Archive for October, 2009

Breaking News – Home Buyer Tax Credit Extended and Expanded

The U.S. Senate has agreed to extend and expand the home buyer tax credit. Do you think this is a good move?

I don’t know where our government is getting all this money to hand out to home buyers. It seems to me our lawmakers work without any budget and that they think money falls from the sky. Our country has trillions in debt and is giving away more money, obviously spending way more than its means.

Home prices are historically low, interest rates are extremely low and equity is instant. These alone are enough reasons to buy a home NOW. I think our government should stop spoiling home buyers and let them realize the built-in benefits of buying a home NOW. Let potential buyers know that buying a home in today’s market is good for them and stop bribing them unnecessarily. It’s like giving a child candy for being good. The child should realize that behaving well is good for him or her and for his/her future.

Lawmakers — if you decide to extend the home buyer tax credit, be discreet enough not to increase our taxes.

For a full story on this news, click here.

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October 28, 2009 at 7:28 pm Leave a comment

What will it take for Metro-Phoenix’s Home Values to Rise Faster?

1. Job creation and stability: Buying a home is not only about location, it is also about financing. People need decent jobs that they can hold onto in order to buy homes. The state’s jobless rate dropped slightly to 9.1 percent in September, the Arizona Department of Commerce reported this week; the rate was 9.2 percent in July. That improvement, while modest, is good news for Arizona and the nation as a whole. If people have better-paying jobs, they are more likely to be able to afford bigger homes in higher price ranges. Cities around the valley could also work towards attracting businesses that will employ high-salaried employees, not just service workers.

2. Lender-Owned Pricing:
The sooner banks price the homes they’ve taken ownership of at market value rather than below market value, the sooner we will see prices go up. At the moment, banks list their lender-owned homes at 10,000 to 15,000 below market value – for a reason: This elicits multiple bids, which usually ends up driving the selling price to a level at or above market value. It would help the market rebound if the banks price homes close to market value. Of course, this is a double-edged sword for the banks. If banks price homes higher, they would probably not get above-list-price offers. However, when they price below market value, it stalls the housing recovery. But banks don’t really care about the housing market – only profits.

3. Loan Modification Approval:
If qualified borrowers are allowed by their banks to modify their loans to terms that are beneficial to homeowners in the long-term, the number of foreclosed homes would be reduced. However, not all homeowners can afford to pay for their homes despite loan modification and therefore may still end up in default. And these homeowners are likely to short sale their homes down the road.

4. Short Sale Pricing:
Short sales are dominating the Metro Phoenix market. The homeowner sells his or her home for less than what it is owed, which requires lender approval. The success rate of short sale approvals have increased by half. If we are to see home values rise much sooner, lenders would need to be more careful about approving short sales at very low prices. This quarter, the short sale purchase prices have decreased to levels comparable to foreclosure prices. A bank typically approves a short sale offer which is 10 percent less than the broker’s price opinion. To keep home values from going down, banks probably should think of approving sales at a level not less than 5 percent below the broker’s price opinion. Realtors listing short sales should price homes based on their value, not simply to elicit a quick offer. Some Realtors’ strategy is to price their listings lowest within the neighborhood to get a quick offer, even if the home could realistically sell for more. This practice may turn the sale over quickly for the agent so he or she can move on to put other homes on the market, but it is not helping home values go up sooner.

In a crazy market where short sales and foreclosures are dominating, nobody really seems to care about overall home values. The homeowner who short sells his or her home is not getting a single penny from the sale. So, it does not matter to him what the home is priced as long as he avoids foreclosure. The lenders are so overwhelmed with selling millions of properties, they are happy to sell their inventory quickly and for less. Similarly, some Realtors, not wanting to spend a lot of time or effort with each listing because of the reduced fees they are earning, look for quick sales without regard for the cumulative effect these low prices are having on the market and future sales prices.

Obviously, the best thing that can happen for everyone with direct or indirect ties to real estate – homeowners, banks and Realtors — is for prices to go up. An increase in traditional real estate sales where the homeowner is selling to profit from the house will help home values to improve. These homeowners care about home values and would like to sell for a good price.

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October 23, 2009 at 4:10 pm Leave a comment

Arizona Real Estate Market Great For Canadian Buyers

Earlier this month, a story in a prominent newspaper in Canada reported how many Canadians are taking advantage of the incredibly low prices of homes in Phoenix while the Canadian dollar is really high.

Prices on houses in some areas of Metro Phoenix are 50 percent lower than they were in 2005. Canadians can purchase a home in Arizona for an average 35 percent down payment, depending on the institution they get a mortgage from – or they can pay cash.

Canadians may purchase a home for investment purposes, as a winter home, or both. Phoenix averages 320 sunny days per year and is the golfing capital of the United States – both strong selling points to our friends north of the border.

There are also many active-adult communities available to those who are at least 55 years or older. These communities offer state of the art amenities and activities including exercise rooms, ballrooms, swimming pools, billiard halls, golf courses, tennis courts and more. These developments are very popular areas as second homes among Canadians in their senior years. In addition, affordable neighborhoods with varying age groups including families and seniors are also great options for those looking for a different lifestyle. Most Canadian visitors – often dubbed “snowbirds” – visit Arizona during the cool months of November through May, then return back to Canada in the summer.

With the Canadian dollar strong and home prices at historic lows, now is a great time for those snowbirds who haven’t already invested in their own home in Arizona to consider doing so.

I occasionally have the pleasure of working with Canadian buyers and sellers and enjoy helping them with their specific needs. If you have questions on how a Canadian or other foreign buyer can purchase a home in Arizona, please feel free to contact me at (480) 650-0075.

October 10, 2009 at 8:36 pm Leave a comment