800 monthly rent.

The unexpectedly severe downturn over the last five years shows that nobody really knows the future direction of the housing market. Gary Shilling, a respected forecaster, is predicting that prices could fall another 20% nationally, on top of the 30% decline that has already occurred. Mark Zandi, meanwhile, of Moody's Analytics believes we're already bumping along the bottom and that prices could begin to recover next year.

Robert Holt, the north Phoenix realtor, argues persuasively that there won't be a price upturn in his market until the ingredients for a recovery are in place. These, he says, include population growth and an increase in jobs. Currently, that isn't happening. The local unemployment rate is stuck at around 8%. While below the national average, only 4,900 jobs were added in the past year. Given all that, ASU Professor Butler says the "housing recovery in Phoenix is likely to improve at only a glacial pace."

Barry Wood is North American economics correspondent for RTHK radio in Hong Kong.

Friday, June 24, 2011

metro Phoenix's rock-bottom home price

Arizona Property Management and Investments
Three Locations Valley Wide, Surprise, Glendale and Mesa
888-777-6664

by Catherine Reagor -
Jun. 15, 2011 12:00 AM
The Arizona Republic

Could $115,000 be metro Phoenix's rock-bottom home price during this crash?

The region's median home price has been hovering around that figure for the past six months. This steady price trend demonstrates the least volatility the Valley has seen in home values in almost a decade.

Data from the Information Market, a real-estate research firm, shows that the median price of all existing-home sales has been $115,000 for every month since December, except February, when it was $116,000.

Now, this median price isn't going to thrill longtime homeowners in the Phoenix area. The record for resale-home prices was set in September 2006, when it hit $267,000. And home prices haven't been this low since 1999. But at least the region's median hasn't dropped any lower so far this year.

Many metro areas in the U.S. experienced a double dip in home prices during March and April of this year. The Phoenix area did not. The region's double dip came late last year, when the median fell from $121,000 in November to $115,000 in December.

The area's previous rock-bottom price during this housing downturn was in April 2009, when the median fell to $119,000 from $122,500 in March. During the second half of 2009 and 2010, prices had been climbing steadily from that April low until December.

Recent key real-estate indicators, including data on foreclosures and listings of homes for sale, have been heading in the right direction. That may signal the housing market could start to recover this year, so home prices may begin slowly to increase again.

- Foreclosures dip: Pre-foreclosures, or notice of trustee sales, are one of the best forward-looking indicators for the housing market.

In May, there were 4,221 pre-foreclosure filings in Maricopa County, Information Market reports. That's basically flat from April's level, the lowest number of pre-foreclosure filings since December 2007.

Last month, there were 4,212 foreclosures, or trustee sales, completed. Phoenix-area foreclosures artificially fell below 3,000 in November due to short-term lender moratoriums that expired in December.

But the best sign for metro Phoenix's housing market is pending foreclosures. The number of residential-foreclosure filings being processed is down to about 27,400. Two years ago, there were 42,000 foreclosures pending.

Sunday, June 19, 2011

Renters get relief from foreclosure

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Renters get relief from foreclosure
By Marcie Geffner • Bankrate.com


A new federal law offers renters more protection from eviction if their landlord loses the property through foreclosure. The law has some fuzzy requirements, but should be a boon to renters who otherwise might have been evicted with little or no notice.

"The fundamental purpose of the Protecting Tenants at Foreclosure Act is to ensure that tenants facing eviction from a foreclosed property have adequate time to find alternative housing. To that end, the law establishes a minimum time period that the tenant can remain in a foreclosed property before eviction," a Federal Reserve memorandum states.

The national foreclosure crisis has not been kind to renters, despite their seeming bystander status. Indeed, the National Low Income Housing Coalition, or NLIHC, in Washington, D.C., has estimated that some 40 percent of households that have lost their home due to foreclosure have been renters.

The new law should provide some relief from immediate evictions, according to NLIHC President Sheila Crowley.

"This bill brings long overdue relief for the most blameless victims of the foreclosure crisis -- the families who, after paying their rent each month, are suddenly told they must move out of the homes because their landlords have been foreclosed on," Crowley said in a statement.

Renters will get 90 days' notice

The new law allows tenants who have a lease to remain in their home until the end of the lease period, unless a new owner purchases the home at a foreclosure sale and intends to occupy it as a personal residence. In that case, the renter can be evicted with 90 days' notice even if a longer-term lease is in force.

A rare but potentially important exception occurs if the renter signed the lease before the owner obtained the foreclosed loan. In that case, the lease will still "survive" the foreclosure, according to Janet Portman, an attorney and author of "Every Tenant's Legal Guide," published by Nolo Press in Berkeley, Calif.

Tenants who don't have a lease also are entitled to 90 days' notice prior to eviction under the new law.

Technically, the law applies only to "any foreclosure on a federally related mortgage loan." That requirement shouldn't be a burden for tenants because, as Portman explains, the definition of "federally related" encompasses virtually all loans.

The law became effective May 20 and is scheduled to sunset Dec. 31, 2012.

Only 'bona fide' renters are protected
The law protects only a bona fide lease or tenancy, which is defined as a situation that meets three criteria:

The renter may not be the former owner of the home or the former owner's spouse, child or parent.

The terms of the rental must be at arm's length between the landlord and renter.

The rent cannot be substantially less than the fair-market rent, unless the rent is subject to a government reduction or subsidy.

The arm's-length and fair-market rent requirements "are designed to prevent a sweetheart deal" between a defaulting landlord-owner and a renter whom the landlord wanted to protect from eviction after the foreclosure, Portman says. For example, if a landlord and renter signed a two-year lease at a very favorable rent just prior to a foreclosure, that likely wouldn't meet the bona fide requirement.

Broken lease can lead to lawsuit

Renters who have a lease and are evicted may be able to bring a breach-of-contract lawsuit against the former landlord to recoup the costs of their forced move, according to Portman. "You go to court and say, 'We had a deal, and he didn't deliver,'" Portman says. "The guy may be long gone. But if you get a judgment, that's good for many years and you could probably eventually collect on it."

New law doesn't affect rents, deposits

The new law doesn't pre-empt any state or local laws. Instead, it specifies that it won't affect "the requirements ... of any state or local law that provides longer time periods or other additional protections for tenants."

State laws apply to most landlord-tenant issues that are beyond the scope of federal law. Examples include prepayment of last month's rent and reimbursement of a security deposit. Neither of those issues is mentioned in the new law.

"Many states, including California, protect the tenant at any cost. They say basically that it is up to the buyer and seller, or in this case, the bank and the (former) owner, to figure out how to (handle those sums)," Portman says.

The bottom line is that landlords and renters have new rights and responsibilities in foreclosure situations. While renters may face challenges in their attempts to exercise those rights, knowledge and action can prevail.