Chad GrahamThe Arizona RepublicMay. 9, 2007 08:56 AM
Sales of existing homes in Maricopa Co. remained sluggish in April when compared to the past few boom years, according to new resale numbers released Wednesday. Still, it appears the market is following a traditional cycle, although "we may not like it," said Jay Butler, director of Realty Studies at Arizona State University's Polytechnic campus.Recorded sales for the month fell to 4,855 compared to 5,385 in March.
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While April sales were a bit stronger than in January and February, they were well below the 5,980 sales in April 2006 and 8,735 sales in April 2005. "While the resale market is tracking near historical norms, the levels should be well below those of the last few years, because the current market lacks the market frenzy to own and/or invest at almost any price and reasoning," Butler said. So far this year, 19,045 homes in Maricopa Co. have sold compared to 23,960 for the same period in 2006 and 36,060 sales in 2005. The median home price in April was $265,000 versus $265,470 in March and $264,900 in 2006.
Wednesday, May 9, 2007
Tuesday, May 8, 2007
Study: Flood of foreclosures coming
(05/01/2007)
By Holden Lewis • Bankrate.com
You have a one in three chance of losing your house to foreclosure if you got an adjustable-rate mortgage, or ARM, in 2004 through 2006 that had an initial teaser rate of less than 4 percent.
If you got a subprime ARM in that period, you started out with a higher rate, and that puts you at less risk. You have a one in eight chance of losing your home.
That's the takeaway message from a densely detailed research report by Christopher Cagan, director of research and analytics for First American CoreLogic. Cagan's study focuses on 8.4 million ARMs that were originated in 2004, 2005 and 2006. About 1.1 million of those borrowers will lose their homes in the next six to seven years because of payment shock brought on from rate resets or loan recasting, Cagan estimates.
Cagan assumes that property values will remain relatively flat from their December 2006 levels. If house prices fall -- and in many markets, they already have fallen in the first three months of this year -- foreclosures will be higher than his estimates. If house prices rise, there will be fewer foreclosures than forecast. Each 1 percent rise or drop in house prices will translate into roughly a 70,000 decrease or increase in foreclosures.
"These losses are (from) reset only," Cagan says. "I do not study job loss, death, divorce, illness or fraud." For example, the foreclosure rate is high right now in Detroit, but that has little to do with low-rate teaser loans, or subprime ARMs. Job losses are driving foreclosures in Motor City.
Pain will lingerIt's important to remember that Cagan's estimate of 1.1 million foreclosures is forecast to take place over the next six or seven years, not all at once. He says much of the pain will be felt next year and the year after.
"2008 is the pinch year," he says. "That is the pileup of 2/28s originated in 2006 at the peak of the market. And also, you have the 3/27s starting in 2005. Those two years are the peak market years; also very generous lending years, so you had the peak of the market, with people borrowing with nothing down or 5 percent down."
When Cagan talks about the peak of the market, he's talking about house prices. In much of the country, especially along the coasts, prices peaked in 2006. If you borrowed 100 percent or 95 percent of the home's value in 2006, you immediately were under water, owing more than you would get if you immediately sold your house and paid a real estate commission.
Subprime ARMs: 2/28, 3/27Most subprime ARMs are 2/28 mortgages, which start out with an introductory rate that lasts two years, and then are adjusted every six or 12 months thereafter. Subprime 3/27 mortgages have an introductory rate that lasts three years.
A lot of borrowers get 2/28 and 3/27 subprime ARMs with the intention of refinancing in two or three or four years, after they have cleaned up their credit problems. This would allow them to get a better rate. But those who made small down payments will find it difficult or impossible to refinance if their homes have lost value.
Cagan assumes that people will lose their homes if they made small or no down payments and they get caught in the payment-value vise: when their monthly house payments rise to unaffordable levels and the value of the home has dropped or even remained unchanged. Since subprime borrowers start out with relatively higher introductory rates, they won't suffer the worst payment shock.
The biggest payment shocks will be felt by borrowers who got those low-rate introductory loans of less than 4 percent (and, Cagan finds, if you got a teaser rate below 4 percent, it probably was under 2.5 percent -- there weren't many between 2.5 and 4 percent). Their monthly payments can double quickly. About 32 percent of those borrowers will find themselves in the payment-value vise, and will lose their homes, Cagan estimates.
This is the second year in which Cagan estimated how many foreclosures would result from rate reset. A year ago, he forecast that almost $200 billion in foreclosures would result over the next six or seven years. He noted that this would be a problem for borrowers, but not for the economy as a whole.
-- Posted: April 18, 2007
How do you feel about this? Let us know!
By Holden Lewis • Bankrate.com
You have a one in three chance of losing your house to foreclosure if you got an adjustable-rate mortgage, or ARM, in 2004 through 2006 that had an initial teaser rate of less than 4 percent.
If you got a subprime ARM in that period, you started out with a higher rate, and that puts you at less risk. You have a one in eight chance of losing your home.
That's the takeaway message from a densely detailed research report by Christopher Cagan, director of research and analytics for First American CoreLogic. Cagan's study focuses on 8.4 million ARMs that were originated in 2004, 2005 and 2006. About 1.1 million of those borrowers will lose their homes in the next six to seven years because of payment shock brought on from rate resets or loan recasting, Cagan estimates.
Cagan assumes that property values will remain relatively flat from their December 2006 levels. If house prices fall -- and in many markets, they already have fallen in the first three months of this year -- foreclosures will be higher than his estimates. If house prices rise, there will be fewer foreclosures than forecast. Each 1 percent rise or drop in house prices will translate into roughly a 70,000 decrease or increase in foreclosures.
"These losses are (from) reset only," Cagan says. "I do not study job loss, death, divorce, illness or fraud." For example, the foreclosure rate is high right now in Detroit, but that has little to do with low-rate teaser loans, or subprime ARMs. Job losses are driving foreclosures in Motor City.
Pain will lingerIt's important to remember that Cagan's estimate of 1.1 million foreclosures is forecast to take place over the next six or seven years, not all at once. He says much of the pain will be felt next year and the year after.
"2008 is the pinch year," he says. "That is the pileup of 2/28s originated in 2006 at the peak of the market. And also, you have the 3/27s starting in 2005. Those two years are the peak market years; also very generous lending years, so you had the peak of the market, with people borrowing with nothing down or 5 percent down."
When Cagan talks about the peak of the market, he's talking about house prices. In much of the country, especially along the coasts, prices peaked in 2006. If you borrowed 100 percent or 95 percent of the home's value in 2006, you immediately were under water, owing more than you would get if you immediately sold your house and paid a real estate commission.
Subprime ARMs: 2/28, 3/27Most subprime ARMs are 2/28 mortgages, which start out with an introductory rate that lasts two years, and then are adjusted every six or 12 months thereafter. Subprime 3/27 mortgages have an introductory rate that lasts three years.
A lot of borrowers get 2/28 and 3/27 subprime ARMs with the intention of refinancing in two or three or four years, after they have cleaned up their credit problems. This would allow them to get a better rate. But those who made small down payments will find it difficult or impossible to refinance if their homes have lost value.
Cagan assumes that people will lose their homes if they made small or no down payments and they get caught in the payment-value vise: when their monthly house payments rise to unaffordable levels and the value of the home has dropped or even remained unchanged. Since subprime borrowers start out with relatively higher introductory rates, they won't suffer the worst payment shock.
The biggest payment shocks will be felt by borrowers who got those low-rate introductory loans of less than 4 percent (and, Cagan finds, if you got a teaser rate below 4 percent, it probably was under 2.5 percent -- there weren't many between 2.5 and 4 percent). Their monthly payments can double quickly. About 32 percent of those borrowers will find themselves in the payment-value vise, and will lose their homes, Cagan estimates.
This is the second year in which Cagan estimated how many foreclosures would result from rate reset. A year ago, he forecast that almost $200 billion in foreclosures would result over the next six or seven years. He noted that this would be a problem for borrowers, but not for the economy as a whole.
-- Posted: April 18, 2007
How do you feel about this? Let us know!
Monday, April 9, 2007
Metro Housing Inventories Surge in March 2007
Daily Real Estate News April 6, 2007 (REALTOR Mag Online)
ZipRealty reports a 6.5-percent surge in for-sale housing inventory in March from the previous month in 18 leading metropolitan areas across the country. The national real estate brokerage compiled the data — which includes single-family homes, condominiums, and town houses — from local MLS’s.
Credit Suisse Group notes that the jump is much higher than the average increase in inventory of 1.7 percent recorded for the February-through-March period over the last two decades. ZipRealty President Patrick Lashinsky says sellers anticipating a summer move and a slower housing market put their homes on the market in March, instead of waiting until April or May.
Los Angeles, San Francisco, and Washington, D.C., reported the largest month-to-month inventory gains of 12.8 percent, 12.2 percent, and 9.4 percent, respectively, according to ZipRealty.
Miami — plagued by an oversupply of condominiums — saw its inventory inch up just 1.8 percent in March from February. Its year-over-year gain of 61 percent, however, far surpassed the 35 percent growth rate recorded for the 18 metro areas combined.
Source: The Wall Street Journal, James R. Hagerty (04/05/07)
ZipRealty reports a 6.5-percent surge in for-sale housing inventory in March from the previous month in 18 leading metropolitan areas across the country. The national real estate brokerage compiled the data — which includes single-family homes, condominiums, and town houses — from local MLS’s.
Credit Suisse Group notes that the jump is much higher than the average increase in inventory of 1.7 percent recorded for the February-through-March period over the last two decades. ZipRealty President Patrick Lashinsky says sellers anticipating a summer move and a slower housing market put their homes on the market in March, instead of waiting until April or May.
Los Angeles, San Francisco, and Washington, D.C., reported the largest month-to-month inventory gains of 12.8 percent, 12.2 percent, and 9.4 percent, respectively, according to ZipRealty.
Miami — plagued by an oversupply of condominiums — saw its inventory inch up just 1.8 percent in March from February. Its year-over-year gain of 61 percent, however, far surpassed the 35 percent growth rate recorded for the 18 metro areas combined.
Source: The Wall Street Journal, James R. Hagerty (04/05/07)
Listings above 50,000 in Maricopa County- Phoenix Metro
It's a buyer's market - like never before
Housing experts suggest reasons for record 50,000 listings in state
Glen CrenoThe Arizona RepublicApr. 9, 2007 12:00 AM
Dave and Karen Rysdam got a jolt when pricing their Glendale home to put on the market.They wanted to sell in the low $600,000s, but their agent recommended an aggressive price in the low $500,000s. Surprised, the couple consulted an appraiser, who offered similar advice. Reluctantly, they listed the house for $519,900.
"The initial reaction was, 'This is too low.' But when you take the emotions out and look at factual data, it feels like it is right given today's market conditions," Dave said.The Rysdams are among a record number of Arizonans trying to sell their homes in today's slowed market. More than 50,000 houses and condos - of which about 95 percent are in the Valley - were listed in March, according to preliminary figures from the Arizona Regional Multiple Listing Service. A healthy market typically carries about half of that number, analysts say. The glut of housing poses problems for an ailing market struggling to find its feet in the wake of a housing frenzy. Listings have been climbing steadily since the boom fizzled, with the total exceeding 40,000 last year. Analysts have said reducing inventory is necessary for recovery in both the new and resale markets, yet resale listings are at an all-time high. So what is driving the numbers? Analysts point to several things:
• Sellers are unrealistic. Many are pricing homes higher than what buyers are willing to pay.
• It's partly cyclical. Sellers dust off their homes after the holidays and put them back on the market for the spring buying season.
• Investors are unloading homes.
Those left over from the boom are trying to get rid of houses that are declining in value."They are the amateur speculators of last year or the year before," Valley housing analyst RL Brown said, noting that big inventory means price softness. "Their 'wink-wink' loan of two or three years ago is about to change into a serious burden."Brown, who heads Home Builders Marketing, sees a few other types of would-be sellers who are helping push the number of listings higher. One is the house shopper who sees lending standards tightening in the wake of the subprime loan scandal and figures and believes he better get a loan now because he won't qualify in a few months.Another is the casual seller just seeing what kind of offers her home may draw. Then there is the seller who absolutely has no idea what is happening in the market and what homes are worth, Brown said."They are the dialed-out folks," he said.The Rysdams don't seem to fit in that category. Dave, director of financial systems for Honeywell Aerospace, combed his neighborhood to check out the competition. The Rysdams spent about $20,000 upgrading the house for sale. The couple bought their house for about $205,000 in 1994 and expected to do well selling it because they didn't pull "a penny" of equity out. They are averaging a showing a day, but if they don't get an acceptable price, they are prepared to walk away from a $30,000 deposit on a new house."For us, the only real variable is what we get out of this house," he said. "I'm a finance guy. ... The market doesn't care how much I owe on my house. It's irrelevant to what the market will pay for your house."Not all homeowners are of the same mind. Some agents say they are going on listing appointments only to find cranky and argumentative sellers. Agents are turning down listings because sellers won't budge from their target prices, a radical change from the boom years when agents scrambled to secure listings that sold in a few days or even a few hours. "If you go to a lawyer or a doctor, you are paying a lot for that opinion," said Doreen Drew of Coldwell Banker Daisy Mountain. "But in real estate, they argue with you, even though they are paying huge amounts for you to sell their house."Housing analyst Tim Sullivan of the Sullivan Group in San Diego thinks resale listings should stabilize and maybe begin to fall midsummer. Drew said she thinks it will take most of this year to work inventory down to more healthy levels. She said more of the sellers she deals with are realistic about prices, and after six or seven counteroffers, a house may sell. But buyers still hold the upper hand, she said. And she has seen that directly at one of her listings."The buyers want everything," she said. "Sellers don't want to give up everything. In this house, the seller has reduced the price $50,000. In her mind, she has done all she could do. And now the buyer wants her two favorite chairs."
Housing experts suggest reasons for record 50,000 listings in state
Glen CrenoThe Arizona RepublicApr. 9, 2007 12:00 AM
Dave and Karen Rysdam got a jolt when pricing their Glendale home to put on the market.They wanted to sell in the low $600,000s, but their agent recommended an aggressive price in the low $500,000s. Surprised, the couple consulted an appraiser, who offered similar advice. Reluctantly, they listed the house for $519,900.
"The initial reaction was, 'This is too low.' But when you take the emotions out and look at factual data, it feels like it is right given today's market conditions," Dave said.The Rysdams are among a record number of Arizonans trying to sell their homes in today's slowed market. More than 50,000 houses and condos - of which about 95 percent are in the Valley - were listed in March, according to preliminary figures from the Arizona Regional Multiple Listing Service. A healthy market typically carries about half of that number, analysts say. The glut of housing poses problems for an ailing market struggling to find its feet in the wake of a housing frenzy. Listings have been climbing steadily since the boom fizzled, with the total exceeding 40,000 last year. Analysts have said reducing inventory is necessary for recovery in both the new and resale markets, yet resale listings are at an all-time high. So what is driving the numbers? Analysts point to several things:
• Sellers are unrealistic. Many are pricing homes higher than what buyers are willing to pay.
• It's partly cyclical. Sellers dust off their homes after the holidays and put them back on the market for the spring buying season.
• Investors are unloading homes.
Those left over from the boom are trying to get rid of houses that are declining in value."They are the amateur speculators of last year or the year before," Valley housing analyst RL Brown said, noting that big inventory means price softness. "Their 'wink-wink' loan of two or three years ago is about to change into a serious burden."Brown, who heads Home Builders Marketing, sees a few other types of would-be sellers who are helping push the number of listings higher. One is the house shopper who sees lending standards tightening in the wake of the subprime loan scandal and figures and believes he better get a loan now because he won't qualify in a few months.Another is the casual seller just seeing what kind of offers her home may draw. Then there is the seller who absolutely has no idea what is happening in the market and what homes are worth, Brown said."They are the dialed-out folks," he said.The Rysdams don't seem to fit in that category. Dave, director of financial systems for Honeywell Aerospace, combed his neighborhood to check out the competition. The Rysdams spent about $20,000 upgrading the house for sale. The couple bought their house for about $205,000 in 1994 and expected to do well selling it because they didn't pull "a penny" of equity out. They are averaging a showing a day, but if they don't get an acceptable price, they are prepared to walk away from a $30,000 deposit on a new house."For us, the only real variable is what we get out of this house," he said. "I'm a finance guy. ... The market doesn't care how much I owe on my house. It's irrelevant to what the market will pay for your house."Not all homeowners are of the same mind. Some agents say they are going on listing appointments only to find cranky and argumentative sellers. Agents are turning down listings because sellers won't budge from their target prices, a radical change from the boom years when agents scrambled to secure listings that sold in a few days or even a few hours. "If you go to a lawyer or a doctor, you are paying a lot for that opinion," said Doreen Drew of Coldwell Banker Daisy Mountain. "But in real estate, they argue with you, even though they are paying huge amounts for you to sell their house."Housing analyst Tim Sullivan of the Sullivan Group in San Diego thinks resale listings should stabilize and maybe begin to fall midsummer. Drew said she thinks it will take most of this year to work inventory down to more healthy levels. She said more of the sellers she deals with are realistic about prices, and after six or seven counteroffers, a house may sell. But buyers still hold the upper hand, she said. And she has seen that directly at one of her listings."The buyers want everything," she said. "Sellers don't want to give up everything. In this house, the seller has reduced the price $50,000. In her mind, she has done all she could do. And now the buyer wants her two favorite chairs."
Wednesday, March 7, 2007
Welcome
Welcome! And thanks for joining us. The intent of this blog is to reach out to our customers by supplying information and opinions about the Phoenix residential real estate market place. Feel free to reply with your opinions and comments and let us know what you would like to hear about as well!
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