For those of you who are thinking you might short sale your home, you need to know about HAFA, Home Affordable Foreclosure Alternatives.

This is another attempt by the Obama administration to stem the tide of foreclosures, thus far with poor results.

Basically, the program will give the home owner $3,000 to encourage them to stay in the home and short sale rather than foreclose. It gives the bank $6,000 if they short sale rather than foreclose.

If you are thinking to short sale, let’s talk. Thus far this program has not been working. It has doubled the paperwork required to short sale and it has slowed down a process which is already taking too long.

I am hopeful that they will work out the kinks. But it is more likely that the market will clear of short sales and foreclosures before that happens.

Learn more at this Arizona Republic Article.

You may have heard in the news about an extension of the tax credit for first time home buyers. I’ve not really covered this because it really only applies to people who are in escrow.

I don’t think the media was clear enough about this: the only thing they were extending was the time you have to close. Remember the tax credit two-step? You had to get an offer accepted by April 30th and the house closed by June 30th? Well, all they are extending is the deadline to close.

So, basically, of the 17,000 properties that are in escrow right now in Maricopa county, fewer of them will cancel because somebody found that they were not in time for the tax credit.

Oh well June still has, at this time 9,083 closed, that’s basically the same as May, but down about 3% from June 2009. REO and Short Sale (SS) trends continue, namely REO’s are dropping (36%) in number and SS are increasing (25%).

According to my broker, Jim Sexton, the number of foreclosures, at 6,170, is the lowest number since 4/08. The change in the Pending Foreclosure numbers was the largest drop on record at 2,673, the lowest since 3/9.

In other words, the market is beginning to clear of the foreclosed properties, slowly but surely. This is for two reasons. First, banks and brokers are getting faster at selling short sale properties. Second, the number of distressed properties may be simply going down.

This picture is not completely clear yet, but we will see soon.

This supports what we are seeing: that sales prices are inching upward as the market clears. We are back at 2001 levels, on average (but better in most Central Phoenix or historic neighborhoods.)

This is still a great time to buy a house, with rates still hovering at or below 6% APR.

It is a bit too early to see if there has been a massive drop in prices, as predicted by some of our more speculative and sloppy reporters.

But we can see a couple other trends that your might find interesting:

#1 The Number of Foreclosures in the Market is Starting to Drop. According to this article in NuWire, an investment newsletter, “Last month they (foreclosures) represented 50.5 percent of the resale market, compared with 64.9 percent a year earlier. The peak for foreclosure resales was 66.2 percent in March 2009.”

The Arizona Republic, usually happy to predict the end of days every time the wind changes direction said “Foreclosures were 33 percent of the market’s recorded activity in May, down from 40 percent in March, according to the latest realty-studies report.

This does not mean that the market it out of distress. The number of short sales is edging upward as sellers, banks and agents get better at selling homes before they go to foreclosure. See below. What does this mean? It means that if you are looking to buy, you are more likely to want to look for short sales and leave yourself plenty of time for the deal to close –3 to 6 months.

#2 Prices Per Square Foot Are Going Up. So, this means that regardless of the size of the home, people are willing to pay more. Not a whole lot more, but they are edging upward.

So, what does this mean? I think it means that once all of the dust settles from the tax credit, we will be on a steady, slow upward climb back to normal and that it will take a couple years. If you are looking to sell, hang tight unless you are looking at using the low market to trade up. If you are looking to buy, you should be looking now because a 5% increase in the home price can me $100 more per month, depending on the home.

This also means that closing on a home is a little different than it used to be. You are more likely to have to deal with a bank and you may take longer to close. But, that is why you ask me to help you! I protect you from the difficulty of dealing with banks and represent your interests.

They are coming in fast and furious now, so I want to share them with you. This might be why I’m getting more calls now from folks wanting to get out and find a house.

1) From a May 25th AZ Central Article

• Foreclosures did not dominate sales of existing homes in the Valley for the first time in more than a year.
• The number of investors purchasing homes from lenders dropped.
• More buyers purchased homes with the intent of living in them.

2) ABC World News Clip on the sudden drop in interest rates, tied to troubles in Europe

Watch for the increasing bits of news like this to start moving the market toward more “normal” sales.

My friend in the real estate industry was commenting to me on Tuesday that it is difficult these days to be taken at our word.

He said, “People I talk to expect me to say that now is the best time to buy, so they discount what I’m saying. But, really rates have not been this low in 40 years and houses will probably not be this cheap again in our lifetimes. I’m not trying to sell something that isn’t real, you know.”

It is difficult, especially when you see that rates are taking a quick drop again, despite the fact that we’ve been afraid that interest rates would take a quick jump upward and that would put a damper affordability, especially for first time home buyers.

Have a look at this post from February to learn how a 1% increase in rates can have a major impact on what you can afford.

These things tend to jump up and down, so this is great news. But, they can just as easily pop upward again if the markets think that the government has taken on too much debt. If you are thinking about buying, lock these rates in now.

Here is a shameless cut-and-paste from something that my friend over at Met Life, Dan Hlavac sent me about where rates stand right now.

Please give me a call if you need more information.

—————

Even though the trend so far this year and likelihood through year end is that mortgage rates have been rising, right now mortgage rates are at the lowest they have been all year.  Those of your who thought you missed the boat on the best rates have been given a second chance.  It is still widely expected that rates will rise throughout the year. If you are in need of refinancing our have been looking to buy a new home, don’t miss the boat again – this is the time to do it.

Below are some sample rates as of this week.  Pricing changes day by day ( and sometimes during the day) and can vary based on your credit score and the amount of equity you have in your home, among other factors.  For more information on the current rate market, take a look at this article from the Arizona Republic.

Please call or email for a to review your current lending needs and see if I can save you some money.  You may also submit an application on my website www.metrophxaz.com

Conventional $417,000 *     Rate     Orig        Points     APR
30 year fixed                       4.875% 1.000%    0.000%   5.009%
5/1 ARM                             3.500% 1.000%    0.000%   3.619%

FHA/USDA $200,000*           Rate     Orig        Points     APR
FHA 30 year fixed                5.000% 0.000%    0.000%   5.077%
FHA 5/1 ARM                      3.500% 0.000%    0.000%   3.566%

Jumbo $1,000,000*              Rate     Orig        Points      APR
5/1 ARM                             4.750% 0.000%    0.000%    4.786%
30 year fixed                       5.625% 0.000%     0.000%   5.660%

*All rates are subject to change with out notice.  Annual Percentage Rate (APR) calculations are base on a conventional loan amount of $417k with 20% down payment, Jumbo loan amount of $1.0m with 25% down payment, FHA loan amount of $200k with 3.5% down payment.  Down Payments of less than 20% may require Private Mortgage Insurance which could increase the APR and monthly payment.  Loan pricing may only be locked through a MetLife Home Loans Mortgage Consultant to be effective.  All loans subject to approval.  Certain conditions and fees apply.  Mortgage financing provided by MetLife Home Loans, a division of MetLife Bank, N.A. Equal Housing Lender

I’ve been saying it for a while, but it is official when ASU says it. Check out this article about how home prices have gone up 5.5% since January of this year.

It reminds me of when I sold my home in Woodlea/Melrose in 2006. I just waited until I heard the news report that “we might be reaching the top of the market”,  then I jumped on it and sold. I sold the house for 2.5 times what I bought it for.

So much is dependent on public opinion. A lot goes in to the data in this article, but it tells me that we are at a crucial point. Shrinking inventory is starting to spur prices upward and people are starting to feel comfortable getting back in to the market. This is as cheap as it is going to be again for years to come.

Things to note:

1) The article says that more expensive foreclosures are on the market and that helps drive prices up. This is true for two reasons. First, some higher priced homes have been lost to the bank. Second, most of the really cheap foreclosures have been snapped up, leaving the others.

2) Condos are really very cheap right now because of the changes in the FHA rules. If you can come in with 15% down, you can pick up an incredible property for under $100,000! See my article from yesterday here.

3) Have a look at the charts. The trend is clear. The number of months that a home sits on the market came down and is stabilizing at (can we say it?) equilibrium! In the market 5 months of supply is usually considered healthy. Also the average monthly prices have gone up over the past months, now comfortably over $130,000. Much better than 2008 and 2009!

If you have been holding off, don’t do it any more! Now is the time. Give me a call at 602-456-9388.

There are 1,134 condos, town homes or patio homes in Maricopa County right now that are at least 2 bedroom, 2 bath and under $100,000!

That is astounding. There are about 171 in Central Phoenix (depending on your definition of “Central”). About 75 of those are under $60,000. 34 are under $40,000.

This is a huge number of properties that are really quite affordable and convenient.

The principle and interest on a $100,000 condo is about $511 per month. Add primary mortgage insurance to that and you are at about $600 per month. If you tailor your search to only those with HOA fees under $200, then you are getting a two bedroom, two bath place for about $800 per month!

As we are still in a low market, you are in a great position to recoup those costs when you sell! Sit on it for a couple years and make it a rental down the road. You have a lot of options with a condo. All of them are better than giving money to a landlord!

What to watch out for

According to my lender contacts, there are several things that you need to be aware of, unless you are buying cash:

1) Lenders require 60% owner occupancy.

2) No more than 15% of HOA residents can be delinquent in their dues.

3) One person or company cannot own more than 10% of the units.

4) The HOA cannot be in litigation.

5) You need at least 15% down to get private mortgage insurance.

But here is the good news about that. These criteria are a great way to weed out the wheat from the chaff. Let’s do the research and we can still find condos that meet these requirements. If they do, then they are more likely to be a good investment or home.

Call me at 602-456-9388 for more information.

Postscript –lots of new condos in the $140,000 to $190,000 range are also a great deal. especially if they were renovations, such as Pierre on 6th and Landmark. They are already FHA qualified, but not selling as quickly as the investors would like and we might be able to bargain them down.

Ever heard of a seller carry-back? Quite possibly not. The house pictured here is offered as a seller carry-back.

The best way to describe it is when the seller of a property “carries the loan” instead of a bank.

So, imagine you are the buyer of a home. Instead of going to a bank to get money to give to the seller, you just pay the seller in installments. The seller and you figure out what your interest rate will be and how long he or she will carry the loan. Let’s say 10 years at 6% interest, amortized over 30 years.

Huh?

Let’s look at that again. You calculate the loan based on a 30-year term. You pay monthly installments as if it is a 30-year term, but the balance of the loan will come due at the end of 10 years.

So, let’s say you buy a $200,000 house with a seller carry-back, and you put down 10%. You amortize at 30 years and the seller charges you 6% interest. Your monthly payments will be about $1,100.

At the end of about 10 years the balance will be somewhat more than $100,000. At that point, you either come up with cash or you get a loan from a bank.

The entire time, a title company takes a small fee and keeps track of the payments for you. So, it is safe for the buyer.

If you can’t buy the house at the end of the 10 years, the house goes back to the owner. So, it is safe for the seller.

Who uses this?

1) People who can’t get a loan. In the early 1980’s the average bank loan interest was somewhere around 15%. So many people did seller carry-backs and left the bank out of the equation all together. They made a private deal between the buyer and seller.

2) Co-op owners. A co-operative is kinda like a condominium, but you can’t get a loan on a unit in a co-op. Long story. So, it is either cash or seller carry-back only.

3) Family members. Sometimes families or trusts will do seller carry-backs so that they can sell something without the bank involved. That way the profit from the interest payments stays in the family.

4) Investors. I have met investors recently who buy homes, then do a seller carry-back with somebody, knowing that that person could get a loan later, but now now. This gives the investor a stream of income on their property.

5) Sellers who don’t want to sell in this market. If the market average is $140,000, you, the seller paid off your home a long time ago and you don’t want to sell at that price, you can sell at a higher price to a person privately. The price is higher than you can get right now, but lower than the buyer could probably get 10 years from now.

Why is this relevant?

I’m in awe that we are not doing more seller carry-backs. Hundreds of thousands of people who have lost houses due to foreclosure or short sale have bad credit but are not necessarily a risk to the seller. If you can’t deal with the bank deal with a human being!

I think the only reason we don’t see more is because so few people know about this tactic. It was 30 years ago that they were last seen commonly.

Could you imagine what the housing market would look like if we could get more buyers buying up some of the lost and forlorn homes? Many buyers can’t get it from a bank. But if an investor buys a home from the bank and a buyer can buy it from the investor on reasonable terms, why not? If you write a contract and have a title company manage the payments, then you are safer. (Never do a seller carry-back on a handshake!)

How do you find them?

The Multi-listing Service has a tag for homes where the seller is willing to do a seller carry-back. All I need to do is look for you. Please shoot me an email at realestate@kenclarkforaz.com and I’ll have a look.

In an era when we all feel pretty stung by the banks, I am surprised that we are not doing more of these. Maybe this is a great way to vote with our wallets and tell the banks what we think of them!

Historic preservation “Grande Dame” G.G. George was highlighted in this spanning piece in Phoenix Magazine about the history of historic preservation in Phoenix.

Y’know, I like to think I have a good grasp on historic preservation. But comprehensive articles like this one really punctuate what a long struggle it has been to preserve our most unique neighborhoods in Phoenix. We have a way to go still in some neighborhoods. But we should all tip a hat to those who came before. They are the ones who presented us with this jewel in the middle of a creeping metropolis  that we have come to take for granted.

It is in their name that we should go toe to toe against people like Sen. Linda Gray, who want to undermine historic neighborhoods in Phoenix.

Enough from me. Please read this article.

Join your host committee for the annual Solstice Eve  to support our friends on Roosevelt Row in Downtown Phoenix.

Friday, May 21, 2010
5:00-5:30pm —  Hosts’ Reception
5:30pm til it’s over – Solstice Party!!
PTE Offices at 1017 N. Central Ave
Light Rail stop at Roosevelt

Tickets for this special event are $50 each and include food from Athenian Express, Four Peaks beer,  fabulous Arizona wines, and an evening of fun.
This year we will have an incredible selection of artwork AND one-of-a-kind experiences in a silent auction.

Roosevelt Row Community Development Corporation started in 2001 as an informal affiliation of galleries and art spaces along East Roosevelt Street.  A more formal corporation was established in 2005 to further the unique character and assets of the area, to advocate for the continuing role of the arts in the revitalization of downtown Phoenix, and to foster a dense, diverse and walkable urban environment.

This fundraiser allows them to build programs like Phoesitval’s on First Fridays, gRow House, Roosevelt Row Community Garden, Mural Match / Eyes on the Streets – a program matching artists and building owners, and Community Phoestivals.

Tickets are limited and your donation is tax deductible.