SimplySOLD Blog

7.22.10	Canadians Buy the Most U.S. Real Estate
7.9.10	Canadian Currency Update #2
6.26.10	Are we in for a Hockey Stick Recovery?
6.17.10	Loan after a Foreclosure or Short Sale?
6.11.10	SFR Certification
6.9.10	Removal of Mortgage Insurance Premiums
5.26.10	Refunds of MIP/PIM, Are you eligible?
5.11.10	Canadian Buyer Update
4.30.10	Will Foreign Buyers Buy in AZ (part 2)?
4.16.10	Will Foreign Buyers Save Us?
3.22.10	Should You Buy Down a Mortgage Loan?
3.11.10	Press Release: SAAR
2.16.10	Is the Phoenix Area the MOST popular?
2.05.10	Gov't Incentives BUY NOW!
2.01.10	Canadian Resources for you, eh?
1.18.10	Lenders Aren't Moving REOs
1.04.10	Loan Workout Options
12.28.09	Are Lenders Holding Back REOs?
12.18.09	Facts & Figures
11.18.09	The New Tax Credit
11.05.09	Buyer's Questions
10.01.09	Foreclosures & Equity in Arizona
9.08.09	Frustration in a Buyers' Market (pt2)
8.21.09	Frustration in a Buyers' Market (pt1)
7.22.09	Free Money for Arizona Home Buyers
7.08.09	New Border Rules Hurt Arizona?
5.22.09	Recovery (p.2)?
5.08.09	Recovery?
4.23.09	Nationwide Foreclosure Rankings
4.10.09	Canada's Economy is Going South Literally...
3.17.09	Positive Lending News at Last!
3.02.09	The New & Improved Home Buyer Tax Credit
2.25.09	Are There Foreclosures in Scottsdale?
2.09.09	First Time Home Buyer Tax Credit at a Glance
1.15.09	Opportunities grow despite the Slowdown
1.05.09	Buyers... Avoiding Distressed Properties
12.29.08	Simplified Passport Renewal for Canadians
12.19.08	Foreclosure Prevention (part 2)
12.12.08	Foreclosure Prevention (part 1)
11.28.08	FHFA Mortgage Help
11.22.08	Bad 10 Years for Stocks
11.14.08	Stop... & Buy

Canadians Buy the Most U.S. Real Estate

July 22, 2010
Once again the latest numbers show that Canadians bought more U.S. properties than the citizens of any other country last year - almost one quarter of the real estate purchased by citizens of other countries in the United States.

A few blogs ago I discussed the participation of foreign buyers to our national and local real estate markets, and the importance of those sales to certain states. For example, almost 60% of the international purchasers buy in Florida and Arizona. Florida has traditionally led in the number of international buyers, with Arizona generally ranking fourth.

As to Canadian purchasers, the Globe and Mail (http://www.theglobeandmail.com) recited the latest statistics available from National Association of Realtors (NAR). The NAR reported that Canadians bought 23 per cent of all the homes sold to foreigners from March 2009, to March 2010. Mexican nationals came in second at 10 per cent. The United Kingdom was third with 9 per cent, with China (8 per cent) and Germany (7 per cent) completing the top five.

The NAR numbers state that foreign purchasers were estimated to constitute 4 percent of the total amount invested in U.S. real estate during that one-year period. That sounds like a small percentage, until you realize that equals 41 billion U.S. dollars! Of that figure, Canadian buyers spent about $9.5 billion on purchases here.

"Although international purchasers from a wide variety of countries are present throughout the United States for a variety of reasons, proximity to the home country and the convenience of air transportation are believed to be important considerations in selecting the buying location," the NAR report notes. Obviously, that explains a large part of the popularity of Canadian and Mexican investment here.

Although our northern neighbors may have greater access to financing compared to other foreign nationals due to the existence of Canadian banks here, the biggest hurdle to investment still is obtaining a loan.

Realtors reported that 34 per cent of all potential purchases by foreigners were not completed due to financing problems (no Canadian specific numbers are available). The only good news here is that the difficulty in borrowing means that Canucks are often cash buyers.

In this difficult market, an Arizona seller should market its property to more than the Phoenix metropolitan area home market. Obviously Canadian buyers in particular are important here. Statistics Canada reports that Canada's population is estimated to have surpassed the 34 million mark. Do not miss an opportunity to sell to a friendly Canadian. I know how to reach foreign investors due my heritage and advanced legal and real estate education. For you Canadian buyers, SimplySOLD understands the complexity of cross border purchases and is your best bet to handle your Arizona real estate transaction.

If you have any questions or would like to know more about how my expertise can benefit you, call me at (480)675-0112 or email to mark@simplysoldndrealty.com.

Canadian Currency Update #2

Friday, July 09, 2010

In previous BLOGS I wrote about the increasing strength of the Canadian dollar relative to U.S. currency, and the result of a favorable currency exchange rate to Canadian investment here. I also discussed the positive impact the exchange rate makes to my fellow Canadians when purchasing here.

Since that earlier blog, things have just got better for the Loonie. In the middle of last month, the Canadian dollar climbed as high as .98. This week it is .95, which is still very strong historically (eight years ago it was .62). A favorable exchange rate is very important to Canadians, because it means that our prices remain attractive, so they should continue to be major purchasers of Arizona properties.

One reason for the rise in the value of its currency is Canada’s favorable economic outlook and the prudent handling of its public debt. The Globe and Mail says the sustained strength of the Canadian dollar and economy is getting international attention. The Russian Central Bank has stated it will add the Canadian dollar to its international reserves. Other central banks are expected to follow suit.

Traditionally the U.S. dollar has been the currency of choice for reserve managers. The Euro was beginning to make inroads in foreign exchange markets, but with the poor economy in Europe, it is no longer a viable option. This has made the Canadian dollar a player in global currency reserve strategy.

Meanwhile, the news from the housing market in the frozen north is not as good. The value of building permits has plunged 10.8 percent, and home sales in my hometown of Toronto were down 23% from June a year ago. Vancouver’s home sales fell 30.2% over the same period. According to the Financial Post (www.financialpost.com), new, stricter mortgage rules have also negatively impacted the Canadian real estate market.

In addition, both Ontario and B.C. have enacted a “harmonized sales tax” effective July1. The tax will be newly applied to services such as real estate commissions. Since taxes are typically passed through to the client, the cost of real estate transactions can be expected to increase in those two provinces, which may further weaken demand. Read more at http://www.financialpost.com/news/Home+sales+sink+markets/3241780/story.html.

But, bad Canadian real estate news is good for Arizona sellers of residential and commercial real estate. Together with the favorable currency exchange rate, hopefully this will result in even more purchases by Canadians in Phoenix/Scottsdale area.

If you think your Phoenix metropolitan, area home or property could benefit from marketing to the Canadian buyer, call or email me at mark@simplysoldndrealty.com. Let my expertise as a Certified International Property Specialist, and SimplySOLD Arizona’s international emphasis, help your next sale.

Mr. Kramoltz, JD, GRI, CIPS is a dual Canadian/U.S. citizen, and is the owner and Designated Broker of SimplySOLD Arizona, a full service real estate brokerage located in Scottsdale, Arizona. His award of the Certified International Property Specialist (CIPS) designation early this year demonstrates his many years of experience and success working on international real estate transactions.

Mr. Kramoltz writes articles and a blog that provide valuable information on local and national real estate issues. Written from his perspective as a real estate attorney with more than 25 years experience, a Department of Real Estate certified instructor, and an active broker, his articles avoid the inaccuracies and vacuous industry propaganda common to real estate writings. You can reach him at 480 675-0112.

Are we in for a Hockey Stick Recovery?

Saturday, June 26, 2010
Everybody who knows me knows how much I love hockey. I am a Canadian so it is a genetic issue, I still play twice a week, and I watch every game I can on the NHL Center Ice channels. However, I never thought I would see my favorite sport compared to real estate.

But according to our local real estate guru, Elliott Pollack, the CEO of Elliott D. Pollack & Co., a real estate and economic consulting firm, we are headed for a "hockey stick' recovery". Although the real estate business does hurt as much as a slash on the legs right now, what he really means is that home prices will spike after a long flat spell.

According to an article by Inman News, unmet demand could spark another rapid rise in metropolitan area Phoenix real estate prices. First our single-family homes market has to recover. According to the statistics accumulated by our local Multiple Listing Service, the average sale price has declined from $362,067 in June of 2007 to $184,312 in May of this year.

The reason for decline is the continuing number of unsold homes. Although the unsold inventory in as reported by MLS is only approximately 4 months worth as of May, Pollack estimates there are 40,000 to 50,000 surplus homes in Phoenix alone. He also noted that utility hookups are at their lowest in 50 years. Homebuilding activity can be expected to stay near record lows, which will limit the amount of new inventory.

But there are a large number of homeowners who want to sell, and will put their homes on the market as soon as they have enough equity to do so. Those sellers had been forced to take their homes off the market due to a lack of offers will re-list their properties as soon as possible. In addition, there is still some evidence that lenders will continue to release foreclosed homes continually in a measured way over the coming months and years. I believe that this pent up inventory will continue to keep enough homes on the market and will squelch home price appreciation for the foreseeable future.

But, eventually the inventory overhang will be whittled away. According to the article, Pollack predicts that it will be 2012 or 2013 before Arizona sees growth in demand for the construction of new housing. Sometime around then the resale market will also start to run short of homes.

Once those homes are gone, markets such as the Phoenix area will react "like a hockey stick," with prices jumping suddenly after the flat period, because builders will not be able to move fast enough to meet demand, Pollack said. We can only hope he is correct, and that the market will get back to being as satisfying as tucking the puck under a goaltenders out-stretched leg pad.

In the meantime, the good news is that this means properties will continue to be available to buyers for a reasonable price. The bad news for sellers is that any decline in the number of homes on the market will be slight, meaning prices aren't going to dramatically increase due to limited inventory, anytime soon.

For more real estate information, go to www.inman.com, "where real estate and technology connect". You can find more economic analysis and data on Arizona's real estate market on Elliot Pollack's website, www.ArizonaEconomy.com. And, if you would like to discuss your real estate situation or the current market, contact us mail@simplysoldndrealty.com to take care of all of your real estate needs.

Can you get a Loan after a Foreclosure or Short Sale?

Thursday, June 17, 2010
Short sales are a fact-of-life in Arizona residential real estate. A short sale is defined as the sale of a property, resulting in a payoff of less than the total amount owed, in lieu of a foreclosure or to permit a sale. If you are the next metro Phoenix homeowner to "short sale" your home, you will be in good company; short sales have averaged just over 20% of residential sales in 2010 (21% in May).

One reason to do a short sale is that it should have less impact on your ability to get credit in the future compared to a foreclosure. In an earlier blog, I provided estimates of the effect of a short sale and a foreclosure on a credit score. Predictably, a short sale had a lesser, negative effect on your credit score than a trustee's sale according to Fair, Isaac & Co., the creator of the credit score system, although the amount of that effect may change in the future.

However, there is another reason a short sale may be advantageous over a foreclosure. A foreclosure will have the maximum negative effect on the ability of a borrower to quality for a loan insured by a governmental affiliated entity. Since overwhelming amounts of loans made are FHA, Fannie Mae or VA, this restriction could prevent a potential homebuyer from getting a loan even if the credit score was otherwise sufficient.

Late last year HUD issued rules regarding the eligibility of a past short seller for a future new FHA insured mortgage. Various criteria were established which allowed a former pre foreclosure event borrower to receive a government insured loan under certain conditions - as opposed to the "no exception" blanket rule (for three years) that applied to borrowers with a foreclosed governmental loan.

Fannie Mae's required "waiting period" for a borrower to be eligible for a mortgage loan after a short sale is changing to two years effective July 1, 2010. The waiting period begins on the completion date of the pre foreclosure event, and its length may vary based on the maximum allowable loan to value ratios (LTV) and the occupancy of the property. The borrower must meet FNMA's "extenuating circumstances" policy (such as the default being beyond the borrower's control, which remains unchanged), with the new loan having a maximum LTV of 90%.

Fannie Mae also changed their requirements for reestablishing credit after a significant derogatory event. After a bankruptcy, foreclosure, deed in lieu of foreclosure, or pre foreclosure or short sale, the borrower's credit will be considered reestablished if the waiting period and the related requirements are met, the borrower meets certain credit score criteria, and has "traditional" credit.

More information on the government loan programs is available at www.fanniemae.com and www.hud.gov. FICO and credit scoring guidance can be found at Fair Isaac's website: www.myfico.com.

By the way, the May 2010 numbers showed that lender sales of property foreclosed upon were 37% of the residential sales for that month, leaving "normal" sales the majority of transactions at 42%.

At SimplySold we have the expertise to help you no matter what type of sale you need.

SCOTTSDALE AREA ASSOCIATION
OF REALTORS®
4221 North Scottsdale Road, Scottsdale, AZ 85251
Phone: (480) 945-2651 - Fax: (480) 994-8498
NEWS RELEASE

Lisa Brazsky Earns NAR Short Sales and Foreclosure Certification

(Scottsdale, AZ): May, 2010 - Lisa Brazsky of SimplySOLD Arizona, has earned the nationally recognized Short Sales and Foreclosure Resource certification. The National Association of REALTORS® offers the SFR certification to REALTORS® who want to help both buyers and sellers navigate these complicated transactions, as demand for professional expertise with distressed sales grows.

According to a recent NAR survey, nearly one third of all existing homes sold recently were either short sales or foreclosures. For many real estate professionals, short sales and foreclosures are the new "traditional" transaction. REALTORS® who have earned the SFR certification know how to help sellers maneuver the complexities of short sales as well as help buyers pursue short sale and foreclosure opportunities.

"As leading advocates for homeownership, REALTORS® believe that any family that loses its home to foreclosure is one family too many, but unfortunately, there are situations in which people just cannot afford to keep their homes, and a foreclosure or a short sale results," said 2009 NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas Fort Worth. "Foreclosures and short sales can offer opportunities for home buyers and benefit the larger community, as well, but it's extremely important to have the help of a real estate professional like a REALTOR® who has earned the SFR certification for these kinds of purchases."

The certification program includes training on how to qualify sellers for short sales, negotiate with lenders, protect buyers, and limit risk, and provides resources to help REALTORS® stay current on national and state specific information as the market for these distressed properties evolves. For more information about the SFR certification, visit www.REALTORSFR.org or call 1 877 510 7855.

For more information on Lisa Brazsky and SimplySOLD, visit www.simplysoldaz.com, or call 480 675-0112.

Removal of Mortgage Insurance Premiums (Part 2)

June 9, 2010
In my last blog, I wrote about the slim possibility of getting a refund of "private mortgage insurance". Lenders require mortgage insurance when a down payment is less than 20%. Usually those payments are non-refundable unless the lender agrees otherwise at the time the loan is made.

During the boom years, the question I often received was not about a refund, but how to get PMI payments removed from future payments. Generally, when a borrower achieves the required amount of equity (20% to 25%), a request for removal can be made to the lender. However, there are no rules, formulas or set guidelines to determine how a refund can be achieved.

Whatever the requirements, there will be a number of steps involved in the process. Moreover, even though many borrowers received a document in their closing package stating how to get the mortgage insurance removed, it is not unusual for lenders to change the qualifications when the request is made those many years later. Therefore, you have to contact your lender to get the latest rules.

The most difficult hurdle these days is having the requisite amount of equity. With values that have fallen up to 50% in some areas of the Phoenix metropolitan area, only a small percentage of borrowers may be able to apply to have PMI removed.

In the event you believe you have the requisite amount of equity, the lender will require that you purchase an appraisal or supply some other evidence of value as proof. If an appraisal is specified, not all will suffice, as the lender will have certain valuation requirements and a list of approved appraisers whose values they will accept. Again, you must follow your lender's procedures contact the lender before doing anything.

One more thing about MIP payments applicable to FHA loans: MIP cannot be removed from condominium loans, no matter what the loan-to-value ratio is. According to Mortgagee Letter 00 46, this is apparently because premiums on condo loans are not paid up front. Go to www.hud.gov (type "Mortgagee Letter 00 46" into search tool).

Finally, is there a way to get a refund of Mortgage Insurance Premiums (MIP) paid in the past on FHA loans directly from the FHA? In almost all circumstances, the answer is no. On December 8, 2004, the FHA terminated their mortgage insurance premium refund program. However, if you refinance into another FHA loan, the refund from the old premium may be applied toward the up front premium required for the new loan. See Mortgagee Letter 2005-03 at www.hud.gov (type "Mortgagee Letter 2005-03" into search tool).

However, if the time to collect has not expired, you may be entitled to a refund from a loan originated prior to December of 2004. To find out, enter your info at http://www.hud.gov/offices/hsg/comp/refunds/index.cfm.

Finally, don't know if your loan is FHA or not? Go to http://www.makinghomeaffordable.gov/loan_lookup.htm to look up your loan.

Refunds of Mortgage Insurance Premiums - Are you Eligible?

May 26, 2010

Recently, I was asked the question: Can I get PMI payments refunded? What was being asked pertains to "private mortgage insurance", which is required if a down payment is less than 20% of the value of the home. In that event, the lender requires the borrower purchase a policy that insurers the lender against loss in the event the borrower defaults.

The PMI premium is paid to the lender out of the loan proceeds in a lump sum at closing, but the borrower can be finance that amount and pay it over time, together with the regular monthly amount due to the lender. FHA loans do not have PMI, but something similar called MIP: mortgage insurance premium. Since the MIP and PMI rules can be different, you first have to determine what type of loan you have (next blog will tell you how).

First I had to find out if the client thought he was entitled to get past PMI premium payments refunded, or whether he trying to get it removed from future payments. Of course when asked, the client said he wanted to know the answer to both - although he admitted that in the beginning it was the refund, he was interested in.

That answer was simple. Unless otherwise agreed (in writing) at the time the loan was originated, there are no refunds of PMI. Mortgage insurance is paid so a borrower can get a particular loan. It is similar to liability insurance on your house; you do not get your premium back at the end of the policy period just because you never made a claim.

Of course as part of the fact-finding process, I asked for copies of his loan documents, and I found a very unusual document. This nonstandard form stated that the borrower had two options regarding PMI: refundable, and not refundable. The client had checked the refundable box. The document implied that the refundable choice would cost extra, but no breakdown of what the cost savings would be was supplied.

So he could get his PMI back, right? NOT SO FAST! The form said "in the event of prepayment or cancellation, any refund due based upon the specific program will be forwarded to XYZ Mortgage Brokerage". So:

The loan would have to be paid off
The language appeared to indicate that whether there would actually be a refund, and/or its amount, was governed by "the specific program"
The "refund" would be paid to XYZ Mortgage Brokerage, not the borrower!

Obviously, there were plenty of ways for the client to be denied a refund, despite the fact he paid extra for the privilege. Nevertheless, the next step would be to follow up with the mortgage brokerage to see if any money was in fact available. Unfortunately, along with thousands of other mortgage brokerages, the company was no longer in business; so it didn't look good.

However, if PMI or MIP is part of your monthly payment, you may be able to get it removed from future payments. My next blog will tell you how, and will show you how to find out if your loan is FHA, and if so, what the rules are for refunds of MIP.

Canadian Buyer Update.

May 11, 2010
My last two blogs covered the favorable influence foreigner have had on our Phoenix/Scottsdale area and national real estate market. I discussed the positive impact the exchange rate makes to my fellow Canadians when purchasing here. I wrote that favorable currency exchange rates should mean that Canadians will continue to buy more of our property, as they get even more for their money here.

Two weeks ago I read that the Canadian dollar climbed to its highest point in almost two years against the U.S. dollar (I timed that blog right). Apparently, this occurred after the Bank of Canada signaled an interest rate rise as early as June. This makes Canada the first G7 participant central bank willing to end emergency policy steps, since the Canadian economy has improved significantly and before that of the United States. Congratulations, frozen north!

This means that U.S. dollar fell as low as $0.9946 Canadian, its weakest level since June 2008, before recovering to C$0.9950. This is bad for US importers, but good for Arizona sellers of residential and commercial real estate.

Call, or email me to mark@simplysoldndrealty.com, if you think your Phoenix metropolitan area home or property could benefit from marketing to the foreign buyer. SimplySOLD Arizona specializes in reaching the non-U.S. citizen buyer - a market you could ill afford to ignore in these trying times.

Will Foreign Buyers Buy in Arizona (Part 2)?

April 30, 2010
Last blog I discussed the participation of non-U.S. citizens in our real estate market. Foreign buyers have traditionally been a significant part of the residential market in select states. Arizona has been one of those favored states, and should be even more attractive in the future.

This is because the large decline in metropolitan Phoenix home values makes our local market more attractive than residential real estate in other states. Increasingly favorable currency exchange rates should mean that foreign buyers will get even more for their money here. Therefore, there is a possibility that foreign sales of domestic real estate will increase over the already significant historical norms.

We know that foreign purchases have an impact because the National Association of Realtors (NAR) keeps statistics, as reflected in the recently released Profile of International Home Buying Activity report (www.realtor.org/research/research/reportsintl). That document shows that the majority of the purchases by non-U.S. residents are in the residential market. For example, 61% of the international clients of Realtors bought single-family homes. Condominiums accounted for an additional 18% of foreign purchases.

The purchases by foreigners are concentrated in the West and South regions of the U.S. Eighty percent of the properties bought were located there. As to my fellow Canadians, almost 60% of them purchased in Florida and Arizona with Arizona accounting for 23% of those Canadian acquisitions. Although Canadians have greater access to financing here compared to other foreign nationals, the difficulty in borrowing meaningful amounts mean that foreigners are solid, cash buyers.

So in this tough seller's market, can you afford to ignore the foreign buyers? Obviously, you cannot because a seller should market its property to the widest market possible. As a result, a real estate licensee should know as much as possible about how to appeal to the foreign investor.

I have many years of experience working on international real estate transactions and in dealing with clients from diverse cultures. To increase this capacity, I pursued a course of study that resulted in the award of the Certified International Property Specialist (CIPS) designation from the NAR early this year.

To earn the CIPS designation, I was required to complete course work devoted to learning cultural differences and international business practices, and demonstrate past achievements in international real estate transactions. The CIPS designation demonstrates that I have the necessary training and experience to work successfully with international clients that are crucial players in today's international real estate market.

The CIPS program focuses on ownership and transaction principles of international real estate, including specifics on real estate markets in Europe, the Americas and the Asia/Pacific region - areas where the majority of buyers come from that purchase in Arizona. Knowing how to reach non-U.S, residents allows me to provide my clients with the highest level of expertise possible.

In addition, a select number of elite real estate agents in other countries are members of the CIPS global network. By earning the CIPS designation, I have joined this worldwide referral network of global real estate practitioners. The agents in that network from other countries represent international clients who are seeking to invest or move here, and they know that I handle the issues applicable to the international buyer.

If you have any questions or would like to know more about how the CIPS designation can benefit you and the sale of your Phoenix metropolitan area home, call me at 480 675-0112 or email to mark@simplysoldndrealty.com.

Mr. Kramoltz, JD, GRI, CIPS is the owner and Designated Broker of SimplySOLD Arizona, a full service residential real estate brokerage. Mr. Kramoltz writes articles and a blog that provide valuable information on local and national real estate issues. Written from his perspective as a real estate attorney with more than 25 years experience, a Department of Real Estate certified instructor, and an active broker, his articles avoid the inaccuracies and vacuous industry propaganda common to real estate writings.

Will Foreign Buyers Save Us?

April 16, 2010

Long before our latest market struggles, there has been a history of foreign buyers for U.S. residential and commercial real estate. But figures from the 12-month period ending the first half of last year show that nationally, international investors bought 10 percent fewer homes and condos compared to that same period the year before.

It is my belief that those numbers should turn around, and foreign home purchases will actually increase above historical norms. Why? Because besides the increasing affordability of Arizona homes, foreign buyers have additional reasons to invest in the U.S.

There is no doubt that dramatic drop in home values should be a major encouragement to foreign investment here. For residents of those cities where urban real estate is traditionally highly priced, the bargains in the greater Phoenix area are increasingly attractive. But foreign buyers have other factors to consider that can be just as important as how much a home costs.

For example, our nation's political and economic stability is better than compared with many other countries. Unstable regimes and economies usually do not encourage investment when opportunities exist elsewhere in more settled countries.

But what could be the biggest positive is the relative value of the U.S. dollar. A favorable exchange rate can make a foreigner's native currency go farther, and in some instances may determine whether they can buy at all.

Starting primarily in the second quarter of 2009, the U.S. dollar began a descent compared to other major currencies. Since June of 2009, the dollar tumbled by 9 to 11 percent against currencies like the Japanese yen, the European euro and the Canadian dollar, and the Brazilian Real gained 17 percent against the dollar in the last six months of the year.

These exchange differences are especially important to foreign buyers as they pay mostly cash, or supply large down payments - 40 percent or more, because financing is usually unobtainable. For example according to the National Association of Realtors, nearly half of the foreign buyers paid cash in the 12 month period of May 2008 to May 2009.

As a Canadian, I know the difference the exchange rate makes to my fellow countrymen looking to buy in the Phoenix/Scottsdale area. Of course, Canadian buyers looking for second or vacation homes in the U.S. have been familiar to us in Arizona for some time. But I have experienced the increasing activity that results when a strong Canadian dollar makes our homes less expensive.

The strong Canadian dollar and low interest rates should mean that more and more of my fellow Canadians will purchase U.S. vacation properties. But not only will those north of the border buy. Even residents of other nations not contiguous to ours should show increased interest in acquiring properties all over the nation if the dollar continues to weaken. With the dollar hitting a 15 month low in December against the euro, European buyers could buy single family homes or condos for two thirds the cost three years ago!

Wondering which state attracts most foreign investment? Florida leads the country in the amount of international buyers, accounting for nearly a quarter of foreign purchases. Arizona generally ranks fourth, behind the other warm climate states of California and Texas.

Comprehensive information on non-U.S. purchases of real estate across our country can be found on the NAR website on their International reports page: www.realtor.org/research/research/reportsintl.

Next blog I will show how my Certified International Property Specialist designation and experience dealing in the international marketplace increases the probability that your Phoenix metropolitan area home will be sold or rented. As always, if you need to reach me, call me at 480 675-0112 or email to mark@simplysoldndrealty.com.

Should You Buy Down a Mortgage Loan?

Monday, March 22, 2010
Conventional wisdom by mortgage professionals was to never pay points when refinancing or at the closing of a real estate sale. Mortgage "points" are equal to 1% of the loan amount, and are paid at closing in order to lower a mortgage interest rate. Lowering the interest rate should lower your payments, and has the benefit, over time, of significantly reducing the total amount in interest paid on the principal amount borrowed.

Due to the enormous changes have taken place in the mortgage business, the investors that purchase mortgages are demanding higher upfront fees for borrowers with credit scores below 740, and mortgage lenders do not have as much flexibility when pricing loans. The lending experts say this means that the interest rate savings can be very significant when you pay up front points. This applies to when you refinance your mortgage or when you use a loan to purchase a home.

A buyer can try to negotiate into the purchase contract for the seller to pay points on the buyer's behalf. Besides the significant interest and payment savings the buyer will enjoy, accountants say that the buyer will receive a tax deduction this year for points paid - either by the buyer, or by the seller on your behalf. Therefore, if you are selling a home, an offer to pay points for potential buyers may be a smart addition to the marketing efforts. This will make your property more affordable (as the buyer's payment will be lower), and may help your listing stand out from the glut of the homes available in today's market.

The mortgage experts also advise that you estimate how long you will stay in the home (or loan) before agreeing to pay points on your own behalf. A number of web sites offer mortgage calculators that can help you determine when, and whether, you will break even based on a guesstimated length of the loan. One such mortgage calculator can be found at http://www.integrityaz.com/calculators/. Be careful of dated information still available on this subject, which generally recommends that you not pay upfront points.

At SimplySOLD, we work with a variety of mortgage professionals who can help you determine if it makes sense to pay points, as well as accountants we trust that can give you the requisite tax advice. If you need a name or a referral, email me at mark@simplysoldndrealty.com.

SCOTTSDALE AREA ASSOCIATION
OF REALTORS®
4221 North Scottsdale Road, Scottsdale, AZ 85251
Phone: (480) 945-2651 - Fax: (480) 994-8498

NEWS RELEASE

N. MARK KRAMOLTZ ACHIEVES MEMBERSHIP IN ELITE INTERNATIONAL REAL ESTATE NETWORK

(Scottsdale, AZ): March 10, 2010 - N. Mark Kramoltz, J.D., G.R.I, Designated Broker of SimplySOLD Arizona, has been awarded the prestigious Certified International Property Specialist (CIPS) designation, and joins a worldwide referral network of elite global real estate practitioners with expertise in working with international clients, as well as those seeking to move here. The CIPS Designation is awarded by the National Association of Realtors® (NAR), which represents over 1,200,000 REALTORS® in the United States. Mr. Kramoltz's achievement will be formally recognized at NAR's Midyear Legislative Conference & Trade Expo in Washington, D.C. on May 12, 2010.

Members of the CIPS global network are crucial players in today's international real estate market. The CIPS designation recognizes Realtors® who have achieved the necessary training and experience to work successfully with international clients. To earn the CIPS designation, Mr. Kramoltz completed rigorous course work devoted to learning cultural differences and international business practices. He also demonstrated past achievements in international real estate transactions.

Mr. Kramoltz has joined a distinguished society of only approximately 1600 real estate agents throughout the world who have earned the CIPS designation. The CIPS program focuses on ownership and transaction principles of international real estate, including specifics on real estate markets in Europe, the Americas and the Asia/Pacific region. Real estate professionals who have earned the CIPS designation tend to be highly experienced both in real estate and in dealing with clients from diverse cultures, and are increasingly relied upon as international business resources.

SimplySOLD is a full service residential real estate brokerage. As designated broker, Mr. Kramoltz supervises a sales staff that has the ability to handle transactions valley wide. He personally has closed numerous transactions in Scottsdale and the greater Phoenix area, and works with buyers and sellers of residential and commercial property on a daily basis. Mr. Kramoltz also writes articles and a blog that provide valuable information on local and national real estate issues. Written from his perspective as an attorney and over 25 years as a real estate professional, his articles avoid the inaccuracies and vacuous real estate industry propaganda common to materials written by real estate agents.

For more information on SimplySOLD and to read Mr. Kramoltz's blog, visit www.simplysoldaz.com, or call 480 675-0112. To learn more about the CIPS designation, contact NAR at 800-874-6500 or visit the Global Network website at www.realtor.org/Global.

Is the Phoenix Area the Most Popular?

February 16, 2010

According to RisMedia (rismedia.com) the leader in real estate information systems, in ZipRealty's Q4 2009 Home Hunter Report, Phoenix dominates the nation's most popular cities for home hunters in 2009.

ZipRealty, the Phoenix area was by far the most popular for homebuyers in all of 2009, according to the volume of the total number of home searches on www.ZipRealty.com throughout the year. Areas where home prices have dropped significantly since 2007, including Phoenix, Southern Florida and Las Vegas, generated the most home hunter interest throughout the year. The most popular cities for home searches in all of 2009 were:

1. Phoenix
2. Scottsdale (Phoenix metro)
3. Orlando
4. Summerlin (Las Vegas community)
5. Chandler (Phoenix metro)
6. Mesa (Phoenix metro)
7. Gilbert (Phoenix metro)
8. Henderson - Green Valley (Las Vegas metro)
9. Atlanta
10. Kissimmee (Orlando metro)

What I do know is that home prices have dropped significantly since 2007 in the Phoenix metro area (as well as in Florida and the Las Vegas area). Since there has been a significant amount of national press reports about those declines, people are likely to be curious about those areas. Because of those declines, buyers should be focusing their attention here, but we all know there are many more lookers than actual buyers.

If you are a home hunter interested in buying in our area, or just need some information about the "Valley of the Sun", give us a call or contact us through our website, www.simplysoldaz.com.

Gov't Incentives will Expire SOON, so BUY NOW!

February 5, 2010

Fannie Mae Offers New Closing Cost Assistance and Appliance Incentive for Homebuyers
The incentive reinforces the organization's commitment to stabilizing communities and assisting buyers. Fannie Mae is offering a 3.5% incentive for buyers who purchase and close on a Fannie Mae owned home between January 28 and April 30, 2010. Buyers purchasing properties listed on HomePath.com that are closed within this period may receive up to 3.5% of the final sales price for:

Closing costs;
The purchase of new Whirlpool® appliances by Fannie Mae; or
A mix of closing costs and appliances, at the buyer's discretion, up to the maximum 3.5%.

To be eligible for this incentive:

Offers must be accepted on or after January 28, 2010;
Property sales must close before May 1, 2010, and;
Buyers must be owner occupants (investors are excluded)

Current homeowners who will have lived in their home for 5 consecutive years out of the last 8 may now be eligible to receive a $6,500 tax credit. There is no requirement that existing homeowners must have sold their home to be eligible for the $6,500 tax credit. To qualify for the tax credit, the repeat buyer must have signed a binding contract by April 30, 2010 and close on the home by June 30, 2010. Tax credit eligibility is subject to income limits, $125,000 for single buyers and $225,000 for couples. In addition, the sale price of the home being purchased can not exceed $800,000.

Canadian Resources for you, eh?

February 1, 2010
Are you a Canuck living in the United States? Are you from the U.S. and thinking of going to Canada for the Olympics or for a vacation? Are you a Canadian visiting on an extended basis here (are you a snowbird?) Or do you have dual Canada-United States citizenship like me? Whatever your Canadian connection is, this blog has the information you need.

How important are Canadians to Arizona? For 2008 approximately 517,000 Canadians visited Arizona! What about the other direction? In 2007, 66,626 Arizonans visited the province of Ontario (where my hometown, Toronto, is located).

Below is a list of useful websites, most of which are courtesy of the Canadian government.

1. The Canadian Embassy Washington, D.C. - www.canadianinternational.gc.ca

Among other things you will find on this website is Connect 2 Canada, a Canadian Embassy email newsfeed for Canadians residing in the United States, which I subscribe to. You may also type in www.connect2canada.com to go directly to the site.

2. Passport Canada - www.ppt.gc.ca

Everything you need to apply for a passport.

3. Citizenship and Immigration Canada - www.cic.gc.ca

For those with questions regarding immigration, study, work, or visiting Canada, with topics like: Change my address, Get a permanent resident card, and When I can become a citizen.

4. Canada Border Services Agency - www.cbsa-asfc.gc.ca

Get information on crossing the border, such as what you can bring across and border crossing wait times, etc.

5. Social Development Canada - www.sdc.gc.ca

Canada Pension Plan, Old Age Security, and Social Insurance.

6. Foreign Affairs and International Trade - www.voyage.gc.ca

Topics include planning a trip to Canada, Country information, Travel reports and warnings.

7. The Canadian Tourism Commission - www.travelcanada.ca

Canada's official tourism website with comprehensive information on planning a trip to Canada and its provinces.

8. Consulate of Canada (Phoenix) - www.phoenix.gc.ca

Information and links to various websites related to Canada such as Trade and Investment, Canada U.S. Relations, Border Cooperation, technology and innovation.

9. Canada Arizona Business Council - www.canaz.net

The Canada Arizona Business Council (CABC) is a 501(C)6 non profit Arizona corporation whose purpose is to promote increased trade and investment between the State of Arizona and Canada. They have lots of great material on the Canadian-Arizona relationship, such as the visit statistics set forth above.

For more information on the Phoenix-Scottsdale area for Canadians, including the current exchange rate, visit our international webpage at www.simplysoldaz.com.

Lenders Aren't Moving REOs

January 18, 2010
In an earlier blog, I wrote about the inability of lenders that had completed foreclosures to timely put those homes back on the market. Under ordinary circumstances, a bank will put a "real estate owned" (or REO) home back on the market as soon as possible - often in 30 days. But only some of the many homes foreclosed on by the banks are being listed "for sale" in the Multiple Listing Service.

Real estate experts guessed that somewhere around 450,000 and 500,000 properties repossessed over the past year or so were not on the market. Fannie Mae and Freddie Mac confirmed last year that they were listing approximately 35 to 50% of the homes they own.

Recent reports from Fannie Mae appear to show a decrease in the number of foreclosed properties held. According to its most recent quarterly report, Fannie Mae acquired 98,428 homes through foreclosure during the first nine months of last year, and sold 89,691 REO properties during the same period. Looks like they are just about keeping up, right?

However, at the end of September 2009, Fannie Mae admitted that it still had 72,275 REO properties on its books, marking a 7% increase year over year numbers. So in reality in appears that this governmentally related entity is falling behind in the processing and disposition of the homes it has acquired by foreclosure.

The delay in getting homes back in the system is especially apparent in localities where there are large numbers of "REOs" - such as our Phoenix/Scottsdale residential real estate market. And loans which end up foreclosed upon by small, non-Freddie Mac and Fannie Mae lenders are probably even more likely to be delayed due to their lack of adequate REO resources.

These time frames may increase due to the escalating rate of seriously delinquent single family home loans. Fannie Mae's monthly summary for November 2009 showed notable growth in seriously delinquent single family home loans held or guaranteed by the company. Loans three or more months behind in payments or those in the foreclosure process soared to 4.98% in November 2009.

Obviously this increase will lead to more REO homes. And this also means that there will be continuing opportunities for buyers to purchase homes for cheap. If you are interested in exploring a purchase of a foreclosed home, let us know what area and price range interests you. Visit us at www.simplysoldaz.com to contact us or for more info.

Loan Workout Options

January 4, 2010

Happy New Year!

With all the talk and confusion surrounding loan modifications, short sales and foreclosures, we have prepared a quick reference cheat sheet to breakdown and explain the major components and what they mean to you. As always, we are here to answer any questions and help you with all your real estate needs (480-675-0112).

1. Sell the property (Releases the Deed-of-Trust and satisfies the loan)
Called a Short Sale if amount due exceeds value of the property.

2. Refinance to take out existing loan
If equity exists

3. Loan Modification (whether or not delinquent in payments or a trustee's sale has been started)
Repayment plan: temporarily lowers payments, unpaid amounts added to the balance of the loan.
Restructuring: permanently lowers the payments or sets a fixed interest rate.

4. Deed in Lieu of Foreclosure
Rarely available in Arizona.

5. Reinstatement (pursuant to statutory right)
Pay all delinquent payments and costs of sale to stop trustee sale - to permit sale or refinance.

If the Workout Options Fail and Foreclosure Occurs

1. Purchase Money Qualifying Property Residential Loans.
In Arizona, lenders have no recourse against a borrower following the foreclosure of purchase money loans (proceeds of the loan(s) were used to acquire the property) on a single one family or single two family dwellings (a "qualifying property"). See A.R.S. §33 814. Therefore, the Arizona legislature intended that a homeowner who is unable to make payments on a purchase money loan should lose no more than their home. The Supreme Court of Arizona, in interpreting this intent, has held that a purchase moneylender may not waive its security (the deed of trust) and sue directly on the note. Finally, the Court of Appeals has held that the anti deficiency statutes protect a homeowner who has renewed, extended, or refinanced the original purchase money loan.

The Supreme Court has held that there is no distinction between a homeowner and an investor/developer seeking protection under the anti deficiency statutes if:
1. The residential property fits within the statutory definition of "two and one half acres or less" and,
2. It is utilized for either a single one family or a single two family dwelling.

The definition of "utilized" in the qualification regarding use as "either a single one family or a single two family dwelling" is unclear. If the home is not complete (still under construction), it probably does not qualify. In addition, we do not know whether even if complete, but never occupied, has it been "utilized" as a "dwelling" if a Certificate of Occupancy was issued.

2. Non-Purchase Money, Qualifying Property Residential loans
If the loan is not purchase money (the proceeds were not used to purchase the property, such as a home equity or improvement loan) if the lender conducts a trustee's sale, there can be no deficiency. However when the non-pm loan is a second, the second lender will rarely foreclose, especially where a first lender forecloses on its loan. The foreclosure then will erase the second lien, but not the obligation created by note, and the lender can sue the borrower for the amount owed. Similarly, the second lender could "waive the security" and sue directly on the note.

3. Commercial loans/trustee sales.
In the event a trustee's sale is utilized, litigation requesting a deficiency judgment must be brought within 90 days of the trustee's sale. A.R.S. §33 814 (A). If the action is not brought in a timely fashion, the debt is deemed satisfied. Typically, the deficiency is established as of the date of sale by the lender bidding in an amount equal to the fair market value of the property, which should be established by an appraisal. The amount of the deficiency judgment is the amount of the debt at the time of the trustee's sale, less the fair market value at the time of the sale, or the trustee's sale price, whichever is higher.

This article is made available with the understanding that it is informational only and has not been prepared to provide specific legal advice that may be relied on by any reader

Are Lenders Holding Back REOs?

Monday, December 28, 2009

In normal market situations, a bank will repossess a home and usually get it to a Realtor for listing in the local Multiple Listing Service in as short as 30 days. Therefore, in a relatively short period of time, virtually every marketable lender owned property (an REO) finds itself listed for sale on the local MLS.

Today, that doesn't appear to be the case. As mentioned in an earlier blog, it has been reported that lenders are not putting all the homes they acquire on the market at the earliest opportunity. It is thought that between 450,000 and 500,000 properties repossessed over the past year are still not on the market. For example, earlier this year Fannie Mae and Freddie Mac stated they were only listing about 35 to 50% of the homes they own.

Why would they do that with hungry buyers searching for housing bargains, and agents and brokers chomping at the bit ready to list and sell the properties?

Lenders have offered a number of reasons:
Some properties have title issues that need to be resolved.
Many of the properties are in disrepair and are not ready for sale.
A number of states have strict redemption rights periods, which prevents the lender from reselling the property quickly.
A few states have extended the length of eviction proceedings, and new federal law allows legitimate renters to stay in the property for up to 90 days after foreclosure.
There are too many to process; there will be roughly 10 times the number of REOs this year as in the last "normal" year (2005).

But there may be another factor that the banks don't want to talk about. Lenders may be holding properties off the market in order to defer losses. For accounting and federal regulatory reasons, in most cases banks are not required to adjust asset prices until the actual resale of the property. If they resell at the expected low prices, suddenly their assets will be worth much less than the loans were valued at, which could force the feds to seize the bank.

In Maricopa County, Arizona, approximately 40% of homes sold in November were REOs, 40% were normal sellers, with the remaining 20% short sales. If the experts are right, the percentage of lender owned real estate may rise next year.

Want to take one of those foreclosed homes off a lender's hands? Visit our foreclosure page at www.simplysoldaz.com. SimplySOLD Realty prepares a list of Scottsdale properties that have been foreclosed on by Freddie Mac and Fannie Mae. We also have access to lender owned homes all over the valley, so give a call or search for yourself on our website.

New Real Estate Facts and Figures.

December 18, 2009

Year-end facts and figures concerning Arizona real estate:

Existing home sales showed a healthy gain in November - sales were the highest for that month since 2004! Experts say that was the result of a rush to close before the then expected end of the month expiration of the buyer tax credit (see my previous blog for more info on that extension). December's sales are expected to be significantly lower.

A big difference from the sales in the November of 2004 is the nature of the sellers. Almost all of that year's sellers were considered to be "normal", while last month approximately 40% of homes sold in Maricopa County, Arizona were by lenders, and 20% were short sales. Therefore, the majority of current sales are considered "distressed".

The result of all those distressed sales is that more than 83% of Arizona households can afford a median priced home (a median price is in the middle of the range of sales prices - half of the homes cost more, half less). Nationally 30% of homebuyers in July were first timers. The enhanced affordability of homes explains why there have been so many sales to new buyers in the lower price ranges.

Another reason is for the uptick in sales is that interest rates on the benchmark 30 year, fixed-rate mortgage dipped to a 38 year low recently. Freddie Mac recently stated the average rate on a 30 year loan was 4.71% with an average 0.7 point, the lowest rate since the agency began its weekly tracking of long-term interest rates in 1971.

In Arizona, foreclosures have spread outward from the Phoenix area. Prescott foreclosures were up 77% in the third quarter. Great deals on second or vacation homes should be the result of the resulting sales by the foreclosing lenders.

Home buyers have a lot of factors working in their favor right now - low interest rates, plenty of marked down homes for sale, and an extended and expanded federal tax credit that will expire in the spring. However, lending experts predict that interest rates will move higher over the next 30 to 45 days. Last year at this time, the average 30 year, fixed-rate mortgage was 5.53%.

SimplySOLD can help you take advantage of the low interest rates and prices. Call or contact us at mail@simplysoldndrealty.com to find out how much you can afford in Phoenix, Scottsdale or elsewhere in Arizona. Do not wait until the tax credit is gone for good!

The New Tax Credit - Not Limited to First Time Buyers.

November 18, 2009

font.10020.T.png he $8,000 tax credit scheduled to expire November 30, 2009 has been extended. Now a purchase agreement can be entered into up to May 1, 2010, as long as the transaction closes no later than July 1, 2010. It continues to cover first time home buyers, but has also been extended to include certain existing home owners. So now an expanded group of home buyers are eligible for this fanatically popular tax credit.

The tax credit remains at $8,000 for home buyers that haven't owned a primary residence in the last three years. But now home owners that have lived in their current primary residence for at least five consecutive years out of the past eight years qualify for a $6,500 tax credit. Under the old rules, existing home owners did not qualify.

Here is an example of how the credit works. If you own a home that you have lived in for the past five years, if you decide to buy a new primary residence today, you would qualify for the $6,500 tax credit, based on the fact that you have lived in the same residence as your primary home for at least five consecutive years out of the past eight.

Another crucial change to the credit rule is that the income qualifications of eligible buyers have been increased. The old rule limited the income of a buyer to $75,000, and for married tax payers, $150,000. Now individuals who make up to $125,000, and $225,000 for joint filers, are eligible to receive the applicable credit amount. This is very important in higher income/cost areas, because in those places most first time buyers wouldn't qualify for the credit because of their income without the income bump.

There is a limitation on the amount of the purchase price of the new home. The tax credit applies to homes purchased for less than $800,000. This amount should be more than adequate for buyers to get their first or a good "move up" home in the metropolitan Phoenix-Mesa-Scottsdale area.

The credit can even apply to the purchase of a multi-family property. As long as the owner will live in one of the up to four units as a primary residence, the other units could be rented out to provide income!

Of course there is fine print applicable to the eligibility rules. Having a cosigner on your mortgage loan doesn't exclude you from claiming the credit. But if a married couple, both spouses must qualify (based on their income or past home ownership status) to receive the credit. But if two unmarried individuals buy a home, and only one of the individuals qualifies for the credit, the individual who qualifies for the credit can claim the full credit.

Because of the exclusions and quirks in the law, it is critical that you speak with an accountant or tax professional to get the specifics and to ascertain if you will in fact qualify for the credit. Just receiving the credit can impact other income and tax issues, so proper advice is a must. If you don't have a tax advisor, we can provide you with the names of people we trust. Whomever you choose to help you with your IRS issues, we will work with them so you can obtain the full amount of credit you are entitled to. Call or contact us at mail@simplysoldndrealty.com to find your new or resale home before the tax credit is gone for good.

Questions a Buyer should ask before Closing

November 5, 2009

When you buy a house, there are a lot of things to think about. One item that should be on every buyers to do list is to obtain as much information about the property as possible. Before closing, an opportunity exists to learn important things about the home from the seller - things no one else may know.

Although a seller may have no legal obligation to answer your questions, it can’t hurt to ask. Plus most sellers are happy to tell you about the home. Here are 10 things to ask, some of which depend on how far you are moving:

Are any appliances under warranty?
Do you have product manuals for appliances, and anything else such as outdoor watering or lighting systems?
Are there any specific instructions of how to care for any outdoor plants?
What are the names and phone numbers of immediate neighbors?
If you have children:

Are there children living near by?
Is there a school bus stop?

What day is trash pickup? Recyclables?
What are your favorite restaurants in the area?
Can you recommend a dry cleaner, plumber, electrician, mechanic; etc.?
What companies did you use for lawn care, pool cleaning, or house cleaning?
Are there keys (or any spares) for the doors, mail box, or gates?
Are there any light switches that operate outlets or something unexpected?

These are questions that the seller doesn’t provide answers to in the Seller Property Disclosure Statement, if one is provided in the transaction. As a result, the seller may be able to give you the kind of information it can take months for you to accumulate - if you ever get it.

The ability to ask questions while in the home is a major advantage to being present during the "walk-through". The walk-through is typically held right before the day of closing. At that time, the buyer should check to see if the home is in substantially the same condition as when the contract was written, and that any repairs that seller promised to make appear to be done. But familiarizing yourself with the property, by asking questions of the seller, should also be a goal of the walk-through.

Potential obstacles to this goal is that the seller is not required to attend the walk-through by the standard Residential Resale Real Estate Purchase Contract used in Arizona. Of course, if the property is a foreclosure or sold on a distressed basis, there may not be anyone has any knowledge of the home.

At SimplySOLD, we always recommend that our buyers take advantage of the walk-though opportunity. Plus, we are not so lazy to not accompany you - a SimplySOLD representative is always present at a walk-through, even if our buyer is unable to show. We can help you gather information and make your purchase as pleasant as possible. Call or contact us at mail@simplysoldndrealty.com to find out how we can help you with your next home purchase.

Foreclosures and Equity in Arizona - How do we Rate?

October 1, 2009

font.10020.T.png he West has been a leader in the number of foreclosures in the United States in first half of 2009. But have things changed? What about the amount of equity in homes? How much have Arizona homeowners lost, and how does that compare to our neighbors?

First, in Phoenix, house prices have declined up to 50% from the peak. Prices have declined by double digits everywhere around the country, with the South West US the most affected (except for Texas' housing market - which has shown remarkable resiliency). This means that not only will homes be lost, but also the equity in the homes retained will disappear.

California, Florida, Nevada and Arizona have been in the top four in foreclosure filings throughout the year. Arizona has popped in and out of the top three. For example, in August a 10% month to month decrease in foreclosure activity helped lower Arizona's rate to fourth in August. But the month before, Arizona securely held third place, with one in every 135 housing units receiving a notice of trustee sale. Among Arizona's metropolitan areas, Phoenix-Scottsdale-Mesa has the highest foreclosure rate.

As might be expected, the crash in values means that Arizona owners have lost the equity cushion in their homes. As much as 68% of metropolitan Phoenix homeowners have no or negative equity, according to Catherine Reagor of the Arizona Republic (www.azcentral.com). This means they are "underwater", and owe more on their mortgage than their home is worth. And it is expected to get worse before it gets better.

Ms. Reagor obtained these numbers come from a new report by Deutsche Bank Securities entitled "Drowning in Debt - A Look at ‘Underwater' Homeowners". In that document, the Wall Street firm states that before home prices stabilize next year, the negative equity number figure for our Phoenix metropolitan area is expected to reach 78%.

But we aren't the worst. Looking at the foreclosure numbers, it is not difficult to figure which states will be the leaders in the negative equity parade: California and Florida. Number one is Merced, Ca, with a whopping 85% current underwater figure. Modesto, Bakersfield and Riverside in California, as well as five Florida cities, rank ahead of Phoenix in this statistical category. Las Vegas, Nevada is number four overall. Frighteningly for the residents of Fort Lauderdale, Florida, it is expected that 93% of all homeowners will be in the red in the next two years.

When applied to Arizona, the foreclosure and negative equity numbers are consistent with the predictions of our market made in past few years by local experts. As I had written in an earlier blog entry, Elliott Pollack, an Arizona economist and real-estate investor, prophesied that a full recovery will probably take three to five years from the bottom of the housing market. With the bottom expected to be around now (fall of 2009), values won't likely return before 2015.

Therefore, patience (the ability to delay a discretionary move) and/or acceptance (listing at a realistic price based on current conditions) will be required to survive this slowdown. At SimplySOLD, we have the expertise to guide home owners or buyers through a successful sale. Contact us at mail@simplysoldndrealty.com for more info on how we can help you.

The Rules have Changed - Frustration in a Buyers' Market (Part 2)

September 8, 2009

font.10020.T.png he buying process should be easy, right? A seller should be desperate to unload their devalued property in this market, so buyers should get what they want quickly. In some parts of the metropolitan Phoenix and Scottsdale market, this can be true. But in those areas where there is significant buyer interest, buyers have found a frenzy reminiscent of the boom years, making a process that buyers thought would be easy just the opposite. In my last blog, I provided the numbers that show the increased activity in selected portions of our market.

Area and price range often determine which of our two different real estate situations you will encounter. But the reality today is that lenders, rather than the typical mom and pop seller, dominate the residential real estate process valleywide. This results in delays and complexity. When you add to this already unfavorable situation an area where there is less inventory due to its price range and location, the situation becomes more difficult for buyers.

The result is that when buyers find themselves in this situation, they can't ask for reduced prices or concessions anymore. In addition buyers, especially the first time purchasers that can now afford to buy, have found that they have to move quickly to make an offer on a home in the desirable area, but then the opposite is true; they must show infinite patience if multiple bids over the list price ensue, and with the frustration inherent in the short sale process.

Purchasers need to brace themselves for the short sale process involved in the purchase of many homes. Short sales are slow and unpredictable, but if a buyer wishes to purchase in some areas, there is usually no choice but to participate in one or more. Expecting a short sale to proceed like a typical sale will result in a level of frustration that can end with the buyer dropping out of the market. The key is having reasonable expectations - realizing that short sales are not the usual "make an offer, get it accepted or countered quickly, wait around 30 days and then close." Making many offers and waiting many months is the rule and not the exception.

Due to the low prices investors are back purchasing multiple properties at a time. In a recent article in the Arizona Republic (www.azcentral.com) they consulted Jay Butler, director of the realty studies program at Arizona State University. He related that because they often pay cash and buy several houses at once, investors are attractive to banks trying to shed dozens of foreclosures. It is common for sellers to get multiple offers, resulting in bidding wars that drive up the price on desirable properties, forcing traditional buyers to the sidelines. Investors can bid prices higher than a home's appraised value, putting traditional buyers at a disadvantage, because the investor, as a cash buyer, doesn't need an appraisal to secure a loan.

An example of the competitive situation places ordinary buyers at a disadvantage, the Arizona Republic article detailed now a young couple had been outbid at least 15 times on what they thought would become their first home. They made an offer on one bank owned house, only to receive a counteroffer that was $33,000 above the initial asking price of $117,000. The continued failures have been very frustrating to the couple because they have done all of the right things by saving money, having good credit and carrying little debt. In an attempt to get a home, they were forced to make offers on homes before they had seen them - as many as three per day. Their strategy is to look at the house for the first time if they got a response, and then decide whether to continue or back out of the deal.

At SimplySold ND Realty, we have extensive experience working in certain desirable, affordable zip codes such as Scottsdale's 85257. To avoid repetitive disappointment, it is sometimes necessary to recommend that buyers offer full price or more that if the property is priced reasonably and the buyers like it. Current appraisals are in most areas are reflective of the pricing of the short sale and pre foreclosure listings, so if the offer is close to the comparable sales, the buyers will not overpay.

What does this mean to you? Circumstances are still favorable for a purchase, and the hassles for buyers are worth the wait. But if you are looking to buy where the magic areas and price ranges go together, be prepared for a longer than normal process to obtain and close on your home. Don't be discouraged by rejected offers and lender intransigence; persistence is required. Critical to success is an experienced, knowledgeable agent to guide you through it (the only kind you will find at SimplySold).

Plus new homes continually come on the market; June 2009 saw a 14% increase of homes on the market compared to May. Inventory is available, although admittedly somewhat spotty in the most desirable areas.
In addition, interest rates are also favorable. According to Freddie Mac, the national average commitment rate on a 30 year conventional fixed rate mortgage declined to a record low 5.03% in the second quarter of 2009 from 5.06% in the first quarter; the rate was 6.09% in the second quarter of 2008

Finally don't forget there is another reason for first time buyers to move quickly now - to take advantage of the $8,000 tax credit. To be eligible for this program, the transaction has to be finalized by November 30, 2009. For more info, go to (Official Tax Credit Information), or contact us below to discuss any of your real estate needs.

The Rules have Changed -Frustration in a Buyers’ Market (Part 1).

rizona’s residential real estate market is schizophrenic right now - a dichotomy of healthy sales in some segments versus years on the market in others. The good news is that lower sale prices overall have allowed buyers once priced out of the market to enter the fray. The bad news is that the buying process can be frustrating - especially in affordable price ranges in desirable areas.

New buyers have entered into the market because homes are now listed at much lower prices than what they were sold at just a few years ago. In the Phoenix area, the median resale home price was $115,500 in April 2009, down from a peak of nearly $265,000 three years ago. Consequently, first time buyers accounted for somewhere around one third of all transactions.

In addition, interest rates are once again near to historic lows (5.03% in the second quarter of 2009). When you add the impending expiration of the $8,000 tax credit (on November 30, 2009), it is easy to see why there is so much buyer activity now.

The lower prices mean that in some price segments there are fewer homes available than in the recent past. For July in Maricopa County, approximately 32,000 homes were on the market, down 30 percent from January. In particular there are fewer properties for sale in the popular $160,000 - $100,000 price range, and the time on the market of properties for sale between those limits has generally decreased. Between $100,000 and $120,000, the number of active listings decreased in metropolitan Phoenix from 1323 in June to 1290 in July. In addition, the number of sales pending (a contract has been signed but the closing hasn’t occurred) decreased in many price points. For example, from 846 to 778 closed sales from June to July in the $120,000 to $139,000 price range.

This doesn’t mean that there are not distressed sales lender owned properties (REOs) and short sales, in the sought after price ranges. Continuous waves of foreclosures affect all of metropolitan Phoenix and Scottsdale. In fact, approximately 87% of all recent sales have been of distressed homes. The difference is that when a desirable area and an affordable price range coincide, demand can exceed supply.

My next blog will detail the consequences to buyers of the multitude of distressed properties: short sales, pre-foreclosures (trustee sales initiated but not completed) and bank owned properties that are available. As you will see, "hurry up and wait, and wait some more," is the new buyer reality. For more on this topic, and for answers to your real estate questions, keep visiting this blog and our website, www.simplysoldaz.com or contact us directly.

Free Money For Arizona Home Buyers!

July 22, 2009

As of July 1, select home buyers in Maricopa County can take advantage of the Your Way Home AZ program. An offshoot of the HUD for Home Purchase Assistance project, the state version provides eligible buyers with up to 22% of a home’s purchase price.

The statewide program was developed to assist home buyers purchasing foreclosed homes in select areas, help rehabilitate housing developments, and stabilize neighborhoods. There are eleven community partners, each one with a slightly different program: the state of Arizona; and the cities of Avondale, Chandler, Glendale, Mesa, Phoenix, Surprise and Tucson, and as of July 1st, Maricopa and Pima County.

Maricopa County’s variety involves the acquisition and redevelopment of fifty to one hundred existing abandoned and/or foreclosed upon single family homes. The homes will be sold to the eligible home buyers for an amount equal to or less than the cost to acquire and redevelop the property. The City of Phoenix uses a different approach. It is assisting buyers of foreclosed homes, townhouses or condominiums with $15,000 in down payment and closing cost assistance.

The assistance is in the form of a deferred second mortgage loan with zero percent interest and no monthly payments, that is forgivable if the homeowner remains in the property for the a specified period of time. The length of that time is based on the amount provided. For example: 5 years for $15,000 or less, 10 years for $15,001 $40,000, and 15 years for amounts in excess of $40,000.

There are of course both other property and buyer qualification requirements.

Buyer eligibility is based on a variety of factors. Income can not be greater than 120% of median (by county) and there are debt-to-income ratio requirements. A Homebuyer Education Class must also be attended.

Homebuyers must purchase a foreclosed one-unit detached single family home, condo or townhome which has been foreclosed or abandoned per HUD definitions. The property must also be used as a primary residence, and the purchase price must be discounted at least 5% from current appraised value.

Although the program states that the homebuyer must pay at least a 3% down payment (of which at least 1% must be their own money), the actual requirements imposed by the participating lenders may require higher down payments (e.g., FHA loans with 3.5% down)

A recent news release from Michael Trailor, the Director of the Arizona Department of Housing, encourages "all Arizonans to visit www.yourwayhomeaz.com to determine if they are eligible to participate in the state’s program or one of the other nine county and community programs listed on the Web site,".

At SimplySold ND Realty, we agree that obtaining up to 22% in what is effectively free money towards the purchase of metropolitan Phoenix and Scottsdale area real estate shouldn’t be passed up. For help in determining whether you qualify for the Your Way Home AZ program, contact us through our website at www.SimplySOLDAZ.com.

Have the New Canadian Border Rules Hurt Arizona?

July 8, 2009

The U.S. government's Western Hemisphere Travel Initiative has impacted travel by Canadians to the U.S. The question is whether the passport requirement portion of the law has been as disruptive to Canadians traveling to the U.S. as once was feared.

As of June 1 all travelers presenting themselves at U.S. border points have been required to present a specific document to enter the U.S., such as a passport or a limited type of high tech identification card (such as NEXUS or FAST or an enhanced driver's licence).

But it appears Canadians have made the necessary preparations. Passport Canada reported a significant increase in the number of passport applications last year, and expects to issue 5.1 million new passports this year. Last year, 4.3 million were issued by Passport Canada. Presumably the increase is in part a response to the new rules.

There are also some exceptions to the passport rules for school age children. Canadian citizens 15 years or younger will only require proof of citizenship (such as a birth certificate), and the same is true if 18 and younger, provided they are traveling with a school or organized group under adult supervision.

Although no significant disruptions on the Canadian border have been reported, the U.S. Northern border states have been worried about the effect of the potential chilling effect of the initiative on commerce and Canadian tourism.

The Arizona Republic (www.azcentral.com) reported on a recent meeting of the Senate Judiciary Committee with Homeland Security Secretary Janet Napolitano, the former governor of Arizona. The lawmakers implored her to make sure new passport requirements don't get in the way of French Canadian grandparents crossing the U.S. Canadian border to visit their grandchildren.

The heightened interest in the impact of the rule reflects that border security and immigration legislation, previously only associated with the border with Mexico, is now also affecting the Canadian entry points. As a result, lawmakers far from Arizona are taking a new interest in border issues. Napolitano calls treating the northern boundary as "a real border" for the first time a big "culture change" for the North.

But although the new rules may be a surprise to U.S. citizens, Canadians, and their travels to the U.S., seem largely unaffected. Canadians are more sophisticated travelers in general, and for many years have taken for granted the necessity of having a passport to travel, due in part to their fondness for international travel.

The metropolitan Phoenix and Scottsdale area real estate markets have not felt any lessening of Canadian investment here that could be attributed to anything other than market conditions. For one thing, most travelers to our state are arriving by plane, and the rules for airline travel have always been stricter than entry into the U.S. by land. Second, it would appear to be impossible to identify a negative impact to, or in anticipation of, the passport requirement, on a non-Canadian border state such as Arizona. Further, Canadian investment here remains strong (more on that in a future blog), and we here at SimplySold ND Realty expect that to continue whatever rules are in place.

For information on how you can take advantage of this favorable buyer's market, or for answers to any of your real estate questions, keep visiting this blog, and check out the resources available to Canadian and U.S. buyers at our website www.SimplySOLDAZ.com.

Do the Latest Market Numbers mean Recovery (Part 2)?

May 22, 2009
With great fanfare the real estate media announced that the number of homes on the market in parts of the greater Phoenix area had declined in the last few months. As detailed in our last blog, certain cities showed a decrease in the monthly supply of homes for sale. The assumption by observers was that the amount of distressed inventory was decreasing because lenders no longer foreclosing on as many homes.

A look at the area numbers does show a decline in sales. According to the figures available from the National Assoc. of Realtors at http://www.realtor.org/research/research/metroprice, sales of condos for the first quarter of 2009 declined from the last quarter of 2008 in the Phoenix/Mesa/Scottsdale area, and were down -40.5% compared to 2008. Single family homes had a similar decline, with a 41.9% decrease. But does mean there are less foreclosed homes for sale, or is it just a reflection of the continued deterioration in the market in general?

Our research shows that the number of homes acquired as a result of foreclosures by lenders in Scottsdale appears to be holding steady. If you visit our list of Scottsdale properties that have been foreclosed on by Freddie Mac and Fannie Mae at www.simplysoldaz.com, you can see there has been no significant decline in REO properties.

In addition, it has been reported that lenders are not putting all the homes they acquire on the market at the earliest opportunity. Moreover it appears that lenders are delaying instituting or completing foreclosures on homes with delinquent loans. Why would they do that?

Although some areas of Scottsdale clearly still have a significant monthly sales backlog, in other locations market times have returned to nearly normal. In those areas, by reducing the amount of homes placed for sale, the lenders can drive up prices on their existing inventory and realize better returns. Our experience in Scottsdale is that lender owned homes in certain desirable zip codes (such as 85257) are starting to attract multiple offers, and are selling for closer to their list prices and much sooner after they are placed on the market than last year.

The good news is that this means properties will continue to be available to buyers for a reasonable price. For the ordinary non-lender seller, this also means that prices should hold steady without further declines. Those sellers who had been forced to take their homes off the market due to a lack of offers should be able to re-list their properties and sell them now. The bad news is any decline in the number of homes on the market doesn't mean prices are going to dramatically increase due to limited inventory anytime soon.

It is beyond the scope of this blog to examine in any detail the intricacies of our current real estate market, so we invite you to contact us by email (mail@simplysoldndrealty.com) or by phone at 480-675-0112 to discuss your real estate needs further.

Do the Latest Market Numbers mean Recovery?

May 8, 2009

Time on the market statistics are an important indicator of the health of a real estate market. One of the indicators of a recovery is when the residential resale inventory falls below a six-month supply. This means, on average, homes listed for sale will accept an offer and be off the active market within that time period. But it doesn't tell the whole story, and can be misleading as to the number of available inventory, as our current Phoenix area numbers show.

Below are the rankings of the cities in the Phoenix metropolitan area for the month of April:

Rank City Monthly Supply

1. Queen Creek 2.9

2. Glendale 3.2

3. Surprise 3.3

4. Goodyear 3.8

5. Phoenix 3.9

6. Mesa 4.4

7. Avondale 4.4

8. Peoria 4.9

9. Gilbert 5.2

10. Chandler 5.7

11. Tempe 6.7

12. Scottsdale 14.3

This means an average home (in good condition, with minor maintenance and condition issues, in an average location and reasonably priced) is taking 14.3 months to sell in Scottsdale. Although that looks bad, in January that number was 19.4!

Why does Scottsdale lead all cities with a 14.3 month backlog? My guess is that in reality it doesn't. Time on the market statistics only measure homes listed for sale; it doesn't measure homes owned by sellers that they want to sell but are not currently for sale. There are literally hundreds and hundreds of foreclosed on and vacant homes in the outlying communities; this is because those areas are the hardest hit by the drop in market values and by foreclosures. If those areas have the most unsold homes, the only explanation for the short time on market numbers is that the owners of the homes have decided not to sell at the moment. Since most of those vacant homes are owned by lenders due to foreclosures, it must be that for business reasons those companies have decided to keep that inventory off the market.

Besides, the broader economic news isn't good enough to support a large reduction in unsold properties. As was just reported in the media, bankruptcies increased a staggering 91% in April over the already high rate for such filings a year ago.

Want to take one of those foreclosed homes off a lender's hands? Visit our foreclosure page at www.simplysoldndrealty.com. SimplySOLD ND Realty prepares a list of Scottsdale properties that have been foreclosed on by Freddie Mac and Fannie Mae. We also have access to lender owned homes all over the valley if you want

For more on Mark and Arizona Real Estate please visit his MySpace page.

How does Arizona Rate? Nationwide Foreclosure Rankings.

April 23, 2009

Although there are monthly variations in the number of foreclosures around the country, it is usually not difficult to figure which states will be the leaders. Arizona continues to rank in the top three, but there are a few surprises in the national distressed sale numbers.

In mid March, the top ten states with the highest foreclosure rates (based on foreclosure filings in February 2009) are below. Note that not all of the trustee's sales that are started by the lenders will be completed and result in a foreclosure.

Rank	State	# of Housing units
1	Nevada	1 in every 70 housing units
2	Arizona	1 in every 147 housing units
3	California	1 in every 165 housing units
4	Florida	1 in every 188 housing units
5	Idaho	1 in every 358 housing units
6	Michigan	1 in every 360 housing units
7	Illinois	1 in every 369 housing units
8	Georgia	1 in every 389 housing units
9	Oregon	1 in every 446 housing units
10	Ohio	1 in every 451 housing units

Ohio, which was ranked with the highest amount of foreclosures in recent years, dropped to number 10 in the third quarter of 2008 and held steady at number 10 during the first quarter of 2009. However, the ratio of foreclosure filings in Ohio has dropped from 1 in every 417 housing units in the third quarter of 2008, to 1 in every 451 housing units in 2009.

Colorado and New Jersey have fallen out of the top ten in 2008 and are now ranked number 11 and number 29, respectively, but I suspect Colorado will reappear in the top 10 soon.

That Michigan is in the top 10 is no surprise, but Idaho? Maybe the answer to that mystery is that the number of vacation homes that have been built there. As we have seen in the metropolitan Phoenix area, second or investment homes are the first properties to be let go in a rapidly declining real estate market and a depressed economy.

States with the lowest foreclosure rates in the first quarter of this year include Nebraska at number 50, Vermont at number 49 and South Dakota at number 48. No doubt that reflects the modest growth that those states experienced in recent years, and perhaps the prudence of their residents.

Simplysold ND Realty prepares a list of Scottsdale properties that have been foreclosed on by Freddie Mac and Fannie Mae on our foreclosure page at www.simplysoldaz.com. This data is compiled in an easy to read format that is available no where else!

For more on Mark and Arizona Real Estate please visit his MySpace page.

Canada's Economy is Going South, Literally...

April 10, 2009

hat's happening with Canadian real estate prices? What about the economy in the frozen north? Have Canadians stopped spending in the US? Although the Canadian economy has slowed, the flow of investment by Canadians in the US has been largely unaffected.

Housing seems to be following the same path as the United States. Canadian home prices softened in 2008 and should fall further in 2009. Canada's new house price index dropped again in February, down 0.7%, compared with a decline of 0.6% one month earlier. Prices were down 1.8% from a year earlier, the largest year on year decrease since 1996.

Last spring the British Columbia Real Estate Assoc (www.bcrea.bc.ca) predicted price gains of 8% for 2008 and 5% for 2009. 2008 actually saw a decline of 11%, and the prediction for 2009 is a decline of 13%.

In other areas between January and February of this year, prices declined 3% in Edmonton, followed by Vancouver ( 2.9%), Saskatoon ( 2.1%), Victoria ( 1.7%) and Calgary ( 0.9%). In all these cities (except for Saskatoon where other factors were involved), poor market conditions continued to be the main reason for the decreases.

Nevertheless, there doesn't appear to be a meltdown on the horizon similar to that which occurred to some parts of the metropolitan Phoenix area real estate market.

For example, not all prices declined. In Quebec, new housing prices increased 2.6% from a month earlier, and prices also increased from a month earlier in Regina, Saskatchewan and in London, Ontario, which were both up 0.9%. More Canadian real estate statistics are available at www.crea.ca.

Job losses have increased and are starting to impact the Canadian economy. Canadian job losses reached 129,000 in January, sending the national unemployment rate to 7.2% from 6.6% in December. Over 100,000 of the jobs lost were in manufacturing, with 71,000 lost in Ontario alone. BC lost 35,000 jobs and its unemployment rate now stands at 6.1% up almost two full points from the end of 2007. Thanks to its oil and gas industry, Alberta is stable so far.

Payroll employment showed employment fell by close to 600,000 unemployment now stands at 7.6%. Job losses since the start of the recession in December 2007 total 3.6 million. The Financial Post (www.financialpost.com) states that Canada shed another 61,300 jobs in March as employers continued to drastically cut costs amid a deepening economic downturn.

Meanwhile The Globe and Mail reports at www.theglobeandmail.com that Canada recorded its first ever surplus in bilateral direct investment with the U.S. last year, overtaking an economy 10 times its size. Direct Canadian investment in the United States was $17.1billion greater last year than U.S. direct investment in Canada. In 2007, the balance of such investments favored the United States by $62.1billion.
An example of that investment is Toronto Dominion Bank's spending of more than $15 billion over the past four years expanding in the United States - buying TD Banknorth, based in Portland, Me., and Cherry Hill, New Jersey based Commerce Bancorp. The flow of Canadian capital southward is the result of Canada "becoming a more mature economy", said Joseph Martin, who studies Canadian business history at University of Toronto. For more analysis from Mr. Martin, go to www.utoronto.ca.

For more on Mark please visit his MySpace page.

Positive Lending News At Last!

March 17, 2009

ood news on the lender front. First, HUD has reinstated the higher limits on FHA loans that expired 1/1/09. The limit for this government guaranteed loan was $346,250 last year for a single family home. But on 12/31/08, that amount lowered to $271,150.00.

The impact of the decrease would have been less lending options and more expensive loans. Up front costs could be thousands of dollars more, even if the borrower had near perfect credit. Plus loans over the limit typically require at least a10% down payment minimum. FHA loans only require 3.5% down payment, and other initial costs are reduced, such as origination fees.

Although FHA doesn’t proscribe interest rates, and lenders are free to set them at whatever they want, the other positive development was interest rates are great right now.

Last week the U.S. weekly average mortgage rates were 5.03% for 30 year fixed, and 4.64% for 15 year fixed. However, according to the Mortgage Bankers Association, rates fell and are now the second lowest level in two decades. As of this week, the U.S. weekly averages are:

30 Year Fixed: 4.96%

15 Year Fixed: 4.5%

As a result, the Mortgage Bankers Association says that loan applications have surged: FHA are up 10.4%, and overall applications are up 7.1%. More information about interest rates and the FHA are available at www.mbaa.org and www.fanniemae.com.

For more on Mark please visit his MySpace page.

The New and Improved Home Buyer Tax Credit

s set forth in an earlier blog, after the phase out of the down payment assistance/gift program in late summer 2008, Congress created a first time buyer tax credit program. The tax credit program evidently didn't do what it was designed to do - stimulate new home sales.

Fortunately the government modified the program, and the new tax credit for homebuyers offering applies to purchases that close in 2009. Once again it is limited to first time home buyers - which are defined the same as before - buyers who have not owned a principal residence during the three year period prior to the purchase.

It also retains the tax credit benefit, but ups the maximum amount to$8,000 (instead of $7,500) or 10% of the value of the home. The big change is that this time, instead of having to repay the credit over a 15 year period, it doesn't have to be repaid at all - provided you stay in the home and use it as your principal residence for at least 3 years.

Not having to repay the credit is a significant benefit, and makes it more like the down payment assistance program.

There is of course fine print. The tax credit starts phasing out for couples with incomes above $150,000, and single filers with incomes above $75,000. And buyers will have to repay the credit if they sell their homes within three years.

More information about the program is available at www.federalhousingtaxcredit.com.
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Are There Foreclosures in Scottsdale?

ong largely immune from the fluctuations in the greater Phoenix market, Scottsdale has not been able to avoid the current adverse conditions. At one time the opinion that homeowners in the "Beverly Hills" of Arizona would lose property by foreclosure in significant quantities would have been laughed at. Fortunately the decline in values in Scottsdale has not been community wide, and the number of trustee's sales are relatively low, justifying the area's sterling reputation.

For example, in January of 2009 the number of completed trustee's sales on single family homes in Phoenix equaled 1235, and that in Scottsdale totaled 90. Even when adjusting for Phoenix's greater population, the Scottsdale figure is statistically lower. The number of resales in Scottsdale are also proportionately better. During that same month, sales of Phoenix homes were 1190 in amount, and that in Scottsdale numbered 165.

Nevertheless, the Scottsdale figures are sobering. Looking specifically at the condominium market for Scottsdale in January, sales volume fell 36% and prices dropped 27% to $195,000.00. The median price for sales of single family homes in January, 2009 was less affected, falling 31% or $170,000 from January 2008 to $380,000.00 - which is equivalent to the median sales price for 2004. Still that beats the decline to approximately the 2001 median price for other parts of the Valley.

The good news is that the decline in the median prices numbers mean that large numbers of people who were priced out of the Phoenix and Scottsdale market can now buy - whether renters or residents of other cities.

And there are still a lot of people in other parts of the country who want to move here. According to a recent national study by the Pew Research Center, the Phoenix area (which includes Scottsdale), is in the top five of major metropolitan places people said they would want to live. This encouraging news reinforces that Scottsdale will continue to have strong appeal to well-healed buyers looking to move to the area.

As a result, I would expect that residential properties in the Valley of the Sun should rebound and appreciate quicker than other metro areas. So if you are one of those people who always wanted to own in the Phoenix or Scottsdale areas, this is the time to buy, because the selection and low prices will not last forever.

First Time Home Buyer Tax Credit at a Glance

font.10020.T.png he loss of the new home buyer down payment assistance/gift program in mid 2008 couldn’t have come at a worse time. With the real estate market already slowing dramatically, the disappearance of the most valuable incentive to purchase a new home hit builders hard in the third and fourth quarter of last year.

The replacement for the gift program, the "first time buyer tax credit" is not as valuable because it isn’t down payment assistance, which is what new buyers really need. But the good new is that it applies to more than the traditional definition of a first time buyer, and to more than new home sales.

Answers to your most common questions about the program are below.

What’s a first time home buyer?

Even though the tax credit is stated to be available for "first time home buyers" only, the definition of that term is broader than you would think. A "first time home buyer" is a buyer who has not owned a principal residence during the three year period prior to the purchase. So in fact, it really should be called the "haven’t owned in 3 years" buyer credit.

What if you have owned a home within 3 years but have rented it out?

You qualify, because the test is whether it was your principle residence. Same for ownership of a vacation home. It gets a little complicated for married couples, as the law tests the ownership history of both. So if you have not owned a home in the past three years, but your spouse has owned a principal residence, neither of you qualify for the first time home buyer tax credit.

What type of home qualifies?

First time home buyers purchasing any kind of home - new or resale - are eligible for the tax credit. This includes single family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and even houseboats!

How long is the credit available?

The home must be purchased before July 1, 2009.

What is the Amount?

The maximum credit amount is $7,500, for single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000. Those with more income qualify for a smaller credit.

How does the credit work?

The sale is reported on your tax return, and works like an interest free loan that must be repaid over a 15 year period. You can even choose which year, 2008 or 2009 you report it in under certain circumstances, even if the purchase actually occurs in the other year.

To learn more about the tax credit and other provisions, consult with your tax professional, and visit http://www.federalhousingtaxcredit.com.

Opportunities grow despite the Slowdown.

Alpha.H.jpg ome sales in 2008 will be the worst in a decade - and that is not adjusting for the population growth during that time. Nationwide, the government figures show that home sales declined 8.9% from October to November, and November was down 17% compared to that same month in 2007. The median sales price in the United States also plunged 13% to $181,300.00, the largest decline since record keeping started 40 years ago. December figures will be out later this month.

Locally, in October home prices in Phoenix dropped 33% according to the Standard & Poor's/Case-Shiller 20 city housing index. The S&P/C-S index also averages a number of cities. 20 city index fell 18%, and the 10 city 19.1%, both records for the 21 year history of this reporting. Both indices have recorded year over year declines for 22 straight months. Prices have reached March 2004 levels. The Standard & Poor's/Case-Shiller index can be found at www.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp.

The good news is the low interest rates, which with the sales price adjustment, has resulted in our local market being affordable again. The "irrational exuberance" of the listing and sales price explosion era has been replaced by the current much needed adjustment period of lower sale prices. Finally, buyers that were frozen out of our prior market can purchase a home in the Phoenix area. There has been encouraging growth in the under $200,000.00 price range, and increasing participation by international investors looking for that warm weather second home. Besides those buyers, our brokerage is also representing former renters who now are able to afford a home in the area they wanted.

Timeless advice, usually applied to the stock market, is to sell high, buy low. Low home prices and low interest rates means this is the time to buy a home. Other excellent market advice is to buy without trying to time the bottom, because any short term decline will be erased by subsequent increases. The Scottsdale area in particular will always have strong appeal and appreciation, so don't wait on the sidelines in a vain attempt to get the perfect deal. Buy now, because as always, the best selection goes first!

Buyers are Increasingly Avoiding Distressed Properties.

Monday, January 5, 2009
uyers have discovered that it is not necessary to purchase a distressed property to obtain a great deal these days. According to its November 2008 survey, Harris Interactive reported that the number of buyers willing to consider the purchase of a bank owned property or that from a seller needing lender permission (a short sale) has declined. In early summer 2008, 54% of buyers would put an offer in on an REO or short sale was 54%. In November, that amount had lowered to 47%.

The reason for the change is attributed to buyers realizing the down side to purchasing that type of properties. Hidden costs, poor home condition, the complications, uncertainty and delays inherent in short sales have made buyers more wary of distressed home. When sold by auction, the negatives to REOs increase, as there is ordinarily no or only a limited opportunity to conduct inspections or other due diligence before the sale, and that there is no contractual right to cancel after purchase afterwards if the property is unacceptable.

In an ordinary market, the price of distressed properties is adjusted downwards to the point that the benefit equals or exceeds the risks. Now there is not enough price advantage, especially when considering that there may be other properties available from traditional sellers at those same prices, to justify incurring that risk. That is why my advice is to avoid distressed homes at all costs when there is other suitable product available to non-investor buyers. For more information on the data in the Harris Interactive survey, go to www.Trulia.com/city.

Simplified Passport Renewal for Canadians

Monday, December 29, 2008
Alpha.F.jpg or those Canadians living in the United States, Passport Canada has announced a Simplified Passport Renewal process. Previously the mail-in renewal process required that the application be verified by a specific type of person (such as an attorney). Called a "guarantor", that person had to sign the form and attest to knowing the applicant for a specified period of years. For those individuals who could not locate the requisite qualified person, or if that guarantor did not know the applicant long enough, renewal using the previous mail-in system could be impossible.

Despite this era of increased security, Canadians living in the U.S. will now be able to apply for a Canadian passport by mail using a new, simplified passport renewal process. Eligible applicants can now apply using a shorter application form, without a guarantor, and without submitting proof of Canadian citizenship and supporting identification. Renewals are still subject to all of the other current security verifications, and two new photos and the most recent, expiring passport must still be supplied with the fee and completed form. More information is available on www.Connect2Canada.com.

Foreclosure Prevention Resources (part 2)

Friday, December 19, 2008
art 1 of this blog series detailed some of the programs and resources available to distressed home owners from the government and Fannie Mae and Freddie Mac. Those programs were insufficient to assist the increasing volume of struggling homeowners. This segment deals with programs which hopefully will prove more effective.

Fannie Mae introduced the Streamlined Modification Program (SMP) in November, 2008. This program designed to help borrowers and loan servicers address potential mortgage problems and prevent unnecessary home foreclosures among the more than 18 million single family loans owned or guaranteed by Fannie Mae. Scheduled to launch December 15, 2008, SMP targets borrowers who have missed three full payments and meet certain other criteria.

On December 8, Fannie Mae announced that it is providing new servicer flexibility to help borrowers avoid foreclosure. These changes were made to allow more struggling families to use the program and keep their homes. Designed to build on and complement SMP, these steps are meant to reach borrowers earlier with foreclosure prevention options.

The changes include specific direction to servicers to provide foreclosure prevention assistance as soon as a borrower demonstrates the need for help, even if a borrower is current but default is reasonably foreseeable. This "Early Workout" program allowing servicers, in one step, to pre negotiate a loan modification that becomes effective and permanent only after an initial trial period. The new guidelines will also double the maximum forbearance and repayment plan periods for most loans to borrowers in need of loan workouts.

In connection with SMP, Fannie Mae has ordered a halt to all foreclosure sales on occupied single family properties scheduled to occur from November 26, 2008 through January 9, 2009. This temporary halt also applies to eviction lockouts of occupied single family properties. Information on the program and the moratorium on foreclosures can be accessed at http://www.fanniemae.com/home/index.jsp.

HUD's offers the HOPE for Homeowners program (H4H), and it recently announced that the Board of Directors has approved changes to the program to help more distressed borrowers refinance into affordable, government back mortgages. Under the program, borrowers having difficulty paying their mortgages will be eligible to refinance into FHA insured mortgages they can afford. The changes will reduce the program costs for consumers and lenders alike, while also expanding eligibility by driving down the borrower's monthly mortgage payments.

For borrowers who refinance under H4H, lenders will be required to "write down" the size of the mortgage to a maximum of 90 percent of the home's new appraised value. Hopefully such a reduction in principal will allow lenders to avoid a costly foreclosure, while helping borrowers stay in their homes

H4H will only offer 30 year fixed rate mortgages so the borrower's last payment will be the same as the first payment. Further, this program will maintain FHA's long standing requirement that new loans be based on a family's long term ability to repay the mortgage. Only owner occupants are eligible for FHA insured mortgages, and any existing second position or subordinate lenders must agree to release their outstanding mortgage liens.

Other limitations apply. Borrowers must also meet the following criteria: Their mortgage must have originated on or before January 1, 2008; they cannot afford their current loan; they must have made a minimum of six full payments on their existing first mortgage and did not intentionally miss mortgage payments; they do not own a second home; their mortgage debt to income must be at least 31 percent; they did not knowingly or willfully provide false information to obtain the existing mortgage; they have not been convicted of fraud in the last 10 years; they must fully document income and employment; and they must agree to share both the equity created at the beginning of their new H4H mortgage and any future appreciation in the value of their home. Additional discussion can be found at http://www.hud.gov/hopeforhomeowners/index.cfm.

Email me at mark@simplysoldndrealty.com if you have questions or want to sell your home and need any pre-foreclosure or foreclosure help.

Foreclosure Prevention Resources (part 1)

raditionally, the help available to a distressed home owner from the government and Fannie Mae and Freddie Mac was limited to information and advice, such as that under the Hope Now Program. Hope Now is a free foreclosure prevention service provided by loan servicers and U.S. Housing and Urban Development ("HUD") approved counseling agencies. It encourages borrowers to talk to their lender first, and who to call when a lender won't work with them. Tips for avoiding foreclosure and foreclosure scams are available, and where to find local renting resources, rental assistance, and relocation resources. It provides links to state and local foreclosure resources, and offers state by state housing counselors, www.hopenow.com. Additional information on the subject is offered in HUD’s Guide to Avoiding foreclosure, available at www.hud.gov/foreclosure/index.cfm.

Clearly the scope of the current crisis required that the government provide more than just information and advice. As a result, Fannie Mae introduced the HomeSaver Advance program in the first quarter of 2008. It grants qualified borrowers an unsecured loan up to the amount of the delinquent payments to bring the mortgage account current, up to the lesser of $15,000 or 15% of the original unpaid principal balance. The loan proceeds can be applied to delinquent payments, escrow advances, and advances, and foreclosure and bankruptcy fees and costs that would otherwise be reimbursed by Fannie Mae. In August, 7,914 mortgages were brought current with this program. A fact sheet on HomeSaver Advance can be found at www.efanniemae.com/sf/servicing/homesaveradvance.jsp.

The adjustable rate mortgage ("ARM") problem requires a different approach - the refinancing and elimination of the loan itself. FHASecure allows current and delinquent homeowners to refinance their FHA loan. If the borrower is delinquent on the mortgage, the default must have been due to the payment shock of an interest rate reset or, in the case of an ARM, the "recasting" of the mortgage to fully amortizing.

The amount that can be refinanced depends on the value of the property and how much is owed and if the lender, or another eligible source, is willing to take back a second mortgage to help bridge the gap between what is owed and the home's value. Disadvantages of FHASecure are that it has very limited applicability to borrowers in foreclosure, and its inability to deliver refinance assistance in the volume needed - there were only approximately 4,500 loan modifications made as of late summer. Information on the program is available at http://portal.hud.gov/portal/page?_pageid=73,1&_dad=portal&_schema=PORTAL

Two other programs which extend loan modification and alternate loan benefits to homeowners will be discussed in the next segment of this blog. If you have any questions thus far or if you are a distressed borrower with a home to sell, you can reach me at mark@simplysoldndrealty.com.

Purchase by Fed should help Borrowers

Friday, November 28. 2008
he residential real estate market and the mortgage industry received some good news this week. The FHFA announced that it will purchase $600 Billion worth of mortgage-backed securities (mortgage bonds) backed by Fannie Mae, Freddie Mac, and Ginnie Mae. This should help increase the availability of credit, while also lowering fixed mortgage rates, as interest rates on conventional, FHA and VA loans are tied to these bonds. In addition, the FHFA will allocate $200 Billion to create liquidity in the auto, student, and small business loan markets.

The 30 year conforming, FHA and VA rates fell to the 5.5% range yesterday. So the mortgage interest rates available to borrowers are the lowest rates in about 5 years!

Low home prices, lots of inventory and low interest rates. It's a great time to buy a home!

It has been a bad 10 years for stocks
And you thought real estate sucked?

Saturday, November 22, 2008
According to an article in the Arizona Republic this past weekend by Russ Wiles, stock values overall have gone nowhere since the late 1990s. This is a rare occurrence, and hasn’t happened since the stagflation days of the late 1960s and 1970s. He calls it the “lost decade.”

The current 10 year stretch is looking worse than anything that happened back then, and could wind up as the worst 10 year period ever. Not only are current stock prices lower, but values are down even if you factor in reinvested dividends along the way.

Including dividends, the worst 10 year stretch back then was 1965 through 1974, when stocks posted a positive yearly return of 1.2%. If the S&P 500 finishes this year down roughly 40%, about where it stands now, that would translate into an average annual compounded loss of 1 percent from 1999 through 2008, slightly eclipsing the worst ever in history – a 0.9% yearly decline during the Great Depression years from 1929 through 1938.

By almost all calculations, holding real estate for an extended time will result in a much higher gain than that attainable in the stock market. Even with the two year decline in the value of metro Phoenix area real estate, the five year appreciation rate for the 2003-2008 period approximates 36% in many areas.

So it appears that the smart money has been in real estate, not the stock market, and I see no reason why that won’t continue in the next 10 years. When you consider the current low prices, it appears that the values can go nowhere but up – and appreciation will return to at least historical levels.

Stop Overreacting and Buy
Says Expert Honored at ASU

November 14, 2008

Joel Naroff, a Philadelphia economist, was honored by Arizona State University in New York City on Thursday. An economist, he was honored for being one of the most accurate forecasters in the country. He gave his view on the housing market, its foreclosures and tightwad buyers.

He stated that things could turn around next year if consumers, banks, business and investors would just stop overreacting. While he said it's impossible to be absolutely accurate in today's weird economy, he believes that once people start to see that things aren't getting worse sometime next year, they'll start shopping again vigorously.

"'While there is a lot of reason to be concerned right now, I think people are overreacting to the situation. When the psychology changes, you will wind up getting a stronger reaction in the economy than basic economic factors would argue for."

In other words, overreaction led to paralysis, but when things don't get worse, a buying rebound should result.

Obviously when the masses start buying again, the best deals will go first and all prices will go up. So stay ahead of the curve and plan to buy now, so you don't end up missing the "when things were cheap" boat.

Naroff, president of Naroff Economic Advisors, was selected by ASU's University's WP. Carey School of Business to receive the 2008 Lawrence R. Klein Award. The honor recognizes him as having the most accurate predictions from 2004 through 2007 among 50 economists' who forecast for the Blue Chip Economic Indicators published by Aspen publishers.

The ASU business school judges and sponsors the national competition and also produces its own Arizona Blue Chip Economic Forecast.

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