Now, one thing we need to keep in mind is that this report covers an entire year, but doesn’t take into account changes that take place month to month. Let’s look at this report based on what has been happening in our market the last several months. Foreclosures ARE decreasing. Maybe not as fast as we’d like, but they are going down. Home prices may have been lower the end of 2011 than compared to the previous year, but those end of year prices were higher than they were in previous months. It’s pretty easy to find a silver lining to the cloud in this case.

An interesting question posed by Jay Butler, author of the report, is what the role of owner/occupants will be. Investors have been quite active recently, and they are getting more involved in purchasing foreclosed homes at auction rather than waiting for them to come on the market as bank-owned listings. This in effect further reduces the number of homes that come on the market (at least in the short term as many investors buy properties to fix and resell).

2012 promises to be a pivotal year in Phoenix area real estate. We may be on the road to recovery, but it remains to be seen how robust that recovery might be.

On a national level, it might seem like a good idea. After all, there are plenty of national statistics that show the foreclosure crisis has really taken its toll on real estate values. Many markets are still experiencing decreases in home values due to the large number of short sales and foreclosures and a small pool of buyers.

However, our Phoenix real estate market is actually growing. Buyers are snapping up homes almost as soon as they come on the market. We currently have approximately 2.5 months’ worth of inventory; to support the buyer demands, we should have 4-6 months. If the government sells the federally backed foreclosures to investors with the provision they be converted into rentals, we will likely see the inventory drop dramatically. Now, on the surface this looks like it could be a good thing. Low inventory and lots of buyers would mean prices go up. However, there’s a dark side to this equation. The demand is artificial; only a few big firms would be buying all these homes, pushing out individuals who might want to purchase a home to live in themselves. Right now we have lots of investor activity on the market, but there are very, very few investors that would be as big as the big companies that would be working with the government to acquire these homes. These large companies would in effect control a significant portion of the real estate market, and not just on a local level since it’s likely that the companies chosen to participate would be national.

I just don’t have a good feeling about this at all, and think that the government needs to quit this “one size fits all” approach to solving the mortgage crisis. What might work in one market may not work here in the Phoenix area, and may in fact stall out what looks to be the beginnings of a recovery for us.

According to data research company CoreLogic, November Phoenix area home values were down 5% from what they were November 2010. If distressed (ie short sale and foreclosure) sales are removed from the equation, that percentage jumps to 5.3%. This indicates that non-distressed properties experienced the biggest drop in value, which comes as no surprise. Short sales and foreclosures have been setting the price of homes for a while, which is why many homeowners who don’t have to sell aren’t putting their homes on the market. Or, if they DO sell their homes, they have to price them to be competitive with the distressed listings.

However, this report doesn’t take into consideration that prices have been gradually edging upwards. Prices may be lower from last year at the same time, but they are up from what they were a few short months ago.  Buyers are still going to find good deals and historically low interest rates, but it appears that they will be paying more to buy the home of their dreams. And, as buyers absorb the short sales and foreclosures, more sellers will find the increasing prices and demand for homes attractive enough to put their homes on the market.

One effect of our troubled real estate market is that foreign investors are being attracted by the historic low prices. According to an article “Snowbirds flock to U.S. Bargains” in the Montreal Gazette, Arizona comes it at fourth place in the markets that attract foreign investors (behind Florida, Texas and California.) According to Credit Sesame, a US-based company, the largest number of foreign home buyers of US properties come from Canada, followed by Asia and Europe. These buyers are purchasing primarily single family homes under $100,000.

Many folks point to the frenzy of investing that helped push the real estate balloon to it’s bursting point a few years ago, and fear that this current interest by investors could create a similar situation in the future. However, a good point that this article brought up was that we have a large inventory of homes available for sale, and that our economy may remain sluggish until that excess is absorbed. Investors, whether foreign or domestic, are indeed snapping up the good deals our market is offering and as the number of available homes decreases we are seeing prices edging upward. It remains to be seen as to what the future implications of investor-driven sales will be, but this article shows that interest in the Phoenix market extends beyond our borders. It also shows that there is competition for good deals, and folks who are thinking about purchasing a home might be well-advised to take advantage of the historically low interest rates and the low prices before both disappear.

I hope that you and your loved ones have a wonderful holiday season!

But these last several months have given me a flicker of hope that things may really be turning around for our hard-hit market. Earlier this month, the Arizona Regional Multiple Listing Service released data that indicates the percentage of home listings that are distressed is dropping. The outlying areas seem to have the greatest numbers of short sale and bank owned listings, while the cities towards the center of the metropolitan Phoenix area have the least number.

Although I think it’s still too soon to tell if we’re seeing an honest-to-goodness recovery of the Phoenix area real estate market, things are sure looking a lot better than they did this time last year!

Other parts of the report, in fact, are quite positive. The number of active listings on the market continues to decrease. Although this too is likely to be in part due to seasonal fluctuations, it is good news as far as price goes. With historically low interest rates and home prices, buyers have been snapping up well-priced homes as soon as they come on the market. Back before the bottom fell out of the real estate market, we would have expected home prices to go up due to the demand and sometimes fierce competition among buyers. However, this hasn’t been the case until recently. Despite the increasing demand, home prices continued to creep downward until lately. For the past several years, buyers have had a wide selection of properties to choose from, and if an offer on one home wasn’t accepted, they could easily find another.  It appears that the number of available listings has dropped to a point where buyers don’t have quite as wide a selection, and in order to make a purchase they have to come to the bargaining table with more money. And, this is what we see on this month’s report; the average price per square foot is edging upward.

Are we on the road to recovery? It’s still too soon to tell, but this is a unique time for both buyers and sellers. Although prices are going up, there are still plenty of great deals available for buyers. And sellers who price their properties well are finding willing buyers. If you would like to take advantage of our unique market, give me a call or send me an email and let’s talk about how I can help!

Still, overall the Phoenix market looks to be on track for a much-needed recovery. After all the bad news about our real estate market these past few years, I’ll take any bit of good news as signs that we’re on our way back up.

Despite the public outcry regarding the huge bonuses that top level bank execs get, the government regulator of Fannie Mae and Freddie Mac approved seven figure bonuses for the top brass of the troubled lenders for meeting “modest” performance goals. According to Securities and Exchange Commission documents, Freddie Mac CEO Ed Haldeman received $2.3 million in bonus pay on top of his $900,000 base salary, while Fannie Mae CEO Michael Williams received a $2.37 million bonus.

Most economic experts agree that Fannie and Freddie were partly responsible for the foreclosure crisis because of their willingness to back risky loans in support of home ownership. They have a massive backlog of homes they’ve foreclosed on, which pundits feel contributes greatly to the suppression of home values and thus the snail’s pace of market improvement that we’ve been experiencing since the real estate bubble burst. The execs in charge back then have been replaced, and supporters of the pay scale say that the companies have to offer Wall Street sized compensation packages to attract the talent needed to steer the floundering firms back to solvency.

Still, when looking over the performance records, one might argue that there is still much room for improvement. Freddie Mac contacted only 45% of their eligible borrowers to offer loan modification, and completed loan modifications for only 160,000 homeowners. Fannie Mae did a bit better, modifying 400,000 loans but still far, far short of the goal set forth by the Obama administration. Bonuses are ultimately paid in cash because the stocks of both companies is worthless so stock options are not an option.  Critics point out that this cash has to come from somewhere, and that somewhere is taxpayers, many whose homes are now part of Fannie’s and Freddie’s massive inventory of foreclosed homes.

You can read more at http://www.politico.com/news/stories/1011/67292.html

Why are more and more people opting to rent rather than buy a home? Some are nervous about the long-term financial commitment that home ownership represents. Others are concerned about the state of the economy. Although the unsteady job situation that many areas of the country are experiencing is a major reason for people to shy away from the financial commitment of a mortgage payment, a large number of renters are homeowners who lost their homes in short sale or foreclosure actions. For these folks, the dream of owning their own homes again may seem distant, but with smart financial planning, it is possible to qualify for another home loan in as little as two years. If you have experienced the short sale or foreclosure of your home, visit our website www.FREECREDITHAWK.com to see how you can plan for purchasing a new family home!

Chamber of Fear Haunted House – 11340 W. Bell Road. Promising “The Fright Of Your Life”, this fright fest was ranked #1 by the Arizona Republic.  Located in an air-conditioned facility, the scares are doled out even in inclement weather. Their website alone is enough to cause nightmares! For more information visit http://chambersoffear.com

AZ Fields of Screams – 5726 N. 75^th Ave. This haunted corn maze is inhabited by things that go bump in the night, being that is was planted over a cemetery! The inhabitants of this frightfest are waiting for you… visit http://www.azfieldofscreams.com for more information.

For those who prefer their ghosts a little more true to “life”, The Ghosts of Phoenix are touring the Hotel San Carlos. This famous downtown Phoenix landmark is allegedly haunted and was featured on “Weird Travels” on the Travel Channel.  The hour-long walking tour will visit areas where paranormal activities have been reported and accounts from past guests and staff members will be shared. There are no special effects or staged activities on this tour. Guests are allowed to bring cameras to capture possible supernatural events that might happen. Visit http://www.ghostsofphoenix.com for more information.

Fear Farm – 2209 N. 99^th Ave. Billing themselves as “the most terrifying experience in Phoenix”, this festival of fear offers several horrifying options, from an un-haunted corn maze to an extreme haunt. Visit their terrifying website for more information; http:// http://www.fearfarm.com

Is this for real, or is it election year posturing? I think it’s great that the administration is thinking about how to help folks who aren’t in trouble yet, but who are just a job loss away from losing the homes they worked so hard for. However, property values have plummeted so much since the bubble burst that many homeowners find themselves with mortgages that are two and more times as much as the market value of their homes. If the principle isn’t reduced to levels closer to the home’s market value, is it reasonable to think that homeowners will line up to refinance mortgages that still leave them underwater for many years to come? In places like Arizona where property values are at least half of what many homeowners owe on a mortgage many homeowners will opt to walk away and start fresh with a new home in as little as two years versus staying in their over-leveraged home for a decade or more until they have equity again.

Proponents of the program say it would help boost the economy by relieving financial stress on homeowners and reducing their mortgage so that they would have more expendable money. But economists disagree on the number of people who would actually benefit. Some say it wouldn’t affect more than a 1 million households, a relatively small number given that more than 6 million homeowners are facing foreclosure or have delinquent payments. Others say the restrictions are too stringent and automatically cut out those under-water homeowners who have bad credit.

It is hard not to view this new strategy as yet another band aid on a very deep wound. Millions of homeowners have been foreclosed on going on five years now and 12 months out from an election this is the game plan? The administration had a bigger stick to help fix this mortgage crisis when it doled out billions of taxpayer dollars to the banking industry. At that time, the "no-strings attached" bailout was a fatal blow to any real reform and assistance for main street.

Experts aren’t relaxing too much though. There are predictions that the roller coaster ride isn’t over yet, and we can expect to see similar rises and falls in foreclosure rates as banks continue to work through problems they’ve been facing in how to deal with the large numbers of defaulting loans they’re experiencing.

Foreclosure isn’t the only option available to troubled home owners though. If you or someone you know is facing the possibility of foreclosure, give me a call or drop me an email and let’s talk about what your options are.

Although this survey comes across as all doom and gloom, we need to keep in mind that it doesn’t indicate that things are going backwards, but that they aren’t going forwards as quickly as was hoped and was once thought. However, to those who are delinquent on their mortgages things might look bleak but there IS help. If you or someone you know is facing foreclosure, give me a call or send me an email and let’s talk about the help that is available.

It has been a buyer’s market in the Phoenix area for quite some time, and buyers are still definitely going to find great deals. Increased buyer interest is always good news for sellers, but we might be on the verge of seeing a gradual shift from a buyer’s market to a seller’s market if prices continue to increase.

Whether you are looking for a great deal or need to sell your home in our challenging market, give me a call or email me and let me show you how I can help!

One of the bidders that will be followed, Doug Hopkins, was quoted as saying “The foreclosure-auction market is more competitive than it’s ever been. It’s definitely entertaining to watch.” Most of those homes represent the shattered dreams of families who became victims of our harsh economic times, and for some reason I just can’t put the words ‘foreclosure auction’ and ‘entertaining’ together.

I understand that people may not see this the same way I do, because I work with many families who are only a few steps away from losing their homes, losing the security those homes represent, and the financial mess that foreclosure often leaves behind. The last word that comes to mind is entertainment. The only thing they got right on this one is this is a reality for homeowners in Arizona and throughout the country.  

This story DOES give us some good news though; the total number of sales in August is up almost 300 from July, and up over 1500 from August of last year. Our real estate market is obviously not where we would like it to be, but at least it’s showing obvious signs of improvement.

One other thing this story mentions is that homes under $100,000 are selling quickly because investors are purchasing them as rentals. As struggling as our real estate market has been, the rental market seems to be picking up.  The low housing prices, combined with fairly healthy rental demand, can provide awesome investment opportunities for folks who  go enter the market well-informed. If you are thinking about investing in rentals, give me a call or drop me a line and let’s talk!

CNN Money ran a story on August 31 about how the government's attempts to stabilize the economy by stalling foreclosures might actually be causing our ongoing woes. The article quoted housing experts as pointing out that about 37% of the borrowers who are in trouble haven't made mortgage payments in over two years, and another 34% are 12 to 23 months behind. Those experts who in the beginning warned that preventing foreclosures might only be prolonging the inevitable may have been right.

There are experts who disagree, however. Many point out that other methods of assisting troubled borrowers haven't been tried out on a large scale yet. Adjusting payments, forgiving a portion of the balance due and refinancing at a lower interest rate are all ideas that have been suggested.

My thought is, the best course of action is a combination;get the already-foreclosed properties sold, make the short-sale process faster for those who are too far behind in their payments, and help those who can still catch up.

If you'd like to read the entire article, visit

http://money.cnn.com/2011/08/31/real_estate/housing_market_foreclosures/index.htm

The only negative that can’t be explained by the normal summer market slowdown is the continuing creeping downward of the average price. This really doesn’t come as a surprise though, given the severity of our market problems. Foreclosures and short sales still make up most of the properties that are on the market, and these distressed sales tend to push down prices.

Despite this bit of negative news, the market is providing opportunities for both buyers and sellers. The lower prices and historically low mortgage interest rates have really motivated buyers to get out into the market to snap up the good deals. They often find themselves bidding against other buyers for homes. Sellers who can price their properties competitively are seeing lots of interest and are frequently receiving multiple offers.

If you’d like to learn more about the unique buyer and seller opportunities our real estate market can offer,  give me a call or drop me an email.

I have had many of agents tell me this is a legitimate practice because it is fully disclosed. However, fully disclosed means the seller's creditor is disclosed to also and guess what, I am SURE that the seller's bank would not be happy knowing there is a buyer who would pay then tens of thousands more for the property but they will let it go to the investor buyer. My motto was if it walks like a duck, talks like a duck it IS a duck. Unfortunately, I have lost a few potential short sale listings along the way because some agent or investor has convinced my prospective short seller that they have better deal for them because they have a buyer already. That's ok.....because now not only is there a FBI task force just for this type of fraud but now the investors themselves are being proactive and asking the ethical realtors in the field to call out these real estate agents, buyers and sellers. If people don't know how serious this is they need to realize what the FBI does. They don't file lawsuits and want your money. They lock people away. This is not only a civil crime against the banks but it is a criminal crime against the banks and their investors. In addition this type of fraud can follow you around for years. It may be years after the fact when the banks catch their breath and then have time to audit their files. Don't get caught having to look over your shoulder wondering if your transaction will be the one audited.

My message to you sellers who are experiencing distress. Please contact an experienced short sale agent who shows integrity and really cares about the end game for you and not just their pocketbook.

Visit my source for more information on this problem: http://realtormag.realtor.org/daily-news/2011/08/23/short-sale-fraud-rising-freddie-mac-wants-your-help