Flagstaff Blog - Real Estate and All Things Flagstaff: April 2009

It wasn't THAT long ago that we Baby Boomers worried a lot about our kids.

You know, those irrepressible Generation Y kids who were on the Internet at age 4 and who grew up clicking (my son says I grew up turning dials and that is why his generation is superior different).

Sitting on our own fat bubble- enhanced, low taxed properties, we watched prices spiral out of control here in the San Francisco Bay Area. We believed our children would either:

1. Never be able to afford a house
   
2. Move away forever
3. Move back in with us (eek!) 

But post meltdown, all of that has changed. And in the wake of economic disaster lies a once in a lifetime opportunity to get junior into his very own house or condo.

This is the year to help your kid become a first time buyer. You snooze, you lose.

No, I cannot promise son will become a handyman or daughter will turn into Martha Stewart. But I can promise you that everyone in the family will look back someday (sooner than you think) and thank their lucky stars you took advantage of a 24 karat golden real estate opportunity to give your child financial stability.

Why this year? Here are 3 reasons that point directly to the stars being lined up perfectly:

1. Cheap properties (prices being driven down by foreclosures)
2. Low fixed rates on old fashioned 30 year mortgages
   
3. FHA financing finally has limits high enough to buy in California

As if that isn't ENOUGH, here is your amazing limited time BONUS OFFER: First Time Homebuyer Tax Credit of $8000 is good through the end of the year.

 

The strategy:

1. GIFT your child the down minimum payment (3.5% of selling price)
2. ASK the seller to pay the closing costs in your offer, so your kid needs NO cash at all
   
3. SNAG a cheap property in the best location your kid can afford

Be prepared for this:

1. MULTIPLE OFFERS on lender foreclosed properties for sale
2. SELLERS insisting on an approval with a LENDER (not just a letter from the mortgage person)
3. A LONGER time line than you are expecting

10 things not to worry about:

1. Rates will go lower. FHA loans have the ability to be easily re-written if rates drop (streamline refinance) 
2. Real estate will be cheaper. So what? Think long term.
3. Your kid isn't "ready". Most first time buyers do not have the perspective to understand the benefit of the tax credit, or the silver lining of economic downturns. Come to think of it, you probably weren't "ready" when he was born.
4. Going on the loan with your kid. If your kid has no job now, or just can't afford to buy, you can co-sign.
5. Finding the "perfect" house/condo. It is a starter house, for crying out loud. Do not expect lender foreclosures to be pretty
6. FHA closing costs are "too high". Yep, FHA will have slightly higher closing costs than conventional. Seller may not pay closing costs. You can gift your kid closing costs, too.
7. What if my kid loses his job?  "What if's" are the biggest reason for missed opportunities!
   
8. The real estate market is just too confusing! That is why you should find a great real estate agent
9. Getting a loan is a big hassle! Get preapproved first with a great mortgage person
   
10. Where will I get the cash to help my kid? How about an equity line or retirement account? Maybe Grandma has the money?

Get your kid set and maybe you could move in with him someday. (double eek!)

Maybe not.

 

 

Written by Janet Guilbault, Mortgage Banker/Broker Based Out of the San Francisco Bay Area

 

 

10 - You don't want the big let down if you can't get approved after you got your heart set on purchasing a property

9 - If there are errors on your credit report you will have time to get it fixed

8 - You will save energy, time and money

7 - Your odds of working with a great Realtor are better (many Realtors don't even show without a Pre-Approval!)

6 - You will be looking at homes in the right price range

5 - You will have a good understanding of current market rates and a monthly payment when your lender gives you a GFE (good faith estimate)

4 - You will know how much money you need to come up with for a down payment

3 - You will know where your comfort zone is and feel confident when you submit your offer

2 - Many REO (bank owned, foreclosure) sellers will not even accept an offer without a pre-approval letter (most the time from a direct lender)

1 - The Seller will look at your offer to see that it is strong so odds of approval are higher

Underwriting guidelines have changed majorly over the last two years.  Many cannot qualify.  Lots can qualify and they don't even realize it.  It never hurts to see if you can qualify for a home.

Condos have become pretty much unfinanceable due to recent underwriting guideline changes.  Underwriters are not only looking at litigation but they are looking at investor concentration in the subdivision and HOA defaults within the subdivision after they order something called a "condo certification."  A condo certification is basically a questionnaire so the lender can balance risk.

If you are a lender in the Las Vegas area and have successfully closed more than 5 VERIFIABLE transactions since March 1, 2009, near conforming rates and closing fees:  feel free to call or email me for an interview!

US retail sales fell 1.1% in March.  They were expected to rise.  The stock market is down, and the 10 year bond yield is falling.  Other factors affecting today's bond market rally:

• Sabre rattling:  North Korea pulled out of the nuclear talks.
• Profits eroding:  Producer prices were down in March by 1.2%.

If you're closing on a loan in the next 30 days, my recommendation is to lock.

___________________________________________________________

I'm Mike in Tucson, your preferred Tucson, AZ Mortgage lender.

Think of me as your Tucson mortgage expert.

Call me if I can help you with a purchase or refi mortgage;
(520) 349-9090

As real estate agents we're in the enviable position of getting a first hand look at all sorts of nifty things in people's homes - from the newest in kitchen design, to a special floor tile, to a dramatic light fixture. All sorts of things - you never know what unusual or intriguing item will catch your eye.

On our weekly tour of new listings I came across something I had never seen before.  It was a flat panel painted to match the wall on which it was attached. As I studied it I realized it was a electric heating unit and I had never seen one like it.  A little investigation online when I got back to the office and I discovered the Econo-Heat Wall Panel Heater.

I've long been a fan of electric heat. It has a reputation of being expensive and people in New England tend to look askance at electric heat.  I think it's underrated though and can be much more economical than people think.  Electric heat is also the cleanest form of home heating - no fumes, no danger of explosion (several gas explosions have destroyed houses in Massachusetts recently), and no danger of ground contamination from oil. It's the ideal heating choice for the growing numbers of people with chemical sensitivities. Since electric heat can be controlled room by room - you have as many zones as you have heating elements - costs can be managed more effectively than with other types of heat.

So I was predisposed to think well of Econo-Heat.  After reading about it I'm quite excited.  Manufactured in South Africa, the Econo-Heat wall panel:

• Is remarkably economical.  The company suggests that the cost to run it is equivalent to the cost of using four incandescent light bulbs and estimates that the cost in the United States is approximately three cents per hour.
• Is a cement fiber board panel.  It is unobtrusive with a slim, stylish design
• Can be painted. In fact, it can even become a decorative piece with screen painted designs available
• Will not burn skin on contact (see the site for details about temperature, safety etc.)
• Has no moving parts to break or burn out
• Takes less than ten minutes to install

This is a great heating option to introduce to your clients or to consider for your own home.  Perhaps that three-season room could be used in the winter.  Or you could add a panel to that unheated bedroom (I've got four of those in my old house!). Maybe you want to try a panel in your home office and leave the thermostat low in the rest of the house. I'm looking forward to spring and summer but I see an Econo-Heat panel in my future!

 

More good news for the Prescott, AZ market which relys so much on the Phoenix market for spillover business: a sign that foreclosure sales have peaked in the greater Phoenix area!  That's the news from the Morrison School of Management and Agribusiness at Arizona State University's Polytechnic campus today regarding the decline in the rates of foreclosure sales in the Greater Phoenix area.

Investors are starting to come into the market again buying rental homes and income  with the expectation that prices will rise in the next few years.  That, and the fact that interest rates are low and 1st time buyers are finding prices that allow them to buy for what they are paying for rent. 

Here's an excerpt:

The declining prices have piqued interest for potential investors and owner-occupants, especially in the lower income ranges. For the traditional market, the median price in March was $127,000, down 45 percent from the $229,900 for a year ago. Foreclosed properties had a median price of $146,880 ($189,170 for March 2008).

Investment interest is being driven by the anticipation that home prices will rise again in the next few years. According to Butler, there are two fundamental reasons why the median price for foreclosed homes is higher than traditional transactions.

"The first reason is more expensive homes continue to be foreclosed, with 15 in March, three over $2 million, and 7 percent of the foreclosures were in the $300,000 range," he said. "The other reason is that, for the last year, slightly more than 30 percent of the traditional sales were foreclosed homes that were sold again with a median price markdown of 15 percent. The markdown varied throughout the Valley ranging from 44 percent in Maryvale to 17 percent in Avondale to 10 percent in Tempe."

Click for the full report that has details by Phoenix area neighborhood.

This is similar to the Prescott and Precott Valley markets where foreclosures made up 34% of sales in the 1st quarter.  It will be interesting to see where they end up in Q2.   For more information see: Prescott Arizona area foreclosure market report for Q1 2009.

To search for foreclosured, REOs, and short sales in Prescott, Prescott Valley, Chino Valley, or Dewey-Humboldt, click here.

I've been posting for a couple of weeks about cash buyers are starting to make up the majority of my clients and how they feel it is time to buy.    They have been buying a mixture of foreclosures, estate sales, and traditonal resales (all at bargain prices) in downtown Prescott, Talking Rock cottages, and income properties in Prescott Valley. 

Now the numbers are starting to come out of the valley and according to the Arizona Republic this morning, "for the first time in years, there's good news coming out of metropolitan Phoenix's housing market."

The article, by Catherine Reagor their real estate guru, goes on to say that March saw several firsts:

1) Home sales rose to 2005 levels;

2) Foreclosures fell for the first time in a year; and

3) Several Phoenix neighborhoods saw prices stabilize.  

She goes on to quote from a Phoenix real estate pro:

"The affordable end of the Valley's housing market could finally be at the bottom looking up," said Mike Orr, a real-estate agent and analyst who publishes the Cromford Report. "Homes priced for $150,000 or lower are selling fast and even getting multiple offers. My money is on home prices in many of those neighborhoods being slightly higher by June."

If sales continue to climb in other metro Phoenix communities this month and in May, there's a good chance home prices in the Valley's most affordable communities could tick up in June.

"April will be the turning point for the housing market," Orr said. "People are beginning to perceive we are at the bottom, and there's no reason to wait to buy anymore."

See the whole article here:  Promising signs from Valley housing data

People who know me can tell you that I am a realist over an optimist.  Right now I think reality is that if you are waiting on the sidelines and keeping stats, circle today and then if you haven't gotten a deal in escrow in 90 days, check this space to see what the average price has gone to in the Prescott area.  I bet it is up. 

For the latest quarterly report of Prescott Arizona area foreclosures and short sales,
see this post:  Prescott Arizona area foreclosure market report for Q1 2009