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.
Tuesday, November 1, 2011
Renters are running out of cash reserve to rent homes.
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, and sex offender background checks, FBI most wanted searches, and the verification of their employments and rental history.
To defray the cost of lease administration, conduct a tenant orientation, setting up a tenant portal and prove HOA documents when applicable, leasing agencies charges tenants between a $100 to $300 non refundable up front lease administration fee. In the past this cost was to the homeowner, but as more rental agencies have entered the market in the past twelve-month competing for homeowners’ business, almost all have passed this charge to the tenants. .
The following is an example of what a married couple with less than perfect credit with two children and one dog has to come up with to lease a home renting for $1,000 per month.
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 $3500 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 on 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, 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 we 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 and who can afford to keep it their property long enough to sell it.
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 it 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 big in 5 to 10 years when the market turns around.
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 and while tax consequences and the rising cost of maintenance and repairs has diminished their return of on their investments.
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 at the auctions in the recent months. 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 IRAs. A new group of investors has recently emerged as the result of the stock market volatility. They are buying rental homes instead. They are conservative buyers and look for the right opportunity to invest.
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 at a lesser rental market value to a well qualified tenant who is going to take 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 paying cash or using high interest hard money loans are buying to flip to end users for a quick return are stuck with these purchases and are now putting them in on the market for rent hoping to sell them to another individual investor at a profit 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 as well or sell it at a loss. The number of e-flyers sent to realtors has increased ten folds recently offering properties either for sale at a high commission, or rent
10) Slumlords: Investors buying for Gross Rent Multiplier (GRM), three and four, mostly old run-down houses in undesirable areas, leasing them out to less qualified renters at a much higher than average rent amount, or leasing it to them with an option to buy, thereby avoiding much required repairs.
Rental Inventory
The 5,000 single family homes advertised each month on Realtor Multiple Listing Services (MLS is a fraction of what is really up available for rent, and 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 be provide a better indication of how many single-family homes are for rent in the valley. There are well over 15,000.
Leasing Agents
It used to be a common practice that a leasing agents, mostly Rrealtors, 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 increasing, 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 the huge liability for the homeowners as well.
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 manages the property, and will take care of them while they are there.
To find a qualified applicant that homeowner approves is a tedious, time consuming and at times frustrating job for the leasing agents. Quite often, prospective tenants fall in love with a home that they may not qualify for. At times it takes a couple of weeks to find a home they would approve of and leasing agents invests an enormous amount of time to find it for them. However;, there are times when a prospective tenants simply calls another listing agent off their sign and leases the house through them with no regards for the original leasing agent’s time and efforts.
Conclusion:
Times are tough for everyone including homeowners, 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 good 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 application and present it to the owner or the listing agent on their behalf. Most often owners will come to terms with the prospective tenant provided that the demands are reasonable.
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 per pet per month which is less expensive than boarding pet in a pet motel for a night.
Tenants, who are working with a leasing agent who has been working hard for them should give them a courtesy call if they find a home on their own. 2/3 of the homes are not listed on MLS, so agent has no way of knowing if that property is available for rent. If you give them the information, they will do all the rest for
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 leasing administration fee, either ask the owners to pay for it or split it between the tenants and owners.
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 too achieve their goals upon arrival to at their charted destination.
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, and sex offender background checks, FBI most wanted searches, and the verification of their employments and rental history.
To defray the cost of lease administration, conduct a tenant orientation, setting up a tenant portal and prove HOA documents when applicable, leasing agencies charges tenants between a $100 to $300 non refundable up front lease administration fee. In the past this cost was to the homeowner, but as more rental agencies have entered the market in the past twelve-month competing for homeowners’ business, almost all have passed this charge to the tenants. .
The following is an example of what a married couple with less than perfect credit with two children and one dog has to come up with to lease a home renting for $1,000 per month.
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 $3500 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 on 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, 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 we 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 and who can afford to keep it their property long enough to sell it.
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 it 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 big in 5 to 10 years when the market turns around.
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 and while tax consequences and the rising cost of maintenance and repairs has diminished their return of on their investments.
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 at the auctions in the recent months. 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 IRAs. A new group of investors has recently emerged as the result of the stock market volatility. They are buying rental homes instead. They are conservative buyers and look for the right opportunity to invest.
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 at a lesser rental market value to a well qualified tenant who is going to take 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 paying cash or using high interest hard money loans are buying to flip to end users for a quick return are stuck with these purchases and are now putting them in on the market for rent hoping to sell them to another individual investor at a profit 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 as well or sell it at a loss. The number of e-flyers sent to realtors has increased ten folds recently offering properties either for sale at a high commission, or rent
10) Slumlords: Investors buying for Gross Rent Multiplier (GRM), three and four, mostly old run-down houses in undesirable areas, leasing them out to less qualified renters at a much higher than average rent amount, or leasing it to them with an option to buy, thereby avoiding much required repairs.
Rental Inventory
The 5,000 single family homes advertised each month on Realtor Multiple Listing Services (MLS is a fraction of what is really up available for rent, and 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 be provide a better indication of how many single-family homes are for rent in the valley. There are well over 15,000.
Leasing Agents
It used to be a common practice that a leasing agents, mostly Rrealtors, 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 increasing, 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 the huge liability for the homeowners as well.
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 manages the property, and will take care of them while they are there.
To find a qualified applicant that homeowner approves is a tedious, time consuming and at times frustrating job for the leasing agents. Quite often, prospective tenants fall in love with a home that they may not qualify for. At times it takes a couple of weeks to find a home they would approve of and leasing agents invests an enormous amount of time to find it for them. However;, there are times when a prospective tenants simply calls another listing agent off their sign and leases the house through them with no regards for the original leasing agent’s time and efforts.
Conclusion:
Times are tough for everyone including homeowners, 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 good 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 application and present it to the owner or the listing agent on their behalf. Most often owners will come to terms with the prospective tenant provided that the demands are reasonable.
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 per pet per month which is less expensive than boarding pet in a pet motel for a night.
Tenants, who are working with a leasing agent who has been working hard for them should give them a courtesy call if they find a home on their own. 2/3 of the homes are not listed on MLS, so agent has no way of knowing if that property is available for rent. If you give them the information, they will do all the rest for
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 leasing administration fee, either ask the owners to pay for it or split it between the tenants and owners.
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 too achieve their goals upon arrival to at their charted destination.
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.
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
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 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.
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 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
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.
Arizona Property Management and Investments
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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."
#1 Property Management Company in Arizona
Three Offices valley Wide, Glendale, Sun City and Mesa
(888)777-6664
CONTACT US
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.
" Good Old-Fashioned American Values"
CALL US: 888-777-6664
CONTACT US
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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