Really. It’s going away. The $8,000 first time home buyer and the $6,500 repeat home tax credits will not longer be available after the end of April. So, set your clocks!

By “Tax Credit Two-Step”, I mean that you must have an accepted contract by April 30th, but you can close as late as June 30th.

If you want an accepted contract by April 30th, you need to start looking right away!! Prices are still historically low, but many people are out in force looking to cash in on this tax credit.

If you want to know more, have a look at this CNN article. As is par for the course for CNN on the real estate news, they are overly pessimistic, talking about huge price drops in Miami, for instance. (They’ve been projecting dire forecasts for a year now, which have not come true.)

But this article is useful in talking about how the tax credit will not be extended. Even the credit’s biggest proponent, Johnny Isakson, R-Ga., says he will not support the extension.

So, if you are thinking about it, now is the time to make it happen. Let’s dance! Contact me at realestate@kenclarkforaz.com

The Arizona Republic and other news outlets vacillate between terror and hope.

At one moment they are telling us that the real estate market is about to enter a tailspin not seen since the History Channel did a major retrospective of WWII airplane dog fights.

In the next moment they are telling us that the fragrant flowers of prosperity and recovery are about to pop out of the ground around our feet.

Thanks, guys. Now, here is the data.

This table is from the Cromford Report. If you’ve been following for a while, you know that I talk about this information source quite a bit. The Cromford Report takes data directly from the Multi-Listing Service, which is the most accurate report of sales in Arizona.

This data is for Maricopa County. Look at the gauges for “Annual Appreciation” and “National Trend”.

You can see that we are in the green zone. This means that we have appreciated in prices 7.7% over the same month last year. It also means that March is doing 3.9% better than the entire year. Now, the second gauge does not say much, as it is only March. But these are positive signs.

The Monthly Average is showing that homes are selling for more on a square foot basis than they were last year. Annual Average is a measure of sales prices, averaged at any moment over the last twelve months. These have seemed to bottom out.

Now, I don’t want the press to only print rosy stories in some attempt to talk our way to recovery. But here are some things they are doing wrong:

1) They report sales trends that are at least 3 months old. So right now they are talking about Christmas and January sales trends. Those months tend to be slower.

2) They are using national data and applying it to Arizona. That is like saying that Arizona’s average summer temperature is 75 degrees because that is what it is nationally.

3) They keep reporting that we won’t recover until 2014, which is a minority view.

4) They keep talking about a glut of homes coming on the market, which has not happened the last three times they reported on it and shows little understanding of how banks like to slowly let homes on to the market to avoid price drops.

5) They ignore that certain parts of the city, specifically Central Phoenix, are doing better than the suburbs and people are moving in to town, thus driving the market!

Here are the conclusions I get from the data:

1) You can never perfectly guess the lowest or highest point of the market. But if you buy generally in the low point and sell generally in the high point, then you are following Warren Buffet’s model (be greedy when the market is bad and miserly when the market is good).

2) I sold my first house at 2.5 times what I bought it for because I sold when I first started hearing news on the radio of price drops. Well, we are getting news of price increases now, so my estimate is that now is the time to buy.

3) If you are buying for yourself, then you don’t need to worry too much about price fluctuations. This is not day trading. Buy it low and hold it for at least 5 years. You will be fine.

4) The market may not recover tomorrow. It will probably not fall lower. But if you are buying now and holding you are in a great position.

Please feel free to contact me for more information and to have a look at the market.

Howdee all,

A friend of mine has a cute little bungalow in the historic Coronado neighborhood that she wants to rent.

The place is only a couple blocks from the best restaurants that have opened up on 7th St. in recent months: La Picolla Cucina, America’s Taco Shop, The Main Ingredient, The Tuck Shop.

Can you tell I think about food a lot?

Well, outside of that, this little gem has two bedrooms and two baths for only $900 per month. This is perfect for a couple or friends who want the quiet of Coronado, but the convenience of downtown. The kitchen has a dishwasher, which is unheard of in many older houses. The master bedroom is huge.

Check out the photos!

Contact Liv Nam Kaur at 602-595-5656 or email at irish4lou@me.com.

After fears in late January that interest rates for FHA loans were going to start going up, they seem to have leveled off again.

There are still concerns that rates will start heading upward in March. See my earlier post.

Lesson: lock in now while rates are down!

Have a look at the charts, below for rates –at least those that my friend Dan Hlavac over at Met Life is getting.

This is what you can expect for FHA loan: a 30-yr fixed loan at 5.187% APR.

MetLife Rate Update FHA

See this link for what you can expect for a conventional loan: a 30-year fixed for 5.136% APR

MetLife Rate Update Conventional

I think people have been taking this recent tax credit for granted. They think that they have plenty of time to grab a house before the tax credit goes away in June.

Nothing could be further from the truth.

Here is what you need to know:

1) You must have an accepted offer by April 30th and a house closed by June 30th.

It is now a two-step dance, my friends!

2) Expect people to start panic buying in late March. This will mean fewer houses available and that you will need to act very quickly when you see a house that you like.

3) You should work backward from April 30th. If you need to have an accepted offer then:

a. Short sales may be tricky. You may get an accepted offer in time, but you may not close by June 30th.

b. Leave time for the bank to get back to you on your offer –that can take a week or two –if you are offering on a foreclosed property.

c. Start looking in early March. Expect 2-3 weeks of “shopping time.” Get those offers in no later than April 15th.

Here is another good post from my friend Tazmine Loomans, who is an architect and green renovator of older homes explaining how you can save big bucks by just upgrading our water heater.

First of all, get rid of the electric water heater if you can. If you have natural gas running to the home, get a gas heater. It is worth the up-front money.

I was told once when I was the Energy Office Director by folks from Southwest Gas that it takes 1,200 gallons of water to heat a 60 gallon electric hot water heater. This is because it takes two units of electricity to move one unit of electricity from the big power plant to your home. Further, that big power plant is cooled by ground water at the rate of 100’s of thousands of gallons per day.

I installed a tankless hot water heater in my historic home in the Garfield Neighborhood. While it saved money, even over the tank natural gas water heater that was there before, I found that it used more water. Basically, it was because the tankless water heater needs to run water through itself at a certain rate, otherwise it will shut off. That’s fine if you have a number of people in the house all using water at the same time. Not so good if you are just little ol’ me.

I always liked the way the Europeans and Asians do this. They put small hot water tanks or tankless heaters at the point they use them. So, they only use that which they need and they are not heating up water just to flow 40 feet from the tank to your shower or kitchen. Much of that water and heat energy goes to waste.

So, what is the solution? First, go gas or get a heat pump. Second, go tankless if you have the demand for it.

It’s been a while since I’ve just laid it all out there for you. The market data, that is.

I did this several times last year. Back then I was predicting that prices were going up during 2009…and I was right! (Just had to say it.)

Here are some of the most telling stats.

1) Prices

Prices are dropping in the first months of the year. I believe that some of that price drop has to do with the fact that you can’t get FHA financing on most condominiums, due to a change in policy last October. I believe that prices will level off and start going up by April, when people will begin to scramble for the $8,000 tax credit again.

In the chart below, look for the green line that is right on top of the orange line. That is 2010, right on top of 2009.

If you did not see it, review my article on the impact that interest rates have on price reductions.

2) Number of Sales

Now this is interesting. The number of sales is going down while the prices are going down, too. Does that mean that nobody is buying houses, despite the lower prices? Actually, it means two things. First, the number of sales always goes down for the first two months of the year. People came back from the holidays, rubbed their eyes, blinked and got down to the business of buying/selling. Those folks that got started in January/February closed in March. Happens every year. See below. Watch for sales numbers to go up in March and April.

Second, it means that people in March are going to start reacting to the lower prices and will start rushing in the market.

3) Market Distress

This is a really great way to see what is actually selling. Everybody has been talking about an impending wave of foreclosures. I have not seen it yet and we probably won’t. The banks want to sell homes at a regular pace. They don’t want to flood the market so that prices go down further!

Notice in the charts below that short sales (“pre-foreclosed homes”) are a smaller percentage of the market of “active listings”, but they make up a minority of homes that actually close. So, while I am happy to help my clients find short sale listings, I am careful to interview the listing agent to see if they have the knowledge and gumption to get through the bank’s process.

4) Interesting Note

Have a look at this chart of annual sales for just 85003. Interesting how much that can fluctuate from just one sale, there in the middle. Fewer sales to average out the numbers. However, also note that  the average sold prices have been much higher than other parts of town. Lesson: historic neighborhoods have kept their value!

Interesting stuff. It’s good to grab these snapshots.  If you want more information in more specific areas, please let me know.

….in other words, even if prices are going down, interest rates are likely go up later this year and undermine any price drops.

How does that work? (Thanks for asking.) Here’s how.

Prices are going down for now, but interest rates are going up.

This is totally different from last year when prices were still dropping AND interest rates were also dropping.

If you look at this chart you can see that prices were climbing last year, but they are dropping thus far this month. Let’s hope it stays that way before people start scrambling for the $8,000 tax credit! However, don’t expect it to. Prices went up last fall when people were buying in time for the tax credit.

Look very closely for the emerald green 2010 line at the lower left. It is almost hidden because it is laying right on top of the orange 2009 line.

While it looks like prices are going down, just know that prices usually go down the first couple months of the year until folks start really gearing up their searches.

Further, interest rates are expected to go up by March and interest rates make a huge difference in your monthly payments.

For instance, if you buy a $100,000 house at 5.5% interest, your monthly payment (before taxes and insurance) would be $568. The same house at 6% interest would cost $600 per month.

That extra $32 per month is $384 per year or $11,520 over the life of the loan!

Another way to look at it is that in order to have the same payment every month that you had at 5.5% interest, you could only afford a house that costs $95,000 at 6% interest.

So, what does this mean? It means that you want to consider getting in to the market before interest rates go up.

It also means that you probably want to act before both prices and interest rates go up. That is the worst case scenario!

Give me a call. I’m more than happy to help you navigate the market: 602-456-9388.

For all you folks who have bought your dream property to rent to the world, don’t forget that you need to register with Maricopa county when you start renting!

Check out this news release.

My friend Tazmine who owns Blooming Rock Development has a post that I like listing the tax credits you can get for energy efficient improvements to your home.

The tax credits are for things like new energy efficient windows, upgraded air conditioning, new roofs, etc.

When I was the director of the state Energy Office, we were always careful to point out that some of these things have a quicker payback than others. The quickest payback comes from new insulation in your attic, water heaters and heat pumps, higher efficiency A/C and just making certain your windows and doors are not leaking badly.

New windows are great, but unless they are really bad, you are not likely to make back what you put in to them for years, as they are so expensive.

However, much of this depends on the situation. I would talk to Tazmine, as she does home renovation planning for sustainability and she can make give you advice based on your entire energy profile.