Navigating Today's Real Estate Market

SmartMoney.com - August 2007

From housing boom to housing bust, the days of "cheap" mortgages and easy money are — at least, for now — decidedly over. Just thinking about how to buy or sell a home in this market seems like a Sisyphean task. And, if you're one of the tens of thousands of homeowners facing foreclosure, the prospect of hanging onto your home probably seems even bleaker.

While it won't be easy, there are ways to navigate this turbulent housing market. Here's a guide for buyers, sellers and homeowners in despair.

Buyers

Before you begin searching for a house, schedule some meetings. Talk with your accountant about how much real estate you can afford, ask your lawyer to tally up the total cost of buying a house in a particular neighborhood and speak with a reputable broker to confirm that your credit score is high enough to qualify for a mortgage.

"Over the past year, lending requirements have tightened and credit thresholds have increased across the board," says Bill Nazur, mortgage banker and co-author of "Finding Foreclosure: The Insider's Guide to Cashing in On This Hidden Market." A first-time home buyer who doesn't make a down payment is required to have a credit score of 740, says Nazur. A year ago, a similar buyer could score 100 points below that and still qualify. As for down payments, those 0%-down deals will be harder to snag. For first-time buyers, a down payment of at least 5% is common, according to Nazur. If they receive assistance from family members, the down payment can range from 10% to 20%.

If you have a high credit rating and cash on hand, then you're in really good shape, says Pat V. Combs, president of the National Association of Realtors. "There's little competition, a lot of inventory, and mortgage rates are still in the single digits."

Buyers with stellar credit scores should consider the traditional 15- and 30-year mortgages, advises Buz Livingston, a member of the Garrett Planning Network and a certified financial planner based in Santa Rosa Beach, Fla. The average interest rates on a 15-year and a 30-year fixed mortgage were 6.5% and 6.85%, respectively, in July, according to HSH Associates. In January, rates stood at 6.05% and 6.33%, respectively.

Those with low credit scores should postpone the house search and focus on improving their credit standing. "The biggest mistake a person with less-than-stellar credit could make is to apply for a subprime, interest-only or exotic loan," says Livingston. Instead, consider renting. "It'll help you create a good rental history, give you time to raise your credit score, and help you shop for an affordable mortgage in the future."

Regardless of your credit standing, be aware of overaggressive lenders. If they offer an adjustable-rate mortgage, find out how long the current rate will last and the maximum payment that you could ever owe, says Livingston.

And when you finally find your dream house, don't hesitate to haggle, says Pamela Liebman, CEO of the Corcoran Group. "A buyer shouldn't box him or herself into a corner when negotiating a price," she says.

Sellers

Noticing a lot of "for sale" signs up in your neighborhood? You're not alone. Several parts of the U.S. are being flooded with houses. That makes it a much more daunting prospect if you're considering joining the fray.

Pricing your home right is of utmost importance when trying to stand out from the competition. "One thing to forget is the amount your home was worth last year," says Livingston. "Some cities are thriving right now while others are caught in a downward spiral."

For example, average home sale prices hit $115,800 in Beaumont-Port Arthur, Texas, during the first quarter of 2007, a 16.5% increase from the first quarter of 2006, according to the NAR. Meanwhile, average house prices in Elmira, N.Y., dropped 14.9% year-over-year to $75,300. To find out the average asking price in your neighborhood, call your broker or consult web sites like NAR's, which provides quarterly reports on state and metropolitan area home prices.

Sellers may also have more wiggle room with their realtors when it comes to price. You could offer to lower your selling price if they agree to lower their commission. "Realtors aren't selling as many homes now, so they're probably more willing to negotiate," says Livingston.

If your mortgage is higher than the value of your house, consider holding onto your house and renting it to a potential buyer, suggests Dr. Gala Gorman, a certified financial planner and realtor based in Brentwood, Tenn. "Allocate a portion of the monthly rent toward a down payment on the house. This way, you're putting the renter in a scenario where he or she is motivated to buy the home," says Gorman.

To help sell your house faster, clean up the yard and freshen up the paint job. Also, consider throwing in some personal items to sweeten the deal, suggests Livingston. For example, if you're moving to a condo, you probably won't need your lawnmower. Some sellers even offer to pay for the buyer's closing costs, typically around $2,000, according to HSH Associates, or to complete an unfinished basement.

"Many parts of the country have a lot of inventory," says Corcoran's Liebman. "As long as you make your home pretty and price it right, you'll be at the top of the list."

Homeowners Facing Foreclosure

Foreclosures have reached epidemic proportions. During the first six months of this year, there were 925,986 foreclosure filings in the U.S., up 55% since the year-ago period, according to RealtyTrac, an online marketplace for foreclosed properties. To put it in perspective, that's one foreclosure filing for every 134 U.S. households.

By far, the most effective way for a homeowner to avoid being part of those stats is to communicate with their lender. Lenders will be a lot more willing to work with you if you call them before you miss a mortgage payment. "Lenders can offer more options in the beginning before late fees and attorney fees kick in," explains Glen Daniels, director of REO at Foreclosure.com.

Homeowners who undergo a life-changing or disruptive event, such as a serious illness or divorce, should also have some luck making arrangements with their lenders. After all, the lender's goal is to get paid. "The bottom line is the lender doesn't want the house back," says Daniels.

Lenders might consider converting a loan from an adjustable interest rate to a lower fixed rate, says Daniels, or they may enter into a forbearance agreement, which relieves the homeowner of his or her mortgages payments for up to 12 months. Typically, this offer is given to individuals who lose their jobs or are unable to work because of a work-related injury. The 12 months are then tacked on to the end of the mortgage period when the homeowner should ideally have a better handle on their finances.

If you simply can't afford the payments, your best bet is to put the house on the market, says Daniels. In turn, your lender will probably lower your payments for a 180-day period. However, if you're at an immediate risk of foreclosure, it may be best to conduct a short sale where the lender agrees to a lower payoff figure than the amount due on the house. For someone in financial trouble, this is a much better option than ruining your credit record with a foreclosure.

Finally, you may be feeling desperate, but make sure to steer clear of the random rescue companies that may contact you. "This is a scam," says Nazur. "These firms claim they can stop your foreclosure immediately if you sign documents appointing them to act on your behalf. In reality, you're probably giving up your ownership of your property."

While the thought of losing your home is a scary one, don't allow that fear to paralyze you into complacence. "Don't be afraid to make the phone call to your lender. This is the best course to holding on to your home," advises Nazur

Tightening of standards squeezes some buyers out of market

Tribune - August 2007

The mortgage industry's tailspin from lofty heights has left potential Valley homebuyers scrambling to pick up the pieces of shattered deals, as lending standards tighten on a near-daily basis. During the housing boom, it was easy to get a loan, said Elaine Paddy, senior vice president at Alliance Home Mortgage in Mesa.

"If you lived and breathed, the underwriting guidelines would pretty much allow for you to get a loan," she said.

Today, it's harder than ever for borrowers to qualify for financing.

The days are gone when anybody could get 100 percent financing or use loans that didn't require proof of income. That's forced some borrowers who were already preapproved to start the process again from scratch.

Buyers now need higher credit scores and often a down payment of at least 5 percent.

Subprime and Alt-A borrowers are taking the biggest hits because they are at greatest risk for default, said Jeff Underwood, a loan officer with Mesa-based AmeriFirst Financial.

Subprime loans cater to borrowers with less than perfect credit, while Alt-A are geared toward people with decent credit scores but who can't or won't document their income or assets.

Many Alt-A borrowers are self-employed and have depended on these loans, Underwood said. That includes local investors, a number of them real estate agents, who hope to refinance loans on multiple properties in the coming months, he said.

"I really feel like we're going to see a lot of Realtors, who are going to be in trouble this year," he said.

LUXURY BUYERS TAKE HIT, TOO

While stricter guidelines have pinched struggling first-time buyers, luxury homebuyers are also feeling the heat.

Earlier this month, interest rates spiked on jumbo loans, which are larger than the traditional loan limit of $417,000. Jumbo rates jumped from 6.75 percent to 8.25 percent practically overnight, Underwood said.

The federal government is considering raising conforming loan limits, but for now, some luxury buyers are sitting on the sidelines.

Borrowers have also watched deals evaporate as mortgage companies have shut their doors.

Lenders throughout the country have lost hundreds of millions of dollars, as surging default and foreclosure rates scared away Wall Street investors from buying up mortgages on the secondary market. More than 38,000 workers at mortgage firms have lost their jobs so far this year.

Tucson-based First Magnus Financial Corp., which filed for bankruptcy protection last week, and Scottsdale's 1st National Bank Holding Co., which laid off 351 mortgage-related workers, are just two of the latest casualties of the fallout.

LIFE IN UPHEAVAL

East Valley resident Jamie Andersen was a week away from closing a deal on a new home when her lender abruptly closed down, causing instant worry.

Now, instead of moving into their new Queen Creek home, Andersen, her husband and two daughters are living at her mother's house in Gilbert, where they've been staying since selling their home in Utah in June.
"At this point, you can imagine I'm a little stressed," she said. "We're definitely anxious to get our own home again."

Andersen now has a friend who is a loan officer at Ameri-First working to push the deal through as soon as possible. Meanwhile, she is trucking her daughter to daycare in Queen Creek during the week.

"Our whole life is just kind of in upheaval until we can get this figured out," she said.

While lenders across the nation struggle to remain financially viable, industry experts worry that the mortgage crisis could have a drag on the larger housing market and economy.

The stricter guidelines could effectively shut out as many as 30 percent of potential homebuyers from the market, AmeriFirst's Underwood said.

Local real estate agents are watching deals fall through as buyers' loan options shrink, said Yalda Alawi, an agent with West USA Realty Revelation in Chandler.

"Any buyers you have right now, don't tell them to be waiting, sitting on the fence," Alawi said. "Otherwise, it's going to continue to get tighter, tighter and tighter."

New homebuilders are facing the same challenges.

At Arizona-based Meritage Homes, some buyers have lost their loan approvals in the middle of the building process, said Ron Morgan, the company's senior vice president of sales and marketing.

Meritage, which has its own mortgage company, has been laboring to fit borrowers into different loans and counseling them on how to repair their credit, Morgan said.

"Everything in the world is dependent on these FICO (credit) scores," he said.

TRADITIONAL RETURNS

Still, local experts say there are plenty of loan products that remain available and some tried-and-true options are making comebacks.

The 30-year-fixed-rate loan is one of them. With rates as good as they are, it doesn't make sense to get an adjustable-rate mortgage, said Jeff Brock, a loan officer with The Mortgage Advantage in Tempe.

The gap between fixed and adjustable rates has steadily closed in recent months.

It's also still possible to do a zero-down loan if a borrower has good credit, Brock said.

"You have to stay on top of all the new guidelines and changes," he said. "There's still good ways to get all the stuff done that you need to get done."

Paddy at Alliance Home Mortgage said she's also seen a large increase in the use of 30-year fixed-rate products over the past six to nine months.

Today's market is beginning to look similar to the days when Paddy first got into the business a decade ago.

There were no interest-only loans or other "crazy types of financing," she said.

Loan officers are having to work harder to close deals and are forced to be at the top of their game, Paddy said.

"Consumers are leaning toward the foundation - what built the mortgage industry in the first place," she said.

Paddy said she's also seen a slight increase in the use of Federal Housing Administration, or FHA, loans, which require 3 percent down but don't have specific credit score criteria.

To qualify for other loans, a borrower has an uphill battle if he can't put down at least 5 percent, Meritage's Morgan said. "For a buyer who has 10 percent or more down and has a good credit score, there is no crisis," Morgan said.

People planning to buy a house need to save some money and work on improving their credit, he added.

It takes four to six months to build a starter home, and a lot can be accomplished in that time, Morgan said.

"You really have to have the self-discipline and commitment," he said. "Lenders just don't reward bad behavior with low rates."

Home Sales, Factory Orders Up in July

Positive Commerce Department Reports Suggest Economy Was Stable Before Credit Crunch Worsened

AP - August 2007

New-home sales turned up and factory orders soared in July, suggesting the economy was on stable footing before a credit crunch took a turn for the worse.The Commerce Department reported Friday that sales of new homes rose 2.8 percent to a seasonally adjusted annual rate of 870,000 units. The increase came after a 4 percent drop in June.

Another report from the department showed that orders placed with factories for big-ticket goods jumped 5.9 percent in July, the most in 10 months.

The latest batch of economic news was better than analysts had expected. They were forecasting home sales to fall and calling for a much smaller, 1 percent gain in factory orders.

On Wall Street, the reports cheered investors who have been consumed by worry in recent weeks about the country's financial health amid spreading credit troubles. The Dow Jones industrials were up around 70 points in afternoon trading.

The housing report showing the July sales boost comes as credit standards have been tightening on home mortgages. Credit problems took a turn for the worse in August, making it even harder for some buyers to get financing. That means home sales in the coming months will likely show renewed weakness, economists said.

"Sales in August will face significant headwinds from further tightening in credit conditions, reduced availability of mortgage credit as many lenders shuttered their doors and upward pressure on mortgage rates, especially for non-conforming jumbo loans" of more than $417,000, predicted Brian Bethune, economist at Global Insight.

By region, sales in the West shot up 22.4 percent in July and increased 0.6 percent in the South. Sales, however, tumbled 24.3 percent in the Northeast and were down 0.9 percent in the Midwest.

The improvement in overall sales didn't change the big picture of the housing market, which has been suffering through a deep slump for more than a year. Sales are down 10.2 percent from last year, and the weakness is expected drag on into next year.

To lure buyers, some builders are offering incentives including help with closing costs or lining up financing, and working with lenders to lower interest rates on loans, said Bernard Markstein, senior economist at the National Association of Home Builders. Some builders also are throwing in free upgrades to sweeten deals for buyers.

Home prices were mixed. The median price of a new home was $239,500 in July, up 0.6 percent from last year. The median price is the point where half sold for more and half sold for less. The average home price, however, dropped to $300,800 in July, down 3.4 percent from same month last year.
In the manufacturing report, gains were widespread, indicating that capital spending -- a key ingredient of a healthy economy -- had gained momentum. Orders increased for machinery, automobiles, metal products, airplanes and communications equipment. That blunted a drop in demand for computers, as well as electrical equipment and appliances.

A proxy for future business investment also was encouraging: Orders for non-defense capital spending excluding airplanes rose 2.2 percent in July, compared with a dip of 0.1 percent in June.

"The recent squeeze on business credit could damp investment plans in the months ahead. That said, the data will help allay fears that business spending was slowing even before credit got tighter," said Sal G
uatieri, economist at BMO Capital Markets Economics.
Fears that the painful housing slump and credit crunch could hurt the economy have gripped Wall Street investors in recent weeks, causing stocks to swing wildly.

Credit is the economy's life blood. If it becomes too hard to get, spending and investment by people and businesses can stall, short-circuiting the economy.

"The downside risks to growth have increased appreciably," Fed Chairman Ben Bernanke and his colleagues concluded on Aug. 17. It was a much more sober assessment than they had offered just 10 days earlier when they met to examine economic conditions and interest rates. Against this backdrop, the central bank sliced the rate it charges banks for loans, a narrowly tailored move aimed at propping up sagging financial markets.
If problems persist, the Fed could opt for more aggressive action: reducing an important interest rate, called the federal funds rate, on or before Sept. 18, the Fed's next regularly scheduled meeting. The Fed hasn't cut this rate in four years. It is the Fed's main tool for influencing overall economic activity.

The funds rate, the interest banks charge each other on overnight loans, has stayed at 5.25 percent for more than a year. A rate cut would bring lower interest rates for millions of people and businesses.

Foreclosure Crisis

Parade - August 2007

Experts fear that a million homes will face foreclosure this year—30% more than in 2006—and scams are making the crisis worse. Some tips:

1. Contact your lender as soon as you have a problem paying. Most want to help you keep your house.

2. Respond to all mail from your lender. Early letters often include options that let you avoid foreclosure; later ones are legal notices. “I didn’t open my mail” isn’t a valid excuse in foreclosure court.

3. Know your rights. Read your loan papers and find out about foreclosure laws in your state.

4. Prioritize your spending. After health care, keeping your home should be your top priority—even before paying off other debt.

5. Avoid foreclosure-prevention companies and scams. You don’t have to pay fees for foreclosure help. Don’t sign a document from someone claiming to stop a foreclosure. In a scam called “equity skimming,” a “buyer” offers to repay the mortgage if you sign over your deed and move out. You’re left with the debt and no house.

6. Get help from HUD. The Department of Housing and Urban Development offers free or low-cost counselors (call 1-800-569-4287 to find one) and information on avoiding foreclosure at www.fha.gov.

Mortgage lending guidelines tighten almost daily

Home buyers need better credit, more cash

Arizona Republic - August 2007

Obtaining a home loan is going to get even more difficult.

Lending guidelines are tightening almost daily for borrowers as the subprime-loan crisis spreads. Those higher-risk loans have just about disappeared as their default rates soar.

Now, financing is getting tougher for all homebuyers.

On Thursday, megalender Countrywide Financial Corp. had to take out an emergency loan to keep operating, and Tucson-based First Magnus Financial Corp. stopped taking loan applications. Magnus is one of the nation's top private lender.

Earlier this year, New Century Financial Corp. and American Home Mortgage Investment Corp. filed for bankruptcy. So far, at least 70 mortgage firms have closed or put themselves up for sale since last year.

Because of the meltdown in the mortgage market, lenders have begun requiring higher credit scores and bigger down payments from all borrowers. They also are charging higher interest rates to people who want to buy a home for $417,000 or more because fewer lenders want to fund them.

The tighter mortgage market will work to slow metro Phoenix's housing market. Real-estate analysts say the new lending restrictions could knock 10 to 15 percent of home buyers out the market because they can't get funding. That could significantly affect the local market, where a record number of homes are for sale and where sales are already down about 25 percent from 2006's pace.

"The mortgage market has changed drastically in just the past few weeks," said Tom Miner of the Scottsdale-based mortgage firm Miner Kennedy Chmura Associates. "We are getting calls from buyers who can't close anymore because lenders want more documentation or money down."

Cheryl Serbic wanted to buy a condominium in central Scottsdale. Earlier this summer, the restaurant manager qualified for an adjustable-rate mortgage that required little down.

But a week before she was to close, her lender said she needed a bigger down payment. Serbic called other lenders and got the same bad news.

"I didn't think I needed a down payment. My friend bought last year without one," she said. "But if the housing market is going to keep going down. I'll save and maybe I'll find a better deal then."

Not all the 100 percent financing and no-documentation loans have gone away. But now, lenders are requiring borrowers' FICO scores to be 20 to 40 points higher than last year. A 10 percent down payment, once considered standard, is now required on many more loans.

"There was a lot of dumb lending done in the past few years," said Jay Luber of First Horizon Home Loans. "Loan guidelines now are tougher but much closer to normal."

How we got here

In 2003, lenders started offering a slew of new easier-to-get mortgages that enabled the nation's housing boom.

Borrowers with bad credit and lower incomes could buy homes by getting subprime loans with higher interest rates.

Other borrowers could get in with nothing down and without paying private mortgage insurance by using 80/20 or piggyback loans.

The 20 percent was typically a home-equity loan that covered the down payment. Lenders also cut back on the income documentation they required on loans. These "no doc" loans opened the door for people to qualify.

The housing market was booming. People thought they could refinance into better loans as home prices climbed. Lenders were making money.

Then last year, home prices and sales started to slip. The subprime market started to implode as foreclosures on those loans jumped.

Now, the foreclosure epidemic has spread to the Alt-A mortgage market, the segment between subprime and prime loans that includes many 80/20s and no-documentation loans.

Changing guidelines

Lending guidelines are changing quickly.

Not only borrowers but sellers looking to move up should make sure they qualify first.

The "jumbo" loan market for mortgages of $417,000 has tightened up because mortgage institutions Fannie Mae and Freddie Mac don't guarantee loans above that amount. The investors who would have backed the bigger loans have pulled back, which is part of the mortgage market's liquidity problem.

Tighter lending practices are also affecting homeowners looking to refinance.

In a slowing housing market, some homeowners who got subprime or adjustable-rate and interest-only loans a few years ago are finding they can't refinance because they don't have a high enough credit score or their house is worth less than they owe.

"Now, their rates are adjusting up, and they can't refinance because don't qualify under the new guidelines," said Andy Griffin of Scottsdale-based Core Mortgage Group.

"It's a really tough time for a lot of homeowners now, but if people can hold on and make their payments, it will be much better for them than a foreclosure."

In its newest report, the Mortgage Bankers Association said mortgage markets are "facing a liquidity crisis of a force and magnitude not seen in decades."

It went on to say the ripple effect will be felt throughout the housing market.

Those effects are already being felt here in the Valley.

"Things are bad and are going to get worse," said Brett Barry, a north Valley real-estate agent.

Subprime standards tighten

AP - August 2007

More banks have tightened lending standards on subprime mortgages, the Federal Reserve said Monday in a survey that provided further evidence of spreading problems.

The Fed said it found that over half of banks responding to a survey reported they had tightened their lending standards for subprime mortgages, loans offered to borrowers with weak credit histories.

The Fed survey found that of 16 banks that said they were still in the subprime market, nine of those banks had tightened lending standards in the past three months. The 16 banks are among the nation's largest and accounted for 57 percent of all residential loans at the end of March, the Fed said.

The survey found that nearly half of the banks responding said they had tightened loan standards for so-called non-traditional mortgages. The Fed defines this category as adjustable-rate loans with multiple payment options, interest-only mortgages and products referred to as "Alt-A" loans that offer such features as limited verification of incomes.

The Fed survey found that even on prime loans, which offer traditional payment options such as 30-year mortgages to borrowers with strong credit histories, slightly more than 10 percent said they had tightened lending standards in the past three months while none reported easing standards.

The Fed survey on prime-mortgage lending was based on the responses of 49 of the country's biggest banks, accounting for 71 percent of all residential loans on the books of commercial banks.

Analysts said the survey, which they follow closely for trends in the banking industry, showed banks were responding to growing troubles in mortgage lending, reflected by a rising number of mortgage defaults.

"Lending standards are being tightened as aggressively as in the credit crunch of 1990-91," said Mark Zandi, chief economist at Moody's Economy.com.

David Wyss, chief economist at Standard & Poor's in New York, said it was troubling that credit standards are being tightened for business loans given that non-residential construction activity had been helping to soften the impact of the steep slump in housing construction.

The Mortgage Bankers Association reported recently that the percentage of subprime loans that were 30 or more days past due climbed to 15.75 percent in the first three months of this year, a record high and up from 14.44 percent in the final three months of last year.

The crisis in subprime lending has sent shock waves through other parts of the financial system and caused big drops in the stock market in trading last week as investors worried about whether an expanding credit crunch could seriously harm the overall economy.

Cooley Station plans 900 Gilbert homes

Tribune - August 2007

The latest phase of a plan to bring thousands of homes, shops and offices to Gilbert is taking shape with two new housing subdivisions in the works.

Longtime farmer Jeff Cooley plans to put 900 homes near the southeast corner of Williams Field and Recker roads, as part of the massive Cooley Station development.

Cooley's family set plans in motion nearly a decade ago to transform 950 acres of farmland into some 4,000 homes and more than 2,000 apartments and condominiums.

Those will surround Cooley Station's Village Center - a mix of lofts, offices, shops and entertainment venues.

It's the family's legacy in a way, Cooley said.

"It's a place we hope people will be proud of," he said. "This is kind of now our last hurrah."

The homes in Cooley's project, called Eldon Point, will be built by Gilbert-based Thornton Homes in multiple phases.

Houses will range in size from 1,100 to 2,400 square feet and likely cost in the low-to mid-$200,000s, said Quentin Thornton. Construction could begin as early as next summer with sales starting the following fall.
Access to Loop 202's Santan Freeway and proximity to Williams Gateway Airport and Arizona State University Polytechnic make the location ideal for housing, Thornton said.

It's in the heart of the southeast Valley, where the growth is, Cooley said.

Still, how long Eldon Point and the larger Cooley Station development take to build will depend on the state of the real estate market, Cooley said.

"We hope, maybe, within the latter part of 2008 things will start picking up again and stabilizing," he said. "The problem now is where's the bottom?"

Cooley Station is going to be a major player in Gilbert's commercial development, said John Zupon, a town business development specialist. It will help serve the future Big League Dreams sports complex, he said.

North of the Eldon Point project, another Cooley subdivision is being planned, which will have 100 houses and 270 town homes.

The multifamily market is much stronger than the single-family market right now, so the town homes will likely be built first, said Greg Davis, president of Iplan Consulting.

Construction could start on the Fincher Fields project in the third quarter of 2008, though a builder hasn't signed on yet, Davis said. It will compl

Gold Canyon property listing sparks ire

Tribune - August 2007

Gold Canyon residents are fuming over a private owner's recent listing of the former Gold Canyon Fire Station for twice its 2006 sale price.

It's especially bothersome since the previous landowner, the Apache Junction Fire District, is now looking to buy property in the same general area for a new station.

"They really should've just kept that station," a Gold Canyon resident and real estate agent said. "They do have a fiduciary responsibility to keep their prices down."

Fire Marshall Dave Montgomery, a fire district spokesman, said many residents have criticized the April 2006 fire station sale, which netted about $800,000 for the district. The buyers placed the former station back on the market in late July for $1.6 million.

Meanwhile, the fire district's failed efforts to find a site for a new station in northwest Gold Canyon have slowly pushed its property search to within two miles of the old location, just east of Superstition Mountain Golf and Country Club.

The district most recently hoped to buy land at Baseline Avenue and King's Ranch Road, about 1.75 miles northwest of the former station, but area homeowners objected. The next choice is likely to be even closer, because most of the area's commercial property is further southeast.

The problem, Montgomery said, is that residents in northwest Gold Canyon, where the fire station is needed most, don't want a fire station in their backyards. The district has repeatedly backed off because fire officials don't want to pick a legal fight with the people they are trying to protect.

"Could we dig in our heels and let the attorneys that represent the fire district go to work and push that type of agenda through?" Montgomery said. "That's not the district's goal."

Others also question the old fire station's sale because the buyers, area residents Lonnie and Julie Pace, are now asking twice what they paid for the property. Lonnie Pace is a friend of fire district Battalion Chief Doug Taylor, top official at the former Gold Canyon Fire Station.

"It's just fishy," a Gold Canyon resident said.

Montgomery said $800,000 was fair market value for the twenty-year-old station and its 1 1/4-acre lot. He said the property was appraised and listed by a professional commercial real estate agent, and that the fire district's board of directors - not Taylor - made the decision to sell.

Proceeds were used to offset the cost of a new, larger fire station at U.S. 60 and King's Ranch, Montgomery said, which opened just prior to the sale and has led to a 20-percent improvement in emergency response times.

The former fire station would be ideal for medical offices, although it could have a number of commercial uses.

The sellers are not in any hurry to sell the property.

"It's a commercial piece, and you can ask whatever you want," said the owners real esate agent.

Voters in the fire district approved a $9.5 million general purpose bond in September 2006, $1.75 million of which is earmarked for a second Gold Canyon fire station. By statute, if that money isn't spent within three years it would revert back to property owners.

Still, if district officials cannot convince homeowners to abide a residential location, the district board will either have to go against their wishes or choose a more distant commercial location, which would defeat the purpose of selling the old property.

Finding a spot just a mile or two closer to homes could improve response times by 30 to 45 seconds, Montgomery said.

"If your house is on fire and you're not breathing, or your heart is not beating, now you're talking about a significant period of time," he said.

Housing dip triggers Agritopia price cuts

Tribune - August 2007

As Gilbert's Agritopia community nears buildout on its first phase, even the niche subdivision is feeling the recent housing-market downturn.

The development, known for its features that promote neighborhood interaction, has reduced home prices to compete in the sluggish market. And specialty housing such as Agritopia can be especially vulnerable to a market slowdown, experts say.

The developer has about 17 existing homes and available lots remaining in Agritopia's approximately 160-unit first phase. They expect to have those sold by the end of the year, said Christa Marten, a sales associate with Scott Communities, which is selling the Agritopia home sites.

"I certainly think the pluses are in the buyer's favor," she said.

Since construction began in February 2002, the project has been sold on its amenities that include large front porches, small front lawns and short fences - all aimed at encouraging community interaction.

When completed, Agritopia will feature various-sized homes along with parks, athletic fields, gardens and a community center.

It was that closer, homey feel that enticed Ronna Meredith to move from north Scottsdale to her Agritopia home three-and-a-half years ago.
"This is a great community, great closeness," she said. "People here just bring over a plate of cookies."

She's not concerned about the real estate slump since she's not planning to move anytime soon. But she said she has noticed for sale signs in her neighbors' yards are staying up longer than they used to during the past few months.

But now, Scott Communities is offering $40,000 discounts on new homes as a buyer incentive.

And it was knocking off $45,000 off a handful of existing homes available when their original deals were canceled.

The price cuts at Agritopia have dropped the development's cottage models to the $210,000-$250,000 range. The cottages range from 1,321 square feet to 1,991 square feet.

"Those types of incentives are not unusual" said Ben Sage, Arizona director for Metrostudy, a national real estate research and consulting company. "The market's pretty slow right now."

The lowest base price in Agritopia, about $210,000, is considerably lower then the median base price for a new home in Gilbert at $289,000, according to figures provided by Sage.

More distant communities such as Florence and Maricopa are feeling the brunt of the current slump, mainly because of resale competition, Sage said.

"I can state that Gilbert is hanging on better," he said. "It's not doing great, but it's not suffering as badly." And a slowdown in the overall housing market can mean extra trouble for specialized projects, such as Agritopia, since there are probably even fewer buyers looking for niche products.
"Generally speaking, niche product is more at risk when the market goes down," Sage said.

But to resident Meredith, Agritopia won't lose its appeal with buyers who were looking for the close-knit community she has found. "I think people who want the front porches and smaller yards will still want to buy here," she said.

Agritopia developers have been planning two more phases of roughly the same size and makeup as phase one.

Number of pending home sales rises 5% in June

Associated Press - August 2007

Pending sales of existing homes rose by 5 percent in June compared with the previous month, a surprisingly positive sign for the beleaguered housing market, a real-estate trade group said Wednesday.

The National Association of Realtors said it was the largest monthly gain in more than three years and that increases in pending sales were reported across the country. However, Lawrence Yun, the trade group's senior economist, wasn't overly optimistic, and the pending sales index remained 8.6 percent below year-ago levels.

"It is too early to say if home sales have already passed bottom," Yun said in a statement.

Since there typically is a period of one to two months between when buyers and sellers sign a sales contract and when the property changes hands, pending home sales in June are likely to be completed between July and August.

The trade group's index of pending home sales rose to 102.4 in June, up from a downwardly revised figure of 97.5 in May. Wall Street had been anticipating a slight decrease, as analysts surveyed by Briefing.com forecast a decline of 0.6 percent from the original May number of 97.7.

The index, calculated since 2001, is based on a national sample that represents about 20 percent of existing home sales.

It is considered an indicator of how sales will perform in the coming weeks because it measures home purchases in which a sales contract has been signed, but the deal has not yet been closed.

The report is comes amid a flood of negative news about the housing market and the troubled mortgage industry. A housing index released Tuesday by Standard & Poor's said U.S. home prices fell for a fifth consecutive month in May, the index's steepest drop in about 16 years. The S&P/Case-Shiller index that covers 10 U.S. cities fell 3.4 percent in May from a year earlier in the steepest decline since the summer of 1991.

Demand for new and existing homes has been hurt as lenders tightened borrowing criteria after defaults started to rise in the market for mortgages offered to borrowers with spotty credit histories. Numerous mortgage companies are facing troubles.

New York-based American Home Mortgage Investment Corp. lost 90 percent of its market value on Tuesday after saying it may have to sell off its assets, and analysts were skeptical about its ability to survive.

Last month, the realtors' trade group projected that home prices and sales would bounce back next year after a dreary 2007.