If you are FHA-financed and get an offer accepted by the end of next week, you could get your new home in time to still capture the $8,000 tax credit. The deadline is the end of the month if you are conventional.

However, it’s going to be tough!

Here are some reasons why you should not despair if you do not make it in time.

1) Interest Rates are Even Lower. According to Bloomberg News, interest rates are below 5% now. If you are not new to real estate, you probably can’t believe this. Interest rates 7 years ago were over 7%. Interest rates in 1981 were over 15%. If you are new to home buying you might just shrug, but you shouldn’t.

Compare a loan at 7% with a loan at 5%. On a $100,000 house your monthly principle and interest at 7% is about $665. At 5% it is about $552. That $113 per month savings equals $1,356. You would match the $8,000 tax credit savings in 5.8 years.

You don’t get the tax credit right away, but you will still save tens of thousands of dollars over the life of the loan!

2) Prices May Change after the Tax Credit Goes Away. We don’t know by how much, but prices may change after the incentive of the $8,000 tax credit goes away. With many people leaving the market and the holidays coming up, the market will slow and prices will come down. It slows during the holidays, anyway. But this is a double-whammy. People buying this holiday season could come up with a really incredible deal, just in time for Christmas.

Helluva stocking stuffer, huh?

OK. So, maybe “Love” is a little strong.

However, if you know me, you know that I’ve been advising against buying a short sale home. You also know that I’ve been advising against trying to sell short.

For the buyer, my biggest concern has been that you would wait for months before you hear back from the bank.

For the seller, my biggest concern has been that you are led to believe that your house will sell quickly because your agent under-prices it, then it does not sell in time because buyers don’t trust the process and then you foreclose anyway.

Well, there are some trends that are indicating that things are getting better.

Don’t get me wrong. We should not turn in to a society of short sellers. That is really bad for the market and really bad for home ownership.

However, if you are getting distressed and you are really, really stuck, this might be of interest to you.

First, the number of short sales that are selling has increased. If you look at the chart, below, you will notice that the percentage of short sale homes that have sold has increased, as a portion of all of the homes that sell. These are the latest numbers.

The blue lines represent the short sales and the red line represents all of the sales, total. For you who are tracking the numbers, that equals to about 7,700 sold homes, total and 1,400 of those that were short sales. Compare that to about 4,000 total sales in Sept. 07 with only 20 short sales completed.

In other words, your chances of getting a short sale through the process before it goes to foreclosure is now up by 700% since Sept. 07. Or, by 200% since May of this year.

Second, short sales represent about 48% of the market now. So, it is more difficult to get away from them. My colleague, Leif Swanson and I have been working more on the short sale issue and are confident that we have ways to get through the process in a reasonable time. We are also interfacing with teams of people who are very good at it. If you are thinking that you might have to short sell, please give me a call at 602-456-9388.

Third, your chances of getting a home that has been terribly damaged by vacating owners is greater with a foreclosure. I don’t have any numbers on this. But a short sale requires that the vacating owner work with everybody to sell the property. Sure, they may be upset, but they are not as likely to trash the kitchen on the way out.

In the end, it is not ideal. Far from it. We just have to hope that all of the foreclosures and short sales clear the market over the next year and we can get back to a “normal” market.

But, in the meantime, we may just have to learn to love the short sale.

Hey, all. Don’t forget that we have two big events this week.

First, drop by the Artist and First Time Home Buyer Workshop tomorrow night at the Alwun House. I will be on a panel discussion with lots of other great people who will help you or somebody you love make that first, all-important home purchase.

http://www.facebook.com/event.php?eid=148132137657&index=1

Second, Get Your PHX at NINE|05 is on Thursday. The good folks at NINE|05 have created a special Get Your PHX cocktail, just for us! I’m told it will or may include rum, strawberries and soda –but they are still playing around with it.

http://www.facebook.com/event.php?eid=141614765792&index=1

Roosevelt Row and the Alwun house have been leaders in helping to promote home ownership in historic neighborhoods around downtown.

This Homebuyer’s Workshop, hosted at the Alwun House, is for you if you think you can’t qualify for a home, or you are just looking to get a new home before the $8,000 tax credit goes away.

The event is tailored to first time home buyers who want to live in CenPho. Perhaps you are an artist or work in a field where income is inconsistent. There will be plenty of folks available to answer your questions (including me).

A panel of experts will cover the following:

1) Funding programs for first time home buyers.

2) How to afford your first home.

3) Housing market analysis.

4) Historic neighborhoods: Garfield, Coronado, etc.

Please RSVP at the Facebook invite here, or directly to me at clarkreport@kenclarkforaz.com

There is an intriguing situation playing out at the legislature, and I’m not talking about the budget.

A little background: In AZ, if you go in to foreclosure,  the bank takes back your property and sells it at a loss, they can’t come after you for the difference. The act of coming after you for the difference is called “deficiency.” Therefore, Arizona is an “anti-deficiency” state.

In other words, let’s say you bought a house for $200,000, but could not make the payments and the bank forecloses. They can only sell it for $150,000. They can’t come after you for the balance of $50,000.

That is why Arizona is such a great place to get a fresh start. We’ve been that way for a while. Banks don’t like it, but people do.

So, along comes freshman Republican Senator Steve Pierce, R-Prescott. He passes a bill that makes Arizona a deficiency state, so that banks can come get the balance from people. Well, actually, the bill allows deficiency only in those cases where the owner has owned the property for less than 6 months. He was trying to target people who flip houses.

Well, the bill has caused quite a few problems. Most importantly, it will encourage more foreclosures and bankruptcies. Here is why: Arizona has a relatively short foreclosure period (90 days). If banks know that all they have to do is wait out an owner in order to foreclose and still be able to go after the deficiency, then they are more likely to do that. This will impact more than just people who are flipping homes. This could impact all kinds of buyers, not just “flippers.”

So, the Arizona Association of Realtors (AAR), who did not see the implications when the bill first passed, have jumped in to action. They asked the governor to put the topic in the call for special session (which we are in now). They also convinced the original bill sponsor to advocate for the repeal of his own bill –a pretty impressive feat, if you ask me.  See the letter to the governor here.

So, now we are in a real pickle. The original bill goes in to effect on Sept. 30th of this year. Yet, despite several attempts, the AAR has not been able to get the repeal through the legislature. See the Arizona Republic article here.

What does this mean for you? Well, if the repeal does not go through, watch for more foreclosures starting in about December. I don’t expect a dramatic increase in foreclosures, but this will add to the mix. There will also be a suppression of investment purchases.

In my opinion, we’ve done well with anti-deficiency in Arizona. Sure, there are folks who should not be lending money. But, perhaps the banks should look inward to consider why they keep lending to people who default within six months of purchasing a property.

I encourage you to call your legislator and ask them to support a return to our traditional anti-deficiency status.

Stay tuned.