1st Southwest Realty

To our valued clients:

Scroll down to read the articles of interest. I hope you enjoy this monthly newsletter. Remember whether you are buying a new or resale home it is important to have a realtor to represent your interests. If you know of anyone who is thinking about buying or selling please let me know.  You can search the MLS from my website at www.greathouseaz.com.

If you have a rental property and need a property manager or if your Homeowner's Association is looking for a new management company please email Karen Van Vugt at ftr9558@cox.net. Karen manages over 250 rental units and several Homeowner's Associations in the greater Phoenix area.

If you no longer want to receive this newsletter reply with remove in the subject line.

Sincerely,
Pat Hune
Broker
greathouseaz@gmail.com
1st Southwest Realty
www.greathouseaz.com
Search the real MLS from my website!
Cell 480-703-1976
Fax 480-304-9099


Good News

RECORD SALES - Sales in June 2011 were up 13.4% with 11,125 homes sold as compared to May 2011 when 9,814 homes were sold.  And this number does not include another 1300+ homes sold at Trustee's Sale.    June 2011 sales were 19.9% higher than June of 2010.  More impressive is the 11,125 sales in June represent  the highest sales figure of the decade, even surpassing the two highest sales figures in the 2005 boom of 10,252 and 10,031, in June and August of 2005, respectively.  All I can say is wow.

FEWER HOUSES ON THE MARKET -  New Inventory dropped again for the third month in a row, albeit by only .5%, adding 10,410 new listings to the total inventory pool.  June’s figure is a 15.4% decline over June 2010.  With the exception of a small 1% increase in January, the total inventory trend line has been declining since December.  June’s 29,203 figure is the first time that the total inventory figure has dropped below 30,000 since STAT began tracking this metric in June 2008. Reduction in total inventory directly affects the market balance.  Declines in inventory
weigh in Sellers’ favor and can positively influence pricing.  On the bad news side buyers will find it harder and harder to get great deals.

FORECLOSURES DROPPING - Foreclosures pending, which fuel lender owned sales, dropped 9.51% to 27,616 in June, continuing a downward trend that started from a high of 50,568 in November of 2009.  The June foreclosures pending figure represents a 45.39% drop from the decade high.  This will further decrease inventory and will put upward pressure on prices.


Bad News

BARGAIN PRICES - Prices are still incredibly low.  This is bad news for people who are not upside down on their loans but still need to sell.  In Phoenix, as well as other metropolitan areas,  prices for low-end homes, which made especially large gains during the housing boom, have now dropped much more sharply than those for high-end properties.   The disproportionate number of low end properties in the sales mix, as seen in the PPI Supplement (see link below), continues to exert negative pressure on median and average pricing.  The Valley’s elusive pricing recovery rests on the supply and demand balance.  Supply appears to be righting itself, as is demand in lower end housing. What is more problematic is the demand for higher end housing, which remains depressed.

COMPETITION IS FIERCE  - The bargain hunters looking for lower end housing are having a hard time getting steals.  Often the buyers are outbid due to multiple offers especially on properties that are very well priced. Many buyers say "Well my friend just bought a condo at $30,000 close to ASU a few months ago.  Why can't I buy one for $30,000 today."  A few months is making a big difference in prices especially in the condo market where there is a lot of competition from both owner/occupants or winter home buyers who are wiling to pay more than an investor.  In addition the bank owned, HUD and Fannie Mae homes are restricted to owner/occupants for the first few days on the market.  Any property in reasonable condition and in a good location will be snapped up quickly.  Amateur investors are having a very hard time because they want to "steal" the property.  Experienced investors recognize the prices are so depressed that almost any purchase made today is already poised for upside in the future.

Articles
1) STAT Newsletter Link
2) Phoenix-area foreclosure rate keeps dropping
3) Shadow Inventory - Confusing Definitions
4) How long do I have to wait to purchase a home after a foreclosure, short sale or bankruptcy?
5) Apartment Sales and New Apartment Developments Increase


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1) STAT Newsletter Link

STAT is produced monthly  by the Arizona Regional Multiple Listing Service - the database realtors use to list homes for sale and that have sold.

http://www.armls.com/Libraries/STAT_and_PPI_2011/STAT-July-2011.sflb.ashx

The ARMLS Pending Price Index™ is a forecasting tool unique to ARMLS which predicts the average and median sales prices three months into the future based on pending
prices of properties in the MLS system in the contract-to close phase of escrow.

http://www.armls.com/Libraries/STAT_and_PPI_2011/PPI-JULY-2011.sflb.ashx

Highlights from the newsletter are:

NEW INVENTORY - New Inventory dropped again for the third month in a row, albeit by only .5%, adding 10,410 new listings to the total inventory pool. June’s figure is a 15.4% decline over June
2010.  Slowing of the new inventory flow into the market affects the total inventory and is seen as a positive and necessary recovery metric.

TOTAL INVENTORY - With the exception of a small 1% increase in January, the total inventory trend line has been declining since December.  June’s 29,203 figure is the first time that the total inven-
tory figure has dropped below 30,000 since STAT began tracking this metric in June 2008. Reduction in total inventory directly affects the market balance.  Declines in inventory
weigh in Sellers’ favor and can positively influence pricing.

MONTHS SUPPLY OF INVENTORY (MSI) - Months supply of inventory (MSI) declined from May’s 3.23 months to 2.62 months in June, representing a 18.9% decline, and following a steady downward trend started in January.  MSIs below 4 are typically seen as Sellers markets and exert upward pricing pressure.  Market wide MSI is a barometer of overall market health.  MSIs in smaller niche markets will have their own unique MSI and which could or could not follow the MSI trend for the entire market.

NEW LIST PRICES - Median and average new list prices both declined in June to $120,100 and $190,400 respectively. The Valley pricing trend appears to have flatlined, with little indication of immi-
nent recovery.  The 2% decline in median list price coupled with 2.6% decline in the average are clearly disappointing given other metrics showing signs of rebound.

The Cromford Report  on Pricing - When a market is falling the monthly average $/SF for sales transactions is consistently lower than the annual average $/SF. When this ceases to be true we have a signal of a market that is attempting to turn round. On June 23 we see a monthly average of $83.85 and an annual average of $83.74. The difference is only slight but like the olive leaf carried by Noah's dove, this is a promising sign that price declines have abated.  We can certainly say that pricing for sales closed between May 23 and June 22, 2011 was on average higher, on a price per sq. ft. basis, than sales between June 23 2010 and June 22, 2011. We saw a similar thing occur in November 2009 confirming price rises that unfortunately did not hold once the tax credit ran out. This signal turned negative again in July 2010 and has stayed negative until the last three days.  If market pricing continues to improve this positive advantage for the short term average over the long term average will likely hold. Stock traders will recognize this kind of signal from their market. For stocks prices turn round frequently, but for residential real estate these signals tend to stay either positive or negative for months if not years.
FORECLOSURES PENDING - Foreclosures pending, which fuel lender owned sales, dropped 9.51% to 27,616 in June, continuing a downward trend that started from a high of 50,568 in November of 2009.  The June foreclosures pending figure represents a 45.39% drop from the decade high.  The downward trajectory of foreclosures pending should cross below 2008 levels by July,
and fall below 20,000 in the August /September timeframe. Foreclosures exert negative pricing pressure, and a decline in foreclosures pending is seen as a positive.

LENDER OWNED SALES - In June lender owned sales (4,542) accounted for 40.8% of the total sales.  Lender owner sales, as a percentage of total sales, have been trending downward from February’s high of 49.6%.

SHORT SALES - The short sale component increased from 21.4% of total sales in May to 27% in June.  A shift in the lender owned sales/short sales balance in favor of short sales means that more homeowners have been able to work out agreements with their lenders and avoid foreclosure.

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2)  Phoenix-area foreclosure rate keeps dropping
July 12, 2011

Good news for the hard-hit Phoenix-area housing market: The rate of foreclosures continues to drop. A new report from the W. P. Carey School of Business at Arizona State University shows the rate has now fallen four months in a row.  Foreclosures represented 31 percent of the existing-home transactions in the market in June. That’s way down from 43 percent in January and February, 38 percent in March, 36 percent in April, and 35 percent in May. However, the report’s author says it’s still unclear whether the downward trend will last.  “Things are showing a lot of improvement, but we still have a long way to go, and some conditions affecting the housing market remain uncertain,” says W. P. Carey School of Business professor emeritus Jay Butler. “Even though the number of foreclosure prefilings has been declining for the last year, foreclosures continue to be the dominant force in the market. Recovery is moving at a glacial pace.”
The Phoenix-area housing market had almost 3,300 single-family home foreclosures in June. That’s down from about 3,500 in May and from more than 3,800 last June.  The median price for a single-family home resold in the Phoenix-area market in June (not new foreclosures) was $126,500. That’s up from $125,000 in May, but still significantly down from $143,000 last June.  “Although mortgage interest rates and prices are attractively low, tighter underwriting standards, a struggling economy and job market continue to be obstacles for the return of homeowner/occupants as the primary force in the market,” explains Butler. “Investors like the low prices now because they know they can sell in several years for a profit, but most people buy a home because they have confidence in their future, in their jobs, in their families. Until the economy really starts to recover, that confidence is lacking.”

Butler also predicts another possible wave of resales in the future that could bring prices down again.  “If the market really starts to improve, many people who bought very cheap foreclosures may try to ‘flip’ their homes to lock in a profit, causing a surge in supply,” says Butler.  Overall, activity in the market is brisk, since we’re in the summer resale home season prior to the start of school and the holidays. About 10,500 single-family homes changed hands in June, similar to the 10,720 transactions last June.  In the townhouse/condominium market, more than 400 foreclosures happened in June. That’s way down from 585 foreclosures last June. The median resale price for a townhome/condo in June was $75,950, significantly down from $94,600 last June.

Butler’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/realestate/Phoenix-Resale-Market-Reports.cfm



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3) Shadow Inventory - Confusing Definitions

Chris Heagerty July 2011

(Editor's note - There has been talk of shadow inventory since the housing crisis started.  In addition there has been a lot of debate about if shadow inventory even exists.  The National Association of Realtors says "Whatever the level of shadow inventory that was present, the impact has been minor. In addition, many people – especially those who have lost their jobs – are concerned about foreclosure.  It is likely that foreclosures will continue to rise through the remainder of the year.  But unlike this time last year, today's home buyers are fighting over the foreclosed properties. Consequently, any newly foreclosed homes will not linger in the marketplace for long.")

The shadow inventory label itself is continually reinvented.  Some define the shadow as properties whose mortgages are at some stage of delinquency or foreclosure and have not hit the market. Others, such as Standard & Poor’s, only include  loans that were packaged and sold as securities by Wall Street, and do not have a guarantee from government-sponsored  entities such as Fannie Mae or Freddie Mac .  Corelogic estimates current shadow inventory by calculating the number  of distressed properties not listed on multiple listing services that are either a minimum of 90-days delinquent, in foreclosure or in real estate-owned status.  Others include properties with negative equity mortgages, i.e., that are “upside down,” reasoning that those mortgages have a high likelihood of foreclosure eventually. The variations are vast, and complicate estimations of the shadow inventory’s size. A look at lender owned sales and lender owned listings does not tell the full distressed property story, because there are still properties not on the market lurking in the shadows.  Since the onset of the Great Recession, shadow inventory has cast a pall of fear over an already troubled market.  A shadow, like its namesake inventory, morphs to appear greater than its physical counterpart.  Because shadow inventory is unseen, it remains ill defined and a source of angst.

The purest definition of shadow inventory begins with trustee deeds, where the trustee has taken back the property from the original borrower. It then subtracts trustee deeds purchased by a third party before the property is acquired by the  lender.  The remainder is acquired by a lender, and those properties are either listed for sale, or held in inventory for an indefinite period.   The difference between what the lender acquires and what is listed, plus any accumulated lender retained inventory, is the shadow inventory in the truest sense. The Cromford Report indicates that the Valley’s residential shadow inventory has remained relatively steady in the 8,000 range since well before November, 2010.

Comparing disparate estimates of shadow inventory becomes problematic unless there is a uniform definition used by all.  In the broadest and most pessimistic sense, any property in distress sits in the shadow and could wend its way into the market.  Lenders, though, prefer not to be in the property liquidation business.  Thus all inventory they acquire will eventually be added to the market and influence the supply and demand balance. The good news is that trustee deeds acquired by lenders are trending downward and at some point all of this property will come out of the shadow and be absorbed.


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4) How long do I have to wait to purchase a home after a foreclosure, short sale or bankruptcy?
(Editor's note: Everyone's situation is different. Consult with a mortgage professional to review your financial situation.)

The current economic and housing crisis has made this a common question for realtors and lenders.  The number of U.S. homes receiving a foreclosure filing will climb about 20 percent in 2011, reaching a peak for the housing crisis, as unemployment remains high and banks resume seizures after a slowdown.  In March 2011 1 in every 542 housing units in the United States received a foreclosure filing. Nationwide, 1 in 45 homes received at least one foreclosure filing during 2010. In December 2010, actual bank repossessions nationwide totaled 69,847.  The number of bankruptcies filed by Americans topped 1.53 million last year as a result of long-term high unemployment rates and depressed home prices. Many people were unable to successfully make ends meet and sought court protection to clean their slates.
This means thousands of former homeowners who understand the value of homeownership will be anxious to buy as soon as they are able.  The waiting period varies by the type of loan used to purchase the home.  Another factor is if the buyer was late on their payments if the house was sold as a short sale. If you are ready to buy a home in the Phoenix area please contact me. You can search the real Phoenix area MLS from website at www.greathouseaz.com


Waiting period to purchase a home after a foreclosure:
1) FHA - 3 years from completion of foreclosure
2) VA - 2 years from completion of foreclosure
3) USDA - 3 years from completion of foreclosure
4) Conventional - 7 years from completion of foreclosure

Waiting period to purchase a home after a short sale:
1) FHA - 3 years if in default at the time of the short sale. No waiting period if they were current with no late payments on their mortgage and other installment debt at the time of the short sale and the proceeds from the short sale served as payment in full.
2) VA - 2 years (No specific information provided, treated like a foreclosure)
3) USDA - 3 years
4) Conventional - 2 years 80% maximum LTV, 4 years 90% maximum LTV, 7 years LTV per the eligibility Matrix

Waiting period to purchase a home after chapter 7 bankruptcy:
1) FHA - 2 years from discharge date
2) VA - 2 years from discharge date
3) USDA - 3 years from discharge date
4) Conventional - 4 years from discharge date

Waiting period to purchase a home after chapter 13 bankruptcy:
1) FHA - 1 year of on time payout myst elapse; buyer must receive permission from the court to enter into a mortgage
2) VA - 1 year of on time payout myst elapse; buyer must receive permission from the court to enter into a mortgage
3) USDA - 2 years from discharge date
4) Conventional - 2 years from discharge date or 4 years from dismissal date

(Source RealtyTrac Inc)


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5) Apartment Sales and New Apartment Developments Increase

J. Craig Anderson, Peter Corbett - Jul. 2011 The Arizona Republic
DORSEY PLACE CONDO PROJECT SELLS

A manager of a San Diego-based real-estate-investment fund said it has purchased the bulk of a four-story, residential and retail condominium project built in 2007 near Arizona State University in Tempe. The investment firm, Pathfinder Partners LLC, said Monday that it paid the original developer $11.3 million for Dorsey Place, 1275 E. University Drive, in Tempe. The deal excluded six condo units the developer already had sold to individuals, said Pathfinder partner Lorne Polger, who co-founded the company with Mitch Siegler in 2006.  Dorsey Place sits on roughly 1.4 acres and consists of 90 residential units and one retail space totaling about 6,500 square feet.  According to documents on file with Tempe, the project's original developer was William Bannister and it was approved by the city in 2005.  Pathfinder officials said the project's original development cost was $23 million - more than twice what Pathfinder paid in the deal announced Monday. The six individual condo-unit owners paid in excess of $400,000 each for their condos, the company added.

Polger said Pathfinder intends to lease out the remaining 84 residential units as apartments with minimum lease terms of 12 months. About half are furnished and had been made available for short-term rental by the original developer, he said.  Pathfinder also plans to find a commercial tenant for the retail space, which never has been occupied, Polger said.  Dorsey Place is Pathfinder's first acquisition in Arizona. The company specializes in buying distressed, multifamily properties. Polger said the firm is about to announce a second acquisition in Mesa.

FIRM BUYS DOBSON SPRINGS APARTMENTS

San Diego-based investment firm Pathfinder Partners LLC said Monday that it has closed on a second investment property in Mesa, just two weeks after buying a condominium project near Arizona State University.  In partnership with Arizona- and British Columbia-based Bruckal Properties and its affiliate New Summit Partners, Pathfinder has purchased Dobson Springs Apartments from an affiliate of Wells Fargo Bank, the company said.  The purchase price for the 120-unit complex, 1325 W. Guadalupe Road, was $5.4 million, and Pathfinder said it plans to invest $500,000 in upgrades to the community.  The Dobson Springs purchase comes on the heels of Pathfinder's July 12 acquisition of the 84-unit condo project Dorsey Place in Tempe, which the firm plans to convert into apartments.

OLD RAWHIDE SITE IN SCOTTSDALE MAY BECOME NEW APARTMENTS
A revised plan for the former Rawhide site in north Scottsdale would include 262 apartments southeast of Pinnacle Peak and Scottsdale roads. Developer Larry Gabriele initially planned the Villa Volterra condominiums on just under 17 acres but now intends to build the Collection of Silverstone Luxury Apartments. It would include primarily one- and two-bedroom apartments in buildings of two or three stories, some with attached garages.  "We're seeing a firmed up market on the rental side, especially in north Scottsdale," said Gabriele, managing member of North Scottsdale Apartments LLC. Apartment development has been scarce in north Scottsdale and rents are on the rise.

Average rental prices in the north Scottsdale/Fountain Hills submarket for the second quarter are $942 per month, up 1 percent from a year ago, and just 6.8 percent of the apartments are vacant, 3 points below the Valley rate, said Pete TeKampe, Marcus and Millichap vice president of investments. "That market is getting tighter by the day, turnover is low and demand is very high," he said.

New units scarce in Scottsdale - North Scottsdale has not seen new apartments built since 2005, when the P.B. Bell Cos. opened Desert Parks Vista northwest of Bell Road and 94th Street with 202 units.  Only eight projects Valley-wide with 1,031 apartments were under construction in the first quarter, TeKampe said.  Gabriele is seeking approval in September for his Silverstone apartments from the Scottsdale Development Review Board. Construction would start by the end of the year if all goes well and the first units could be ready a year later, Gabriele said.  It is too early to set rents but prices should range from about $800 for the one-bedroom apartments up to $1,600 for three-bedroom units, he said.  The Collection at Silverstone would be southwest of the Appaloosa Library with access from Scottsdale Road at Silverstone Drive and also 74th Street.Whitneybell Perry Inc. of Phoenix is the architect.
The apartments would be the third project on the 160-acre Rawhide site. The Western theme park relocated to the Gila River Indian Community in 2006 after 35 years in Scottsdale. The library was completed in May 2010 and V at Silverstone, a retirement community, opened last September .  Other residential and retail development is planned at Silverstone.  Meanwhile, Scottsdale is negotiating with a developer for a new $48 million Western attraction called Stagecoach Gap at 94th Street and Bell Road.

Demand for condos collapsed - Gabriele bought the apartment site at Rawhide in 2006 for $22.3 million and got approval for 262 condominiums with underground parking. But the market collapsed and the property has been idle.  "Having been in this business for some 45 years, I've been through a few economic ups and downs," Gabriele said. "The difference with this one is that it's so sustained."  Apartment vacancies in the Valley were 9.9 percent in the first quarter. That was the first time the rate has been below 10 percent in four years, said TeKampe of Marcus and Millichap. "Apartments are one of the few bright spots in our real-estate economy right now," he said.


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