We were not certain that The Mortgage Forgiveness Debt Relief Act of 2007 was going to survive into 2013, regardless of the much ballyhooed fiscal cliff. The Debt Relief Act simply says that you will not pay taxes on the amount of debt you are forgiven if you short sell or foreclose on a home. 

The 11th hour congressional extension means homeowners will not have to pay taxes on forgiven mortgage debt from short sales or loan modifications until 2014. The Relief Act was set to expire December 31, 2012.

Without the tax break, a homeowners forgiven debt could be considered taxable income.

“Housing advocates and lawmakers [were] worried that the exemption [would] disappear just as thousands of homeowners [were] receiving large amounts of mortgage debt relief from the nation’s five largest banks as part of a national settlement of foreclosure abuse investigations.” ~ Jim Puzzanghera, Chicago Tribune

The five big banks the reporter for the Tribune is referring to are Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. As of September 20 last year, the article goes on to say, “Nearly 140,000 homeowners received some type of relief under the settlement, averaging about $76,615 each.”

As we are all well aware, homes today are worth much less than what they were purchased for in the housing bubble. By reducing the value of a troubled mortgage to the current value of a house, banks are frequently able to save themselves money. If the tax break had not been extended, any mortgage debts a bank forgave would then be counted as taxable income. In other words, if a $350,000 mortgage were reduced by the bank to a then current value of $250,000, the happy homeowner would suddenly become the proud owner of a $100,000 income tax bill.

“As a result, a homeowner struggling to pay the bills would be faced with tens of thousands of dollars in taxes. That would destroy any hope of establishing future mortgage debt relief for troubled homeowners, as any bank leniency would result in heavy tax trauma for borrowers.” ~ Zach Carter, The Huggington Post

According to CNN/Money, over 50,000 families lose their homes to foreclosure every month.

A sigh of relief is in order. Whew.

Here is the important take-away: Take advantage of this fiscal-cliff debt relief tax extension…now…while the next 12 months are still in play. Give me a call or drop me an email. I will absolutely sell your home, even if it is short sale.

Choosing an agent is a very personal decision. 

Let’s grab a cup-o-coffee, I’ll explain the Get Your PHX Method and you can see if I’m the right agent for you. Try before you buy!

In part 3, I shared my experiences with my physical visit to Desert Schools Federal Credit Union. I ended just when I was about to talk about their Health Savings Account. As both Desert Schools and Arizona Federal Credit Union offer this package, I thought I’d size up the two choices on this note, follow it with my review of Arizona Federal, then see if you would choose the same one I will.

Health Savings Account. These types of accounts came into effect under George Bush II, in what I see as an ineffective attempt to control health costs. The way it works is if you self-insure (a lot of small businesses, for example, get their own insurance), you can open a Health Savings Account. By doing this, you’re in insurance rates are lower, your deductibles are higher, but you’re allowed to open a savings account that earns money tax-free. When you spend money on your healthcare out of that account, you get to deduct it on your taxes. If you are self-insured under the Health Savings Plan, you have to have a Health Savings Account to go with it.

With the national banks, you can’t toggle from your online account over to your health savings account, without going through a third-party “firewall” of sorts, a completely different site where you must login from there. They keep the Health Savings Account very separate from your other accounts.

At both of these credit unions, your Health Savings Accounts are integrated. This makes it so much easier. Part of the reason for having health savings account, is that you want to be putting money aside every month into the account. Because the credit unions make that easier to do, I’m much more likely to set aside money for that purpose. Any financial advisor will tell you that you need to be socking away money every month that goes somewhere that you don’t touch specifically for the kind of health emergencies one doesn’t anticipate.

For Desert Schools Federal Credit Union’s local investment, they were good. They had a nice long list of groups they give money to that are Arizona-based. That’s very good. For example, they support United Way and BALST School District (one of the underprivileged school districts where we need to get kids into a better situation).

Arizona Central Credit Union

They have 50 valley locations. I went to the branch on Central Avenue and Palm Lane. They do have a drive-up ATM there, but no teller window. I didn’t get a chance to look at their online demo, because, like Desert Schools, they don’t have one– and because no one offered me a peek at their own personal account. Of course, I didn’t ask. I did ask if they had an online demo and they said, “No. For one, we just updated our system, but also, nobody ever really asks about that.”

Bill pay for them is not always free. I don’t remember the conditions under which that’s the case, but I think it’s related to account balances. For security, they use Alert Me Credit Monitoring Service.

I was less impressed with their customer service. My hold time on the phone, just waiting for someone to pick up at the branch, was 15 minutes. The next day, I physically went into the branch, not so much because I was ready to do that, but because I didn’t get anywhere on the phone. So I walked into the Arizona Central Credit Union (ACCU), kind of just waited around for a while, and then someone said, “If you just have a seat over there somewhere, someone will be over to help you.” It felt to me like they didn’t really care that I was there.

That’s two red flags. One on the phone. One in person. If it weren’t for the fact that I was also planning to write this post, I’d have bailed on Arizona Central Credit Union right there. If I were to treat my perspective clients like that, I’d never sell any homes. I expect the same level of service from people who want to hold on to my money.

Again, from the perspective of the small business (and the biggest selling point that credit unions should have over mega-banks), I’m making this shift for the personal touches of knowing consistently who I’m talking with at the bank. ACCU failed on this point.

Their personal accounts were pretty much the same as Desert Schools Federal Credit Union. I was not impressed by what had to be done in order to get free checking, though. Their minimum balances seemed really high to me. It just bugs the Dickens out of me that people want to hold on to my money (to earn interest on it) and they’re still charging me fees. Their fee structure for business accounts was a minimum of $1500. This was the same at Desert Schools. Nothing significant was different in the way they structure savings accounts as well. They also have the Health Savings Account, with no monthly fees, and it’s integrated into their website. Local Investment for them was also a healthy list. One of them was International Rescue Committee, which I like.

The last thing I want to review for Desert Schools and Arizona Federal Credit Union, before I make a decision between the the two, is Brokerage Accounts. That’s the first thing I’ll talk about in the next installment of my six-part series on the process of selecting a credit union. Until then!

Welcome to part 3 of my investigation into the wisdom and practicality of making the switch to credit unions from my current national bank at JPWellsComeriBank.

In part 2, I narrowed it down from 10 to two Credit Unions worth serious consideration:

Desert Schools Federal Credit Union and Arizona Central Credit Union.

I’m starting with Desert Schools Federal Credit Union, but there is a significant amount of overlapping, so you’ll want to read this first one, first, or you’ll miss out on a good portion of both reviews.

Desert Schools Federal Credit Union

They have 56 valley locations. I went to the one on Missouri and 7th Street, by the Buffalo Exchange. They were very nice. I asked if they had a demo of their online system. They did not have one. A woman at another desk said, “You can look at my account”. I was surprised that she was willing to share her personal information and resisted at first, but I saw that it works about the same as the accounts at my current national bank, though it’s not as pretty or intuitive. JPWellsComeriBank spends a lot more money on their customer website account interface.

Both Desert Schools Federal Credit Union and Arizona Central Credit Union have mobile apps, but neither of them have the app feature where you can take a picture of your check and deposit it through your phone. Now, that’s not something I need at present, but it’s worth knowing. Because as soon as they do come out with that feature, you better believe I’ll take advantage of it, especially given the small number of physical locations compared to the larger, national banks.

Bill Pay, for all of their different checking account types, except for one that is set up for kids, is always free with Desert Schools Federal Credit Union. I was impressed with that. You can also see copies of your checks for free. The national banks charge for that. This credit union also interfaces with Quicken.

This part is the most important for a small business like mine, and in fact, it was one of the reasons I hesitated moving away from the megabank I’ve been with. In the end, I’ve seen that I really had nothing to worry about. I’m sure the megabanks are happy to feed the fear that credit unions won’t be able to provide the same on-line services.

Withdrawals from non-credit union banks are free for the first four and $2 after that. But there is a workaround to those non-specific-institution charges; one that is often utilized by people, but never openly promoted (and for obvious reasons): make a cash withdrawal when making a purchase at a supermarket. This method also suggests a way around any maximum per day ATM withdrawal amount.

For security on their credit/debit cards, they use Visa Fraud Monitoring. That seems pretty good to me. The woman I spoke with at the bank said that Desert Schools Federal Credit Union has never had their information hacked or stolen.

Regarding their customer service:  when I first walked into the bank, I was greeted after a couple of minutes and the woman who assisted me was very helpful. I didn’t tell her that I was preparing to write this blog post, but she was very surprised at the number of questions I asked.

What I noticed at both of these credit unions, if you wanted to have both free checking and a minimum balance, they required you to do a certain number of credit charges. What they mean by “credit charges” is that they require a certain number of charges to be run as credit, as opposed to running them as debit. I thought that was really interesting. I had never seen that before. I later talked to a local merchant who explained that banks get a higer percentage per charge if it’s run as credit, as apposed to debit. In the end, it doesn’t really matter to me whether I sign for it as a “credit” charge or use my pin as a “debit”. The money comes out of my account the same way.

$7 dollars a month is what you pay for their personal checking account, unless you have a balance over $1500, in which case it’s free. With both credit unions, you must have a savings account (with a minimum $25 balance) along with your checking account. This is their gateway to becoming a member of the credit union. That makes sense, because then you have voting rights as a member (remember, Credit Unions are, by definition, member-based institutions). Also, both credit unions do not require automatic savings withdrawals every month, unlike the national banks all do. This is great.

In next week’s post, I’ll cover Health Savings Accounts at Desert Schools Federal Credit Union and share my experiences at Arizona Federal Credit Union. I’ll then chose one and see if you can figure out why I chose it.

To see the next installment, click here.

While some of you will understand instantly what this post’s subject title means, others will get lost along the way if we don’t clarify some road signs.

That ‘FHA Anti-Flipping Rule Waiver’ stop sign is good through ‘Dec 31, 2012’. No California-stops, please. Thank you.

Before moving forward, let’s make sure we all understand the legal definition of “Property Flipping”:

A practice whereby a property recently acquired is resold for a considerable profit with an artificially inflated value.” ~ Housing and Urban Development / Fair Housing Administration (HUD/FSA)

(And for those who think flipping requires anything less than deep pockets and lots of hard work, the creator and star of A&E’s reality show, “Flip This House” has some great insight into the inevitable question: Is house-flipping as easy as it looks on TV?)

The stop sign was put in on February 1, 2010 by HUD/FHA. Before that, there was one of these:

What that meant was that prior to the February 1, 2010, HUD/FHA didn’t allow a home buyer to use an FHA loan when purchasing a home from an investor who bought the home, did repairs and renovations, then listed it for sale within ninety days of the original acquisition date. If you were a buyer with an FHA loan, you had to wait until the 91st day to make an offer on a flipped home sold by an investor.

This prompted investors to stay away from HUD owned homes, which had the kind of negative effects we’ve all seen with REO’s (bank owned homes) being abandoned for long periods of time, leading to vandalism, squatters, and reflecting poorly on the surrounding community. The rule was originally supposed to expire in Feb 2010, but with so many houses distressed and foreclosed the FHA waived the rule (video) to encourage home buying until Dec 31, 2012.

Because of the FHA 90-day flip waiver extension (full PDF guidelines), investors can now accept offers from FHA buyers within the first 90 days.

This has been an important extension because the goal of ‘house flipping’ is (of course) to sell the home as fast as possible and for as much as possible. This helps to stabilize home prices by allowing home investors to purchase HUD or bank-owned houses and sell them quicker, raise housing prices faster, removing all the negative effects of abandoned homes, and therefore turn the housing market around sooner.

Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.” ~ HUD.gov

Come Jan 1, 2013…

What lies ahead for the U.S. Housing Market…?

What about closer to home, say Central Phoenix? I’ve been writing about that very thing over the last couple months in my series ‘Get Your PHX Market Briefing’ based on my expertise in this area and with invaluable input from Mike Orr at The Cromford Report.

If you would like to be part of a future ‘Get Your PHX Market Briefing’, please contact me at 602-456-9388 or feel free to email me.

We found out in part 2 that While Prices Are Rising in Central Phoenix in 2012, they’ve risen most dramatically under $150,000. The high end properties of $800,000 and upwards have increased in price, but not nearly as dramatically. (Before I jump-in, I want to again recognize Mike Orr and Tina Tamboer for allowing me to share their work from the Cromford Report which is mixed in with my take that follows.)

The monthly average price per square foot in greater Phoenix in this chart to the left is very broad. Obviously, not every home is going to be at $100 per square foot, especially in central Phoenix.

Jump your eyes down to this little blue square in the center of the next chart, which will come up later.

 I’m going to be putting everything into the historical context of that square, which is Non-Distressed homes between 2005 and mid-2009 for Single Family Residences in Maricopa County.

In this next chart, below, which shows the price per square foot from 2001 to Aug 2012, try to ignore the $190 Close Encounters peak  and take a look at the far left line. That’s the 2001 price lines. They were basically at about $100/sf at that time. Again, this is for the greater Phoenix average per square foot.

Based on that, here’s my rule of thumb: “Did you buy your home around 2001 or 2002 or before that?” You’re probably going to be okay to sell now, because you’ve survived the worst of it. If you’re thinking, “Gosh, I could really sell my home now”, or if you know someone who’s thinking that, make sure you both take a look at your specific area, before making the leap.

I know. What a relief.

Do we want to get back to over $190 per square foot, to that place where the UFO’s are landing on our mountain of Devil’s Peak? Heck no, not anytime soon. What this long-term context tells you is we do have a little bit of ways to go still. This is a great way to look at this to tell whether people are potentially underwater or those who are likely to be okay.

Next up: Median Sales Price.

We’re back to the little blue square I mentioned earlier: people who are potentially undewater from the 2005 to mid 2009 range.

When you take this median sales price, for single-family homes, all the way across the board, you can see it’s pretty obvious that during those years, for those people who are non-distressed (which is when we saw the big bubble and crash) these are the people who have not sold yet.

They’re potentially underwater, we don’t know for sure, but they’re not considered distressed or late on their payments.

So what’s going to happen with all of those? Are they suddenly going to find themselves in the market? Say, a year from now, when the prices get a little bit better for some of those people?

That’s going to be something that you’re going to want to watch.

I love this next particular chart. This tells you how much growth we have and how much potential you have if you happen to be an investor.

The long-term timeline with just general growth, year over year, (taking into account population, prices) is going to keep up at a regular pace.

This is a kind of equilibrium with a pretty good number of houses for sale that people will want to buy. This long distance in this chart is great because however long it takes us to reach that point, there’s still the potential for you to either buy something as an investment, and get some return on that investment, or buy a home and know that you didn’t buy it above what it should be worth.

Next, let’s look at greater Phoenix wide and then we’ll drill down closer into some specific zip codes. This is encouraging stuff. Okay, so look at this section listed as under $200,000.

Look at the price and notice that price per square foot has gone up 33% since August 2011. That’s citywide.

Now hop down to the next chart and look at the similar thing for greater Phoenix, between $200,000 and $500,000.

Drill down between $200,000 and $300,000, for just these zip codes, look at this huge 14% growth!

This speaks to a premise  that I’ve been pushing for a very long time: in central Phoenix, especially around the light rail and historic neighborhoods, prices dropped the least and will come back the fastest.

This is something to keep in mind as density continues.

And $500,000 and $800,000, in the same areas in the same zip code?

Look at this 18% growth!

That’s from the lowest point to where we are right now, that’s a good place to stay.

$800,000-$1 million? See below: The growth is 5%. Again, that’s in the Camelback corridor area.

“Under Contract” homes is what this next chart is all about. We’ll end today’s brief on this. It offers a lot of insight.

If a house is under contract, you don’t know the price at which the house is under contract for. It’s private information. Let’s say you go to the multiple listing service and look at the sales price of the house and its $200,000. The next day, it says it’s “pending”. It still says $200,000 but that property could have a contract for $215,000 or $190,000. You just don’t know.

But MLS does because agents must report it

It’s in the system. They can’t tell you what it is. But they can report an aggregate.

So when you hear “Under contract. Legally average list price per square foot.” That means that on this date, 10/1/12, everything under contract was under contract for an average of $93.88 per square foot.

Those hosues aren’t going to close for 30 days, though. So, when you look at this chart and see that right now it’s $93.88 per square foot, that’s the amount that is going to be realized, most likely, in the market 30 or 40 days from now.

If you’re following this chart and you suddenly see this line turn a different direction, you have a very good indication that 30 days from now, that may be what the market is going to start to look like.

That’s as much of a crystal ball, as I think you are ever going to see.

The thing that’s impacting all of these numbers, especially in places like the Camelback corridor, and those other zip codes, is new-home sales recorded, as in “What are the homebuilders doing?”

Great Question. In part 4 of our Get Your Phx Market Briefing, we’ll find out that very thing…

Let me start out by saying that this investigation into credit unions may not take as long as I originally thought in part 1.  Just doing Internet searches, I found 10 in Phoenix metro. My criterion to narrow it down from there was simple geography: the proximity to Central Phoenix and the number of their locations. I did this via the most important investigative step: I found them all on the Local First Arizona website.  Reviewing those I narrowed them down from five to settle on three (the links that follow are to their reviews on Local First): Arizona Central Credit Union, Desert Schools Federal Credit Union, and Marisol Federal Credit Union.

I did all of this before I contacted any of the Credit Unions in person.

I then narrowed it down from three, to two, because Marisol Federal Credit Union wouldn’t pick up their phone. That’s a big deal when it comes to a bank. Before I called, I looked at their website and saw that in order to avoid fees on their accounts, the minimum balance was pretty high. I wouldn’t really save anything compared to my existing account at JPWellsComeriBank in that area. Conclusion: Marisol was out of the running.

I didn’t just pick up the phone, though, and start calling the three before I narrowed it down to two. I started with an Excel spreadsheet, naturally, where I prepared to rate each credit union according to the following categories:

• Number of ATM locations?
• Online system usability?”The online stuff is important because I don’t want to be forced to go into the bank. Who does? Small business owners want to be able to just get it done on their computers.” ~ Me
• What did their bill pay system look like (and did it cost anything)?
• Their security system (if credit card is stolen? How secure is their internal information?)
• Customer service?
• Fee structure (personal and business checking, personal and health savings?)
• Reinvest locally?
• Member of Local First Arizona?

That left two Credit Union’s worth more serious consideration: An actual physical trip to the branch.

I started with Desert Schools Federal Credit Union, before I went to Arizona Central Credit Union. In part 3 of my investigation, I’ll share those two experiences, what I decided and why. (I may even include another humorous link as a bonus. What? You didn’t see it? I’ll give you one guess which link it is…)

To see the next installment, please click here.

In part 1, I ended with an argument I often hear from people after I describe what a “normal foreclosure market” looks like. There’s always going to be some percentage of people who should not have bought a house and now they’re upside down or late on payments.

The real interesting bit we can see is that there will still be some foreclosures and short sales coming on the market. The argument I hear some people say is:

All the banks were just holding onto their houses. They just hadn’t been listed yet. You’re not seeing them in the charts and graphs you’re using as evidence.

(Much of my briefing is based on Mike Orr’s Cromford Report. A huge thanks to Mike Orr and Tina Tamboer for allowing me to use their work at my presentation and share it here as well.)

To answer those naysayers, let’s look at the “REO” (which is another way of saying “foreclosed property”, not a band who heard it from a friend who heard it from a friend…). The REO then is where the bank has already repossessed the house and is putting it on the market directly. This chart below is REO and includes everything sold between 2007 and 2012. The big blue Pac-Man looking thing on this chart is sales sold through MLS; in other words, 131,000 homes.

(graph, above)
“Sold wholesale” means some big investor bought a bunch of homes at one time. According to the chart, there are only 961 in escrow. When people talk about where to find this mythical crop of homes held back by the bank, you would find them in “Not yet listed.” Well, that’s a whopping 3,047 –not what I would call a wave of foreclosures.

Supply is down, but it’s also increasing.

This is a very interesting thing. Look at this next graph. If you look at December 2010 (far left) all the way into the future, you see a huge drop in supply. Homes being sold by Housing and Urban Development (HUD), the tiny sliver on top in gray, are few and far between and get a ton of offers when they come on the market.

(graph above)
The last two colors on the chart are short sales (light blue) and normal sales (darker blue).

You can see from this same graph that things are moving back up a little. Does that mean that we’re going to get back up to 35,000? No, because you’d have to have the same kind of event that put us into the recession to get back up to those numbers.

Let’s take that same thing, single family residential inventory, and look at the distressed sales.

It’s declined 77%.

That’s in terms of the active distressed listings. For those who don’t know, AWC means ‘Active With Contingencies’. Look at that chart again. See how it’s called “Distressed SFR Inventory (Excluding AWC)”? This means someone has an accepted offer on a short sale, but they’re waiting for their lender to say it’s okay to precede and close on that property. Let’s break it down a bit.

Look at the far right side of the same chart. There are 1,923 Active Distressed homes. It’s a huge decline. But this is the interesting part. Notice the top right corner of the graph, where it breaks down the percentages of the different price ranges listed.

Rather than do each price point, one at a time, let’s look at the combined total, the 81% of homes that are under $300,000. If you make another chart and take out the HUD homes, the REO’s, and the short sales, and compare those to where the normal sales have been…

…there’s basically no change since November 2011.

So what does this U-shaped area represent? I’m speculating here, but in my professional opinion, the normal sales coming back on the market comprise two types of sales: A) People who bought before 2003 or 2004 (so they are able to sell their house, get their money back, maybe make a little bit of money); or B) People who bought a house in 2008 or 2009—which was my advice to people at that time—and now they flipped it, or renovated it and put it back in the market. Those people are adding to the inventory.

The rebounding economy and stronger job numbers, plus incredibly cheap houses, are why–in this next graph–we went from a 3.7 month supply of homes to a one-month supply of homes. By “month supply of homes”, what is meant is that if you shut off the tap and prevented homes from being put on the market, how many months would it take to clear out what’s on there? In this case, it would take us one month to get from a 3.7 month supply of homes to a one-month supply of homes.

This is more drastic than, say, above $1 million homes, but all of this brings me to one point: single family homes that are affordable for most working families will continue to increase, in price and in value, in 2013. That’s even with the increase in inventory that we’ve seen here at the end of 2012.

Prices are rising. This is pretty obvious. You’ve probably heard it in the news. What wasn’t reported on the news, however, is that the rising prices in the last year are only happening at the low ends, under $150,000; far more than they’ve occurred at the high ends. Where’s my evidence? What do I draw from this conclusion? What should you conclude from it?

Stay tuned for Get Your PHX Market Briefing, part 3 where we’ll find out!

If you would like to be part of a future PHX Market Briefing, please contact me at 602-456-9388.

JUMP TO PART 3 OF THE MARKET BRIEFING HERE.

I was listening to the news recently. They were siting the Case-Shiller index talking about what the average home price was in America. This always seemed absurd to me. You could tell me that the average temperature in America is 75° and that doesn’t help me plan a trip. So I got to thinking, it would be great to have a sort of one-stop shop where people could come in and talk to people like Jeannie Bolger, Mike Orr, or myself.

So this past Tuesday, that’s what I did. We had a room of about 25 people. Some were buying houses, some selling them. Some were investors, some realtors, some mortgage brokers. Some were just curious. Another reason I did this was because I just wanted my friends to have this information. I know the market. I work hard to understand the market. We’ve been fighting some of the same myths over the past three years and I wanted to clear the air.

I covered several things in my presentation:

• The home delinquency rate in America and in Maricopa County
• The inventory that’s currently out there
• Some interesting trends hidden inside the data.

Much of my briefing was based on Mike Orr’s Cromford Report. (Thanks to Mike Orr and Tina Tamboer for allowing me to share their work at the presentation and here as well.) I’m a huge fan of this report. If The Cromford Report were like the Grateful Dead, I would just follow them around everywhere, like a groupie. It’s very easy to understand, has helpful visuals, and is easy to digest. Mike is not only behind The Cromford Report, he’s also the director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business.

Orr made this great statement, which he calls the Coiled Spring Theory:

The longer it takes for prices to respond, the larger prices are going to be.

I think that’s very true in the market right now. For greater Phoenix, the local average sales price per square foot, in just the last year, has seen a 30% increase in prices. Is that going to happen again this coming year? Quite possibly. And that has a lot to do with the number of homes left on the market, and where the next ones are coming from.

Before we get to that, let’s talk about delinquency. This is when people are simply late on their loans. They may foreclose. They may short sale.

I have heard the following phrase a lot over the past year:

We don’t know what the banks are hiding.

I like Mike Orr’s response to that. He says what they’re really saying is:

We’re too lazy to check.

It’s really easy to see what’s coming downstream from the banks. You can see it in several ways. First, by looking at the number of delinquency filings at the county courts. You can see who’s getting notices that they’re late on their loan and are in danger of being foreclosed. Second, you can see it in the number of trustee sales.

When you look at these numbers (see pictured graph, below), you see that Phoenix has no shadow inventory.

Phoenix was well above the USA average in 2009 and 2010 for the number of delinquent loans or foreclosures. Today, we’re below USA average. We’re number 38.

Below is another great snapshot of where we are.

Nevada is in a world of hurt right now. But things in Arizona are not what you have been hearing in the news over the last few years. It’s just not like that anymore for us. In fact, one of the reasons we saw the two big drops in Arizona (note the AZ drop-offs in the above graph) is that title companies got really good at processing short sales and they got us through that. So in Arizona, residential foreclosures are down.

If you want to see the big picture of why there is no shadow inventory, this next chart is a great thing to look at. I was saying it in Aug, 2011 (“If I have to hear another person predict a massive “shadow inventory” I’m going to turn green, and you wouldn’t like me when I turn green…) and I said it again this past July when I wrote about Countervailing Forces (you remember the graphic: two monopoly houses dueling with light sabers. I crack me up, sometimes.)

On this chart, that line on the bottom is the normal level at which people expect to see foreclosures in the market. There’s always going to be some percentage of people who should not have bought the house and now they’re upside down late on payments. The real interesting bit here is that based on this chart we can see that there are still going to be some things coming onto the market or those people are going to be short selling. They’ll find a way through it, but they’ll have a better chance at a better way through it then they would have three years ago.

Some people argue that I’m not looking in the right place. They’ll say,

All those banks are just holding onto their houses. They just haven’t been listed yet. You’re not seeing them in this chart.

Well those people will have to keep arguing, or holding their breath, until part 2 of this series on Get Your PHX Market Briefing. That’s when I’ll share how I answer those people and I’ll share some relevant and interesting insights about the inventory that’s actually out here in Central Phoenix.

If you would like to be part of a future PHX Market Briefing, please contact me at 602-456-9388.

[train photo: andrew_j_w] [modified with permission by Ken Clark]

JUMP TO PART 2 OF THE MARKET BRIEFING HERE.

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“Phoenix’s Innovation and Efficiency efforts are leading the way nationally,” said Mayor Greg Stanton. “As a leader of the city, I get my best ideas from listening to people. We want to put as many of the city’s best ideas forward as possible.”

This deserves a huge round of applause!

The Innovation and Efficiency Task Force went to work January 2010, with private sector members and city executives serving together. Ideas flow through the Task Force to a subcommittee and then to the full City Council. In this excellent 10-minute video the City Celebrates $59 million in Innovation and Efficiency Savings (with numerous specific examples) and announces a $100 million Goal.

“The leadership from Mayor Stanton and Councilman Gates, the full City Council, our Task Force members and hard work from city staff have created a culture of innovation,”said City Manager and Task Force creator, David Cavazos. “Innovative ideas and sound financial management are at the heart of what we do here at the city of Phoenix, and we will continue to find new ideas and solutions.”

Marty Schultz, Task Force Member, and Senior Policy Dir. Brownstein/Hyatt/Farber/Schrek had this to say about the people in the private sector who are involved:

“They are actually very smart people who have finance backgrounds, service backgrounds, and management backgrounds, and have been able to work closely with the city staff.”

This brings to mind a string of programs Mayor Stanton and the city have initiated: In June, I told you about the unveiling of “Go Green Like Your Grocer”, a community energy efficiency showcased at AJ’s Fine Foods; in August, the innovate community-engaging website ‘My Plan Phx’ opened an opportunity for residents to help shape the future of the city through participation in updating the city’s General Plan (Conserve Create ConnectPHX), and planning for the communities along the light rail line (ReinventPHX). This short 1:30 video gives a good idea of what My Plan PHX is all about.

As a former State Legislator and the former state Energy Office Director, I have a strong understanding of energy efficiency in homes. I participated in Energize Phoenix on my property in Garfield, as have many others. That’s a significant bonus when people work with me as their agent. Of the two homes I’ve renovated in Central Phoenix, I did the Energize Phoenix program on my 1925 Arts and Crafts Bungalow. (The other home is a 1948 “war baby” tract home). I understand the attractions and challenges of old homes, as well as how to identify quality new homes. So, please let me know if I can apply my experience to help you buy or sell an energy efficient home in Phoenix.

 [innovation image: seth1492][usa image: Kyle McDonald]

I saw a movie recently (“Heist: Who Stole the American Dream?“), which featured our own Kimber Lanning, Local First Arizona’s founder and director since its inception. We got to talking about why it’s important to consider moving to a credit union as your bank of choice.For years, I had been thinking about the prospect of closing my national bank account and opening an account at a local credit union.

Well, it is finally time and I need your help. Allow me to explain.

To start, and for the sake of this series, let’s just say that I bank with “CitWellsiBank of America.”

Like most banks, my bank charges these fees unless I carry a certain balance; difficult for a small business to do. I suspect credit unions have fees of their own. However, that money has to go somewhere, but I’d rather have it go to a local credit union and keep the money in the local economy. Did you know that when you spend your money locally, four times that amount stays in local circulation, than if you spend it on a national chain or, in this case, a bank?

Credit unions, by design, are investors in their local economy (I think you could make the case that we wouldn’t have the same damage to our economy if we were all using credit unions that weren’t too big to fail. The big banks prior to the recession were doing big credit default swaps, bundling loans (great 2-minute video clip explanation from William Hurt film, “Too Big to Fail” at the link), and selling off collateralized debt obligations.

So when I was talking to Kimber at the movie, I got to thinking about the things were holding me back and I realized that they are probably the same things that hold back other people:

Time. This is probably the biggest impediment to making the switch. My suspicion is that it’s going to take a lot of time to research credit unions, narrow it down to one, set up all of my business accounts, personal accounts, savings accounts so that it’s an exact replication of what I currently have and like. Not to mention learning new things like how to navigate their online offerings, their apps (if they have them) and how to move money around between banks the process.

Uncertainty. Will the credit union have a similar setup on its website interface? How easy will it be to get cash from a credit union with, presumably, fewer locations and ATMs. Where will I get cash if I need it? The big banks tell us we have to go to an ATM or a branch to get money, but we’re smart consumers; we know we can just visit the local supermarket and get cash back and there’s no ATM fees this way. Am I to expect the same level of trust/uncertainty when considering a relationship with a local credit unions?

Security. We’ve been duped into believing that big, national banks are the only ones who take security seriously. How often are local credit unions information compromised? We know it happens to the big banks. What measures do local credit unions take and how do they compare to the national banks?

Over the course of the next two months, I’ll be doing a series on my personal experience in setting up and moving from my big national bank to a local credit union. The first one, which you’re reading now, is defining The Problem: time, uncertainty, and security.

I’m going to do it for everyone, putting these posts up. And I’d love to have your comments as we do it. Tell me what you’ve experienced. Please help me get started by answering these questions:

1) Have you ever considered moving to a credit union?

2) What has kept you from seriously considering a credit union? What’s been holding you back? Why did you decide against a credit union?

3) What credit union do you recommend (or not recommend) and why?

I look forward to our journey together. (Read Part 2, “Credit Unions: Funnel it Down”.)

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