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
Home sales set a record - Last week KTVK Channel 3 featured a story about positive signs that the Real Estate market in Phoenix-Scottsdale is showing. March of this year achieved the fifth highest monthly sales volume in 66 months,  lowest inventory in 12 months and 22.8% reduction in pending foreclosures.  This is all welcome news!  It appears that the foundation has been set for a rebound with postive signs in 2011 for Real Estate in the Valley of the Sun!

Please click here:  http://sage-scottsdale.com/pages/news.php then on the watch video link for the Channel 3 story

Jobs and more jobs - On March 29th Mayor Gordon announced that Phoenix will become the home to the world’s largest health care data center, Institute for Advanced Health, expected to attract thousands of biomedical jobs to the Valley.   Yulex will be expanding its rubber production capabilities with a new facility in Chandler which will create 100 full time jobs and 500 part time, and grow to 300 full time in five years.  First Solar’s new plant on the General Motors Proving Grounds site, is expected to bring 600 new jobs and potentially hundreds more if it entices its products’ supply chain to relocate here. It expects to start construction in Q2 and be completed by 2012. Gestamp Renewables plans to build a steel facility in Surprise which will employ 50 in the first phase, bring in 100 construction jobs and eventually employ 300 at the factory.


Bad News
Home Prices - The median and average pricing picture for both new list and sales prices, which continue on a disappointing downward trend. The pricing metrics are influenced by distressed properties’ (both lender owned and short sales) disproportionate percentage of total sales.

Slow population growth - The Phoenix Metropolitan area (Maricopa and Pinal Counties) which grew 28.9% from 2000 to 2010, grew only .017% from 2008 to 2009 and 2009 to 2010.2   From August 2009 through July 2010, net migration into the Valley was negative, ranging from a loss of 1,000 in May of 2010 to a high of 25,500 in August of 2009, or an average monthly loss of 13,958.   Starting in August of 2010 the loss pattern reversed and the Valley saw positive, albeit small gains, averaging 2,769 per month.


Articles
1) STAT Newsletter Link
2)  Phoenix-area foreclosure rate continues to drop
3) How long do I have to wait to purchase a home after a foreclosure, short sale or bankruptcy?
3) Real Estate News Briefs
4) Echo Boomers Will Define the Future of Homebuilding
5) Second Chance For Stalled Tempe South Bank  High Rise Development


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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-May-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.


Highlights from the newsletter are:

Sales Month over Month - Sales fell 6.1% to 9,331 in April, 602 below March’s 9,933 sales. While the March figure was the highest in the last five years, April’s lower number is still positive news.

Sales Year over Year - Sales were up only .8% over April 2010.  Still April had the ninth highest sales figure of the decade.  Review of the last twelve months shows year over year declines from May  through November 2010 over May through November 2009.  However, in December 2010 the trend reversed showing year over year gains from December 2010 through April 2011.

New and Total Inventory - Following the wave pattern of new inventory which started in December, April added 1,438 fewer new listings to the market than March.  The 10,874 new listings added in
April is 11.7% lower than March, and 22.5% lower than April 2010.  A slowing of new inventory added to the market each month tilts the supply toward a more balanced market, and in the current market context is seen as a positive metric.

The good news is the downward trend line for total inventory started in December and continued in April at  34,515. This represents a 8.3% drop since March, an 18.7% decline
since the downward trend began in December, and an overall 17.3% year over year decline.  April’s total inventory figure is the lowest since the May 2009 figure of 33,902.
This decline in total inventory is seen as positive for the supply and demand balance.

Months Supply of Inventory - MSI dropped from 3.79 in March to 3.70 in April.  This is the second month in a row that the MSI has been under four. MSIs above six are indicative of a buyer’s market, and exert downward pressure on pricing.  MSIs between four and five are typically seen as balanced, where supply and demand are close to equilibrium.  MSIs below four are viewed
as seller’s markets, and exert upward pressure on pricing.  April’s MSI figure is a positive indicator.  MSI as calculated for STAT is a macro look at the entire market and should only
be used as a barometer of overall market health.  Smaller niche markets will have their own specific MSIs, and are a more reliable measure of supply and demand in smaller geographic areas.

Prices - Median new list price remained almost level, increasing only 1.1% over last month to $121,300 in April. The April figure is a 12.1% decline from April 2010.  The January 2010
through April 2011 median list prices represent the sixteen lowest median list prices of the decade.  Average new list price fell 3.9% from last month to $193,200.  This is the first dip below
$200,000 since December’s $191,000.  April’s average list price is the second lowest of the decade.  Overall both the median and average list price trend lines have remained relatively
flat since November 2010.

Like the new list prices, median and average sales prices have shown only minor movement.  Trend lines for both median and average sales price remain relatively flat. The April median
sales price at $111,000 has fluctuated only $750 since December.   The average sales price rose slightly (2.2%) in April to $161,300.  The April average sales price is the ninth lowest of the decade, only $5,692 above the decade low of $155,605 in February 2010.  All in all, median and average sales prices remain low, with the overall changes in median sales price of –6.7% and average sales price of –1.7% since August.

Foreclosures and Lender Owned Sales -  Foreclosures pending continued on their seventeen month downward trend to 33,773 in April.  This represents an 8.8% drop over March, and 33.2% decline from the high of 50,568 in November of 2009.  The steady decline in foreclosures pending is good news, even though they remain at elevated levels.  Foreclosures pending wend their way into the market as lender owned properties, and eventually become lender owned sales, a large component of distressed properties.   Eliminating or significantly reducing distressed property influence is a prerequisite to moving the market prices to healthier levels.

Lender owned sales declined by 436 sales to 4150 in April, down from last month’s 4,586.  Lender owned sales represented 44.5% of total sales in April, and have been hovering between 43% and 49.6% since September 2010, with the eight month average of 45.7%.

Distressed Sales - Distressed sales are a composite of lender owned sales and short sales, and their disproportionate percentage of total sales exerts strong negative pressure on pricing.  April’s
distressed sales at 5,989 were 64.2% of total sales.  Distressed sales as a percentage of total sales, which hovered around 70% in December, January and February, declined to
65.3% and 64.2% in March and April respectively, possibly beginning a downward trend in the percentage of total sales.  April short sales fell to 1,839, a 3.2% drop from March.  Short sales as a percentage of  total sales remained relatively unchanged from March at 19.7% for April. The trend line for short sales has remained relatively flat over the past twelve months.

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2)  Phoenix-area foreclosure rate continues to drop
May 10, 2011
For the second month in a row, the hard-hit Phoenix-area housing market saw a drop in the foreclosure rate. A new report from the W. P. Carey School of Business at Arizona State University shows what might be the beginning of a welcome trend.  In January and February, 43 percent of the existing-home transactions in the market were foreclosures, but that declined to just under 38 percent in March and now to 36 percent for April. The numbers appear to be moving in the right direction for those hoping to see some stability in the market. However, the author of the new report says not to celebrate yet.  “The actual number of monthly foreclosures in the Phoenix area is still very high,” explains Associate Professor of Real Estate Jay Butler. “It’s like flying through a hurricane, and we may just be in the eye right now. There’s probably more of the storm to go through, and we could see another wave of foreclosures.”

In April, the Phoenix area had about 3,750 foreclosures in the existing-home market. That’s down from about 4,150 in March, but still up from about 3,500 last April. Butler doesn’t expect to see clarity in the market’s direction until October or November for several reasons.  “Some homeowners have a lot of frustration built up, having used many of their resources like 401(k)s and other savings accounts to keep their homes; it’s unclear how much longer they can hold on,” says Butler. “Also, there are ongoing discussions about even stricter mortgage guidelines, inflationary concerns, changes in the secondary market and possible lowering of the Federal Housing Administration mortgage limit, which could strongly influence the market. It will take time for all of this to play out.”

The median price for existing-home resales in the Phoenix area (not new foreclosures) in April was $125,000, the same as in March. However, that’s still way down from $144,000 in April of last year, but Butler says prices may finally start to go up some.  “Those looking for the cheapest homes in the Valley have already snapped up many of the deals,” he says. “We’re now seeing low-end buyers have to look into different, slightly more expensive neighborhoods to find opportunities.”  We’re now in the resale home season that traditionally lasts until August, so the market is seeing a lot of activity. About 10,300 existing homes changed hands in April.  In the townhouse/condominium market, 550 foreclosures happened in April, slightly down from 580 in March, but still up from 515 last April. The median price in the traditional townhome/condo market in April was $83,325, slightly up from $80,000 in March. This is still a big drop from last April’s $95,000 median price.

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) 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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4)  Real Estate News Briefs

AZ/Colorado foreclosures up 10% in April - PR Newswire - ForeclosureWarehouse.com recently reported that in April, the top five states with more foreclosure opportunities were California, Florida, Colorado, Arizona, and Georgia. From March to April, only Florida saw a decrease at -12.07 percent in foreclosures. California foreclosures increased 4.95 percent, Colorado was up 13.98 percent, Arizona was up 11.96 percent, and Georgia was up 7.22 percent. This is paving the way for astute investors to purchase homes in desirable areas for a steep discount on their actual value. This is all good news for the investor or home buyer. This is an ideal time to buy a home if an individual is in a good position to purchase a house; the buyer has job security, has a credit score high enough to be approved for a loan, has enough money for a down payment (usually 20 percent), and is ready to establish roots in a community, for example.

http://www.prnewswire.com/news-releases/arizona-and-colorado-home-foreclosures-raised-10-percent-in-april-120687959.html

Phx underwater mortgages threaten recovery - Bloomberg - Homeowners who are underwater may be slower to relocate for employment, leaving job-poor markets clogged with surplus workers. Would-be entrepreneurs are unable to tap their non- existent home equity for start-up cash, meaning some good ideas for new businesses never get off the ground. Most of all, millions of homeowners who have seen their principal asset melt in value are in no mood to spend. During the easy money days last decade, rising home prices helped power the American economy. From 2000 to 2005, homeowners funded about 3 percent of annual consumption spending by borrowing against the equity in their homes, according to a 2007 paper by Alan Greenspan, then-chairman of the Federal Reserve Board. Lingering effects from the housing implosion can be glimpsed in retail sales and consumer confidence readings, economists say. Nationwide, almost two years after the recession's end, inflation-adjusted retail sales may have declined in March.

http://www.bloomberg.com/news/2011-04-27/phoenix-underwater-mortgages-show-housing-s-threat-to-recovery.html

Phx Law School to move downtown - www.azcentral.com - The growing for-profit Phoenix School of Law is moving downtown this year into bigger digs at The Tower at One North Central near Washington Street, providing more potential customers for downtown businesses and creating some new jobs. The school, owned by InfiLaw System, has been growing since it was founded in 2004. It is now in a building at 4041 N. Central Ave., ,near Indian School Road. Its downtown lease, which starts Aug. 1, ,doubles its space for new students and employees. The school's current enrollment of about 700 students will increase by 350 new students for the school year that begins in August, said Scott Thompson, CEO and president of Phoenix School of Law. Thompson said that with the continued increase in students and the addition of new certificate programs and specializations, the school will need to hire more people, adding to its current 100 faculty and staff members.

http://www.azcentral.com/business/articles/2011/04/26/20110426phoenix-law-school-arizona-move-downtown.html#ixzz1KgSGQZGH

Medical Marijuana & Fair Housing - AAROnline - Attorney Andrew Hull writes: As many know, the hot issue of the impact of the new medical marijuana law in Arizona has many confused as to how they should proceed with their tenants and employees. In the final analysis, it appears that the U.S. Department of Housing and Urban Development has unequivocally determined that at least as to federally funded housing, a landlord can refuse to permit the use of medical marijuana and other medical marijuana — related conduct. This does not mean that the landlord must evict a tenant if they or their guest use medical marijuana in compliance with state law. There has been a suggestion that if the landlord agrees to grant a "reasonable accommodation request" by a tenant for the use of medical marijuana, the landlord must put in place specific standards for determining when the request would be granted.

http://www.aaronline.com/azr/2011/April/Medical-Marijuana-and-Fair-Housing-Update.aspx

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5) Echo Boomers Will Define the Future of Homebuilding (Once They Define Themselves)
Bigger than the Baby Boom, this younger generation will create a new wave of demand for housing and all the materials it takes to build a home …eventually.
BY BENDIX ANDERSON
ARIZONA REALTOR® MAGAZINE  APRIL 2011

(Editor's note:  As the US population of baby boomers reach retirement age they may decide to down size, buy two homes - one for the winter and one for the summer, buy an RV to allow them a mobile lifestyle or other housing changes.  It is important sellers understand what these buyers want. Sellers will either need to modify the home to match the buyers demands or price the home low enough to allow the buyers to remodel the home to fit the buyer's needs.)

The number of children born each year increased sharply for about 20 years from around 1980. Today, there are 81 million “Echo Boomers” who were born from 1981 to 1999, compared to just 78 million Baby Boomers born from 1946 to 1964. They’re also more diverse: More than 40% of Echo Boomers belong to an ethnic minority, compared to less than 30% of Baby Boomers, the Joint Center for Housing Studies at Harvard University estimates. For the most part, these are the latter-day children as well as the grandchildren of Baby Boomers–thus the “Echo” name. They’re also called Generation Y or Millennials.  The Echo Boomers are probably going to make news for years to come, in the same way that the Baby Boomers before them dominated the national landscape. But at least for housing, that news hasn’t happened yet. Even the oldest Gen Y members—those born in 1981—haven’t turned 30 yet. The peak of the Echo Boom—the more than 4.1 million people born in 1990—are still two years away from graduating from college. And that’s assuming they take four years to matriculate; there’s evidence it’s taking Gen Yers a few extra years on average to get their diploma, putting off even further their entrance into the housing market.

Economic Headwinds
One popular image of Generation Y—the 40% of adults in their 20s who move back home with their parents at least once—can lead pundits to ask whether Echo Boomers will ever move out of the toughest economic times in decades. The unemployment rate for workers aged 20 to 24 is 15.7%. As writer Derek Thompson notes in the Atlantic Monthly, “You can’t become financially independent on food stamps.”  To make matters worse, much of Gen Y started the recession deep in debt. In 2006, the average public college student owed $17,250 from loans. That’s more than twice the $8,000 in average debt 10 years before, according to the American Association of State Colleges and Universities.  “Gen Xers probably already have their first home,” says Stephen Melman, director of economic services at the National Association of Home Builders. “Gen Yers are probably looking for their first job.”

A Desire To Own
Despite all this bad news, Millennials have grown more confident about the economy over the last year, unlike older Americans, according to research from the NPD Group.  Almost half of Generation Y respondents said they were somewhat to very likely to buy a home in the next three years, according to a poll by the Concord Group taken in the first quarter of 2009. Like most housing research firms, Concord focuses on Echo Boomers who were born before 1990 and who are now old enough to have started their professional lives.  More than half of the members of Generation Y would trade lot size for proximity to shopping or work, and a third will pay more for this easier access.

A little less than half of these Generation Y respondents expect to buy their first home by the time they are 30, and three-quarters expect to buy that first home by the time they hit 35, according to Concord. That’s reason for builders and dealers to cheer especially loudly, as younger buyers now account for much of the scant demand for housing. The number of first-time home buyers rose to 47% of all home sales from 41% of transactions in last year’s study, and was the highest on record dating back to 1981, according to the 2009 NATIONAL ASSOCIATION OF REALTORS®’ Profile of Home Buyers and Sellers.

SIZING UP THE GENERATIONS
After decades of dominating America’s demographic charts, Baby Boomers are being supplanted by Generation Y, aka Echo Boomers or Millennials. How they add up:
BABY BOOM1946 – 19644 million births per year
GENERATION X1965 – 19803.2 million births per year
GENERATION Y1981 – 19993.9 million births per year
GENERATION Z2000 –4.1 million births per year
Source: Census Bureau

Oh, the Urbanity!
These young professionals are widely supposed to desire a social, urban lifestyle. In the Concord Group’s recent Generation Y survey, 52% chose their current city for its lifestyle, the most popular response. “Nowadays you have Generation Y making location decisions first and then looking for a job,” says Tim Cornwell, director of the Concord Group. Those locations tend to be one of roughly a dozen metro areas, including New York, Los Angeles, San Francisco, and Portland, Oregon.  “It’s a pretty small list,” Cornwell notes. Research shows Gen Y is, on average, willing to give up prized home features to live closer to work and other amenities: Two-thirds of Gen Y respondents say living in a walkable community is important to them. More than half would trade lot size for proximity to shopping or work and a third will pay more for this walkability, says Charles A. Hewlett, managing director for research firm RCLCO.

Even among families with children, a third or more are willing to trade lot size and “ideal” homes for walkable, diverse communities, according to RCLCO. Compared to location, amenities provided by developers, such as a swimming pool, a game room, or wine storage, are much less valuable to Generation Y. Two-thirds called those amenities “not important,” though a handful of Gen Y respondents were still enthusiastic about a pool, the Concord study found. The most valued amenity? Safety. Just over half said secured access for the community was somewhat or very important. An exercise room and “community activities” were also important to well over a third or respondents, according to Concord.

Not Really So Different
Of course, it’s possible to overstate the case that Gen Y favors dense, pedestrian-friendly environments and nothing else. By they time they reach age 50, more than 60% of Echo Boomers see themselves “living the suburban dream,” residing next to a golf course, or even becoming “a country squire with acres of land,” according to Concord. More than two-thirds say yard space is somewhat or very important to them, and close to two thirds value a “large lot,” according to Concord. And even though about 70% say their next home will be an apartment, condominium, townhouse, or urban loft, that still leaves close to 30% who plan to move into a home with a yard.  “We are much more traditional than a lot of people expect,” Cornwell says.

Inside the home, a big kitchen is somewhat or very important to more than 90% of respondents. That makes the size of the kitchen the most important potential feature of the home, followed by an open floor plan. Also, more than 80% say having a place to park a car is important, the Concord study shows.  Clearly these Millennials don’t expect to rely on buses and subways—though close to 80% polled by Concord would pay more to be located near alternative modes of transit. Younger members of Gen Y, those now aged 20 to 24 years old, also value green building ideas and sustainable design. More than half say green building and sustainable design are “somewhat important,” while more than a fifth say these features are “very important.”

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6) Second Chance For Stalled Tempe South Bank  High Rise Development

The City of Tempe reached a deal with the South Bank developer that's designed to help it ride out the real estate recession. Tempe had agreed to sell the 27-acre site at the southeast end of Town Lake to The Wolff Company, for $42 million. Wolff spent more than $40 million to build roads, water lines and excavate land for basements when the economy tanked and work stopped.
Wolff still owes Tempe $28.7 million for a portion of the land, which the city agreed to regain ownership of while giving the developer five years to buy the property back. But Wolff will pay about $5.4 million in assessments during that time even though the city will own the land.   The transaction helps Wolff move forward on the land it's already paid for, Hallman said, while letting it buy back land as the economy improves.

South Bank is the second project stalled on this site, as a Peabody Hotel deal fell through a decade ago in the wake of a previous recession.  South Bank has approval for 3.6 million square feet in multiple mid-rise buildings. Hallman said Wolff deserves high marks for its commitment.  "Even when times get hard they do not walk away," Hallman said.