Just because I’m a Realtor®, does not mean that I am willing to go along with everything the State or National Associations of Realtors says.

Typically, in Arizona, they have attempted to undermine rights residential users of solar energy. Nationally, they don’t typically support environmental laws that I support.

But I am ready to step out and say that we should not extend the $8,000 tax credit past the November 30th deadline. This is sacrilegious to some. Aren’t I undermining my own business? Aren’t I preventing people from buying houses?

Well, my personal business is not as important as the fate of the country. The program has cost the country $15 billion. The National Association of Realtors wants to increase the credit to $15,000 and remove the first time home buyer restriction. It will cost the general fund between $50 and $100 billion. And, over time, we will find all kinds of loopholes, so that will only grow.

We are looking at a bankruptcy of Medicare and Social Security on the horizon, and we are supposed to expand this program? Unacceptable.

As for preventing people from buying houses, I simply don’t accept that the market will dry up.  We have record low home prices in America. The market will do better as the rest of the economy recovers. Further, banks still have many, many foreclosed homes that they have not released into the market (over 40,000 in Arizona). While we don’t want them to release them all at once, a steady stream of homes on the market can keep prices down.

For me, it is a simple equation: we needed the boost in the housing market, but it is not worth creating a permanent new hand-out when the result will just add to our staggering deficit and debt.

Now, here is another idea for you to ponder. It might be high time that we eliminate the tax deduction on the interest on your home. Or, at least we need to replace it with something that is more geared toward new home ownership. Now, that is sacrilege! I’m trying to find the article in my stack of old magazines. It was either in the Atlantic Monthly or the Economist, but this is not a new argument.

It goes like this: the interest deduction encourages people to buy houses that are unrealistically large for their income, it encourages sprawl, it is a huge drain on our general fund when we can’t afford it and it is used by people for second homes. Heck, my parents take an interest deduction on their stinkin’ RV because it is a second home!

Really? You gotta squint really hard and look sideways to call an RV a second home.

Regardless, if the goal is to get first time home buyers in to a home so that they can become stable, why give a credit for a second home? Why not offer a one-time $15,000 tax credit for your first home. After that, you are on your own.

I’ll find that article and link to it. This it a very touchy topic, so I’d love to see some debate on it.

As for this topic, check out a very good article on the issue, here.

You might recall from my previous post about anti-deficiency, that Arizona was just about to find itself in a baaaad place for home owners. Here is the recap:

• Arizona is traditionally an anti-deficiency state. I.e., if the bank takes back your property and sells it at a loss, they can’t come after you for the difference.

• A legislator (Republican Senator Steve Pierce, R-Prescott) attempted to change that law so that people who lost their homes to the banks within 6 months of purchasing (presumably investors), could be pursued by the banks.

Problem: it would have encouraged 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, were successful in moving legislation to overturn the original bill  –with the help of the original author, who should consider thinking through legislation in the future.

Moral of the story:

1. Lawmakers need to think through things a little more thoroughly;

2. The AAR lobbyists might have been a little too busy helping the home builders undermine local cities’ ability to collect impact fees or improve energy efficiency of homes to catch this one early.

I’m just sayin’.

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

Way back in March or April, I went to a seminar on how the city was going to use the $39 million in neighborhood stabilization grant money from the feds to help people purchase foreclosed property. One could get $15,000 toward a home.

The general feeling in the room was that the program was far too complicated for most people to take advantage.

That concern has been born out. See this post from the city. It has taken them since March to get one person through the process and another 60 qualified.

Don’t you get the sense that they could have done that a little differently?

If you are putting off  purchasing a home because you are afraid that there might be changes at your job (layoffs, relocation, etc.), there might be an answer in Nova Home Loan’s Safe House Mortgage Protection Plan.

I work with a lot of different brokers. Others may have this, as well. But this is good to know.

Here are the features:

• If you lose your job, they will cover as much as 24 months of your mortgage (up to $1,800 per month). 12 months if you purchase the plan if when you are just refinancing a loan.
• You start the plan when you close on the house or complete the refinance.
• Cost = $770 on a purchase and $595 on a refinance. (You can pay this at close of escrow and maybe work it in to the closing costs that the seller pays!)

Eligibility:

• Ages 18-66
• Must reside in the US.
• Cannot be self-employed.
• Must be employed a minimum of 30hrs per week at time of close.

There are more details here. So, have a look. It might be something that could give you the piece of mind to move ahead and get a house in phoenix now, while you can still get the $8,000 tax credit!

Here is a news article about it.

Or, call Jeannie Bolger at Nova Home Loans at jeannieb@novahomeloans.com.

The Case-Shiller Index is going to come out tomorrow and tell us that home prices are on the rise.

See and article here.

Of course, I’ve been telling you about this since March of this year. We saw it coming because we see the numbers, direct from the multi-listing service (MLS). Here is an oft-repeated graph from the Cromford Report:

Here are some things to remember:

1) Reports like this are always 3-5 months behind because the people who report them want several months behind them before they feel comfortable making any statements, even if the triggering event happened 4 months ago!

2) Prices are not going to rocket up like they did from 2005-2007. The economy is just not that strong. So, today’s market is much like it was in 2001-2003.  It is still a great time to buy.

3) Stratify the market. Homes on the market sell faster the cheaper they are. A $100,000 home that is a foreclosure is going to sell in a matter of days or weeks. A $300,000 traditional sale may stay on for a few months. However, the over-all market is very close to equilibrium, which means homes sell in about 5 months. Homes over $1 million have an “absorption rate” of 848 days!

4) The Case-Shiller Index looks at the market nation-wide. Every market is different. Stay tuned for the best local information.

The economy seems to be making those little signs that indicate some kind of recovery. Whether it will be like a man coming out of a coma or a volcano erupting is yet to be seen.

But, here are two stories that illustrate how recovery happens: when prices get so low that investors and consumers can’t help but get back in the market.

First, from the Arizona Republic, this article illustrates how developers have started building homes out in the burbs again. However, instead, this time they are doing it more cheaply because they are building homes where previous builders had to abandon ship.

Okay, set aside for a second what a bad idea it is to keep sprawling out in the desert. Also set aside just what a negative influence some developers are on the state. In my experience when I was in the Energy Office, they resisted all attempts to make more energy efficient homes and are currently going to far as to trying to undermine local ordinances that require more energy efficiency.

But, aside from that, this activity is a really good indicator of how the market is moving. First they make money on the cheapest property. Then they move on to scraping new land, etc.

Obviously these builders are watching the existing home market and are seeing that the current inventory will exhaust soon. We had an inventory of over 56,200 homes  last November. Now we are down to 31,400 homes, with a monthly sales rate of over 9,000 per month.  These guys know that it won’t be long before people are looking for new homes.

Obviously, I would like to see more incentives for smart in-fill. But I don’t expect to see that soon.

Second, the rage of multiple offers indicates where we are headed. Check out this article from Inman News.

Five months ago, you could low-ball an offer for a home. But not now. If the home is at all good looking and well-priced, you can expect to see multiple offers within 48 hours. I don’t know for certain, but I don’t think as many of those are full-cash offers because prices have gone up. But, they are definitely more aggressive.

So, this is a turning  point. A few months ago I told you how the prices started going up (the second week of April) for homes under $200,000. Now, you are seeing multiple offers on those lower-priced homes. Next you will see quicker sales on homes over $200,000.

It begs the question of whether we need another $8,000 tax credit package next year.

If one is to believe that there are a whole bunch more foreclosures coming down the pipe, then we might need that. However, I think talk of a second wave are over-rated. There certainly are more short sales on the market, but only proportionally. They are not moving and the banks don’t seem to be interested in moving them all in to foreclosure all at once.

My colleague, Leif Swanson, publishes market stats for the Phoenix metro area once per month. Have a look here to see them thar updates.

Here is the Cliff’s Notes Version:

1) It is now a seller’s market in Phoenix! The inventory of homes in July 2009 was 4.2 months.  It was much better than July 2008’s absorption rate of 9.1 months, but a small bit higher than June 2009’s 4.1 months.  (Absorption rate = the # of months’ inventory available for sale.) A balanced buyer-seller market is six months.  The absorption rate in July 2009: 3.8 months for homes, 6.7 months for condos, and almost 14 months for manufactured homes.  Therefore, it is now a seller’s market for homes in the Phoenix metropolitan area.

2) Sales of homes in July did not go up from June. However, both months saw a 52% increase of home sales (about 9,000 homes) over last year (about 5,900 homes).

3)  Bank-owned foreclosure properties accounted for 53.3% of the sales in July 2009 down from June 2009’s 57.4% and May 2009’s 63.1%.  More and more buyers are purchasing homes from regular sellers.  While nearly 36% of the total sales in July 2009 were cash, 33% of the sales were with FHA or VA financing.

4) The average sales price in July 2009 increased for the FOURTH CONSECUTIVE MONTH to $175,345.

There is plenty more to geek out on in Leif’s report. He always does a thorough job in his report.

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.

The City of Phoenix today announced that Entrepreneur.com named out little town as one of the top ten best places in America to start a new business.

Like Las Vegas, some of this has to do with the very cheap rents that resulted from the commercial real estate market crash and the very low home ownership costs right now. See the article here.

But in poking around on that article, they had a very nice series on how to start your own business. This would have come in handy! Why didn’t anybody tell me that I should have done a logo first, before I started selling homes?

Still, useful…