NEWS
I’m hearing from my mortgage broker friends that there is a very good possibility that rates will increase in March 2010.

WHY IT IS HAPPENING?
With the Fed buying fewer Mortgage Bonds and wrapping the program up entirely at the end of March, any improvement in rates may be modest at best.

In fact, last week the Fed purchased just $9.3B in Mortgage Backed Securities.  This is down sharply from their recent purchases averaging around $15B, and down from highs of $25 to $30B over the Summer.  Their total purchases are now $1.11 Trillion out of the $1.25T allotted for the program.

This leaves $140B remaining in purchases over the next 12 weeks before the program ends.

WHAT IT MEANS FOR YOU
So, if we have you on a track to get in to a home this year, remember that increased interest rates are more costly than increases in home prices.

If interest rates go from 5% to 6%, that is an increase of $63 per month on a $100,000 home.

Please contact me if you’d like more information. If you have been working on your credit score, or otherwise been getting things lined up for a purchase this year, we may want to take this development in to account and make a plan for you.

News: Circles Discs and Tapes in downtown is closing its doors. Please stay tuned as we work to find new inhabitants of the building who will respect the history of the corner.

This is a serious blow to downtown, but I am confident that we can pull together and find an appropriate business to occupy this space and contribute to CenPho.

Some people were doubting me when I said that there is actually a live auction down at the county courthouse when a house goes to foreclosure. Well I was there last week and took a quick photo of the auction, in process. Sad, yet interesting!

Setting aside dire circumstances where you can’t purchase a property, if you have a credit score in the 600s, you can probably purchase a home in today’s market. If you are close to that, there are things you can do to get in the right position.

But, I like to point out now and again the benefits of buying a property over renting. This might be because I waited far too long to purchase a property for myself. I look in awe of clients of mine who are buying in their early 20s. I don’t think they even know what a good thing they are doing for their futures, if they stay conservative about their finances and keep those houses for the long term.

Anyway, I love the calculator at the Money-zine website that helps you calculate what you save by buying a home –not even taking in to account the historically low prices.

Have a look and let me know if you have any questions about this calculator.

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.

I’m all giddy to tell you about these two homes for rent in Garfield. In both cases, the owners have improved the properties and will maintain a close relationship with the neighborhood as we transition in to a renaissance of renovation in downtown neighborhoods.

Folks are buying foreclosed homes in historic neighborhoods at historically low prices and are doing an incredible job bringing them back to their former glory

First, 916 E. Taylor is just about the finest example I’ve seen recently of how an old property should be renovated and improved in an historic neighborhood downtown.

This is a property with two small houses on it, each about 800 square feet. They are perfect for the downtown and/or ASU lifestyle, with everything updated, security and a beautiful courtyard between the homes. You can walk to First Friday in about 10 minutes from here.

I was the buyer’s agent for this property. The listing agent was Sherry Rampy and the man responsible for the renovation is Kurt Krutak, who has done a number of similarly meticulous transformations. According to Rampy, “This property stands as an example of what is possible in Garfield and it is right next to everything going on downtown.”

This is how the property used to look.

This property is the new gold standard for how homes should be renovated and the potential we have in the Garfield neighborhood.

Both units are for rent right away. Please contact Ruben at rubenx02@yahoo.com or 602-368-6832.

Second, 747 E. McKinley is a 1925 bungalow, renovated in 2006 with a new bathroom, new kitchen, laundry, security, all new landscaping and an inviting updated front porch. I even renovated most of the old double-hung sash windows so you can open the place up the way it was meant to be. It is about 1,100 square feet with 3 bedrooms and 1 bath.

Here is they way it looked when I bought it in 2005.

You can walk from the front porch to the center of First Friday activities in about 5 minutes. I know. I timed it. I live here. I’m moving up the street to my old stomping grounds, but I will leave my heart in Garfield!

This property will come open in January. Please contact me at clarkreport@kenclarkforaz.com for inquiries.

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!