by MICHAEL BODEEN | Dec 8, 2014 | Bodeen Team Blog, Real Estate News, Selling a Home
TEMPE RANKS AS ONE OF THE BEST COLLEGE TOWNS for students and permanent residents alike, based in part on:
- Livability
- jobs
- housing affordability
- availability of rental units
- walkability
The ranking was completed by www.livability.com, which states that Tempe offers a big city experience while still maintaining a small town feel. The study further noted that Tempe has a diverse economy, major university, vast shopping opportunities, excellent recreation facilities, great local transportation, including a good “walk Score,” warm sunny days and, I will add, PAC 12 ASU Sun Devil football and basketball.
PENT UP DEMAND FOR ACTIVE ADULT COMMUNITIES? Homebuilder confidence in the market for homes aimed at buyers over the age of 55 rose in the second quarter – its highest 2nd quarter reading in 6 years. According to the National Association of Builders chief economist, David Crowe, “The slow but steady increase in existing home sales” is one of the factors of this optimism.
As more and more of the over-55 crowd is able to sell their homes for better prices, many are looking to the active adult communities for their next move.
IT’S ALL ABOUT THE KITCHEN STUPID! What ranks as the most important feature for buyers considering a “new” home? Well no surprise here, but according to the PulteGroup Home Index Survey, 30% of Americans say they consider the kitchen to be the most important area when choosing a new home. And considering the phenomenal popularity of cable TV home and cooking shows in the past 5 years, it looks like this trend will only move upwards.
Surprising to me anyway, is that the master bedroom is ranked the 2nd area of importance by 22% of the new home buyers. In personal experience of showing buyers homes, the “Great Room” seemed to be almost as important as the kitchen.
HOMEOWNERSHIP DECLINING The U.S. homeownership rate declined for the ninth year in a row in 2012-2013 according to the Joint Center for Housing Studies of Harvard University. The number of homeowner households also fell for the 7th straight year with a drop of 76,000. Homeownership rates, per the study, for ages 25-54 are at their lowest rates since 1976.
These declines are the smallest reported since 2008 suggesting that the bottom may be in sight. Without question, our great recession, spurred on by the housing debacle of 2007-2009, was the main culprit as more folks lost homes or walked away and turned toward renting or living with relatives. As the numbers turn, homeownership will again head upwards in a big way.
by MICHAEL BODEEN | Nov 18, 2014 | Bodeen Team Blog, Real Estate News
In the early 90’s it was commonplace to get offers subject to the sale of the buyer’s residence. When the market heated up in the mid 90’s contingency sales like this began going extinct, especially when investor’s entered our market and were making all cash offers and when multiple offers became more of the norm. An offer subject to the sale of the buyer’s home would not even be considered, and often it would not be considered even if the home was sold and in escrow waiting to close. Well, that’s no longer the case.
Now, new offers coming in that are in escrow awaiting the close are seldom refused just for the sale of the contingency. And lately, we’re seeing offers happening that are not in escrow. This is a real change to our market and is another positive sign of a “normal” market.
What should a seller do if they receive an offer with a contingency? Well, for one thing don’t toss it. If a buyer is really interested in your house, they will probably offer you full price, or close to it to make it worth your while. But price is only one consideration. Perhaps too, their home is an easier sell than yours, (i.e. less expensive, better location, better condition, etc). The bottom line should be which house will sell quicker.
Other considerations would include how long their house has been on the market? How is it priced? Your Realtor should do a Market Analysis on their home. If it’s not on the market yet, make sure you provide a clause in your counter offer that gives you and your Realtor a few days to examine the marketability of their home, then decide. And limit the time they have to find a buyer for their home, such as 30 days.
There are other considerations as well that your professional Realtor will advise you on, but today’s takeaway for our current market is for you to consider all offers, including contingency ones, if they make sense.
FORECLOSURE NOTICES OLDER THAN 2002
It wasn’t too long ago that a host of states were consistently in the news as leading the nation in huge foreclosure rates and right at the top of that list with Florida, Nevada and Michigan was Arizona.
Well the worm has turned! Now, Arizona is one of a few states leading the nation with the FEWEST foreclosures and new filings. In fact, since the foreclosure market peaked in March of 2009 with 10,712 foreclosures filed, the current number of new filings has dropped off the table to less than one thousand. Actual completed foreclosures are less than 500 per month now compared to the height of the market in March 2010, which saw 5450.
Local experts are expecting the foreclosure rate to continue stabilizing due to the stiffened underwriting standards now imposed.
NEW HOMES SALES DECLINE – NEW HOMES LARGER NOW
Although newly built single family home sales grew 4% from 867 recorded unit sales in August to 906 in September, the monthly total was 9% below the same month in 2013. The total dollar value of single family new homes closed in September was down from $311 million in 2013 to $302 million in 2014.
Closings increased month to month in both Maricopa and Pinal County. The average sq. ft. of a new home in August was 2,527 while the average sq. ft. of a normal re-sale was 2,024. This suggests the extent to which homebuilders have abandoned the entry-level market in favor of the move-up market. It also shows us why the median sales price of new homes is so much higher than for re-sales.
Thanks to Michael Orr of the Cromford Report for todays stats.
by MICHAEL BODEEN | Nov 12, 2014 | Bodeen Team Blog, Real Estate News
You’ve seen the mortgage financing ads quoting a certain rate, such as 2.99% on a fixed rate mortgage, but your lender is quoting you 4.00% for that 30 year fixed rate loan. Is your lender gouging you?
Or, when you chose your lender, they gave you an initial quote for that 30 year fixed at 3.75% and no points. You choose that lender, and shortly thereafter, the lender quotes you a far higher rate. Are you being hustled?
Or, you’ve got a solid 20% cash down payment but now your lender is saying you’ll have to switch to a FHA loan rather than conventional. Is this bait and switch?
We know there are a few lenders who may take advantage of you, but the answers to the above frustrations are all probably no, you’re not being gouged, hustled, or bait and switched. More likely, that 2.99% fixed mortgage is a 2.99% fixed rate loan, but it’s really a “fixed/variable,” as in a fixed rate, amortized over 30 years, but in 5 years it adjusts to a variable rate mortgage.
In the case of the lender who quoted you 3.75%, they may have been quoting you based on top FICO scores of 780 or higher. When the lender actually pulled your credit and your FICO’s were lower your rate was now quoted higher based on perceived higher risk to the lender.
And the lender who’s now saying you may need to do an FHA loan rather than the conventional even though you have a strong down payment, may be suggesting that because you’re still not qualifying for the conventional, but would qualify for the FHA as their qualifying standards are more lenient.
So, how important is having stellar credit when looking to finance a home purchase? As the above examples show, you may be able to get a loan, but unless you have good credit, you will pay more for that loan as in a higher interest rate and/or higher loan costs. You also may not qualify for as high a mortgage amount which means your price range will be less, therefore you get less house or less neighborhood, or less whatever.
Today we’re seeing a number of credit issues affecting buyer/borrowers. Student loan debt, poorer credit due to fiscal mismanagement, and folks still in the “Penalty Box” waiting period of having had a short sale, foreclosure, or bankruptcy.
There is financing available for folks who have had a short sale or foreclosure and don’t otherwise qualify for a loan. These are called “Portfolio” loans. Local community banks may have these loans available, but one such loan quote we got for a buyer recently was requiring a 35% cash down payment, 10% interest, all due and payable in two years. The good news is that if you have to have the house, you can get it and then refinance in two years when you come out of the “Penalty Box.” This is risky however.
We’ve talked before about reasons why the market is not more robust with rates as low as they are, and I tended to blame the Millennials’ generation for not buying, but credit obstacles are probably the main reason. As these issues
For better or worse, I think the new congress, commencing in January will be more pro-active in setting policies that could lighten the loan requirements thereby increasing the number of qualified buyers in the marketplace. Time will tell.
(Next week, we’ll look at how you can best discern if you’re getting the best rate and terms available from your lender)
by MICHAEL BODEEN | Nov 3, 2014 | Bodeen Team Blog, Real Estate News
Where have all the Buyers Gone?
Sung to the tune of “Where Have All the Flowers Gone…”
Where have all the buyers gone, long time passing
Where have all the buyers gone, not so long ago
Where have all the buyers gone, gone to rentals everyone
Oh when will they ever return? Oh when will they ever return?
2014 will go down in local real estate lore as the year we Phoenicians caught our collective real estate breath. This is a good thing. Though the Phoenix-Scottsdale metro market has been languishing for a year plus now, our prices have so far held up.
As far as sales are concerned, we have to go back to September 2006 to find as few sales as we had last month. So, this begs the question, where have all the buyers gone? More importantly, when will they return? And what will bring them back?
There’s good news on this front (in my opinion). Before I go there, let’s take a look to see where our buyers did go. Here’s a quick review, thanks to Michael Orr, of the Cromford Report. It is generally agreed that a number of issues contributed to the current real estate malaise, including:
Where Have all the Buyers Gone?
• Investor activity dropped 36% from September 2013 (our peak)
• Millennials are not buying homes like their parents did (more of them are living with their parents, sharing or renting)
• One in four former homeowners are in the “Penalty Box.” (The “Penalty Box” is where these former homeowners have to wait before they can buy a home again. Typically, this wait runs from 3-7 years, (2 years if VA) no matter how well their fico credit scores rise)
• 367,000 owners lost homes to foreclosure, short sales
• Large Lenders are holding back as they are very much risk averse and so buyer qualification standards are still pretty rough
• Demand is currently favoring Renting
A Closer Look at the Millennial Buyer:
• Starting families later than earlier generations
• Lower birth rates
• Many Still living with parents
• Higher preference for urban lifestyle
• Tendency to share accommodation and transportation
• Not convinced home ownership is good for wealth
• Expect to own a home one day – Not a high priority for them in 2014
• Mostly renting, creating demand for landlords.
A Closer Look at the Penalty Box:
• 232,767 (19% of Maricopa homeowners) have been foreclosed since 2008
• 83,849 (7% of homeowners) completed short sales since 2008
• 26% of former owners have credit issues
• Peak foreclosures were from 2008 – 2011
So What’s the Good News?
In this case, what goes down should go back up. As there were peak foreclosures and short sales in 2008-2011, the penalty box release phase begins in 2015 and continues through 2018, meaning that these buyers, assuming their regular credit is good, can qualify for conventional and FHA loans again.
If only 5% of these Boomerang Buyers (18,000+-) bought a home in each of the next four years, each of those years, save one, would make a record sales year. And if that happens, look out, we could see the wild, wild west all over again.
by MICHAEL BODEEN | Oct 31, 2014 | Bodeen Team Blog, Real Estate News
I received an e-mail today from a prospective buyer from Minnesota who was coming out to Arizona to purchase a second home in the North Scottsdale area next month. Her e-mail sadly explained that due to an unforeseen economic event, they couldn’t qualify for a mortgage and would have to delay any consideration of a purchase. This was confirmed by their lender as well.
The buyer is the niece of a wonderful client of mine and she and I had been communicating for several months via e-mail about their upcoming visit here. Jon and I initially set them up on a local real estate search using our automated MLS system which sends them property updates twice per day according to the parameters of the type of home they’re looking for. They were really getting excited about buying – very much looking forward to getting this second home in North Scottsdale as they have much family here and LOVE Arizona. It’s been my experience that ALL Minnesotans love Arizona!
This situation is a very good reason why professional Realtors make it a mandatory practice to make sure a buyer is qualified to buy before looking at homes. In the “old days” (as in the 80’s and 90’s) we just took it for granted that someone could qualify to get a loan, and they most always did – except in the heyday of 17% -18% mortgages.
Lending requirements have changed a lot, especially with the Dodd-Frank Act in 2009 and signed into law in 2010. Some have changed for the better, but for many, not so much. (Side note: Chris Dodd and Barney Frank are no longer in office, having retired from their positions last year. Hmm, as we now feel the full farce, uh, force and effect of this legislation, I’m not surprised)
Now this doesn’t mean that we don’t show homes to prospective buyers who are considering buying and want to get a “feel” for the lay of the land, or summer temps, or various neighborhoods, etc. This is a part of what we do. We will however have a pretty good idea of where the buyer is at in terms of their financial ability to buy so there are no dashed expectations.
We met with our Minnesota clients yesterday and they remain as enthusiastic as ever to get a piece of the Arizona real estate pie. We sat down with a lender who has access to portfolio loans that don’t have the same stiff waiting period as regular conventional loans, however they also cost more so the client will need to weigh the cost vs. benefits. We also discussed some other alternative measures to move them sooner rather than later. We’ll see.
So if you or someone you know wants to check out buying a home in the Valley, please give them our contact info. We’ll be happy to provide an excellent buying experience for them…and that makes us and you look good!
by MICHAEL BODEEN | Oct 30, 2014 | Bodeen Team Blog, Real Estate News
(A Short Sale Miracle Part 1)
Most residential deals are fairly predictable. Buyer sees home. Buyer falls in love with home. Buyer gets approved for a conventional loan, inspection results are negotiated successfully, buyer gets formal loan approval, and we go to closing. That’s the norm. The typical.
Sometimes, however, we complete a deal that when we ponder each step that got us to the close, we end up in a delighted state of wonderment. This has just occurred. We now call this recent closing, which was two months following our most recent story where we thought we were closing, the Vistancia Miracle!
The miracle that some of you may recall, was that this short sale in the upscale Vistancia community in North Phoenix, was never supposed to happen. It took an “I won’t take no for an answer buyer” and the grace of God to put together a wild and I might add, exhilarating finish which did indeed close this last week.
The short story recap is that after many months of time, energy, and money expended by all involved, Freddie Mac (Freddie) turned the short sale deal down stating that the seller made too much money. This was true. Once Freddie turned down the deal, it’s as good as dead. They are the ranking authority for this short sale.
The buyer however did not throw in the towel so easily. Immediately following the Freddie rejection, he called me – mind you I’m not his agent, but he called me direct nonetheless. I explained the sad story which he had already heard. “But I’ll pay more than our ‘negotiated’ price of $273,000. I’d pay over $300,000!” Can’t we do something?” To pacify him, I told him I’d make some calls.
I did, to a fellow HomeSmart professional who gave me the direct line to Freddie’s CEO and the numbers of three underlings who report to him. He said, “Call Samantha first.” I called the number. She personally answered. After explaining to her my sad story she said she’d check it out and get back to me. She did.
Simone put me in touch with a Freddie Manager and within days, Freddie was reconsidering the loan. For no other reason, that attitude of Freddie was a miracle in itself.
To further condense this down, Freddie did approve it. Once this occurred, the buyer’s lender sent out their appraiser. The buyer’s lender, who just happened to be the same mega lender who was foreclosing on the loan, said that the home was only worth $240,000 – $33,000 less than our negotiated price. Oy Vey!
The amazing thing is that the buyer would probably have come up with the extra funds anyway, but instead we went back to Freddie to appeal the appraisal. They had a second appraisal done. This one came in at $256,000. And now we waited while Freddie decided what they were going to do. In one paragraph I just explained this process which actually took a month of laborious communication and decision making and then they made their decision that they will sell it to the buyer for $240,000! Whoa!!!
At this point since Jon and/or I had been on the phone each day with Freddie, or the servicers, I think they were tired of hearing the name “Bodeen” and we really think they may have wanted to do us a good turn (or get us off their %#*) considering all the ups and downs we went through.
The best part of all this was the very appreciative phone call I got from the buyer a few days later while he was physically moving into his “dream home.”
And now you know the rest and best of the story!
