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.

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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!

OK. I don’t have a degree in economics. I’m just a lowly real estate agent. But these guys over at ASU are only now saying that home prices are going up and I think they’ve spent a little too much time away from the light of day!

“The March figures also show the first monthly increase in the median price of non-foreclosure homes since the end of 2007,” said ASU Professor Karl Guntermann, who is the Fred E. Taylor Professor of Real Estate. “This may signal the start of price stability throughout much of the housing market.” (4/28; Phoenix Business Journal)

This is great news, but I still maintain that prices have been going up, albeit slightly, over the past year.

Here is the data, directly from the Multi Listing Service:

I think it might be that the folks at ASU are reporting prices for active listings, not what that actual sales prices were. Look above and you will see that Active Listings $/SF (price per square foot) shows $179.63 on this day in 2009, but $148.18 yesterday. Looks like things are going down.

But, wait! All that this is telling us is that people are listing them for lower now, not that they are selling lower.  Probably because they are more realistic about prices when they list them.

Look at Monthly Sales $/SF. In April of last year they were $82.49 and now they are sold at $90.18. That is down from last month slightly, but up from 2009.

Even the Average Price – Monthly Sales is up.

I think these guys at ASU are running these numbers through some complicated and possibly unnecessary equation just to come to these conclusions.

I still maintain that they are dead wrong.

At least they might be starting to come around. As I said yesterday, watch for folks who have been hesitating to get back in the market in May.

I am happy to help you with any further analysis, listings or home searches. Please contact me at realestate@kenclarkforaz.com

As you might guess, March was an insane month.

Everybody was jumping for that tax credit. There were almost 9,000 sales of homes & condos in the Phoenix metro area in March, which was the 2nd highest March sales month ever.

The median sales price in March was higher than March 2009, making it the first year-over-year increase since July 2006.

Let me say that again for all y’all (CNN!) who think price prices are still falling. That is higher than March 2009.

This is raw data from the multi-listing service. This is reported as it happens. When I close on a house, the system shows that close. Nobody can tamper with it. No third party interpretation. (CNN!)

As of April 20, there are 22,684 properties currently under contract, an all-time high.

Active listings in MLS are 34,064, down 24% since April 2009.

Want to see how things are going in your neighborhood? Check out this link to see this new feature I have. It is a free market trends analysis. After clicking on the image, you can scroll down to find your zip code and then it will show you active listings, sales per month, price per square foot, & foreclosure data for the past year.

Here is what I predict will happen in May: People will start getting back to normal buying patterns.

Source: Businessweek

We will spend the first three weeks of May waiting for this mythical “shadow inventory” to arrive, and it won’t.* Once we see that prices are not taking a downward spiral, people will start doing what they usually do. They will move if they need to move. They will buy a house if they need to buy.

There will be two types of buyers that come on the market first. 1) Those who have jobs but did not buy previously because they were afraid that they were about to lose their jobs. Now that economic indicators are turning up, they will feel more secure in their jobs and they will go ahead and buy. 2) Those who recognize that prices actually have been going up over the last year and that this is the best time to grab a new home or an upgrade before interest rates go up.

I’m happy to help you with your buying and selling decisions. Please give me a call at 602-456-9388 for more information.

*As you may recall from my previous posts, I don’t see this happening. There are many houses that are foreclosed or awaiting to foreclose, but the banks will not depress prices by throwing lots of inventory on the market all at once.

**Thanks, Leif Swanson (www.leifswanson.com) for contribution of market data.

This New York Times article is a very interesting demonstration of determining whether you should rent or buy.

This is for those of you who want to geek out on numbers a little this morning.

This is a great way to look at the situation without getting all hung up on predictions about where the market will go next. Because, as I’ve spoken about many times, you can never guess exactly when the market will be at its lowest point until that point is gone. But, if the conditions are right for you now, that is the best measure.

Basically, you take the price of the home for sale and divide it by the annual rent of a comparable rental home. If the resulting number is higher than 20, then continue renting. If it is below 20, then you are better off buying. Got it?

So, I want to apply this demonstration to a case here in Phoenix. Let’s take, for instance, 2214 N 12th Street, which is my listing.

This beautiful historic property is listing for $189,000. It is a 4 bedroom, 2 bathroom, 1,600 square foot home in a popular neighborhood. Let’s say you buy it with 10% down at 5.5% interest and a 30-year loan. You are looking at about $960, principle and interest. Add $115 per month for taxes and $70 per month for mortgage insurance and $40 per month for home owners insurance (all rough estimates). This home costs about $1,185 per month.

So, what should we compare it to? I did a search of 4br/2ba homes, minimum 1,400 square feet that are also in popular neighborhoods in CenPho. I found no 4 bedroom homes. So, I found eight 3 bedroom homes in the area. The cheapest at $1,050 per month and the highest at $2,995.

Just so you know I’m not cherry picking an example that best makes the case for buying, let’s take the cheapest one, at 1805 E. Willetta, as a case in point. I’ve posted all of the homes in this study here for your reference.

$1,050 x 12 months equals $12,600 annual rent. (You could keep much of that money by owning –just had to say it.) Divide that in to the price for the home above and you get a factor of 15. So, even in this case it is better to buy.

On the high end, let’s take 902 W. Verde as an example. That one is renting for $2,750 per month. So, that is $33,000 per year going to a landlord. That results in a Rent Ratio of 5.7.

I think this is pretty accurate analysis, especially as you consider that these are all 3 bedroom homes, and any 4 bedroom homes would certainly cost more to rent.

So, what have we learned, besides how fun numbers are?

We’ve learned that you can divorce yourself from the daily back and forth speculation about where the market is going so that you can make a decision that is good for you.

Will the market go lower? I don’t know. I doubt it. Will it go higher? Probably, yes. How quickly, we don’t know. But we know that prices have been going up in more popular neighborhoods in CenPho.

But I’ll say it again: you can never find the lowest point until it is gone. If you buy when the market is generally low and sell when the market is generally high, you are in good shape. This ain’t the stock market, after all!

If you would like to get out there and explore the market, or if you have specific questions, please give me a call at 602-456-9388.

I just confirmed that this Haver Home is now starting renovations and will be on the market for under $160,000. I do not represent this seller.

But, I am happy to represent you if you’d like to look at it. Please give me a call or email at realestate@kenclarkforaz.com if you want to know more.

The original Haver home, pictured here, is ready to be renovated. The owner/renovator intends to sell the home after renovation. He says that he is willing to work with the buyer to do at least some renovations to order!

This is a Haver Home, built by Fred E Woodworth. I’ve been in this home and it is perfectly preserved. Somebody took great care of this property for years!

This is a huge opportunity to grab a mid-century modern Haver home in a neighborhood that is bound together by their love of these homes.

All of this and the agreement could be made in time for the $8,000 tax credit!

This kind of thing simply does not happen that often!

This MSNBC article is a perfect example of how waiting for some mythological, dramatic drop in prices might actually price you out of the market because interest rates go up.

In just a few weeks interest rates for new homes have gone from 5.0% to 5.3%. See the article for the reasons why.

The rule of thumb is that every 1 percentage point increase in mortgage rates reduces a buyer’s purchasing power by about 10 percent. So, accordingly, if you’ve been waiting, your buying power has eroded by 3% in the last three weeks.

Now, interest rates are still historically low. The best I got on my house in 2001 was somewhere around 7%, as I recall. In 1981, they were over 15%. Yeah, really.

But if you are on the fence, now is the time to get off the fence. You have three weeks to get an offer accepted on a house if you want both historically low interest rates and the $8,000 tax credit.

This news just in from John Hall and Associates:

Initial numbers are in for March.

Number of Closed Escrows for March is 8846, that’s a 16% increase over March 2009 and a 34% increase over February 2010.

2010’s YTD Closed figures show a 19% increase over 2009’s 1st Quarter numbers.

REO sales numbers are continuing to decline as a percentage of sales-39% of Closed; 34% of Pending; and 15% of Active listings.

Short Sales on the other hand are increasing with 21% of Closed; 30% of Pending (or 3930); another 6585 in AWC status (89%); and 27% of Active listings.

What does this mean? It means that all of the dire predictions keep turning out to be false. The market is moving and people are picking up incredible deals before the tax credit goes away.

You have 25 days and counting to get an offer accepted on a property if you want to get the tax credit.

Please let me know if I can help you, or if you know of friends and neighbors who are thinking of buying or selling.

Remember, a rush for the tax credit helps sellers as well as buyers.