Here’s a good article about the role that home appraisers had in the housing bubble.

The problem I’m having as an agent is that the appraisals are coming in much lower the the price the buyers and sellters agreed to, and much lower than the comps that I find in the area.

We are not allowed to communicate with the appraisers, which is a good thing. We should not be able to so that we can have an impartial perspective and eliminate corruptions in the market.

However, right now, appraisers seem to be viewing the market as it was 6 months ago, not they way things are moving up and moving quickly right now.

In the last three months, I negotiated three closings in which the appraisals came in at least 12% lower than the agreed price. Luckily, I got the sellers to reduce their prices after much effort and saved my clients money.

It’s been a few months since I’ve just laid out the market conditions in the Phoenix market.

Overall:

1) Prices are still slowly increasing, probably because the tax credit was extended.

2) Sales volume is still high, even though volume typically falls off around the holidays.

3) Watch for prices to climb upward faster starting in January as people start looking in greater numbers.

Conclusion: Prices are going up, but we are still at the lowest point for picking up a property. If you are looking to sell, wait just a little longer or expect to price aggressively.

Exhibit A: Monthly average sales prices have been going up since April. We are now above the lowest point from 2008. While that was a harrowing year and nobody wants to be compared to it, we can at least feel like we are going the right direction. Prices will continue to climb as people take advantage of the extended tax credit.

Exhibit B: Months Supply. This is a measure of how long it would take to sell the current homes on the market today at current monthly sales rates. This is very interesting. The months supply decreased near the beginning of the year as people started to scramble for the cheapest prices ever (April). But it has not gone down any further, I suspect because the banks have figured out how to slowly and methodically release foreclosed homes so that they don’t flood the market. I suspect that this will stay relatively the same through next summer.

Exhibit C: Sales Per Month. Notice how the sales per month are higher than the last two years, still. So, fears that the market would be flooded with more foreclosures never materialized and we just keep selling at a good clip. Check out how sales volume goes up after October, when volume usually slows, thanks to the tax  credit and low prices. Add to this that banks are getting better at processing short sales and people are closing quicker.

Here are three articles that, together, point to the trend downtown.

1) Downtown is the Real Deal. OK. This is an opinion piece, but it really speaks to the fact that there is a general perception of progress, despite the economic downturn. Oh, and they mention the Urban Grocery and Wine bar of which I am a fan!

2) New Nursing College Building Opens in Downtown Phoenix. A new 84,000 square foot building in downtown, serving thousands of students means that ASU is progressing on plans that they set in motion before the economic crash.

3) More Students are Flooding in to Downtown. Slightly more than 7,000 students took at least one class downtown this fall, up from 4,963 in fall 2008.

So, if you are thinking about investing in real estate for a business or a home, CenPho, in my opinion is the safest place to be in Arizona. It is beyond safe with prices this low. It is a smart move.

But, beyond the real estate side of things. Feel free to invest in the human capitol, as well. We aren’t going anywhere!

I want to share this great post with you (especially all of you who tell me that prices are still going down). This is unashamedly lifted directly from the John Hall web site because I think they explain it best:

How can some experts say Phoenix home values are going up and others say they are going down?

Don’t answer that…yet.  First we need to remove some variables.

Let’s pull out the possibility that we’re talking about two different markets – like nationally vs locally.  For this question we’ll only analyze the Greater Phoenix real estate market.

We also need to remove the possibility that we’re looking at different data sets – like townhouses vs single family homes.  So let’s look at the exact same data – from the exact same system – filtered almost identically.

Next we want to make sure both statements are from similarly educated individuals.  I tell you what, to remove all doubt – I’ll say them both.  Home values in Phoenix are going up.  Home values in Phoenix are going down.

Now that we’ve removed said variables – which statement is more correct?

Uno momento – real quick let me show you a couple of charts from the Cromford Report to help you get the more correct answer.

Here is a chart showing the annual median price of homes sold in greater Phoenix.

Prices are going down-right?  This next chart is showing the monthly median price of homes sold in greater Phoenix.

Prices are going up!!  It’s hard to see the exact numbers, but hopefully you can make out the trends.  If you only look at the top chart (Annual Median) it would be correct to say values are coming down.

However, if you look at the second chart (aka monthly median).  You can see that values bottomed in April and have been bumping along since.

You might recall that I wrote about anti-deficiency a couple months ago.

It is a dry topic, but incredibly important to the market in Arizona. Had the law stuck, we would have seen a huge disruption in the sale of homes through the end of the year. Well, here’s the latest.

The House of Representatives passed SB 1004, the anti-deficiency fix, on November 23rd in a special session with a vote of 53-0. SB 1004 included the repeal and replacement of ARS§ 33-814 essentially returning the statute to its original status prior to the passage of SB 1271. With this fix, Arizona will continue to operate as a deed of trust state with the protections that have been in existence since 1971.

SB 1004 did pass both the Arizona State Senate and House of Representatives with an emergency clause, and it will go into effect upon Governor Brewer’s signature.

The Arizona Association of Realtors promises to continue to work on language to address “speculative builders” in the upcoming session in order to resolve this issue entirely.

Of course, it begs the question of where they were when all of this originally happened!

Check out this news, below, tracking the enrollment downtown.

After only four years, ASU downtown is up to 11,503 students. They are expecting upwards of 20,000 by 2012.

I am thrilled. Downtown students tend to be serious students and graduate students. These folks, along with faculty and staff, are going to make up the neighborhoods around downtown.

For those of us in Garfield, I think this is great. I think it means that we are going to have a vibrant community of people who are engaged as home owners or land lords. I think it will result if homes being renovated and people being active in the neighborhood.

It is a great time to invest in Garfield as the next campus community.

I’d love to hear your thoughts on it all.

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There were an astounding 8,000 closings in October 2009. That’s 50% above last year.

Didn’t I predict this buying spree six months ago? (Say “yes.”)

Expect even more closings in November, as everybody races for the tax credit.

Notice also that there is a greater trend toward short sales over foreclosures.  The percent of foreclosures continues to drop both as Closed transactions (44%) and in the Pending category (35%). 25% of the active listings were short sales. 31% of the pending sales were short sales.

Unlike a few months ago when short sales were active, but did not close, we are averaging 20% closed. Further, short sales are staying on the market for less time. So, the banks are doing better at processing them.

The price numbers are continuing to ‘bump around’ with no consistent trend line. October’s Average Sales price was down about $4000 to $171,000 and the Median Sales price was down $2000 to $128,000. Both of these numbers are considerably above the yearly lows of $159,000 and $115,000 respectively, but the Average has been up and down for the past 4 months, with the Median down for the first time since April.

What does all of this mean?

It means that everybody is rushing so hard for the tax credit that they are buying whatever they can.

What does it mean if you want to buy?

It means that you should try to buy during the holidays when everybody else has either already captured the tax credit, or has given up. The holidays usually see less activity, so that might increase your power as a buyer.

Please give me a holler if I can help you with more market analysis.

Data compiled from report by my broker, Jim Sexton of John Hall and Associates.

You might have seen my previous post on this topic of the potential of the $8,000 tax credit.

The National Association of Realtors wants Congress to extend and expand the $8,000 tax credit. Now it will not only be for first time home buyers, but everybody.

As an agent, I would continue to do everything I can to get my clients this credit if it remains in effect.

However, I believe that the cost to the country (over $200 billion) is not necessary. Further, I believe that this could encourage more unrealistic upward pressure on home prices –something that got us in to this mess.

I think the expectation is that the housing market will drive the economy. That is questionable when the commercial real estate market is tanking.  I believe that there will be an imbalance as people obligate themselves to new homes while unemployment might continue to rise and the commercial real estate market might result in more lay-offs.

The result could be many more people buying houses that they cannot afford.

This recovery needs to be driven, not by real estate, but by investment in infrastructure, energy and technology.

For your information, here is the National Association of Realtors Call to Action. I have called and told the Senators and Rep. Mitchell that I do not want to see the extension.

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Dear Arizona REALTOR:

The U.S. Senate will be voting on an amendment this week that would extend the first-time homebuyer tax credit.

NAR is supporting the Dodd-Lieberman-Isakson amendment because this amendment will:

–Provide the $8,000 tax credit to any buyer (not just first time)
–Set income limits at $150,000/$300,000 for single/married buyers
–Make the credit available until June 30, 2010

NAR’s Legislative talking points on the Dodd-Lieberman-Isakson Amendment $8,000 Homebuyer Tax Credit also are attached for your use.

NAR is asking for your help in generating phone calls from Arizona REALTORS to the offices of Senator McCain and Senator Kyl in Washington, DC.

Please request to speak to each Senator’s Tax Legislative Assistant and ask them to support the Dodd-Lieberman-Isakson amendment. We need to generate as many calls as quickly as possible.  Below are the phone numbers for our Senators.

Senator McCain:   202-224-2235
Senator Kyl:       202-224-4521

Thank you for your prompt response on this important issue!

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.