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Sun City: 13211 N 103rd Ave. Suite 2 Sun City AZ 85351
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.
Sunday, October 9, 2011
Phoenix-area real estate collapse echoed troubles
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 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."
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 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."
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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.
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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.
ARIZONA PROPERTY MANAGEMENT AND INVESTMENTS
" Good Old-Fashioned American Values"
CALL US: 888-777-6664
CONTACT US TO BUY AN INVESTMENT PROPERTY
CONTACT US TO MANAGE YOUR PROPERTY
" Good Old-Fashioned American Values"
CALL US: 888-777-6664
CONTACT US TO BUY AN INVESTMENT PROPERTY
CONTACT US TO MANAGE YOUR PROPERTY
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.
ARIZONA PROPERTY MANAGEMENT AND INVESTMENTS
" Good Old-Fashioned American Values"
CALL US: 888-777-6664
CONTACT US TO BUY AN INVESTMENT PROPERTY
CONTACT US TO MANAGE YOUR PROPERTY
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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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.
CONTACT US TO MANAGE YOUR PROPERTY
Metro Phoenix housing market confusing
Payam Raouf
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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
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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."
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