Here is this week’s updated list of the best deals in the ‘hood.

1) This expertly updated ranch in CenPho (now only $149,500) is walking distance from Light Rail and convenient to all the CenPho attractions. You can walk to Lux, Pane Bianco, Copper Star and all the shopping on 7th. That’s heaven!

You should see the upgrades: triple-pane Pella windows in the living room, a block addition to the master bedroom, with bath and a lush back yard. This 2br/2ba home is a great first home, its roomy and move-in ready.

2) 2-Bedroom, 1.75-Bath Easy Livin’ Condo. You’ve heard me rant about this little 1950s complex. It is shady, inexpensive, picturesque and built as sturdy as a fallout shelter. This 1,100 square foot place came on the market last week at $41,500. I’ve not seen many people look at it. It does not help that the carpet needs to be ripped out and replaced (what were those people eating?). But I think this price should come down in to the high $30s. I’d rip out the carpet for that price!

3) 1-Bedroom, 1-Bath Starter Condo. OK, there is a theme here, I know. But these places are so inexpensive, it blows my mind. They are listing this one, at 846 square feet, at $31,000. I’m telling you right now, I think this place should go for about $3,000 less. It is HUD-owned, so they have a different bidding process. I can help you with that. But if this is your first property, you can’t beat the price. Your monthly costs would be less than $500, assuming you are paying a loan back to your uncle Albert. (You are not likely to get a home loan for this low, so these are cash deals only.)

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

The Arizona Republic reported this morning that housing prices are due to drop again by 10%; such that they could be cheaper next summer than they are today.

Now, I can’t read tea leaves any more than Lady GaGa would be seen wearing a polyester polo shirt from WalMart.

But there are parts of this story that you should, you know, take with a grain of salt the size of a BP oil spill.

Here is why:

#1. Using nation-wide statistics and applying them to Phoenix is like saying that the average elevation in Phoenix is 3,000 feet because that is the national average. (Note: I don’t know if there actually is a national elevation average, but you get my point.)

#2. This is not the first time that I’ve seen this narrative from the Arizona Republic. In fact, you can pretty much count on seeing an article in the next couple weeks hinting at how there might be a rebound. You know, when I was younger I had a friend who’s dog got so excited every time we came over he could not decide whether to run around or eat his food. So, he spent a half an hour trying to do both. Kinda reminds me of this.

#3. They cite Mike Orr of the Cromford Report, whom I respect as an analyst, saying that prices will go down in August. I think that is probably true. But did you notice how they jump from Mike’s very local and specific analysis of one month ahead, to Moody’s very speculative analysis of next year’s prices in other cities?

#4. CenPho is not Vegas. While I work all over the valley, you know that I spend most of my time on historic neighborhoods in the central corridor. I am not seeing the same trends here that you see elsewhere. CenPho is marked by people who want to get out of the suburbs and experience a more diverse and interactive lifestyle. The price of fuel will continue to go up and people are preparing for that and choosing to live closer to work. So, this article should not lump every community together.

#5. The article says that 13% of mortgages nation-wide are late by one payment. That may be true. I don’t know. But they don’t discount how many of those folks will find work by next year and they present a worst case scenario.  I don’t know about you, but when I’m making decisions, I want to know a range of likely outcomes.

So, I don’t know what will happen 6 months from now any more than these folks do. But what I can see is that more people are calling me every day wanting to find a house. They recognize that prices are still historically low, rates are under 5% in most cases and houses are not staying on the market very long.

On thing to keep in mind: buying a house is not like playing the stock market. Don’t buy if you just want to sell tomorrow. Buy because you need a place to live and you want to build equity over time.

If you think you will stay in Phoenix for the next three years, then I would definitely feel confident that you can buy something now and probably be able to sell such that you “pay yourself rent.” Prices are so low now that the likelihood of prices going up is much greater than what Chicken Little is telling us.

There has been a lot of talk recently about how short sales are getting closed with greater success. The data is mixed on that.

On the whole: if you are buying a home on and considering making an offer on a short sale, talk with me first. The speed of your closing depends on who is selling, who is lending and what paperwork they have completed already. It is best to build a strategy around approaching the sale.

Now, on to the data.

Below is the standard market distress dashboard put out the the Cromford Report. On the left, you see active listing; those that are still on the market. On the left you see that 44% percent of the market that are short sales (“pre-foreclosures”). The average sale price is $84.64 per square foot.

On the right you see what is actually closing and at how much. Only 24% of closings are short sales and they are averaging $81.74 per square foot.

I find it interesting that some folks think short sales are such a great deal, but notice that foreclosed properties are actually cheaper. Yep, they are harder to find, but I’ve noticed something in my clients: while we are waiting for the short sale to close, they many times see a foreclosed property that they would rather have.

So, bear with me a little more as I geek out on the speed at which short sales are selling, and the price. See the chart below and compare today’s information with the column for last year. The active listings, and sales per month are all up. In the case of sales, they are double. Look further down the chart and see that the sold price per square foot is actually down from last year.

So, what is happening here? Well, the listing agents who are listing the short sales are getting better at negotiating the banks’ processes. The banks are getting better at clearing the short sales and they are more likely to negotiate a lower price. Even the time needed to close (days on market) has come down.

All of this points to one conclusion: short sales are worth the risk if your agent (me, hopefully) can get a good sense of the players in the deal and whether they are likely to close on time. I can help you with this analysis. Call me at 602-456-9388.

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.

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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.