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Arizona real estate: Phoenix home prices down
Home prices in metro Phoenix are falling again, and new data about upcoming sales suggest that they are likely to keep falling over the next few months, bringing concerns of a housing-market “double dip” closer to reality.
Home prices had fallen to a median $119,900 back in April 2009, marking the low point of the region’s housing crash. Recent months showed small but steady increases, keeping the price above $130,000.
But in July, the median sales price of a metropolitan Phoenix house fell more than 2 percent, according to the real-estate research firm Information Market. It was the first time the area’s median has fallen below $130,000 this year, and the second month in a row that home prices fell.
Pending home-sales data provided to The Arizona Republic show the downward trend continuing.
Thousands of Phoenix-area homes are in escrow. If those deals close at the sales prices listed in their contracts, the region’s overall home-sales price will tumble nearly as far as April 2009’s low point.
If home prices drop below that mark, most analysts will consider it a double dip. With prices below their previous low point, a housing recovery will be even further away.
July is traditionally a slow month for the Phoenix-area housing market. But there is little data to contradict what pending home sales indicate about where prices are headed.
Instead, several other factors also point to a continuing decline.
The region’s recession-battered job market is still weak, meaning few new buyers.
The number of foreclosed homes, which often end up being resold at bargain prices, continues to rise.
And most people who were considering buying anytime soon have likely already bought, getting in on a federal tax credit for homebuyers before it expired in June.
Also concerning to some in the industry is Arizona’s crackdown on illegal immigration, which has spurred some people to leave the state.
New residents, who help fuel home buying in metro Phoenix, are no longer moving to the area like they were before the real-estate crash and recession.
“The market is much weaker now than it was a few months ago, with demand down severely almost everywhere,” said Mike Orr, who publishes a daily online analysis of Phoenix-area housing called The Cromford Report. “I am currently expecting the average square-foot sales price to fall about 1 percent a month during the next two months. It’s anybody’s guess after that. It could get quite ugly.”
He tracks average square-foot prices because they are less skewed by a few high or low prices. The current average is $87 a square foot, down from $91 a month ago.
Declining prices
The search for a recovery in metro Phoenix’s housing market began in April of last year.
Prices had shot up more than 50 percent during the boom of 2004-06, then collapsed amid a mortgage crisis and a local, national and international economic crash.
April 2009 brought the bottom. With the median sales price at $119,900, home values were the lowest they had been since January 2000, according to Information Market. Since then, home prices showed what appeared to be a small, slow recovery. Prices dipped occasionally but never for two months in a row.
Last month changed that. The 2 percent decline was the largest this year.
The Arizona Regional Multiple Listing Service, the home-sales database set up for the state’s real-estate industry, now tracks home prices in pending sales agreements.
The index shows metro Phoenix’s median home price falling from $128,000 in July to $125,000 this month to $120,000 in September. A slight recovery is expected for October, to $123,000.
The index tracks future home prices by analyzing signed purchase agreements scheduled to close in a given month. The actual median prices for those months may turn out to be slightly higher. The predictions typically run slightly lower than actual sales prices because of last-minute changes to purchase agreements that drive up the final selling prices.
Since most home sales close within three months of a buyer signing a contract, the listing service can track prices and sales from its real-estate-agent members as far out as three months.
“Even with historically low mortgage rates, people in Phoenix just aren’t that excited about buying a house now,” said Mike Metz, managing director of Scottsdale-based Sun State Home Loans.”More inventory and fewer buyers equals lower prices.”
Falling demand
A declining number of home sales indicates that there are fewer homebuyers in the market.
Valley home sales neared record-high levels during the past 18 months as buyers snapped up inexpensive foreclosure homes and houses discounted for short sales. But last month, sales of existing homes dropped 24 percent from June’s robust pace. New-home sales in July fell to 534, half their pace in June.
“We have been predicting this kind of contraction as the tax credit expires,” said Phoenix home-building analyst RL Brown.
Market watchers say there were fewer first-time buyers last month because of the June 30 expiration of the federal homebuyer tax credit. People who would have purchased later this year or next year rushed to buy to receive the $6,500 to $8,000 credit and are now out of the market.
Investors continue to buy Valley homes, particularly from lenders who have recently foreclosed on them. In July, investors were behind more than 21 percent of all home sales, up from 17 percent the month before, reports Information Market.
“If you aren’t selling an inexpensive home, it can be tough to sell in this market,” said Jay Butler, director of realty studies at Arizona State University.
Interest rates are near record lows, but it’s more difficult to obtain a mortgage now. Also, potential buyers who own homes and can’t sell them are stuck until home prices climb.
Rising supply
As demand from homebuyers dropped, the inventory of homes for sale in metro Phoenix climbed. Too many homes for sale and too few buyers will continue to drive down home prices.
There are 43,000 homes listed for sale in the region, up from 41,500 in June and 37,000 a year ago but still well below the record 55,000 homes listed in early 2008, when prices began to plummet.
Still, sales prices are falling, and many of the houses for sale now are lower-priced: one-fourth are foreclosure homes or houses discounted for short sales.
Pre-foreclosures rose 34 percent in July. If many of those homes are foreclosed on and go up for resale, the median price could drop further.
Part of metro Phoenix’s home-price plunge can be attributed to foreclosure homes that lenders sold at bargain prices in late 2008 and early 2009.
“So many homeowners and investors are underwater with their homes that foreclosures will continue to lead market pricing,” said Deila Mangold, a broker with Scottsdale-based Ideal Homes Realty.
There also is concern that Arizona’s new immigration law will cause more legal and illegal residents to leave the state and that many may leave behind homes that will end up in foreclosure.
“Demand for housing is directly related to population,” said Ruff, the Information Market analyst. “If there’s an exodus due to SB 1070, expect home prices and sales volume to drop dramatically.”
Despite the housing market’s current setback, many analysts still expect a return to a normal market of steady annual growth by 2015.
For now, market watchers are tracking home sales and foreclosures to determine if prices will drop as far as expected in September and whether they climb again in October as the Arizona Regional Multiple Listing index predicts.
“It’s just that there are now far fewer buyers and far more sellers than at this time last year,” Orr said. “It’s too early to say whether the current setback will be mild, moderate or severe, but there are no encouraging signs in the data from August so far.”
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Freddie Mac to auction off foreclosed Phoenix houses
Freddie Mac to auction off foreclosed Phoenix houses
Prospective buyers trying to purchase Phoenix foreclosed homes to live in will have first dibs on 135 houses that mortgage giant Freddie Mac is auctioning off next month.
Buyers, particularly first-timers using government incentives and mortgage financing, have had a tough time competing with investors for inexpensive foreclosed homes in metropolitan Phoenix over the past 18 months. This auction, Aug. 7 at the Phoenix Convention Center, is geared toward buyers who plan to live in the houses.
HomeSteps, the real-estate-sales unit of Freddie Mac, is offering to pay qualifying buyers up to 3 percent of their closing costs. Almost a third of the foreclosed homes going on the auction block are set aside for first-time buyers using federal funds from the Neighborhood Stabilization Program.
In spring 2009, Arizona and several metropolitan Phoenix cities received $121 million in Neighborhood Stabilization funding to help the areas hardest hit by foreclosures. Much of the funding has gone toward providing closing costs and funds to help first-time homebuyers purchase and fix up foreclosed homes. A portion of the Neighborhood Stabilization funding that the Arizona Housing Department received will go to helping buyers at the Freddie Mac auction.
Foreclosures dipped earlier this year, prompting hope that the region’s foreclosure crisis was easing. But foreclosures in the Phoenix area climbed by almost 20 percent in June, according to the Information Market.
“Owner-occupants are the key to strengthening neighborhoods in the Phoenix market,” said Jim Park, CEO of New Vista, which is working with Freddie Mac.
For more information on Foreclosed properties go to:
As a Buyer Do I Use the Listing Agent Selling the Home?
Here’s a question that I see consistently popping up on real estate forums, my email inbox and in conversations on the telephone:
I really like this house, do I have to use the agent that listed it to… [insert one or more of these here: show me the home, represent me as my agent, write the offer].
The short answer is no, you do not have to use the listing agent for anything.
The long answer is you don’t want to use the listing agent. Here is why…
Showing Homes
Any licensed real estate agent can show any home listed for sale in the Multiple Listing Service (MLS). Just because the for sale sign says, “Century 21”, “RE/MAX”, “Thompson’s Realty” or “Joe’s Generic Real Estate Company” doesn’t mean only those agents can show you the home. Most homes for sale in the Phoenix real estate market are in the MLS, and most have a lockbox that allows any agent access to the home (well, any agent that pays for a lockbox key or access to the combination for agents who still use combo boxes from the dark ages).
In fact, if you use the listing agent to show you the home, you likely have just taken the first step toward enabling a confusing (and potentially expensive) agency relationship issue in what the real estate industry calls Procuring Cause.
The “book definition” of procuring cause is, “the uninterrupted series of causal events which results in the successful transaction”. Real estate agents get paid their commission if they are considered the procuring cause of the sale. Erroneously, many agents think simply showing a home entitles them to be deemed the procuring cause in a sale. That is not really the case, but having a listing agent show you a home can (and usually does) start the ugly spiral toward a procuring cause claim. And there are certain scenarios where a buyer (that’s you) might have to fork over a payment for commission that normally the seller would be paying for.
Don’t muck up the procuring cause. Use YOUR agent to show you homes. Don’t call listing agents, don’t go to open houses on your own, and don’t step into a new home builder showroom without first consulting with YOUR agent.
Representation / Writing Offers
The listing agent represents the SELLER. They have a contractual and fiduciary duty to the SELLER, not to you the BUYER. What do sellers want? They want the most money for their home with the least amount of pain. Fundamentally, the listing agent’s job is to get the seller the most money. If they are working for the seller, trying to get them the most money they can, how can they possibly represent you – you who wants to pay the least amount possible for a home.
They can’t.
Oh, some will claim they can fairly represent both sides of the transaction. Many agents like representing both parties in a transaction because then they get both sides of the commission – a double payday if you will.
Dual agency – where one agent represents both the buyer and a seller in a real estate transaction – is legal in Arizona (and many other states). But just because something is legal doesn’t mean it is right, or a good idea. Here’s an often used analogy – if you were being sued in court by someone, would you use the same attorney that the guy who is suing you is using?
Of course you wouldn’t. And you shouldn’t use the same agent to help you buy a home that represents the person you’re trying to buy it from.
(Of note, dual agency – in Arizona – also technically occurs when the sellers agent and buyers agent work in the same real estate brokerage. This is often unavoidable, and is not as problematic as using a single agent for both parties.)
So, what is a homebuyer to do?
Find YOUR agent BEFORE you go out looking at homes. Secure your representation first, and you won’t have to concern yourself with accidently winding up being represented by a listing agent.
How do you find an agent?
In the Phoenix metro area you literally have tens of thousands of licensed agents to chose from. Many are absolutely brilliant and will represent you competently and efficiently. But let’s be realistic… given the shear number of licensed agents in these parts there are plenty that aren’t so swift.
Ask your friends for recommendations. Look around on the Internet. Read agents blogs and websites to get a feel of who they are and what they know. Pick three or four agents and interview them. Ask them about their philosophy toward clients, ask them for references from past clients. Trust your gut. Most people have pretty finely tuned BS meters and you’ll know when you’re being fed a line. Pick an agent that you feel comfortable with and let them help you.
Any agent can show any home. Any agent can write an offer on any home. Chose YOUR agent up front and let YOUR agent show you homes, mine the data, and contact the listing agent. That’s what we do. Why use someone else’s agent, especially the agent representing the person who owns the home you want?
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Things to Do and See in the Phoenix Area
15 Places In and Around Phoenix That You’ve Got to See
http://phoenix.about.com/od/attractionsandevents/a/15bestplaces.htm
For more Information on buying and selling homes in Arizona go to :
Arizona Home Information Free Arizona Home Information
Seattle firm sees potential in Valley
Seattle firm sees potential in Valley – The company that recently purchased the Gateway building in downtown Tempe says it’s looking to make more investments in the Valley’s real-estate market. “We see Phoenix as an area that has good growth prospects going forward,” Curran said Lori Mason Curran a spokeswoman for Vulcan. “We see that it’s poised for growth and a rebound, and we think it’s a good time to get into the market.” Vulcan, headed by Microsoft co-founder Paul Allen, is not alone in its interest in Valley real estate. “There’s an opportunity to make money in short order,” said Brent Moser, executive vice president of real-estate firm Cassidy Turley BRE. “The growth in value is going to be staggering over the next 10-20 years.” Read full article:
http://www.azcentral.com/business/realestate/articles/2010/07/05/20100705tempe-vulcan-real-estate.html
For More Information on Buying and Selling Homes in Arizona go to:
Banks: We’re hiring so we can make more home loans
http://money.cnn.com/2010/06/24/news/economy/mortgage_lending/index.htm
http://www.eastvalleytribune.com/local/chandler/article_ed8924ca-7f07-11df-8ba8-001cc4c002e0.html
Obama Administration OKs $1.5bn Hardest-Hit Mortgage Relief Fund Plans
http://www.housingwire.com/2010/06/23/obama-administration-oks-1-5bn-hardest-hit-mortgage-relief-fund-plans
Existing home sales up in Western US
http://phoenix.bizjournals.com/phoenix/stories/2010/06/21/daily15.html
Home Price Index up by 2.6%
http://www.azcentral.com/business/realestate/articles/2010/06/22/20100622biz-homepriceindex0622.html
Billionaire Buys Tempe Gateway Building
http://www.myfoxphoenix.com/dpp/news/business/paul-allen-tempe-gateway-6-22-2010
For more Information on Buying and Selling Homes in Arizona go to:
- Arizona Home Information Free Arizona Home Information
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Valley Home Prices Up Again
Valley home prices up again – May marked the second consecutive month that an index of Phoenix-area home prices rose – the latest sign that home prices are stabilizing. The ASU-Repeat Sales Index rose 2.7% from a year earlier. The index posted its first gain in about three years in April – rising 1%. ASU real-estate professor Karl Guntermann expects the year-over-year price gains to continue through the summer. Read full article:
http://www.azcentral.com/business/realestate/articles/2010/06/16/20100616home-price-index-valley-up-2nd-month-row.html
Mortgage applications rise nearly 18 percent – The number of customers applying for mortgages jumped last week, signaling that the market could be stabilizing after dropping off sharply last month. The Mortgage Bankers Association reported that overall applications were up nearly 18% from a week earlier. Applications to refinance home loans were up 21% to the highest level since May 2009. New mortgages taken out to purchase homes increased for the first time in six weeks – rising 7%. Read full article:
http://www.msnbc.msn.com/id/37736704/ns/business-real_estate/
For more Information on Buying and Selling Homes in Arizona go to:
Myth’s About Buying Forclosed Properties
10 Myth’s About Buying Foreclosed / Lender Owned Properties
Myth #1: Foreclosures need a huge amount of work. In all, 92% of respondents said they would be prepared to do significant work on a foreclosed home. Yet, despite memorable news stories about homes stripped to the studs, many foreclosures need little more than the standard spruce up duo of many a home: paint and carpet.
Myth #2: Foreclosures sell at massive discounts, compared to other homes. More than a third of respondents expected to receive a discount of 50% or more. Nelson says that bank foreclosures may be discounted as little as 10%, in part because they owe it to their investors. “Banks, in my experience, do not take super low-ball offers,” she says.
Myth #3: Buying a foreclosure is risky, according to 49% of respondents. This may be true for those sold at the courthouse or in other venues, but Nelson points out that most people will be buying bank-owned properties. “Buying a home, period, involves risk, for sure, but would I say buying a foreclosed home involves more risk? Not usually,” she says. “By the time they’re bank owned, the bank really has sanitized the title” so that no lingering debts or other hidden costs can pop up later.
Myth #4: You can’t get inspections on a foreclosed property. While county auctions may preclude inspections, virtually all bank-owned foreclosures allow them, in part to avoid future liability claims.
Myth #5: There are hidden costs to watch out for, according to more than two-thirds of those who sensed a negative stigma to buying foreclosures. This is where Nelson’s mantra, that foreclosures are “not a monolith,” is particularly key. Auctions can include buyer’s premiums and hefty fees, but bank-owned properties offered by a real estate agent likely carry the same closing costs as any other house purchase.
Myth #6: Foreclosures are more likely to lose their value than “regular” homes, said 35% of those who saw some negatives in buying foreclosures. Instead, the discounts on foreclosures may offer a bit of “insulation from further depreciation”.
Myth #7: Most foreclosures happen when homeowners just walk away. In fact, most occur when the owners’ financial situation changes or the loan adjusts, Nelson says.
Myth #8: When you buy a foreclosure, you should low ball the bank, which is desperate to get these homes off its books. Instead, most banks “would rather lower the list price in bite-sized increments” and see what kind of new traffic is attracted once they lower it, Nelson says.
Myth #9: You need to be able to pay in cash in order to buy a foreclosure. Most bank-owned foreclosures typically can be bought with regular mortgages, although there are exceptions for properties in such bad condition they do not qualify for loans.
Myth #10: If you have bad credit, it’s easier to get financing from the bank that owns the property. Though banks do offer incentives like lower fees or closing cost credits for buyers who use their bank for their mortgage, they aren’t likely to bend their qualification rules. “Think about it,” Nelson writes in her blog, “why would the bank want to end up with the same property as a foreclosure, again?”
If you would like first pick of Bank Owned and other Distressed homes that interest you, and Instant updates of all new Foreclosure and Distressed properties that match your specific criteria FREE of charge, go to
Short Sale Myths
A short sale can be an excellent solution for homeowners who must sell and owe more on their homes than they are worth. Unfortunately, a number of myths about short sales have developed, and it is important to understand the reality of this process should you find it meets your current needs.
Myth #1 – The Bank Would Rather Foreclose than Bother with a Short Sale
This is one of the most common misconceptions. The reality is that banks do not want to foreclose on your property because the foreclosure process is incredibly costly. Banks, investors, and even the federal government have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. Overwhelmingly, banks receive more on their investment through a short sale than a foreclosure.
The qualifications for a short sale include:
- Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
- Monthly Income Shortfall – “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
- Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
Myth #2 – You Must Be Behind on Your Mortgage to Negotiate a Short Sale
While this may have previously been the case, today lenders are looking for verifiable hardship, monthly cash flow shortfall, or pending shortfall and insolvency.
If you meet these three requirements and believe that you soon may be unable to afford your mortgage, act immediately. Any delay could limit your options. Do not wait until the countdown clock to foreclosure has started and you have even less time left.
Myth #3 – There is Not Enough Time to Negotiate a Short Sale Before My Foreclosure
This is a myth that probably hurts homeowners the most. Many do not realize that foreclosure is a process, and that there is time to make decisions that may result in better outcomes.
The foreclosing party—in most cases a lender—can stall a foreclosure up to the final day of the process. Today, many lenders will stall a foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with a legitimate contract. For real estate professionals who understand foreclosures and short sales, there is time available until the foreclosure process is complete.
Myth #4 – Listing My Home as a Short Sale is an Embarrassment
It is understandable to have reservations about letting the world know that you owe more on your home than it is worth. However, according to recent estimates, more than one out of eight homeowners in the U.S. is in the same situation. You are to be congratulated for admitting you need help, taking action, and finding a professional who can work with you toward a solution.
With recent estimates showing 40-60% of U.S. sales will be short sales or foreclosures, you are not alone.
Myth #5 – Short Sales are Impossible and Never Get Approved
This is a complete falsehood. Are short sales more difficult to execute? Yes. Do you, as a homeowner, need to learn about a new process? Yes. Are they impossible? Absolutely not.
For example, agents with the Certified Distressed Property Expert® (CDPE) Designation receive thousands of short sale approvals on a monthly basis. These professionals have undergone extensive training in methods to help homeowners in distress and process short sales. While there are no guarantees in any transaction, more and more short sales are being approved regularly. This is far from an impossible process.
Myth #6 – Banks are Waiting on a Bailout and Not Accepting Short Sales
You may have heard this, but the reality is that banks (and the U.S. government) are trying to do anything they can, within reason, to avoid foreclosing on properties. It is preposterous to believe they would deny a short sale in hopes that some future legislation would pass and pay them for losses.
Today, more banks are aggressively pursuing short sales and working with agents who understand how to process them. Freddie Mac recently hosted a national training Webinar for real estate agents where they expressly stated the organizational goal of “eliminating distressed assets through modification or short sale.”
Myth #7 – Buyers are Not Interested in Short Sale Properties
This is a myth that potential sellers hear all the time. Thankfully, this is just not true. In fact, many agents are getting calls from buyers who say they only want to look at foreclosure and short sales.
For buyers, short sales and foreclosures have become synonymous with “good deals.” More specifically, international buyers are targeting these properties. Listing with an experienced agent who is educated in the short sale process will provide you with a great chance of quickly seeing a contract on your property.
For more Information on Buying and Selling Homes in Arizona go to:
Arizona Home Information 