Low interest rates, bargains are helping
The Arizona Republic - March 2008
Existing-home sales climbed unexpectedly in February, as home buyers took advantage of low interest rates, falling home prices and foreclosure bargains.
The uptick in resales ended multiple-month losing streaks both nationally and in metro Phoenix and is prompting speculation that the housing market is close to hitting bottom.
National figures for February show U.S. resales climbed 2.9 percent from January, according to the National Association of Realtors. Valley existing-home sales climbed 10 percent in February, according to figures released earlier this month from realty studies in the Morrison School at Arizona State University.
With the spring buying season under way, March resales in the Valley are on track to top February's pace, according to an early count from Phoenix real-estate data firm Information Market.
"We are still bumping along the bottom, but the Valley's housing market is starting to gain some traction," said Jim Sexton, president of Phoenix-based real-estate firm John Hall & Associates. "Sellers are getting more motivated. Prices are coming down, and there's a lot of activity from first-time home buyers again."
He said foreclosure bargains are also beginning to attract real buyers instead of just speculators.
In metro Phoenix, the median price of a used single-family home fell to $220,000 in February from $230,000 the month before. Nationally, the median home price was $195,900 in February, down from $201,100 in January.
Jay Luber, vice president of the Phoenix office of First Horizon Home Loans, said many potential buyers are still "making the mistake" of trying to gauge when the market will hit bottom.
"But nobody can predict the bottom, and I have several clients that didn't have homes to sell who are thrilled with the deals they made when they bought," he said.
Home sales and prices, locally and nationally, are both down substantially from the pace set in February 2007.
During a boom or downturn, month-to-month figures are a better indicator of where the market is headed.
Lawrence Yun, chief economist at the Realtors Association, called February's gain over January encouraging.
"We're not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing," he said.
New-home sales in metro Phoenix were down less than 2 percent in February. National figures will be released later this week.
A drop in the number of homes for sale will be another sign that the housing market is poised to stop slowing. Home listings in the Valley climbed by a few hundred in February, to top 53,000. But that figure is down from last fall, when there were more than 54,000 homes for sale across metro Phoenix. Nationally, listings fell by 3 percent in February.
Across the country, tougher credit standards are knocking some potential buyers out of the market, and lenders are expected to get even tougher as mortgage losses mount.
Foreclosures continue to be the wild card for the housing market. As long as the number of people losing their homes continues to climb, inventories of homes for sale will rise and home prices will likely keeping falling.
Tom Ruff, real-estate data analyst with the Information Market, said foreclosures aren't likely to peak in the Valley until late summer.
"But I am optimistic," he said. "I feel like we are finally approaching the housing market's bottom."
Wednesday, March 26, 2008
Thursday, March 20, 2008
Census: Booming growth in Pinal County
Tribune - March 2008
Pinal County continued a trend of explosive growth into 2007, despite a housing market that has slowed across Arizona and in Pinal's suburban neighborhoods.
The U.S. Census Bureau reports today that Pinal County saw the third-highest rate of growth in the nation, with an 11.5 percent increase in population from July 1, 2006, to the same time in 2007. That places the county's population at 299,246, according to census figures.
The two areas that topped Pinal County during that time were parishes surrounding New Orleans, which are repopulating after Hurricane Katrina scattered many people in Louisiana.
The explosion of population in Pinal County creates both positive and negative impacts, real estate agents and academic experts say.
Since 2000, the county has experienced a 66.5 percent burst in growth, the fourth-highest rate in the nation. In 2000, the county was home to 179,715 people, according to census figures.
Much has changed since then in a county whose growth has been fueled largely by people who are employed in Maricopa County, but have looked for more affordable housing farther from their jobs.
In 2005, the housing market in Pinal County boomed. In the last three months of 2005, Pinal County saw 6,055 new and resale homes purchased, according to statistics issued by Arizona State University Polytechnic. In the first three months of 2007, home sales dropped steeply, to 3,320.
However, much of the resale market is based on bank foreclosures and short sales of homes by banks that want to get as much as they can out of a house at risk of foreclosure while developers sit on the sidelines, said Bambi Sandquist, a Pinal County real estate agent.
The market has brought in investors, but not necessarily a population of families that will continue to live and spend money in the area, she said.
"This kind of happened overnight," Sandquist said. "There's lots of investors. They've been coming and buying new homes. Prices are half of what they were in some places."
Stephen Doig, an ASU professor who studies the census and demographics, said that Pinal's substantial growth since 2000 could create a changing political representation that could place more emphasis on Pinal County.
Pinal County is split between congressional districts 1, 6 and 7.
District 6 includes Queen Creek and some of the new development that has boomed around it in the last several years. District 1 encompasses Florence and parts of eastern Pinal County and then extends to Prescott, Flagstaff and all the way to Arizona's northern border. District 7 covers some of western Pinal County, as well as Tucson and Nogales.
State reapportionment of legislative and congressional districts after the 2010 Census will bring more focus to what is still a fringe community when compared with Maricopa County, Doig said.
"Pinal is certainly going to gain some political clout," Doig said. "It'll be seen most strongly when reapportionment comes."
A housing market that's slowed could give Pinal County the opportunity to catch up with services that have been spread thin, especially road building. The area surrounding Johnson Ranch is notorious for bad traffic, as the two-lane Hunt Highway connects thousands of houses to Maricopa County.
"Growth is definitely one of those silver linings that has a cloud in it," Doig said. "It can be a burden on government ... building roads and services to suburbs that increasingly have numbers of people and places that are owned by the bank."
Jordan Rose, a local land-use lawyer, said that the slowdown in the housing market and the population growth could give the county a chance to catch its breath.
For instance, the first wave of suburbs built in the county were assessed no fees that would help pay for roads, schools and parks.
"The slowdown is allowing government to catch up with some of the planning," Rose said.
Playing the Housing Slump: Is It Time to Make Your Move?
AP - March 2008
Financial lore says you should buy when there's blood in the street -- which suggests real estate is a bargain, because there's blood all over the neighborhood.Time to invest? I wouldn't be surprised to see home prices drop sharply this spring, as long-suffering sellers in hard-hit areas throw in the towel and slash their asking price.
That could spell opportunity for this year's buyers. But what if you already own a home -- and have no desire to become a landlord? Here are three ways to play today's battered housing market.
Trading up. If you're hankering after a larger home or a house in a better neighborhood, this could be your chance to trade up on the cheap.
To be sure, when you go to sell your current home, you will likely get a modest price. Since 2006's second quarter, real estate has fallen 10.2%, as measured by the S&P/Case-Shiller U.S. National Home Price Index. But your new, grander house will also be relatively inexpensive, so you're effectively cranking up your real-estate exposure when the market is well below its peak.
That said, I wouldn't think of this move as an investment. Your new home will probably mean not only a bigger mortgage, but also higher ongoing costs, including homeowner's insurance, property taxes and maintenance expenses. These ongoing costs will offset a large chunk of any future home-price appreciation.
In other words, trading up to a larger home or a better neighborhood is really about wanting to consume more real estate. Still, like any thrifty shopper, you want to buy when there's a sale -- and that is what today's market offers.
"It's like going from a Honda to a Mercedes," says Charles Farrell, a financial adviser with Denver's Northstar Investment Advisors. "It's a lifestyle choice. As long as it doesn't cut into your ability to accumulate capital for retirement, this is probably a pretty good time to upgrade."
Doubling down. Instead of trading up, you might be eyeing a vacation home. If you don't plan to rent the place out, the same logic applies: Once you subtract the annual costs from the price appreciation, you likely won't make very much money -- which means the property won't be much of an investment.
On the other hand, maybe you're two or three years from retirement and are toying with buying a second home that could become your sole residence once you quit the work force. Does it make sense to purchase now, given the decline in home prices?
Buying today is no doubt appealing, because it'll give you a chance to vacation in your future home. But whether it turns out to be a wise financial move depends on what happens to property prices -- and that's tough to predict.
Still, I wouldn't bank on a rapid bounce back in home prices. At the current sales pace, it would take a whopping 10.3 months to clear January's backlog of unsold homes. By contrast, in January 2005, the supply of unsold homes was at a mere 3.6 months, according to the National Association of Realtors.
The bottom line: If you think you'll get a lot of use from a second home, go ahead and buy. But if you view the purchase as a bet on rising home prices, I would hold off for now.
Helping hand. While buying more real estate for your own use probably won't be a great investment, you could help your adult children make good money -- by transforming them from renters to homeowners.
To that end, you might give your kids an advance on their eventual inheritance, so they have enough money to make a down payment. Yes, that means they will start to incur the housing costs I mentioned above, including property taxes and maintenance expenses. But your children will also replace their monthly rent check with a monthly mortgage check, and that will allow them to start building home equity.
"If you have kids who are first-time buyers in markets that are relatively depressed, this could be a good time," Mr. Farrell reckons. "These days, they might need to make a 10% down payment. You could make a gift to them of the down payment or make a loan to them."
Financial lore says you should buy when there's blood in the street -- which suggests real estate is a bargain, because there's blood all over the neighborhood.Time to invest? I wouldn't be surprised to see home prices drop sharply this spring, as long-suffering sellers in hard-hit areas throw in the towel and slash their asking price.
That could spell opportunity for this year's buyers. But what if you already own a home -- and have no desire to become a landlord? Here are three ways to play today's battered housing market.
Trading up. If you're hankering after a larger home or a house in a better neighborhood, this could be your chance to trade up on the cheap.
To be sure, when you go to sell your current home, you will likely get a modest price. Since 2006's second quarter, real estate has fallen 10.2%, as measured by the S&P/Case-Shiller U.S. National Home Price Index. But your new, grander house will also be relatively inexpensive, so you're effectively cranking up your real-estate exposure when the market is well below its peak.
That said, I wouldn't think of this move as an investment. Your new home will probably mean not only a bigger mortgage, but also higher ongoing costs, including homeowner's insurance, property taxes and maintenance expenses. These ongoing costs will offset a large chunk of any future home-price appreciation.
In other words, trading up to a larger home or a better neighborhood is really about wanting to consume more real estate. Still, like any thrifty shopper, you want to buy when there's a sale -- and that is what today's market offers.
"It's like going from a Honda to a Mercedes," says Charles Farrell, a financial adviser with Denver's Northstar Investment Advisors. "It's a lifestyle choice. As long as it doesn't cut into your ability to accumulate capital for retirement, this is probably a pretty good time to upgrade."
Doubling down. Instead of trading up, you might be eyeing a vacation home. If you don't plan to rent the place out, the same logic applies: Once you subtract the annual costs from the price appreciation, you likely won't make very much money -- which means the property won't be much of an investment.
On the other hand, maybe you're two or three years from retirement and are toying with buying a second home that could become your sole residence once you quit the work force. Does it make sense to purchase now, given the decline in home prices?
Buying today is no doubt appealing, because it'll give you a chance to vacation in your future home. But whether it turns out to be a wise financial move depends on what happens to property prices -- and that's tough to predict.
Still, I wouldn't bank on a rapid bounce back in home prices. At the current sales pace, it would take a whopping 10.3 months to clear January's backlog of unsold homes. By contrast, in January 2005, the supply of unsold homes was at a mere 3.6 months, according to the National Association of Realtors.
The bottom line: If you think you'll get a lot of use from a second home, go ahead and buy. But if you view the purchase as a bet on rising home prices, I would hold off for now.
Helping hand. While buying more real estate for your own use probably won't be a great investment, you could help your adult children make good money -- by transforming them from renters to homeowners.
To that end, you might give your kids an advance on their eventual inheritance, so they have enough money to make a down payment. Yes, that means they will start to incur the housing costs I mentioned above, including property taxes and maintenance expenses. But your children will also replace their monthly rent check with a monthly mortgage check, and that will allow them to start building home equity.
"If you have kids who are first-time buyers in markets that are relatively depressed, this could be a good time," Mr. Farrell reckons. "These days, they might need to make a 10% down payment. You could make a gift to them of the down payment or make a loan to them."
Tuesday, March 18, 2008
Lenders altering rules for credit
All areas tighten criteria for loans
Associated Press - March 2008
NEW YORK - The loan you qualify for today might be out of reach on Tuesday.
Bankers and lenders are rapidly changing their requirements as home sales and prices plummet and delinquencies and defaults rise. Problems in the mortgage market are spilling into other lending markets as customers struggle to keep up with payments on other loans, such as auto and credit-card payments.
"The market is reinventing itself daily," said Les Berman, owner of Beverly Hills-based EB Financial and a director of the California Association of Mortgage Brokers. "I did my first loan in 1971 and have never seen anything like this."
To adjust their standards, which many critics say grew too lax in the middle of the decade, lenders now are raising minimum credit scores, offering smaller loans and requiring detailed proof of income and assets.
For those who do meet the tightened criteria, a new plan announced Tuesday by the Federal Reserve to provide $200 billion to the financial-services sector should mean there is plenty of money available for borrowers and lower interest rates, said David Wyss, chief economist at Standard & Poor's.
Mortgages have been among the worst-performing loans in recent months. More than 16 percent of subprime mortgages - loans given to customers with poor credit history - were delinquent at the end of the third quarter, according to the latest data available from the Mortgage Bankers Association.
In early 2007, customers with credit scores in the low 600s would be able to receive a mortgage with no down payment and by simply stating their income. Today, a credit score below 680 is a red flag that subjects a prospective homeowner to higher rates and special fees. Credit scores range between 300 and 850 and are determined by a borrower's past ability to repay loans.
"Credit is the gateway right now," said Dan Green, a certified mortgage-planning specialist and author of TheMortgageReports.com. "Weak credit is cost prohibitive."
And regardless of credit score, customers are going to have to provide proof of income and assets in the bank. Lenders have drastically reduced the amount of money they will lend on any given purchase and their maximum loan-to-value (LTV) ratios.
The LTV ratio measures the amount a customer borrows compared with the total value of the property. Traditionally, LTV ratios did not exceed 80 percent, but during the peak of the housing market, borrowers could actually take out a loan worth more than the house.
Last year, a borrower could get complete financing on a $300,000 home with a mortgage alone or in combination with a home-equity loan or line of credit. Today, that same borrower likely needs $60,000 for a down payment or will face large fees and higher interest rates.
"If a customer is weak somewhere, he has to be stronger elsewhere to make up for it," Green said.
The easy lending environment of the past few years extended into home-equity products, which like mortgages are now seeing banks change their standards as defaults rise.
Tom Kelly, a spokesman for JPMorgan Chase & Co., said that within the past eight months, Chase has focused on combined loan-to-value ratio (CLTV), documentation and credit scores to improve loan quality, and raised minimum requirements for each. Chase also no longer offers 100 percent CLTV loans anywhere, with restrictions as tight as a maximum 65 percent CLTV in Nevada because of rising delinquencies.
Just as delinquencies and defaults are rising among mortgage and home-equity products, problems are mounting for auto lenders as well.
Greg McBride, a senior financial analyst at Bankrate.com, said many auto lenders are requiring larger down payments on loans. In fact, McBride said changing credit requirements for auto loans are somewhat mirroring changes for home lending, with high credit scores and larger down payments needed to qualify for loans.
"Consumers with a risky profile qualify but for higher rates, if at all," McBride said.
Turner Acceptance Corp., a subprime auto lender that offers loans in Illinois, has ramped up its due diligence while reviewing loan applications, Jonathon Levin, the company's chief executive said. The Chicago-based lender typically works with first-time borrowers or customers with poor credit scores, Levin said.
Since Turner Acceptance works with subprime borrowers, it is increasing its review of loans by requiring additional cross-checking on all parts of a loan, including references.
Levin said customers are having a harder time with down payments in recent months because rising consumer costs and a slowing job market have reduced their ability to save.
Even more traditional lenders, such as Hyundai Motor Finance Co., are mindful of loans for customers with spotty credit.
Michael Buckingham, the company's president and chief executive, has noticed lenders fighting to get high-quality, high-credit customers, lowering rates for top-tier borrowers. Hyundai Motor Finance recently completed a three-month program offering low interest rates to high-quality customers.
"When we have compelling financing, it drives better-quality customers," Buckingham said.
With customers struggling to make payments on loans backed by actual assets, credit-card lenders have also seen an uptick in losses as fewer people are making payments.
Credit-card lenders could write off more than 7 percent of their portfolios this year, compared with the 5.21 percent pace of write-offs in 2007, according to Fitch Ratings.
"We are a little more conservative with our pre-approvals," said Aaron Bresko, director of credit and portfolio management for the Boeing Employees Credit Union, which offers banking products to Boeing Co. employees, family members of employees and Washington residents.
Fewer credit-card lenders are also approving new applications.
"No question there is tightening in the market," said Robert McKinley, president of Cardweb.com and Cardtrak.com, industry research Web sites. "Approval rates are not as aggressive as they were even three or four months ago."
The volume of direct mailings dropped 10 percent during the fourth quarter, reversing a roughly 10-year trend, said Ben Woolsey, director of marketing and consumer research at Creditcards.com.
The cutback is a clear indication lenders are more selective on who they want to offer cards to, focusing on high-creditworthy customers, he said.
Associated Press - March 2008
NEW YORK - The loan you qualify for today might be out of reach on Tuesday.
Bankers and lenders are rapidly changing their requirements as home sales and prices plummet and delinquencies and defaults rise. Problems in the mortgage market are spilling into other lending markets as customers struggle to keep up with payments on other loans, such as auto and credit-card payments.
"The market is reinventing itself daily," said Les Berman, owner of Beverly Hills-based EB Financial and a director of the California Association of Mortgage Brokers. "I did my first loan in 1971 and have never seen anything like this."
To adjust their standards, which many critics say grew too lax in the middle of the decade, lenders now are raising minimum credit scores, offering smaller loans and requiring detailed proof of income and assets.
For those who do meet the tightened criteria, a new plan announced Tuesday by the Federal Reserve to provide $200 billion to the financial-services sector should mean there is plenty of money available for borrowers and lower interest rates, said David Wyss, chief economist at Standard & Poor's.
Mortgages have been among the worst-performing loans in recent months. More than 16 percent of subprime mortgages - loans given to customers with poor credit history - were delinquent at the end of the third quarter, according to the latest data available from the Mortgage Bankers Association.
In early 2007, customers with credit scores in the low 600s would be able to receive a mortgage with no down payment and by simply stating their income. Today, a credit score below 680 is a red flag that subjects a prospective homeowner to higher rates and special fees. Credit scores range between 300 and 850 and are determined by a borrower's past ability to repay loans.
"Credit is the gateway right now," said Dan Green, a certified mortgage-planning specialist and author of TheMortgageReports.com. "Weak credit is cost prohibitive."
And regardless of credit score, customers are going to have to provide proof of income and assets in the bank. Lenders have drastically reduced the amount of money they will lend on any given purchase and their maximum loan-to-value (LTV) ratios.
The LTV ratio measures the amount a customer borrows compared with the total value of the property. Traditionally, LTV ratios did not exceed 80 percent, but during the peak of the housing market, borrowers could actually take out a loan worth more than the house.
Last year, a borrower could get complete financing on a $300,000 home with a mortgage alone or in combination with a home-equity loan or line of credit. Today, that same borrower likely needs $60,000 for a down payment or will face large fees and higher interest rates.
"If a customer is weak somewhere, he has to be stronger elsewhere to make up for it," Green said.
The easy lending environment of the past few years extended into home-equity products, which like mortgages are now seeing banks change their standards as defaults rise.
Tom Kelly, a spokesman for JPMorgan Chase & Co., said that within the past eight months, Chase has focused on combined loan-to-value ratio (CLTV), documentation and credit scores to improve loan quality, and raised minimum requirements for each. Chase also no longer offers 100 percent CLTV loans anywhere, with restrictions as tight as a maximum 65 percent CLTV in Nevada because of rising delinquencies.
Just as delinquencies and defaults are rising among mortgage and home-equity products, problems are mounting for auto lenders as well.
Greg McBride, a senior financial analyst at Bankrate.com, said many auto lenders are requiring larger down payments on loans. In fact, McBride said changing credit requirements for auto loans are somewhat mirroring changes for home lending, with high credit scores and larger down payments needed to qualify for loans.
"Consumers with a risky profile qualify but for higher rates, if at all," McBride said.
Turner Acceptance Corp., a subprime auto lender that offers loans in Illinois, has ramped up its due diligence while reviewing loan applications, Jonathon Levin, the company's chief executive said. The Chicago-based lender typically works with first-time borrowers or customers with poor credit scores, Levin said.
Since Turner Acceptance works with subprime borrowers, it is increasing its review of loans by requiring additional cross-checking on all parts of a loan, including references.
Levin said customers are having a harder time with down payments in recent months because rising consumer costs and a slowing job market have reduced their ability to save.
Even more traditional lenders, such as Hyundai Motor Finance Co., are mindful of loans for customers with spotty credit.
Michael Buckingham, the company's president and chief executive, has noticed lenders fighting to get high-quality, high-credit customers, lowering rates for top-tier borrowers. Hyundai Motor Finance recently completed a three-month program offering low interest rates to high-quality customers.
"When we have compelling financing, it drives better-quality customers," Buckingham said.
With customers struggling to make payments on loans backed by actual assets, credit-card lenders have also seen an uptick in losses as fewer people are making payments.
Credit-card lenders could write off more than 7 percent of their portfolios this year, compared with the 5.21 percent pace of write-offs in 2007, according to Fitch Ratings.
"We are a little more conservative with our pre-approvals," said Aaron Bresko, director of credit and portfolio management for the Boeing Employees Credit Union, which offers banking products to Boeing Co. employees, family members of employees and Washington residents.
Fewer credit-card lenders are also approving new applications.
"No question there is tightening in the market," said Robert McKinley, president of Cardweb.com and Cardtrak.com, industry research Web sites. "Approval rates are not as aggressive as they were even three or four months ago."
The volume of direct mailings dropped 10 percent during the fourth quarter, reversing a roughly 10-year trend, said Ben Woolsey, director of marketing and consumer research at Creditcards.com.
The cutback is a clear indication lenders are more selective on who they want to offer cards to, focusing on high-creditworthy customers, he said.
Sunday, March 16, 2008
Median prices of Valley homes are all over the map
The Arizona Republic - March 2008
The housing market's troubles are showing up in many neighborhood home prices, but not all.
Home sales are pretty much down across the board, but prices were flat or even up in one-fourth of Valley ZIP codes last year, according to The Arizona Republic's Valley Home Values Survey.
Most of the areas that posted increases in values were closer in and more centrally located, while affordable, new-home communities farther out continued to see the biggest declines in prices.
• The north-central Phoenix neighborhood ZIP code 85021, peppered with historic homes, posted a 16 percent increase in its median price during 2007.
• Condominium prices in the west Phoenix ZIP code 85037, which is at the junction of the Loop 101 and Interstate 10, climbed 21 percent. This area is also south of Glendale's sports stadium hub and the new Westgate shopping center.
• The central Ahwatukee ZIP code 85042 saw home prices climb 9 percent.
• None of the ZIP codes in Tempe, surrounded by other communities, fell by double digits. The median condo price in ZIP code 85281 climbed almost 11 percent.
Home builders continued to drop prices in fringe neighborhoods, which worked to pull down those communities' overall median price.
• The north-Phoenix ZIP code 85050 saw a 22 percent drop in its median price because the area's new-home prices plummeted 47 percent. Builders were cutting prices but also constructing smaller homes.
• In Pinal County, the Queen Creek ZIP code 85242 posted metro Phoenix's second-biggest overall drop: 20.2 percent. The area's median new-home price fell by almost 22 percent.
• Home values in the Buckeye ZIP code 85296 were down 18 percent overall, while the area's median new-home price dropped 15 percent.
Neighborhoods farther out with higher-end housing developments are an exception to the fringe trend.
• The median home price in the Mesa ZIP code 85207 climbed 17.7 percent, to $365,000.
• The median price in north Scottsdale's 85262 ZIP code, home to high-end golf developments, increased almost 7 percent, to $1.1 million.
Some areas are correcting from zealous prices increases.
• Glendale's 85305 ZIP code posted a 23 percent drop in its median home price. But the area, home to the Arizona Cardinals' University of Phoenix
Stadium, the Coyotes' Jobbing.com Arena and Westgate, saw resale prices climb 27 percent jump in 2006 and a huge 71 percent increase in 2005.
• In Phoenix's Camelback Corridor/Biltmore area ZIP code 85016, condo prices fell 29 percent.
Friday, March 14, 2008
Home sales tick up from Jan
The Arizona Republic - March 2008
Sales of existing homes in metro Phoenix climbed from January but declined 13 percent in February compared with sales recorded a year earlier, an Arizona State University realty expert said Tuesday.
The median resale price for single-family homes dropped 15 percent, to $220,000 last month from $260,000 in February 2007, said Jay Butler, director of realty studies in the Morrison School of Management and Agribusiness at Arizona State University's Polytechnic campus.
In February, 3,710 sales were recorded, compared with February 2007's 4,280. Homes selling for less than $200,000 now make up 40 percent of the resale homes for sale in metro Phoenix, Butler said.
A bright spot in the report shows that last month's numbers were better than January's, when 3,350 sales were recorded. January's median price was $230,000.
The increase in sales could be a sign that the spring home-buying season is starting.
“For some people, it's a win, a great time to buy,” Butler said. “Yes, prices are probably going to go lower, but there are a lot of people out there willing to help people get into good mortgages now.”
On the other hand, Butler said, homeowners who purchased or refinanced at the 2006 market peak will have to sit tight at least “for a couple years” if they want to sell for as much as their purchase price.
Butler predicted that people who bought homes in built-out areas will see prices recover more quickly than those who purchased on the fringes of the metro area, in places where neighborhoods and shopping centers remain unfinished.
“What we went through was a really crazy time,” he said, referring to the $85,000-plus surge in median resale-home prices from 2004 to late 2006, when median prices rose to $260,600 from $174,815. “We had never seen big increases in prices before,” Butler said. “We got caught up in this frenzy, and it is going to take awhile to work our way out of it.”
Wednesday, March 12, 2008
Housing: Best time to buy in four years
Home values have declined across the country, giving homebuyers the best buys they've had since 2004.
NEW YORK (CNNMoney.com) - March 2008
It may be the best time to buy a house in more than four years.
Home prices have dropped so quickly and so far that valuations - the difference between what a home should cost and its actual price - are the lowest they've been since 2004, according to a report.
The Cleveland-based bank National City Corp. (NCC, Fortune 500), together with financial analysis firm Global Insight, revealed Tuesday that more than 88% of the 330 housing markets surveyed showed price declines and improved affordability during the last three months of 2007.
"Housing valuations are almost back to long-term norms," said National City's chief economist, Richard DeKaser. He called current affordability "the best in the past four years."
But DeKaser cautioned that home prices could fall even further.
"This isn't to say home price declines are over," he said. "We could move below historic norms. By the end of 2008, housing markets could be broadly under valued."
Prices still improving
There are still 21 housing markets, or 6% of those surveyed, that are severely over valued, including Atlantic City and Madera, Calif. That's down from 56 overvalued markets at the peak of the housing bubble in 2006.
The report compares actual median home prices with what the authors determine are proper home values based on population density, relative income levels and interest rates, as well as historically observed market premiums or discounts, to determine whether markets are over or under valued.
The report also factors in market intangibles that make some areas more desirable places to live, and more expensive.
"Declines are no longer confined to once-frothy markets," said DeKaser.
The survey covered home valuations during the last three months of 2007, but DeKaser pointed out there's reason to believe that valuations are even more favorable for buyers today.
Price declines have continued into 2008 and interest rates, although they have inched up lately, have been steady or lower compared to late last year. There have even been wage gains; personal income rose 0.5% in December. Soaring foreclosure rates have added inventory to many housing markets, depressing home prices further.
The biggest gains in affordability occurred in California, Michigan and Florida, which are areas that have also been some of the hardest hit by foreclosures. Those states registered 43 of the 50 biggest price declines.
Bend, Ore. currently tops the overvaluation list. Home prices there were judged to be about 59% higher than their fair-market value. Miami, despite a median home price decline of 5.7% last year, is the most overvalued big city, by 44%.
All the best bargains were found in Louisiana and Texas. Houses in Houma, La. were under valued by 31.2%, according to the report. Dallas was the most undervalued big city, by 30%.
NEW YORK (CNNMoney.com) - March 2008
It may be the best time to buy a house in more than four years.
Home prices have dropped so quickly and so far that valuations - the difference between what a home should cost and its actual price - are the lowest they've been since 2004, according to a report.
The Cleveland-based bank National City Corp. (NCC, Fortune 500), together with financial analysis firm Global Insight, revealed Tuesday that more than 88% of the 330 housing markets surveyed showed price declines and improved affordability during the last three months of 2007.
"Housing valuations are almost back to long-term norms," said National City's chief economist, Richard DeKaser. He called current affordability "the best in the past four years."
But DeKaser cautioned that home prices could fall even further.
"This isn't to say home price declines are over," he said. "We could move below historic norms. By the end of 2008, housing markets could be broadly under valued."
Prices still improving
There are still 21 housing markets, or 6% of those surveyed, that are severely over valued, including Atlantic City and Madera, Calif. That's down from 56 overvalued markets at the peak of the housing bubble in 2006.
The report compares actual median home prices with what the authors determine are proper home values based on population density, relative income levels and interest rates, as well as historically observed market premiums or discounts, to determine whether markets are over or under valued.
The report also factors in market intangibles that make some areas more desirable places to live, and more expensive.
"Declines are no longer confined to once-frothy markets," said DeKaser.
The survey covered home valuations during the last three months of 2007, but DeKaser pointed out there's reason to believe that valuations are even more favorable for buyers today.
Price declines have continued into 2008 and interest rates, although they have inched up lately, have been steady or lower compared to late last year. There have even been wage gains; personal income rose 0.5% in December. Soaring foreclosure rates have added inventory to many housing markets, depressing home prices further.
The biggest gains in affordability occurred in California, Michigan and Florida, which are areas that have also been some of the hardest hit by foreclosures. Those states registered 43 of the 50 biggest price declines.
Bend, Ore. currently tops the overvaluation list. Home prices there were judged to be about 59% higher than their fair-market value. Miami, despite a median home price decline of 5.7% last year, is the most overvalued big city, by 44%.
All the best bargains were found in Louisiana and Texas. Houses in Houma, La. were under valued by 31.2%, according to the report. Dallas was the most undervalued big city, by 30%.
Saturday, March 8, 2008
Forecast Positive for Second Half of 2008
National Realty News - April 2008
WASHINGTON, D.C. - The volume of existing-home sales is expected to hold steady through late spring, with a gradual recovery during the second half of the year as the mortgage situation improves in high-cost areas, according to the latest forecast by the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said many buyers have been waiting for higher mortgage loan limits.
“The higher loan limits for both FHA and conventional loans will increase consumer choice and provide greater access to lower interest rate mortgages in high-cost regions,” he said.
“Therefore, a notable rise in home sales can be anticipated in the second half of the year.
"The Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, held at a stable level of 85.9, unchanged from December, but was 19.6 percent below the January 2007 reading of 106.8. “This additional sign of a stabilizing market is encouraging, and our members are telling us there’s been a pickup in shopping activity.” Yun said. “Our hope is that the increased traffic of buyers looking at homes will translate soon into more contract offers.”
The PHSI in the West jumped 13.0 percent in January to 93.8 but remains 12.7 percent below a year ago. In the Midwest, the index rose 0.6 percent to 85.2 but is 13.3 percent lower than January 2007. The index in the Northeast declined 4.1 percent in January to 69.6 and is 28.0 percent below a year ago. In the South, the index fell 6.1 percent in January to 89.5 and is 23.8 percent below January 2007.
Existing-home sales are forecast to remain flat around an annual level of 4.9 million in the first half of the year before improving to a 5.8-million pace in the second half. With a weak first half, total sales for 2008 are projected at 5.38 million, but are then seen to rise 3.5 percent to 5.60 million in 2009. The aggregate existing-home price is projected to decline 1.2 percent to a median of $216,300 this year, and then increase 3.5 percent to $223,800 in 2009.
A pattern of disparate price performance continues around the country with a roughly even split between up and down markets. Recently released data for the fourth quarter shows strong price gains in markets such as the Kennewick-Richland-Pasco area of Washington; Topeka, Kan.; and Atlantic City, N.J. At the same time, many areas that have lost jobs are showing price declines.
“Significant price declines in some local markets have sharply and quickly improved local affordability conditions, and are inducing buyers to return to the marketplace,” Yun said. NAR’s housing affordability index is forecast to rise 14 percentage points to 127.0 in 2008.
New-home sales should decline 23.7 percent to 590,000 this year before rising 7.2 percent to 633,000 in 2009. Housing starts, including multifamily units, will probably fall 25.1 percent to 1.01 million this year, and then continue to slip another 2.7 percent to 987,000 in 2009.
“As builders sharply cut back production, vacant new-home inventory has consistently declined over the past year-and-a-half,” Yun said. “That will permit a quicker return to balanced market conditions in many local areas.” The median new-home price is likely to fall 6.1 percent to $232,200 this year, and then rise 5.1 percent in 2009.
The 30-year fixed-rate mortgage, which has moved erratically in recent weeks, is expected to hover around 5.8 percent most of the year, and then rise to an average of 6.3 percent in 2009.
Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.4 percent in 2009. The unemployment rate is projected to average 5.4 percent in 2008 and 5.5 percent next year.
Inflation, as measured by the Consumer Price Index, will probably be 3.2 percent this year and 1.5 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.4 percent in 2008 and 3.1 percent next year.
WASHINGTON, D.C. - The volume of existing-home sales is expected to hold steady through late spring, with a gradual recovery during the second half of the year as the mortgage situation improves in high-cost areas, according to the latest forecast by the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said many buyers have been waiting for higher mortgage loan limits.
“The higher loan limits for both FHA and conventional loans will increase consumer choice and provide greater access to lower interest rate mortgages in high-cost regions,” he said.
“Therefore, a notable rise in home sales can be anticipated in the second half of the year.
"The Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, held at a stable level of 85.9, unchanged from December, but was 19.6 percent below the January 2007 reading of 106.8. “This additional sign of a stabilizing market is encouraging, and our members are telling us there’s been a pickup in shopping activity.” Yun said. “Our hope is that the increased traffic of buyers looking at homes will translate soon into more contract offers.”
The PHSI in the West jumped 13.0 percent in January to 93.8 but remains 12.7 percent below a year ago. In the Midwest, the index rose 0.6 percent to 85.2 but is 13.3 percent lower than January 2007. The index in the Northeast declined 4.1 percent in January to 69.6 and is 28.0 percent below a year ago. In the South, the index fell 6.1 percent in January to 89.5 and is 23.8 percent below January 2007.
Existing-home sales are forecast to remain flat around an annual level of 4.9 million in the first half of the year before improving to a 5.8-million pace in the second half. With a weak first half, total sales for 2008 are projected at 5.38 million, but are then seen to rise 3.5 percent to 5.60 million in 2009. The aggregate existing-home price is projected to decline 1.2 percent to a median of $216,300 this year, and then increase 3.5 percent to $223,800 in 2009.
A pattern of disparate price performance continues around the country with a roughly even split between up and down markets. Recently released data for the fourth quarter shows strong price gains in markets such as the Kennewick-Richland-Pasco area of Washington; Topeka, Kan.; and Atlantic City, N.J. At the same time, many areas that have lost jobs are showing price declines.
“Significant price declines in some local markets have sharply and quickly improved local affordability conditions, and are inducing buyers to return to the marketplace,” Yun said. NAR’s housing affordability index is forecast to rise 14 percentage points to 127.0 in 2008.
New-home sales should decline 23.7 percent to 590,000 this year before rising 7.2 percent to 633,000 in 2009. Housing starts, including multifamily units, will probably fall 25.1 percent to 1.01 million this year, and then continue to slip another 2.7 percent to 987,000 in 2009.
“As builders sharply cut back production, vacant new-home inventory has consistently declined over the past year-and-a-half,” Yun said. “That will permit a quicker return to balanced market conditions in many local areas.” The median new-home price is likely to fall 6.1 percent to $232,200 this year, and then rise 5.1 percent in 2009.
The 30-year fixed-rate mortgage, which has moved erratically in recent weeks, is expected to hover around 5.8 percent most of the year, and then rise to an average of 6.3 percent in 2009.
Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.4 percent in 2009. The unemployment rate is projected to average 5.4 percent in 2008 and 5.5 percent next year.
Inflation, as measured by the Consumer Price Index, will probably be 3.2 percent this year and 1.5 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.4 percent in 2008 and 3.1 percent next year.
Friday, March 7, 2008
Huge Home Buyer Tax Credits Will Move Buyers off Sidelines and into the Market
National Realty News - March 2008
WASHINGTON, D.C. - With the housing industry facing its greatest crisis since the Great Depression and the economy teetering near recession, the National Association of Home Builders (NAHB) called on Congress to move quickly to enact a second round of economic stimulus directed squarely at the housing sector. Specifically, NAHB believes the best policy is to create a tax credit for the purchase of a home.
"The biggest bang for the buck most likely would be provided by a temporary home buyer tax credit," NAHB Chief Economist David Seiders told the Senate Finance Committee. "Tax credits for the purchase of a home are a means of eliminating excess inventory, relieving some of the pressure on falling housing prices and ending the waiting-on-the-sideline strategy some potential buyers have adopted in response to overly negative media stories concerning the future of the housing market."
The recently enacted Economic Stimulus Act of 2008 could fall short of achieving its intended results because it does not address the problems posed by the housing contraction that are at the root of today's economic and financial market problems, he said.
"The U.S. housing market now is in the contraction phase of the most pronounced housing cycle since the Great Depression," said Seiders. "Single-family housing starts are already down by 60 percent from their peak at the beginning of 2006 and the bottom is not yet in sight. Congress can, and should, do more."
There are many models that Congress can look to when designing home buyer tax credits. The District of Columbia, for example, offers a $5,000 tax credit to first-time home buyers for the purchase of a new or existing home. A national first-time home buyer tax credit would stimulate buyer demand for households who do not have a home to sell, who are waiting on the sidelines until prices stabilize and who now face greater housing affordability than a year ago. Furthermore, those who sell their existing home to a first-time home buyer will in turn purchase another home and spur additional economic activity.
A similar version of a home buyer tax credit was used successfully in the mid-1970s when Congress established a temporary tax credit for the purchase of a newly-constructed home to help clear off a then-record number of unsold homes on the market.
NAHB applauds the efforts of several senators who are seeking similar solutions. For example, Sen. Debbie Stabenow (D-Mich.) has introduced S. 1988, legislation that provides for a temporary, one-time refundable tax credit for first-time home buyers of 10 percent of the purchase price of a principal residence.
Additionally, Sen. Johnny Isakson (R-Ga.) introduced S. 2566, a bill creating a one-time $15,000 tax credit for purchasers of a single-family principal residence that is a newly constructed home or a home in default or foreclosure purchased within a one-year time period.
"What is common among these tax credits for the purchase of a home is that they represent policies that increase housing demand, thereby enabling home purchases for families and fight falling housing prices, which threatens the economy as a whole," said Seiders. "We recommend a targeted home buyer tax incentive in order to maximize induced purchases."
Seiders also urged the Senate Finance Committee to consider the following changes to tax policy in order to get housing moving again:
- Expand the mortgage revenue bond program to be used for either home purchases or refinancing of existing mortgages to help strapped borrowers. This would be especially helpful for communities experiencing the possibility of a wave of foreclosures or an extreme excess of inventory, he said.
- Allow businesses to carry back net operating losses for five years. For home builders large and small, the importance of the ability to claim and carry back net operating losses deductions to years when significant taxes were paid cannot be overstated, said Seiders. "The inability to do so will result in the need to either increase high-cost borrowing or further liquidate land and homes, which will only compound the existing inventory problem." Expanding the carryback of net operating losses to five years would help the home building sector, as well as all businesses, to weather the economic downturn.
- Designate housing as an eligible investment for tax-preferred retirement accounts. A downpayment remains the single largest hurdle for most first-time home buyers. Congress could increase capital available for a downpayment for the purchase of a home by allowing a downpayment to qualify as an eligible investment from tax-favored retirement accounts. This would enable buyers to use IRAs or 401(k) accounts to purchase a home without suffering tax penalties.
WASHINGTON, D.C. - With the housing industry facing its greatest crisis since the Great Depression and the economy teetering near recession, the National Association of Home Builders (NAHB) called on Congress to move quickly to enact a second round of economic stimulus directed squarely at the housing sector. Specifically, NAHB believes the best policy is to create a tax credit for the purchase of a home.
"The biggest bang for the buck most likely would be provided by a temporary home buyer tax credit," NAHB Chief Economist David Seiders told the Senate Finance Committee. "Tax credits for the purchase of a home are a means of eliminating excess inventory, relieving some of the pressure on falling housing prices and ending the waiting-on-the-sideline strategy some potential buyers have adopted in response to overly negative media stories concerning the future of the housing market."
The recently enacted Economic Stimulus Act of 2008 could fall short of achieving its intended results because it does not address the problems posed by the housing contraction that are at the root of today's economic and financial market problems, he said.
"The U.S. housing market now is in the contraction phase of the most pronounced housing cycle since the Great Depression," said Seiders. "Single-family housing starts are already down by 60 percent from their peak at the beginning of 2006 and the bottom is not yet in sight. Congress can, and should, do more."
There are many models that Congress can look to when designing home buyer tax credits. The District of Columbia, for example, offers a $5,000 tax credit to first-time home buyers for the purchase of a new or existing home. A national first-time home buyer tax credit would stimulate buyer demand for households who do not have a home to sell, who are waiting on the sidelines until prices stabilize and who now face greater housing affordability than a year ago. Furthermore, those who sell their existing home to a first-time home buyer will in turn purchase another home and spur additional economic activity.
A similar version of a home buyer tax credit was used successfully in the mid-1970s when Congress established a temporary tax credit for the purchase of a newly-constructed home to help clear off a then-record number of unsold homes on the market.
NAHB applauds the efforts of several senators who are seeking similar solutions. For example, Sen. Debbie Stabenow (D-Mich.) has introduced S. 1988, legislation that provides for a temporary, one-time refundable tax credit for first-time home buyers of 10 percent of the purchase price of a principal residence.
Additionally, Sen. Johnny Isakson (R-Ga.) introduced S. 2566, a bill creating a one-time $15,000 tax credit for purchasers of a single-family principal residence that is a newly constructed home or a home in default or foreclosure purchased within a one-year time period.
"What is common among these tax credits for the purchase of a home is that they represent policies that increase housing demand, thereby enabling home purchases for families and fight falling housing prices, which threatens the economy as a whole," said Seiders. "We recommend a targeted home buyer tax incentive in order to maximize induced purchases."
Seiders also urged the Senate Finance Committee to consider the following changes to tax policy in order to get housing moving again:
- Expand the mortgage revenue bond program to be used for either home purchases or refinancing of existing mortgages to help strapped borrowers. This would be especially helpful for communities experiencing the possibility of a wave of foreclosures or an extreme excess of inventory, he said.
- Allow businesses to carry back net operating losses for five years. For home builders large and small, the importance of the ability to claim and carry back net operating losses deductions to years when significant taxes were paid cannot be overstated, said Seiders. "The inability to do so will result in the need to either increase high-cost borrowing or further liquidate land and homes, which will only compound the existing inventory problem." Expanding the carryback of net operating losses to five years would help the home building sector, as well as all businesses, to weather the economic downturn.
- Designate housing as an eligible investment for tax-preferred retirement accounts. A downpayment remains the single largest hurdle for most first-time home buyers. Congress could increase capital available for a downpayment for the purchase of a home by allowing a downpayment to qualify as an eligible investment from tax-favored retirement accounts. This would enable buyers to use IRAs or 401(k) accounts to purchase a home without suffering tax penalties.
Subscribe to:
Posts (Atom)