Real Estate News What's the buzz...? Well... it's been HOT out there. In fact, according to Valley weather experts, mid-July 2009 in Phoenix was the hottest on record. The average high temperature during the period was 112.7 degrees, topping the previous record of 112.1 set in the same time frame in 2005. Don't know about your electric bill for July, but mine hurt! Of course, along with blistering hot July's we get some spectacular thunder storms -- and this year has been no exception. This photo was taken over downtown Phoenix about 10 days ago.
But not only has the weather been hot, but so has the local real estate market! Especially for homes under $400,000. According to most experts, the "bottom" is either here, or so close that it doesn't matter. And interest rates on mortgage loans have continued to float around historic lows. But that may be changing. Lots of mortgage brokers we deal with tell us that rates will soon go up. It just doesn't take a rocket scientist to know that this is a fantastic time to buy. Oh, and we happen to know one rocket scientist who is doing just that! Tax Credit to Expire Soon There is very limited time to qualify for the $8,000 first-time homebuyer tax credit. As of August 1, there were only 121 days for first-time purchasers to take advantage of the credit. In order to qualify, the transaction must close before 11:59 p.m. on November 30, 2009. While November might seem like it is a long ways off, potential buyers need to account for the time it takes to shop for a home, present an offer on the property of their choosing, and manage the various contracts and logistics that are required in a real estate transaction. In fact, starting the process now may allow just enough time to reach closing before the expiration of the credit. As we've mentioned before, the clock is also ticking for buyers to maximize their purchasing power in this market. Affordable prices and low interest rates are aligning right now with the $8,000 credit to form an unprecedented opportunity that is not guaranteed to last much longer. Remember, all transactions vary, and there are different circumstances for each of them that could lead to a longer buying process. The tax credit is available to buyers who have not owned a principal residence during the three-year period prior to the purchase. The credit does not have to be repaid, and it must be claimed on your federal income tax return. Buyers are finding that the credit is allowing them to take advantage of opportunities they might not otherwise consider. For example, the $8,000 can be applied toward repairs and renovations in fixer-uppers that buyers might not otherwise have been able to afford. The extra funds can be invested for future use, or applied to new furniture and appliance purchases.
What some call health, if purchased by perpetual anxiety about diet, isn't much better than tedious disease. ~George Dennison Prentice
In this edition:
Signs of Life in the Housing Market The good news is that government efforts to prop up prices didn’t do much. The Wall Street Journal JULY 30, 2009 The economic crisis began with a housing downturn that spread to housing finance, and then to the entire economy in the form of a deep recession. Stability in the financial sector and growth in the economy will not resume until there is recovery in housing. But what will constitute a recovery in housing? Click here for complete article.
Bernanke sends mortgage rates lower CNNMoney.com - July 23, 2009 Home mortgage rates ticked lower after Federal Reserve Chairman Ben Bernanke said the central bank will continue to keep interest rates low. The average 30-year fixed mortgage slipped to 5.55% from 5.58% the week prior, and the 15-year fixed fell to 4.89% from 4.93%, according to the weekly national survey from Bankrate.com. Click here for complete article.
Phoenix home prices 'at or close to bottom' abc15.com July 15, 2009 TEMPE, AZ -- A new Arizona State University study of Valley real estate concludes home prices here are "at or close to a market bottom." Measurements of Phoenix-area home prices year-over-year by month are falling at a continually slower pace, according to the report. Click here for complete article.
Welcome to the bottom: Housing begins slow rebound
The bottom-line basics of short sales Due to several economic conditions -- rising unemployment, a fall in home prices and an increase in the amount of homeowners unable to pay their mortgages – many homes are falling into a new category called short sales. Here are some FAQ’s on short sales that every potential buyer or seller should know: What is a short sale? According to the National Association of REALTORS® a short sale is defined as “a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner.” In other words, a short sale occurs when the homeowner owes more on the home than it is worth. How is a short sale different from foreclosure? Foreclosure is the process in which the property is seized by the lending institution. A foreclosure occurs when a homeowner defaults on the loan that they are unable to pay due to deteriorating finances. The process of foreclosure varies from state to state, but generally begins with a Notice of Default issued by the lending institution after the homeowner has been 3 months delinquent on a mortgage payment. To avoid a foreclosure, which dramatically reduces a homeowners FICO credit score, many homeowners will attempt to sell their property as a short sale. How does a homeowner qualify for a short sale? The homeowner must have financial proof that they are upside down on the mortgage. They must demonstrate a financial hardship and prove their insolvency. This includes W-2 forms from the employer, bank statements, two years of tax returns, and other paperwork indicating income and debt obligations. Are there disadvantages to a short sale? Yes. Your credit score will be reduced by up to 200 points once reported to the credit bureau. The short sale process is long and arduous and many sellers’ submissions for short sales are declined by the lending institutions due to lack of proof of financial distress. Keep in mind that because of current economic conditions and the amount of distressed properties flooding the market, lenders are incurring a very large inventory. They are scrutinizing every short sale submission for any reason to deny the request. Are there advantages to a short sale? The simple answer is yes. Short sales are almost always a better option over foreclosure. First, you avoid having your home seized by a lending institution and second, you preserve most of your credit score. For buyers, a short sale could be a great opportunity to purchase a bigger home for less money. Be aware, though, the process of purchasing a short sale is generally more difficult and takes longer than a traditional home. This information is only a brief overview of a short sale. Whether you are buying or selling, if you think a short sale might be an option for you, know the advantages and disadvantages of a short sale and get with a REALTOR® immediately to explore your options. For more information on short sales, visit www.realtor.org.
August 2009 Mortgage Rates (from BankRate.com)
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Signs of Life in the Housing Market