Mortgage And Real Estate News

Wednesday, March 28, 2012

Fewer Phoenix-area homes for sale; prices up

A surge in buyers and a drop in foreclosures have left a shortage of houses for sale in metro Phoenix, according to a newly released report on the state of the housing market.

The shrinking inventory has prompted bidding wars and pushed up home prices in many communities.

At the end of February, the supply of homes for sale was just under 24,000, down 42 percent from a year earlier, mostly because of a 52 percent drop in foreclosures during the past year, according to the latest monthly real-estate report from Arizona State University's W.P. Carey School of Business.

As banks take back fewer homes through foreclosure, fewer homes go to auction or back on the market.

Tuesday's report, which said that home prices could keep climbing if the inventory of homes for sale remains low, was the most optimistic from ASU since the beginning of the region's housing crash in 2007.

"Supply is tight, in a pretty extreme way, and it looks like it will stay that way for months," said Mike Orr, director of the Center for Real Estate Theory and Practice at ASU.

Orr said that as long as supply is tight and there are more buyers than sellers, Phoenix-area home prices will continue to climb.

Metro Phoenix's median home price has steadily been increasing since last August, when it fell to a 12-year low of $113,000. The region's median for February was $124,500, up 8 percent from a year earlier.

Climbing home prices could entice more homeowners who bought before the boom to try to sell their homes.

More sellers would increase supply, balancing the market and aiding many frustrated buyers who are currently being outbid on foreclosures and short-sale homes.

"Now, I have a ton of buyers and no properties to sell them," said Diane Brennan of Scottsdale-based Keller Williams Integrity First Realty.

"I warned buyers for months they should act quickly. Many didn't pull the trigger before because they were waiting for the bottom," she said.

There is a potential problem lurking in the recent trend: Some appraisals aren't keeping pace with the increases in home prices.

Orr said appraisers are still looking at prices from three months ago.

In some parts of metro Phoenix, though, home prices have climbed 5 percent or more since the beginning of the year.

by Catherine Reagor - Mar. 27, 2012 10:48 PM The Republic |

Fewer Phoenix-area homes for sale; prices up

Demand For Homes Continues To Show Recovery -

The number of contracts signed to buy homes in February eased slightly from January but posted another strong gain from a year ago—the latest sign that demand for homes is up from the depressed levels of the previous 18 months.

A report Monday by the National Association of Realtors showed the index of pending home sales, reflecting deals that have gone into contract but haven't yet closed, rose 9.2% last month from a year earlier, continuing a rise largely fueled by investors' purchases of foreclosed properties. The index fell by 0.5% from January.

While buyers are starting to step forward, however, home builders and real-estate agents report an elevated level of contracts falling apart, as buyers run into trouble qualifying for mortgages amid tough lending standards.

Another common complaint: low appraisals that come in below a negotiated value, requiring sellers to cut their price or buyers to put more money down in order to keep a deal from collapsing. As a result, the pending sales figures could be overstating actual sales as buyers sign multiple contracts over the course of several months.

The number of contracts signed to purchase homes in February posted another strong gain in the latest sign that housing demand is up from the depressed levels of the previous 18 months. Nick Timiraos has details on The News Hub. Photo: Bloomberg News

Still, analysts say that housing demand appears to be stronger than at any point in the past year. Low prices are luring investors who can convert properties into rental units and make double-digit returns. More first-time buyers could face added urgency to move as landlords begin to raise rents and mortgage rates rise from record lows.

"We are seeing very strong activity out there," said Ivy Zelman, chief executive of research firm Zelman & Associates. Buyers are tired of deferring moves, and rising rents "have really pushed people off the fence," she said. "We're not ready yet to wave the victory flag and say home prices are going up, but we're confident they're stabilizing."

Monday's report showed that purchase activity was up 18.4% and 19% from a year ago in the Northeast and Midwest, respectively, after an unseasonably warm winter. Contract activity fell by 1.8% in the West.

Real-estate agents in many parts of the country say inventories of homes for sale are declining, leaving more buyers competing for less supply. Shrinking inventories could be a consequence of the decline in home prices, which has left more sellers unable or unwilling to sell their homes at a loss.

In Orange County, Calif., the number of homes listed for sale is down by 36% from a year ago. Meanwhile, the number of homes under contract is up 25% to its highest level in four years, according to Steven Thomas, a local housing-market analyst.

So far this year, nearly one in six homes listed for sale have gone under contract within their first three days across the 18 markets covered by Redfin Corp., a Seattle-based brokerage, said Glenn Kelman, the firm's chief executive.

by Nick Timiraos The Wall Street Journal Mar 28, 2012

Demand For Homes Continues To Show Recovery -

Housing availability plummets 42% as prices rebound - Local News - Phoenix, AZ -

A dramatic housing turnaround is taking hold, with the glut of homes for sale in the Valley plummeting 42 percent in the last year.

This has put housing in short supply and helped to boost homes prices by nearly 16 percent since values bottomed out in September 2011, according to an Arizona State University report.

The findings are probably a shock to Valley residents used to gloomy housing news, said Mike Orr, director of the Center for Real Estate Theory and Practice at the W.P. Carey School of Business at ASU.

“They think we have a glut but we have a shortage, and it’s almost as stressful as having a glut as to have a shortage,” Orr said.

Many buyers have become dispirited after making multiple offers and not getting a home. That problem will likely get worse in the next few months because spring is the most active time for home buying, Orr said.

The shortage is made worse because new home construction had fallen so dramatically.

Builders completed about 4,000 homes a month at the peak of the housing boom, but that’s fallen to about 400 a month now. Orr expects builders can double production but he said they face limits because so many construction workers left the state when the housing market crashed.

“I can’t see them building enough to change a shortage into an adequate supply, at least not in the short term,” he said.

The February housing report includes Maricopa and Pinal counties. Its findings include:

• Median sale prices rose 8.3 percent from February, from $115,000 to $124,500. That includes new homes.

• The average price per square foot rose 4.1 percent, from $81.07 to $84.36.

• Monthly foreclosures are up from February but down 9 percent from February 2011.

• Foreclosure completions were down 52 percent in the last year.

• Bank-owned sales dropped 40 percent.

Low-end and moderately priced homes are in the highest demand, Orr said.
Housing wasn’t hurt by gas prices of nearly $4 a gallon, Orr said. But it has affected where people want to buy and made central locations more desirable.

Orr said the improving housing news doesn’t indicate the market is healthy or normal yet. Prices need to rise about 33 percent based on trends of long-term average pricing, Orr said. That would place values at $120 per square foot. Prices had fallen to $78 but are now at $90.

“I don’t know when we’ll get back to normal,” Orr said. “Arizona, housing prices in particular, seems to be a very volatile market.”

by East Valley Tribune Mar 28, 2012

Housing availability plummets 42% as prices rebound - Local News - Phoenix, AZ -

Tuesday, March 27, 2012

Bernanke says US job market weak despite gains

Is this a precipice for more QE3?

WASHINGTON - Fed chairman Ben Bernanke says that the U.S. job market remains weak despite three months of strong hiring and that the Federal Reserve's existing policies will help boost economic growth.

Bernanke's comments Monday to a group of economists in Arlington, Va., drove stocks higher. Many took his cautious words about the economy to mean the Fed is likely to stick to its plan to hold short-term interest rates at record lows through 2014.

Though the hiring has helped support consumer confidence and incomes, "we have not seen that in a persuasive way yet," Bernanke said. The Fed needs to "remain cautious" in deciding what its next moves should be, he said.

Further job gains will likely require stronger consumer and business demand, Bernanke said in a speech to the National Association for Business Economics' spring conference.

The association has 2,500 member economists who work for corporations, universities, the government and trade associations. Bernanke was addressing the group for the first time since 2008.

After Bernanke spoke, the Dow Jones industrial average rose 160 points, its third-biggest gain of the year. Broader indexes also increased.

The surge in hiring since December had led some economists to predict that the Fed might consider raising rates earlier than planned. But many took Bernanke's cautious tone as a firmer commitment to the late-2014 timetable.

And some viewed the speech as a signal that the Fed might take further steps, if the economy falters, to try to further drive down long-term borrowing rates. The goal would be to encourage more spending by consumers and businesses.

Robert Dye, chief economist at Dallas-based Comerica bank, said the Fed might extend a program of shuffling its investment portfolio to shift more of its holdings into long-term Treasuries. That could help lower long-term rates. Or the Fed could launch another round of bond buying.

"The chairman is very much keeping additional monetary-policy options on the table," said Dye, who attended the NABE conference.

Employers added an average of 245,000 jobs a month from December through February. The unemployment rate has fallen nearly a full percentage point since summer, to 8.3percent.

Still, the economy grew at an annual pace of just 3 percent in the October-December quarter. Economists think growth has slowed in the January-March quarter to around a 2 percent annual rate.

Bernanke said the combination of modest economic growth and rapid declines in unemployment is something of a puzzle. Normally, it takes roughly 4 percent annual growth to lower the rate by 1 percentage point over a year.

He offered some reasons for the unexpected decline in unemployment. Employers may be hiring rapidly because they cut too many jobs during the recession. He also said that government revisions may later show stronger economic growth over the past year.

But Bernanke cautioned that he doesn't expect the unemployment rate to keep falling at its current pace without much stronger growth and more robust hiring. He noted that the rate is still roughly 3 percentage points higher than its average over the 20 years preceding the recession.

"Despite the recent improvement, the job market remains far from normal," Bernanke said. "The number of people working and total hours worked are still significantly below pre-crisis peaks."

Bernanke also expressed concerns about the millions who have been out of work for more than six months. Those long-term unemployed Americans have made up more than 40 percent of the unemployed since December, he said. In the severe 1981-82 recession, long-term unemployment never exceeded 25 percent.

"Long-term unemployment is particularly costly to those directly affected, of course," Bernanke said. "But in addition, because of its negative effects on workers' skills and attachment to the labor force, long-term unemployment may ultimately reduce the productive capacity of our economy."

The Fed is concerned that the recovery could falter, as it did last year. Americans aren't seeing big pay increases. Gas prices are high. And Europe's debt crisis could weigh on the U.S. economy.

As long as inflation remains tame, analysts think the Fed will likely hold interest rates down to give the economy more support. Most economists don't think Fed officials will change their interest-rate policy at their next meeting on April 24-25 and will ease credit only if the economy slows further. While the recent job-market gains may continue, analysts think the record-low rates will continue as well, at least through this year. The Fed could reconsider the timetable next year, if the job gains prove more enduring.

But for now, most economists sense the Fed is committed to its plan.

"The clear tone of Chairman Bernanke's statement is that he is defending the Fed's current highly accommodative position," said David Jones, chief economist at DMJ Advisors.

by Martin Crutsinger - Mar. 26, 2012 06:27 PM AP Economics Writer

Bernanke says US job market weak despite gains

Goodyear, Glendale eye vacant land near ballparks

Goodyear and Glendale are years behind in building proposed hotels, restaurants and shops that were to surround the multimillion-dollar stadiums in the Cactus League.

Three years after the training ballparks were built, fans are left with little more to do than walk to and from the parking lots.

Land that had been planned to house a hotel and convention center, restaurants and offices became mired in foreclosures, bankruptcies and legal wrangling.

Leaders in both cities worry how they will pay off the complexes. Dwindling tourism-tax revenue collected by the Arizona Sports and Tourism Authority has meant a funding shortfall for stadium improvements.

Glendale and Goodyear are on the hook for $63 million and $43 million in stadium costs, respectively, that city leaders had expected would be paid by the tourism authority.

With a legal battle over development rights winding down, Goodyear Mayor Georgia Lord talks of circumstances beyond the city's control.

"It's a very emotional time," she said. "Some of those memories and heartaches are going to linger, but I think this is the time to finish it up, and we'll just get on with whatever next is going to happen with our stadium."

Glendale is also deflated over expectations surrounding its spring-training complex, Camelback Ranch Glendale. The city borrowed $200 million for the project. Sales taxes from surrounding amenities were expected to help pay for it.

"Camelback Ranch to me is the big drain," Glendale Mayor Elaine Scruggs said two months ago during discussions on how the city could restructure its debt.

But both cities are taking steps to jump-start construction. Goodyear recently settled a lawsuit, a move city leaders hope will pave the way for commercial development around its remote ballpark southeast of Estrella Parkway and Yuma Road. And land surrounding Glendale's ballpark, once tied up in foreclosure, is up for sale again. Much of the land surrounding the stadiums is on the market again or is expected to be soon.

Goodyear earlier this month approved paying $1.1 million to settle with a bank and landowner, a move that will soon put roughly 100 acres around its $123 million ballpark up for sale.

For Glendale, the lender that foreclosed on a huge chunk of land was the only bidder to buy it. A key 70-acre parcel next to the stadium was put on the block two months ago.

"We've had offers," said Mark Winkleman, chief operating officer of ML Manager LLC. "Nothing that we've accepted yet, but we hope to before too long."

A Main Street never built

Camelback Ranch, at Camelback Road and 107th Avenue, is surrounded by 166-acres that was to be called Main Street. Developers spent $120 million on land and zoning to build a sprawling, sports-themed office, shopping and resort complex. The land could support 2.8 million square feet of development.

But when the market crashed and developers defaulted on loans, ML Manager, successor to lender Mortgages Ltd., began foreclosure proceedings. ML Manager has control of roughly 86 acres near the ballpark, including a 70-acre site on the southwestern corner of 99th and Maryland avenues.

The city hopes the land will ultimately contain mixed-use development primarily focused on employment, residential, lodging and higher-end retail.

The complex is on land owned by Glendale, but the land is actually in Phoenix.

A broker offering the land has plans to approach a new ownership group of the Los Angeles Dodgers, who share Camelback Ranch with the Chicago White Sox. There are several groups of bidders vying for the Dodgers.

"There is a need out there today for amenities and housing for the teams," said Brent Moser, Cassidy Turley executive vice president.

The other option for the area is a limited-service hotel, Moser said. The developer has taken calls from those who want land to build higher-end hotels closer to Loop 101 and Westgate City Center, in time for the area to host the Super Bowl in 2015, Moser said.

Apartments would likely be the easiest to build on land near the stadium, but "I don't know if that's the highest and best use for this property long-term," Moser said.

The White Sox believe growth around the stadium is only a matter of time.

"Certainly, more stores, shops, restaurants and hotels benefit White Sox fans during their visits to spring training, but that scale of economic development benefits Glendale and the residents of the West Valley year-round as well," said Scott Reifert, team spokesman.

'No win here'

At Goodyear Ballpark, where the Cincinnati Reds and Cleveland Indians train, attendance has been at the bottom of the Cactus League for two consecutive seasons.

Development plans around the stadium called for a hotel and convention center, restaurants and offices.

But legal battles between a bank, city and family landowners broke out over costs associated with streets, utilities and other work needed to develop land around the stadium.

When the disagreement threatened to delay construction of the ballpark, Goodyear took control of the loan and finished the job.

In June 2009, the bank sued, saying the city's action accelerated the due date on its loan to the family, and they defaulted in 2008. The suit was part of the bank's effort to foreclose on the land surrounding the stadium and south of Lower Buckeye Parkway.

The family filed a lawsuit against the city in January 2010, arguing the city received benefits it did not pay for.

The settlement agreement reached by the City Council earlier this month clears up all the issues related to the title of the land and its development rights.

The bank plans to market the property as soon as a bankruptcy court agrees to the settlement.

City officials say there has been development inquiries about the land, but it has been tied up in litigation. They want to put the issue behind them.

"Unfortunately, there is no win here in this situation," said Vice Mayor Joanne Osborne before approving the settlement.

by John Yantis - Mar. 26, 2012 09:32 PM The Republic |

Goodyear, Glendale eye vacant land near ballparks

Monday, March 26, 2012

1 tax break homeowners may have missed - East Valley Tribune: Money

Homeowners are well aware of the many home-related tax breaks they can claim each filing season.

But there also are a lot of added costs that come with purchasing a home. For buyers unable to make a down payment of at least 20 percent of their home’s purchase price, one of those costs is private mortgage insurance, or PMI. A PMI policy is coverage that you, the homebuyer, pay for, but it protects your lender in case you default on the loan.

Now, however, some PMI payers can use those insurance payments as a tax deduction when they file their returns.

This tax deduction was created as part of the Tax Relief and Health Care Act of 2006 and originally applied to private mortgage insurance policies issued in 2007.

But because the housing market was slow to recover, lawmakers have extended this tax break. It now is in effect for premiums paid through 2011.

The private mortgage insurance deduction can be taken for policies issued by private insurers as well as insurance provided by the Federal Housing Administration, the Department of Veterans Affairs and the Department of Agriculture’s Rural Housing Service.

If you itemize deductions you will find the private mortgage insurance deduction in the “Interest You Paid” section of Schedule A. It is claimed on line 13.
What amount of PMI do you claim? You should find the amount in box 4 of the Form 1098 (or the substitute year-end loan information statement) that your lender sent you.
While it’s easy to claim the PMI deduction, make sure you meet the requirements.

First, note when you paid the mortgage insurance. The deduction is allowed only if you took out the mortgage on which you pay PMI on or after Jan. 1, 2007. No PMI premiums are deductible if they were made in connection with a home loan that was made before that date.

Any associated PMI premiums on new mortgages issued through 2011 will qualify for the deduction.
If you refinanced your home since Jan. 1, 2007, you also qualify for the PMI deduction on that loan. Be careful how you structure your refi. The mortgage insurance deduction applies to refinances up to the original loan amount, but not to any extra cash you might get with the new home loan.

You also might be able to deduct private mortgage insurance payments on a second home loan. As with your primary residence, the loan on the second home must have been issued in 2007 or later to be deductible.

The additional property also must be for your personal use as a second or vacation home. If you rent it out, then you could end up paying the PMI without any help from the Internal Revenue Service, unless you claim tax breaks on the home as rental property.

Finally, while there is no statutory limit on the amount of PMI premiums you can deduct, the amount might be reduced based on your income. The deduction disappears completely for most homeowners whose adjusted gross income is $109,000 or $54,500 for married filing separately taxpayers.

Mortgage rates jumped this week as investors became more optimistic about economic growth in the United States.

The 30-year fixed-rate mortgage rose 14 basis points to 4.29 percent. A basis point is one-hundredth of 1 percentage point.

The 15-year fixed-rate rose 10 basis points to 3.48 percent. The average rate for 30-year jumbo mortgages, generally loans for more than $417,000, rose 12 basis points to 4.85 percent.

The 5/1 adjustable-rate mortgage rose 10 basis point to 3.24 percent. With a 5/1 ARM, the rate is fixed for five years and adjusted annually thereafter.

The volume of mortgage applications decreased 7.4 percent last week, compared to one week earlier, according to the Mortgage Bankers Association.

by Kay Bell Mar 23, 2012

1 tax break homeowners may have missed - East Valley Tribune: Money

Saturday, March 24, 2012

Apartments on tap at Morrison

Morrison Ranch will soon get its first apartment complex.

The 228-unit apartment complex will be going up on a 14-acre parcel of land that Scottsdale-based P.B. Bell Companies bought from the Arizona State University Foundation on March 6 for about $2.8 million, according to R. Chapin Bell, president of the real-estate management and development firm.

To date, Morrison Ranch has developed 2,300 single-family lots in five neighborhoods, and Bell said he has special plans for the complex, to be built on a parcel in the Highland Groves area, near Big League Dreams near Elliot and Power roads.

"We're very excited about it," Bell said. "What's different about it is there are so many high-density developments, with 24 or even 28 units per acre. This has a lower density, with 16 units per acre. And that creates more open spaces that people can enjoy, with more landscaping, lush trees (and) green grass. It will have a nice, open feel to it."

The land is part of a nearly 80-acre parcel that Marvin and June Morrison donated to the ASU Foundation in 1998. As part of that deal, ASU's College Of Agribusiness became the Morrison School of Agribusiness and Natural Resources at the ASU Polytechnic campus at Phoenix-Mesa Gateway Airport in Mesa.

Nearly all of the 14 acres owned by P.B. Bell was part of that donation, said Scott Morrison, one of the co-owners of the ranch.

None of the buildings in the development -- a mix of one-, two- and three-bedroom units -- will be higher than two stories. The complex will include a resort-style pool, fire pits, grills, ramadas with TVs, a spa and a resident lounge with kitchen facilities. There also will be a playground for children.

Bell said the units will include granite countertops, custom cabinetry and upgraded flooring, and will lease for about $800 to $1,200 a month.

MT Builders of Scottsdale will start construction within 90 days.

by John Stanley - Mar. 23, 2012 01:52 PM The Republic |

Apartments on tap at Morrison

'Resort' assisted living popular despite price

When Bob Whipple was recovering from knee-replacement surgery late last year, he counted 39 friends and neighbors who came to visit him.

And why not? Most didn't have far to walk.

He and his wife, Helen, live in Sagewood, an upscale-retirement complex near the Musical Instrument Museum in northeast Phoenix. One of Sagewood's salient features is assisted living, memory care and nursing-home care, provided on the property for anyone who needs it.

"I went to our health facility next door and stayed in a lovely private room for a week," said Whipple, a gregarious 79-year-old, speaking of his post-surgery recovery. "It never cost us a cent, not a penny. They have to take care of us no matter what, at no extra cost."

Facilities such as Sagewood bundle retirement-resort living with elder health care. Simply put, you live independently in an apartment until you need assisted living, memory help or skilled nursing care. The concept has been around for a while but is getting a new look as the oldest Baby Boomers retire, though it's clearly not for everyone.

Sagewood, operated by privately held Life Care Services of Des Moines, Iowa, provides resort-style amenities expected of an upscale complex, such as four restaurants and two swimming pools, jacuzzis, weight and fitness facilities, classes and special-interest clubs. Weekly housekeeping is provided in each home, and a monthly allowance covers most meals.

Sagewood offers on-site health care at no extra cost, except for added meal expenses and medical supplies required during health stays, and ancillary services from doctors and medical specialists. Sagewood is regulated by the Arizona Department of Insurance.

"We're basically offering long-term health care," said Stewart Ingram, the facility's executive director. "It's a life-care contract."

Sagewood is open to people 62 and up, with the average age 77 or 78, Ingram said.

Various other apartment retirement complexes in metro Phoenix have a similar focus, typically combining assisted living, nursing care, memory care and other services in an active-adult atmosphere.

These include Vi at Grayhawk, Vi at Silverstone, Westminster Village, Maravilla and the Pueblo Norte Senior Living Community, all in Scottsdale; Friendship Village in Tempe; the Beatitudes Campus in Phoenix; and Sierra Winds in Peoria. Some charge separately for health services, while others like Sagewood package all services into a single price.

Life Care Services has been in business for four decades.

"It's not a new concept," Ingram said. The firm operates about 90 such communities.

Because homes are taking a lot longer to sell these days, making it tough for prospective residents to move in, some developments are dangling incentives. For instance, Sagewood is offering interest-free financing for up to 18 months to help residents pay part or all of the one-time entrance fee.

"That allows clients to leave their homes, come to Sagewood and enjoy all the services and amenities ... while waiting for their homes to sell," Ingram said.

Part of Sagewood's marketing approach is to get seniors thinking about these issues before they're forced to. Many people wait until they face a health emergency, but by then, they're often hurried into making hasty decisions.

Pricey considerations

The Sagewood experience doesn't come inexpensively. Life Care Services charges one-time entrance fees ranging from about $310,000 to $1.1 million, depending on the size of the apartment, which you don't own. The entrance fee for a second person is $12,000. That's on top of monthly fees ranging from about $2,400 to $4,100, plus around $1,100 for a second person, covering rent, most meals, most utilities, weekly housekeeping and more. Sagewood has 19 floor plans ranging from 750 to 2,400 square feet, Ingram said.

But Life Care Services does offer a return-of-capital program that makes the up-front cost easier to bear. The company returns 80 percent of the entrance fee to residents if they decide to move out or to beneficiaries when residents die. The company promises a full refund to anyone moving out in the first four months.

The 278-apartment Sagewood property, which opened two years ago, is about 60 percent occupied.

It's important to note that not everyone will need significant assisted-living or nursing care, though it's hard to predict how much you might require. Long-term-care insurance can be a lower-cost option for people who can qualify medically for it, with a 60-year-old couple in good health likely to pay an annual premium of about $3,000 for a standard policy, reports the American Association for Long-Term Care Insurance. But premiums rise the older you get, and you become less likely to qualify for coverage as you age.

A full year of assisted-living care averaged about $36,000 in Arizona in 2011, according to a study by Genworth Financial, while a full year in a nursing home averaged about $79,000. Both estimates were for private rooms; shared rooms were a bit less expensive.

Sagewood residents aren't required to have a long-term-care insurance policy, but they must maintain coverage for Medicare Parts A and B and supplemental insurance, the company said. Prospective residents also must pass a memory health assessment, and they can't need 60 or more minutes of personal care a day.

Not for everyone

Those prices make Sagewood unaffordable for a lot of retirees, and there are other possible impediments. For example, although pets are allowed, smoking is not, even within apartments. Also, Sagewood is a high-density community, which means there are rules everyone must follow.

"If you make up your mind that you don't want to be around a lot of people, this place isn't for you," Helen Whipple said.

Husband Bob, a retired certified public accountant, ran the numbers before the couple sold their Carefree house and moved to Sagewood. In terms of monthly costs, he said living at Sagewood came to within $50 of what they had been spending. They felt the extra outlay was worth the peace of mind.

The Whipples have two sons, both married and living out of state. They said both welcomed the move, in part because it relieves them of potential caregiving pressure.

"I'm not sure if it was our sons or our daughters-in-law who rejoiced the most," Bob Whipple quipped.

By Russ Wiles Mar 23, 2012

'Resort' assisted living popular despite price

Buying a home in a tax lien sale

As foreclosures continue to pile up, so do unpaid property taxes. That's an opportunity if you're willing to wade into the arcane world of property tax lien sales. Before you do, however, understand the risks that come with these little-known investments.

"Every year, $7 to $10 billion in property taxes go delinquent," says Howard Liggett, executive director of the National Tax Lien Association in Pensacola, Fla., a trade association of investors, tax collectors, and service providers involved in tax lien sales. "The subprime mortgage crisis has spiked those numbers. For example, four of the 67 counties in Florida saw spikes of 30 percent to 33 percent in the number of tax liens offered for sale last year."

Homes on the auction block

Tax collectors in 29 states, Washington, D.C., Puerto Rico and the U.S. Virgin Islands use tax lien sales to force owners to pay unpaid property taxes.

"It's a method for people responsible for collecting property taxes to make everyone pay their fair share," says James Hughes, president of SRI Inc. in Indianapolis, who's represented governments in tax lien sales for 20 years. "If there were no enforcement, nobody would pay their property taxes."

The process varies by state, but here's how it generally works: When property owners don't pony up for their property taxes, tax collectors wait the time period required by state law and then put those unpaid property taxes up for auction.

"The time period varies from just a few months to several years," says Hughes. "In Florida, if owners don't pay taxes due in April, tax collectors will sell a lien June 1. In Indiana, it's about 15 months before a property goes to a tax sale."

In most states, the person willing to pay the most cash for the tax lien wins the auction. Some states, however, have a bid-down process, where investors' bids indicate how much interest they're willing to accept on their investment, and the lowest bidder wins. Whatever method is used, the tax collector takes the payment for the overdue taxes from the winning bid. In exchange, the purchaser gets a lien on the property.

As the winning bidder, you'd get a return on your investment in one of two ways: interest on your bid amount, or ownership of the property.

1. Interest on your bid amount. If owners redeem their property by paying the overdue taxes within the time allowed under state law, you'll get your investment capital back, plus the amount of interest allowed in your state.

"Tax lien sales are good investments because they usually have a statutory interest rate, typically between 10 and 12 percent," says Walter Spader, an attorney at the Marcus Law Firm in North Branford, Conn., who represents tax lien purchasers. They can go much higher, too. For example, Connecticut offers 18 percent, and Nebraska offers 14 percent.

Assume Joe Smith, an Indiana homeowner, owes $500 in unpaid property taxes. Your $5,000 offer is the winning bid at the auction. If Smith redeems his property within a year, as required under Indiana law, he'll owe the tax collector the initial $500, plus a 10 percent penalty, totaling $550. He'll also be required to pay 10 percent interest on the amount of the bid over the initial tax bill, or $450. As the winning bidder, you'll get your capital investment of $5,000 back, plus that 10 percent interest payment of $450.

2. Ownership of the property. About 75 percent of owners redeem their property within a year. However, if owners fail to redeem their property, you'll have to file a lawsuit seeking title to the property. That process can be complicated, costly and time-consuming, but once it's complete, you take ownership.

Avoid the pitfalls of tax lien sales

What's the catch? There's no catch, but there are pitfalls to investing in tax liens. Here are four tips for avoiding them.

1. Scope out the property. "Make sure there's a house on the property and that it's still there when you bid," says Hughes, "The house could burn down or be damaged by something like a flood. If you paid $5,000 and the land is worth only $2,000 after the home burns down, you'll lose money. That doesn't happen very often, but it has happened."

2. Check the records. Spend time at your local tax collector's office combing through the records.

"Make sure the municipality followed all statutory procedures in placing the tax and the lien on the property," says Spader. "Look at what's on the land records. Did the tax notice actually go out? Were there partial payments that may not have been applied?"

3. Monitor your investment. If your state allows a long redemption period, protect your investment.

"If there's a two- to three-year redemption period, when next year's taxes are due, pay them and get another lien," says Spader. "If you don't also pay the next year's taxes, the municipality can lien that property again, another person could buy that lien, and then you'd be in trouble."

4. Be patient. "The return on your investment can be delayed for extended periods of time," says Liggett. "For instance, owners could file for bankruptcy, which may allow them more time to redeem the property." A bankruptcy could also mean a lower interest rate, since bankruptcy judges are sometimes permitted to lower debtors' interest rates to help them get back on their feet.

Start small and local

If you're interested in tax lien sales, do your legwork first.

"Go to the revenue officer charged with property tax enforcement," says Liggett. "Find out when sales are held, how they're conducted and how you'd participate. All that information is free because it's public record."

Then troll in your neighborhood pond. "Stay local and take advantage of being a little guy," says Spader. "Since you know local properties, you can better tell their value. Also, smaller towns don't have as many liens available, so you're less likely to be competing with big investors looking to buy portfolios of tax liens. You may even be able to go right to an individual government official and find liens that aren't being offered in a public auction."

Even if you're not sold on tax liens as an investment vehicle, they serve as a stark reminder to all property owners. "Pay your property taxes," says Hughes. "The penalty is too great to not pay them."

by G.M. Filisko Mar 23, 2012

Buying a home in a tax lien sale

Friday, March 23, 2012

Housing Crisis to End in 2012 as Banks Loosen Credit Standards

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.


The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

by Krista Franks Brock Jan 24, 2012

Housing Crisis to End in 2012 as Banks Loosen Credit Standards

Tuesday, March 20, 2012

The one number to watch for a housing recovery

If you're waiting for home prices to go up, then you're missing signs the troubled housing market has finally turned around.


FORTUNE – Over the past few months, many economists have concluded that that the U.S. housing market has reached a turning point and is healing. This may sound hard to believe, since home prices have continued their downward trend. In 2011, prices fell by 4% following nearly a 30% decline since the property bubble paeked in June 2006. They ended the year at a 10-year low.

Indeed, prices aren't likely going to rise for a while. But this might not necessarily mean the housing market isn't on the mend. Perhaps we're looking at the recovery all wrong, says Paul Dales at Capital Economics. In a report to clients recently, the economist said higher prices won't be the sign that tells us there's a realrecovery under way. Rather, the recent pick-up in sales is what we should pay attention to.

After all, prices tend to be a lagging indicator. It could take six months for any improvements to show in the market, if not longer.

"Even if the asking price is at the right level when the home is first listed, it may still take a few months to find a buyer and another month or so before the contract is closed," Dales wrote to clients last week. "The selling price that is registered at the end of this process therefore relates to the market conditions somewhat earlier."

Sales have risen recently, reaching a few milestones.

In 2011, existing home sales climbed to 4.26 million – higher than the 4.19 million sales in 2010. Needless to say, this is far below the market's peak of 7.1 million sales amid the housing boom in 2005. But it's worth noting that for the past two years, sales have crept up from the market's low of 4.1 million sales when the market collapsed in 2008. In particular, in the past six months, total homes sales have risen by 13% as borrowing costs for home mortgages continue to fall to record lows and investors making up the bulk of sales find opportunities in heavily discounted properties after foreclosures and short sales.

And a series of home sales data released later this week is expected to show that home purchases probably climbed in February to their highest level in nearly two years, according to the forecasts in a Bloomberg survey. Sales of new and previously-owned properties combined are expected to rise to an annual rate of 4.93 million – the strongest since May 2010, and up from 4.89 million in January.

The evidence reminds us that perhaps we should change our expectations of what a housing recovery might look like, particularly following a crisis marked by record foreclosures and a financial crisis that sent the economy into one of the deepest recessions. The recovery we have been anticipating is defined more on the rate at which the glut of vacant properties comes off the market as opposed to any steady rise in prices, which some think won't happen for another few years.

The inventory of unsold homes has dwindled, falling in January to 6.1 month's worth of supply – its lowest level since March 2005. A supply of six months is generally considered ideal for a healthy housing market, but there continue to be several headwinds at play that could weigh down prices.

The most immediate threat is the $25 billion settlement that federal and state officials recently reached with five banks to end investigations into abusive foreclosures practices. The agreement, which had stalled pending foreclosures nationwide for more than a year, will probably add more properties into the market. Dales at Capital Economics estimates additional 3 million homeowners might succumb to foreclosure over the next few years.

And then there's the longer-term threat to prices, which some experts say could arise when the Federal Reserve raises interest rates later. The inevitable move could potentially make the cost of home purchases more expensive relative to stagnant incomes.

So if anyone is looking at prices for signs of a recovery, it's likely that they'll miss it.

By Nin-Hai Tseng CNNMoney Mar 20, 2012

The one number to watch for a housing recovery

Monday, March 19, 2012

The Impact of Rising Mortgage Rates

Mortgage rates will be starting to rise from this week on.  From the 3.9 to 4.0 percent average rate in the past five months on a 30-year fixed mortgage, the new rates will soon be in the range of 4.3 to 4.6 percent.  Usually the initial phase of rising rates can quicken the decision to sign on the dotted line as consumers do not want to face even higher mortgage rates later on.  However, a prolonged increase will shrink the pool of eligible home buyers.

Here are some raw statistics to contend with.  Let’s say a person is committed to paying at most $1,000 per month in principal and interest to be comfortably within this person’s budget.  A mortgage calculator will spit out that at a 3.9 percent rate (last week’s rate), this homebuyer will be able to take out $212,000 in mortgage amount.  At 4.5 percent (near future rate), the figure drops to $198,000, or the equivalent to a drop of 7 percent in purchasing power.  The homebuyer therefore has to shoot for lower price points.

Another way to view the impact of rising rates is to compute the income required to get the $212,000 in mortgage funds as in the above example.  At 3.9 percent, the income would have to be $4,000 per month, assuming that this particular person only feels comfortable with a mortgage payment taking up 25 percent of his or her income.  At 4.5 percent, the mortgage payment to buy that same home would be $1,074 per month and the corresponding monthly income requirement would be $4,296.  Now, how many people have a monthly income between $4,000 and $4,296 or on an annual basis between $48,000 and $51,552?  According to the Census income distribution table, 2.9 percent of the population is between these two incomes.  This income gap also represents how many people would have qualified to buy this particular example home before and after the mortgage rate change.

Simply put, if mortgage rates rise to around 4.5 percent in the upcoming weeks from the previous 3.9 percent, then home sales are expected to be impacted by 3 percent.  If the 30-year fixed mortgage rate rises to 5 percent then the impact is closer to 6 percent.

This illustration is what economists call a static analysis.  It assumes that other variables are not changing.  In the real world, the confluence of factors makes the data analysis less clean.  The 3 percent impact may not be meaningful if, say, job gains pick up steam or mortgage underwriting standards become less restrictive.  Then there are the cash buyers, making up about one-third of all buyers in the past year, who would care squat about rate changes. Still, it is worth keeping in mind that rising rates will put some drag on the broader housing market recovery.


by Lawrence Yun Chief Economist National Association of Realtors Mar 16, 2012

The Impact of Rising Mortgage Rates

Home prices rise for first time in 18 months: RE/MAX | HousingWire

For the first time in 18 months, home prices increased year-over-year in February, a turnaround that RE/MAX said signifies a "very active selling season."

A RE/MAX housing survey released Wednesday shows national home prices in February rose 1.1% from a year earlier and 1.4% from January to $171,881.

Of the 53 metro areas included in the survey, 24 experienced price increases from February 2011, including: Miami (20.5%), Orlando, Fla. (15.8%), Phoenix (12.5%), Tampa, Fla. (11.1%), St. Louis (9.8%) and Detroit (8.9%).

Home sales in February rose 8.7% from a year earlier, continuing a trend of eight straight months above the previous year's total. February home sales climbed 8.1% above sales in January.

Of the metros, 45 saw increases over February 2011, with 26 jumping double digits, including: Albuquerque, N.M. (46.6%), Providence, R.I. (36.7%), Raleigh, N.C. (33.8%), Boston (30.5%) and Chicago (27.5%).

“All the data is pointing to a very active spring and summer selling season this year, which is great news for a recovering housing market,” RE/MAX Chief Executive Margaret Kelly said. “As sales numbers have trended higher for several months, we have been anticipating a turnaround in home prices, and it looks like it’s finally starting.”

Analysts at Barclays Capital on Monday said the homebuilder spring selling season has "arrived strongly enough to kick-start a positive feedback loop in housing for the first time since 2005."

Properties sold in February stood on the market for an average of 103 days, the same as in January and a year earlier, according to RE/MAX findings. In the last 12 months, the average fell below 90 in only two months — 88 in both July and September.

By Justin Hilley HousingWire Mar 16, 2012

Home prices rise for first time in 18 months: RE/MAX | HousingWire

Wednesday, March 14, 2012

US Mortgage Restrictions to Increase

The poor fiscal health of the Federal Housing Administration (FHA) is expected to make getting home loans even more difficult as the agency responds to increasing legal costs that stem from loan servicing claims and insuring banks against loan defaults. Prior to the $26 billion mortgage settlement between banks and the government, the FHA had applied for a $688 million loan from the U.S. Treasury to cover its rising expenditures. High-risk borrowers who turn to the FHA for loans are likely to find them as unwilling as banks to extend credit due to banks’ demands that the agency cover their losses. With both banks and the FHA raising lending restrictions, many would-be borrowers will be left with nowhere to turn for financing. For more on this continue reading the following article from TheStreet.

Getting a home loan is only going to be tougher, as banks tighten standards for Federal Housing Administration (FHA) loans amid rising legal claims.
Analysts at FBR Capital have long been worried that the FHA's poor fiscal health will lead it to deny insurance claims and file lawsuits over servicing and origination of FHA loans.

The FHA insures banks against defaults on loans and has seen its share of the mortgage origination market rise from 3% in 2005 to 24% in 2011 in the wake of the sub-prime crisis. But the high default rate during the crisis has drained its resources.

The latest budget plan found that the FHA might need as much as $688 million from the U.S. Treasury to bridge a shortfall in its reserves. That problem was quickly resolved by the recent $26-billion mortgage settlement between the nation's largest servicers and the 49 states.

Under the settlement, the five banks would have to inject $1 billion into the agency's capital reserves to settle claims related to servicing.

Still, not all legal concerns have been put to rest. Analyst Paul Miller notes that the settlement only covers servicing violations and not origination violations. He cites the example of Flagstar Bancorp(FBC) which recently entered into a settlement with the Justice Department for $133 million related to fraudulent FHA lending practices.

Bank of America(BAC) also entered into a $1 billion settlement with the Justice Department over allegations that the bank's Countrywide Unit knowingly made loans insured by the FHA to unqualified home buyers.
Recent fines also include Citi Mortgage, a subsidiary of Citigroup(C) agreed to pay $158 million to settle a civil complaint by the Manhattan attorney's office, accusing the company of routinely certifying that loans qualified for FHA when they did not.
According to FBR, the fines imposed on banks could be quite severe, in some cases trebling damages for violations of FHA's "highly complicated and technical" rules.

The recent Flagstar settlement might just be a one-off, but the analysts believe that the "damage to lender confidence" has already been done. "We believe that this settlement could result in lenders reexamining their risk with respect to FHA lending and tightening standards for the FHA product. Our major concern is that the tightening credit policies could lead to fewer borrowers being able to qualify for an FHA mortgage," the analysts wrote in a note Monday.

Recent government measures have aimed at providing relief to the troubled borrower, but as the Federal Reservefrequently notes, the credit conditions for those seeking a fresh mortgage are still too tight.

One reason is banks have pulled back from lending to borrowers with riskier profiles because of rising putback claims from Fannie Mae and Freddie Mac.
Now, higher risk borrowers who have so far managed to avail of FHA loans might now find that even this source of credit is drying up.

Currently, less than 25% of all loans being purchased by Fannie Mae have a credit score below 740. Over the past 10 years, borrowers with FICO scores between 620 and 660 have fallen from 12% to less than 2% of loans purchased, while roughly 75% of loans have a FICO score over 740, according to the report.

by Shanthi Bharatwaj NuWire Investor Mar 13, 2012

US Mortgage Restrictions to Increase

Tuesday, March 13, 2012

Commercial Mortgage Lending: LIBOR vs. Fixed-Rate Loans

Commercial lending has gotten more complex in recent years as banks increase lending restrictions and get choosier about their lending clients. One significant change is the shift from offering long-term fixed-rate commercial mortgages to using the London InterBank Office Rate (LIBOR), which is a rate determined on a daily basis by the British Banker’s Association. These types of variable-rate loans shift according to market trends and is usually conveyed to the borrower at the start of the loan negotiation as a spread above a specific LIBOR rate. Obviously, these types of loans make it difficult for the borrower to determine the final cost of the loan, so many banks will offer an “interest swap” product that will cover a certain percentage of the unknown value. For more on this continue reading the following article from JDSupra.
If you have been involved in commercial mortgage financing during the past decade, whether as a borrower, lender, or legal counsel, you have likely been a witness to the changes that have taken place in the manner in which loan interest rates are set and adjusted.  For most sophisticated institutional lenders, long gone are the days of long term, fixed interest rates, which remain unchanged throughout the life of the loan.  Instead, many lenders now quote interest rates which either “float” with market conditions or, frequently, adjust to reflect the latest market trends.
The benchmark used by many lending sources to set loan interest rates is “LIBOR.” “LIBOR,” an acronym for the London InterBank Offered Rate, refers to an averaged rate, which is determined on a daily basis on behalf of the British Bankers’ Association.  It measures the cost at which a member bank can borrow from other member banks, on an unsecured basis, for a certain time period utilizing a given currency.  The LIBOR rate is calculated for 10 currencies and for 15 maturities, ranging from overnight borrowing to a 12-month loan period.
It is common to see commercial mortgage lenders quote proposed interest rates based on a “spread” above a specific LIBOR rate, which rate is automatically readjusted at the end of each LIBOR period.  For instance, the lender may quote an interest rate of 3.00% above one month LIBOR, which will adjust monthly at the end of each one-month LIBOR cycle.
Such variable rate loan pricing creates potential uncertainty as to the ultimate borrowing costs for a transaction.  In order to bring some certainty and stability, many lenders offer their borrowers “interest swap” products, pursuant to which the borrower exchanges its variable rate loan obligation for a fixed rate obligation.  The swapped, fixed rate is somewhat higher than the then current variable rate obligation.
Variable interest rate loan documentation, whether based on LIBOR or some other benchmark, requires careful drafting and negotiation to be certain that the details of the interest rate calculations, loan amortization, and swap features are properly covered. Therefore, it is important to consult with an experienced business and commercial financing lawyer.

by Robert Marsico NuWire Investor Mar 12, 2012

Commercial Mortgage Lending: LIBOR vs. Fixed-Rate Loans

Monday, March 12, 2012

Phoenix-area homebuyers squeezed out by investors

Many potential homebuyers who sat on the sidelines watching metro Phoenix's house prices fall during the past five years are back in the market, ready to take out a mortgage and move in.

But many are finding they cannot buy.

Armed with a preapproved mortgage and even enough cash for a hefty down payment, they bid on foreclosed homes and houses up for short sale -- but are outbid by investors buying houses for cash on the spot.

Traditional homebuyers, who typically make an offer contingent on other steps such as an appraisal and securing the loan, find they can't compete with someone who is willing to pay up front the entire asking price or more.

Tight supply makes the competition even stiffer.

Home resales, averaging 7,500 a month, are at their highest level since the peak of 2005-06. But the number of homes for sale is at the lowest level in more than a decade. There currently are about 23,000 homes for sale in metro Phoenix, one-third of the area's housing inventory in 2009.

With demand for houses high and supply so low, many are drawing multiple bids.
That is not to say the bidding wars are driving up prices in the overall housing market nearly as much as they did in boom times. Median resale prices remain near the bottom of the lows to which they fell after the housing crash and wave of foreclosures that began in 2007.

But those low resale values have kept many traditional sellers out of the market, too, experts say. Many homeowners don't have enough equity to sell, or just don't see enough profit to make selling and moving worth it.

The result is that much of today's bidding is on foreclosure homes or short sales, where banks approve a sale for less than the current borrower owes.
And in these cut-rate homes, cash is king.

Foreclosures have declined in recent months, as banks increasingly approve short sales to help residents avoid foreclosure. The drop in foreclosure inventory is working to push up home prices a little each month.

Most metro Phoenix homes for sale are still considered great deals. Market watchers agree that long-term investors paying cash will lead to fewer empty homes and a better market overall.

But for the housing market to truly recover, they say, it must see a return of the regular participants: homeowners confident enough to put their houses on the market, and perhaps more importantly, regular buyers with mortgages and jobs who can afford to buy homes of their own.

"Phoenix's housing market is in a state of fast changes," said Mike Orr, real-estate analyst for Arizona State University's W.P. Carey School of Business.
"Prices are ticking up, and buyers are getting more and more frustrated they can't find homes," said Orr, who also publishes daily real-estate analysis called the Cromford Report.

Traditional buyers

Nakisha and Lenny Williams heard about the great deals for Phoenix foreclosure and short-sale homes more than a year ago. The couple began searching online. The low prices for homes built just a few years ago helped them decide it was time for a move.

The young couple quit their jobs, sold their Chicago-area home for a modest profit and relocated to Phoenix, where they found new jobs fairly quickly and rented an apartment while they shopped for a home. But the Williamses have been outbid on at least five homes so far and have been waiting for more than a month to hear back on their latest bid on a Litchfield Park house.

Nakisha Williams works for a water company. Though Lenny Williams recently lost his construction job, the couple have been saving for a down payment and are preapproved for a mortgage they can afford, if their offer of $120,000 for the home is approved.

"It's crazy for buyers now," said the couple's real-estate agent, Yvette McDonald of Monopoly Realty. "The Williamses are still looking for other homes while they wait to hear back from the lender on the Litchfield Park home, but we can't find anything that is still available by the time we make an offer."

She has several other potential buyers in the same position, making multiple offers that aren't accepted or are topped by other bidders, especially investors.


Andy Rysdam has $10,000 for a down payment and is preapproved for a mortgage to buy a home for as much as $175,000. Recently, his real-estate agent found a potential house listed late in the afternoon. They went to see it first thing the next morning, and already there were seven other offers on it.

"It's the investors getting the best homes. They have cash," said Rysdam, who is renting and not giving up on buying a home despite already being beaten out by investors several times.
Cash buyers, who are typically investors looking to resell the properties or use them as rentals, account for nearly 60 percent of all Phoenix-area homebuyers now, according to data compiled by, an online foreclosure-auction service.

"We are seeing multiple offers on any decent home," said Rysdam's agent, Brett Barry of Phoenix's HomeSmart. "These are different than the bidding wars from the boom, but buyers are getting more and more aggressive as the inventory of homes for sale continues to shrink."

Scottsdale real-estate agent Diane Watson is working with a Canadian investor who wants to spend $10 million on metro Phoenix homes that can be turned into rentals.

Wealthy investors can make more money buying foreclosure or short-sale homes in growing areas like Phoenix and renting them for seven to 10 years until prices rebound than they can on most other investments now.

Watson can't find enough homes for her Canadian investor and is considering approaching homeowners underwater on their mortgages and late on their payments to sell through a short sale even before their lender suggests it.

"I am about to go door to door," she said. "People don't realize they have the short-sale option because the deals have been so hard to do in the past, but not now."

Laura Gonzales thought she had found the home of her dreams in Phoenix. The elementary-school teacher has been renting a house in north Phoenix's Desert Ridge area since she moved from California in 2007.

As foreclosures have climbed in her neighborhood and home prices have fallen, she has slowly saved for a down payment. In January, she found "the perfect home" listed for short sale just a block from where she's renting. The house was bigger, and her monthly mortgage payment would be less than her rent.

She made an offer the day it was listed for sale. But already a dozen other offers had been made. She upped her offer by $10,000, but at least two investors upped their offer by twice as much.

The home ended up selling for almost $200,000 -- more than $50,000 over the asking price.

"It was heartbreaking," Gonzales said. "And last month, the same thing happened to me on a house I didn't want nearly as much, but I felt like I had to keep bidding because the homes I like are going so fast in this area."

Diane Brennan of Scottsdale's Keller Williams Integrity First Realty said the housing market is crazy now. "It's nearly impossible to buy a home in the $100,000 range," she said. "I've got tons of buyers and no properties to sell them. One home in south Scottsdale got 43 offers."

A rush to avoid higher prices

Metro Phoenix's median existing-home price has been steadily ticking up since last August when it fell to a 12-year low of $113,000. In February, the median price for the region was up to almost $123,000, according to a monthly analysis from AZBidder. All types of homebuyers see metro Phoenix's prices finally rising and want to close a deal before they go higher.

Some first-time buyers with Federal Housing Administration financing have a bit of an advantage now, said real-estate agent Barry.

Those buyers are required to put down only 3.5 percent, so they can often keep bidding with investors, knowing that if they win and the appraisal doesn't come in that high, the lender will have to lower the price to meet the housing agency's requirements.

Banks might boost supply of homes

Banks still hold many of the homes they took back through foreclosure in recent years; the rush to buy could push them to put more on the market.

"If lenders are holding back on foreclosures and waiting for a sign the homes will sell, well, the time is now," said Jim Sexton of Phoenix's Realty ONE Group.

"Real-estate agents and buyers are all frustrated. The demand for homes is real."
Lenders did slightly increase the number of new notices of foreclosure they sent last month, which could mean more short sales or foreclosures for buyers to choose from in the next few months.

Housing analysts say the current buying frenzy may run its course in six months and not create a lasting recovery. Experts say the region's housing market won't really recover until regular homeowners, who can afford their mortgages, feel like they can sell and make a decent profit -- not the profit of 2006, but enough to pay off their mortgage and net a slight profit if they bought before 2000.

Regular buyers, who have to put down 10 to 20 percent for a mortgage, might have to wait for those regular sellers to put their homes on the market, creating enough supply to ease the bidding frenzy. When demand is strong enough that multiple bids are made on houses owned by homeowners, not lenders, that will be a strong sign of a return to a normal market.

"Once sellers begin to realize the market is recovering, and they can actually make some money on their home, then the market will truly start to stabilize," said ASU housing analyst Orr.

by Catherine Reagor - Mar. 10, 2012 11:25 PM The Republic |

Phoenix-area homebuyers squeezed out by investors

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