The Phoenix Area Foreclosure Experts

4th Highest Sales Volume in Phoenix Real Estate Market: April 2011

Home sales in the Phoenix real estate market made the news again. Our housing tracker reports that sales of Arizona MLS home listings reached 9,492 in April 2011. This is the fourth highest home sales month in the history of our MLS.

The article in our Phoenix housing tracker from last month reported that March 2011 had the third-highest home sales with 9,973. The all time highest sales month was June 2005 with 10,216 MLS homes/listings being sold. The number two month was August 2005 with 10,003 sales.

The percentage of sales that were foreclosure homes, defined as bank owned (or REO homes) and short sales, remained near 65%. You'll notice on the chart, as indicated in green, that the height of foreclosure sales was reached in the months between April 2009 and July 2009. March 2011 managed to sneak in as the third-highest sales of foreclosure homes, while April 2011 is now recorded as the sixth highest month.

Many sales are attributed to both people and businesses who are making investments in real estate. The rental market has never produced more people looking to lease, primarily because they have lost their homes to the short sale or foreclosure process. The trend of unprecedented low home pricing and higher rents has caused investors to flock to the Phoenix area and put their money back into real estate.

We will report on pricing trends in the next couple articles, but the decline in real estate property listings will undoubtedly produce at least a temporary increase in prices.

Scottsdale Luxury Real Estate

Cash is King or the Norm in Phoenix Arizona Investment Real Estate?

The bar for investment real estate in Phoenix Arizona has been raised. Our housing tracker reports that cash buyer's in 2011 have quadrupled from historical trends, as noted in information obtained from the Cromford Reports. Investors who bought property for cash almost always had advantage over home buyers who were obtaining mortgage financing.

Historically, less than 10% of all residential home purchases are made with cash. As the chart below indicates, the foreclosure trends of the last few years -- coupled with lower interest rates for saving accounts and unstable stock and financial markets -- have induced many more investors to buy property with cash.

The chart indicates that cash buyers jumped to an average of 17.1% in 2008.The number went to 31% in 2009. 34.7% was the average in 2010. However, cash purchases for residential homes, either by home buyers or investors, has jumped to an amazing historical high of 41% in 2011.

Let's take the analysis a step farther. How many Phoenix real estate investors do you suppose are paying cash for home purchases? While I have not been able to find any detailed information on that statistic, we can always do a little interpolation of the data based on the below chart.

The chart indicates how many residential home purchases were made by investors. The Cromford report obtains this information by scraping it from the tax records. They do this by evaluating the number of properties that are categorized as rentals at the initial purchase. The left side of the chart, illustrated by the blue lines, indicates the number of purchases made by investors. The right side of the chart, and illustrated by the red circles, indicates the percentage of investment purchases. We can now clearly see that 25% of all residential home purchases in 2011 were made by investors. This is a higher percentage than during the real estate boom when the average was around 17%.

Now comes the time for the interpolation. If 25% of all property purchases are made by investors, and 41% of all purchases are currently being made with cash, what percentage of investors are paying with cash? The odds are in favor of an extremely high percentage of investors paying cash. Therefore, it appears you are in a minority if you're a real estate investor and not paying cash.

Real Estate Investing

Search Phoenix Foreclosures

Phoenix Real Estate Property Listings continue 7 month decline: May 2011

Phoenix real estate property listings have entered their 7th consecutive month of declines. At 27,075 property listings (seen in red on the chart), Arizona MLS homes/listings are now at a 5 year low point. To give a historical perspective, listings averaged around 25,000 when I first became a Realtor in1999.

Let me make a distinction for anyone who is an avid follower of the Cromford Report (as I am). Mike Orr looks at "active" listings differently than I do. I consider an active MLS property listing to be one that does not have any offers on it. Mike Orr also counts properties that have "contingent"offers on them as part of his active count. In the Arizona MLS such listings are defined as "AWC," or active with contingencies. In today's market AWC generally means that a seller has entered into a short sale agreement and the contingency is whether or not lien holders will approve the short sale. It can also mean the sale is contingent upon a successful home inspection. There are currently about 7,700 property listings in the Arizona MLS that are classified as AWC.

Regardless of whether you subscribe to Mike Orr's philosophy or mine, we will both show a 12,000 property decrease (seen in yellow) over the last 12 months. If you follow the real estate market you know that shadow inventory is the reason for the property listing declines. The banks understand basic economics and realize that if the demand for properties goes up and the supply goes down -- the price will go up. Apparently the banks have figured out that the cost of holding the shadow inventory is less than the losses they will sustain by flooding the market with foreclosures, thereby driving prices down even further than at present.

The chart also illustrates that both the number and percentage of foreclosures is declining (seen in the orange). The number of foreclosures reached a historical high in October 2010 with 20,097 REO homes and real estate short sales. At 11,698, as seen in May 2011, they are at a 20 month low point.

This this brings up two main points: 1.) will prices go up in the short term because of lower inventory and higher demand and 2.) how long can banks hold onto shadow inventory? I believe many investors have voiced their opinions by the increased competition at the trustee sales.

Phoenix price per square foot

Phoenix housing tracker

3rd Highest Sales in History of Phoenix Real Estate Market: March 2011

Our Phoenix housing tracker shows a near record sales volume in the Phoenix real estate market for March 2011. Nearly 10,000 MLS homes/listings were sold making this the third highest sales volume in the history of our market. The sales significantly reduced real estate property listings to begin April 2011.

The chart (shown in green) indicates 9,973 transactions, though home sales figures vary within the first week of each month while corrections and updates are made. The only months with higher sales were recorded during the peak of the real estate market. Our Phoenix housing tracker reported the number one sales month as June 2005 with 10,216 MLS homes/listings being sold. The number two month was August 2005 with 10,003 sales.

You'll also notice that the summer months are historically the months that record the best sales. That's because many families time their home purchases to coincide with the school year. Click here to search Phoenix real estate.

One of the most commonly heard questions by real estate agents is: "Has the Phoenix real estate market hit bottom yet?" For a number of reasons the answer is probably a solid "no." However, in our best opinion, we believe they won't drop that much further because of how the banks are controlling the shadow inventory. That being said, home buyers have cast a vote of confidence that, while prices may not be at the very bottom, they are low enough to make a real estate purchase right now.

The chart also illustrates the five months with the highest number of foreclosure-type home sales recorded in the Metropolitan area. Foreclosure type sales are defined as either bank owned (REO homes) or real estate short sales. You can see that March 2011 ranks number three.

More Phoenix housing tracker stats and updated market information.

See the original article at: Phoenix housing tracker

Phoenix Real Estate Property Listings continue to decline: April 2011

At the beginning of April 2011, Phoenix real estate property listings have continued their downward trend for the sixth consecutive month. Our Phoenix housing tracker chart illustrates the 9,047 property drop in Arizona MLS homes / listings.

There has been talk about "shadow inventory" for at least the last 16 months or more. Shadow inventory homes are homes owned by the bank and those on the verge of foreclosure, but not listed on the market as Phoenix real estate property listings. The reason shadow inventory is important is because of the dramatic affect they would have on pricing if they were all released into the market at the same time. Housing prices could plummet if there was a dramatic increase in Phoenix foreclosures. The banks are doing us all a bit of a favor by holding onto these homes.

As seen in the chart, the initial drop in real estate property listings (indicated in yellow) was rather small compared to the escalating decreases over the last two months. Simple economics dictate that the smaller the supply, the greater the possibility of increased prices. Let's see what happens to residential home sales by the end of this month.

 

Another indication of the validity that banks are holding onto shadow inventory is the decrease in the percentage of foreclosure listings currently on the market. Notice that the numbers in orange indicate total foreclosure listings, expressed as a percentage of total listings, and that they have been decreasing in sync with the decline in overall listings.

Phoenix housing tracker

See the article on our main site: Phoenix real estate property listings

Homeowner Rights, Foreclosure Eviction Laws, and Forcible Detainers

Homeowner Rights, Foreclosure Eviction Laws, and Forcible Detainers

A Forcible Entry and Detainer is an action that a new property owner (the foreclosing bank) can take if the existing occupant refuses to leave after appropriate notice (90 day notice of Trustee Sale). This occupant could be either a tenant or original owner of property that was sold at a foreclosure or trustee's sale. Foreclosure eviction laws are subject to change, but this article is current as of March 2010.

The tenant/occupant receives a written demand to vacate the property. The term of the period to vacate is dictated by the type of occupancy - whether commercial or residential and whether a tenant or an owner that was foreclosed on. This term normally is either 5 or 7 days, unless the contract states otherwise. After the 5-7 days expire and the tenant/occupant still refuse to leave then a complaint for a forcible detainer action can be filed. The statutes provide for a very short notice period before a court hearing.

The sole issue at the court hearing is whether or not the tenant/occupant has the right to possession. If they do not then they will be found guilty of a forcible entry and detainer. The court will enter an order directing the tenant/occupant to vacate within 5 judicial days. After that period has expired the Sheriff's office can then evict the tenants/occupants, remove their personal property and give the rightful owner possession and control of the property.

It would be wise for the rightful owner to change the locks and take steps to protect the property.

Typically the seller must vacate the home within 7 to 14 days after a Trustee Sale (auction). Often the bank will offer the homeowner a $1,000 - $2,000 relocation fee if the homeowner moves within several days and leaves the home is good condition. If a foreclosed homeowner is being forced out without a moving fee or several days to move, the homeowner has rights. Inform the lender’s representative that you request a moving fee or are requiring them to file a Forcible Entry and Detainer Action. If they refuse to comply with either of these or if you feel your rights are being infringed upon, contact the local Sheriff for enforcement of current foreclosure eviction laws.

If the lender has to file a Forcible Entry and Detainer Action, you will not be able to get any cash for moving expenses.

[Note: more research was done after this article was posted. Reference this article to see how a part of the government may be breaking the law : Fannie Mae blantantly violating protecting tenants at foreclosure act]

Georgi Stratton ,Paralegal - Director of Short Sales,  Winsor & Coleman, PLC Direct: 480.695.6565 Fax: 480.699.8853 Email: georgistratton@yahoo.com

Phoenix Foreclosures 41% of Active Market

Arizona Mortgage Lenders

$8,000 Tax Credit Fraud Under IRS Scrutiny

$8000 Tax Credit Fraud under IRS Scrutiny

According to the Wall Street Journal, the IRS is reportedly examining more than 100,000 suspicious claims for the $8000 dollar tax credit and is investigating 167 "criminal schemes" involving the credit. IRS officials declined last week to describe the suspected schemes or provide additional details. However, they did say they have identified the different types of potential fraud and matched them against their compliance program.

We could speculate about how people are trying to commit fraud with the $8000 tax credit.  Perhaps they are modifying closing statements, commonly known as HUD-1's to make it appear the house was purchased in the correct tax year. Perhaps they are taking incorrect tax advice from their accountants.  Perhaps people are modifying HUD-1's to make it appear that they bought a house -- when in fact they did not. Regardless, the IRS taking it very seriously.

The IRS says it has received more than one million claims for the $8000 tax credit.  Housing industry experts estimate the credit helped to generate at least 350,000 additional home sales. The $8000 tax credit to set to expire on November 30, 2009 but leaders in the housing industry are lobbying Congress to extend it.

It would seem that widespread abuse would be relatively easy because of the loose standards for claiming the credit. In other words, the IRS never set anything in place with title and escrow companies to document the tax credit at time of sale.  Free money has had a history of attracting people with dishonest intent, and $8,000 is a good deal of money. This is just the kind of trouble that will delay or eliminate the proposed extension of the program, or even it's conversion to the much talked about "$15,000 tax credit."  It's always sad when dishonest people potentially destroy a good program they can benefit the masses.

On the other hand, does our country really need an extension of the $8000 credit, or even a new $15,000 tax credit?  Has our country, which already has enough debt to choke 20 medium-sized countries, need to be giving out more money it doesn't have?  It does seem that many citizens have developed an attitude of "entitlement" and expect the government to just keep giving out more and more money. But I digress...

According to the IRS website , the IRS successfully prosecuted its first fraudulent tax credit case in July 2009. A Jacksonville, Fla. tax preparer, James Otto Price III, pled guilty to falsely claiming the $8000 tax credit on a client’s federal tax return. Price faces the possibility of up to three years in jail, a fine of as much as $250,000, or both.

A quote from the IRS's website:

“We will vigorously pursue anyone who falsely tries to claim this or any other tax credit or deduction,” said Eileen Mayer, Chief, IRS Criminal Investigation. “The penalties for tax fraud are steep. Taxpayers should be wary of anyone who promises to get them a big refund.

Metro Phoenix homes for sale

Get your mortgage loan approved

Distressed Markets and private mortgage insurance

Distressed Markets and private mortgage insurance

by Craig Bohall, Academy Mortgage
Have you ever wanted to know who decides what "distressed markets" are and what is not distressed? Well here is your chance to see a map.

Who is the "all knowing wizard" who determines that? Well for the most part it is the Mortgage Insurance (MI) companies. Fannie Mae and Freddie Mac also have their own lists. When a home gets sold at the trustee's sale, the Mortgage Insurance company likely had a policy on that home and, thus, they paid out on that policy. So imagine how many pay outs they have had in the last several years. 

Guess how many they are planning on having the next few years? That's right -- their goal is "zero" mortgage insurance payouts!  So in order to minimize risk and maximize profits they don't want to give mortgage insurance to loans that they feel might be risky for THEM.

What makes a loan risky you ask.... could be 1.) an investor loan rather than an owner occupied loan, 2.)  a manufactured home rather than a "stick-built" one, 3.) a second home, 4.) any higher "loan to value" loans and, 5) a loan in a HIGH foreclosure area. Regarding the latter, they decided they would determine which areas had more losses and call those areas high risk or "distressed markets." Other factors go into it like % of price deterioration and % of REO's to resales and such, but all in all  - distressed markets - is pretty self explanatory.

The good news is when you click on this map it is not one solid color  - YES, it was at one time. People used to ask me what areas are distressed and I basically said "South of Canada and North of Mexico!

Now click on this Map of distressed markets in the US to see what areas they have deemed to be distressed. If you are buying in those areas then having mortgage insurance is going to be less available  - or in other words - there will be a much bigger list of loans for which they DON"T want to give mortgage insurance.

To see that list of loans  not eligible for Mortgage insurance click here.  The interesting thing about this list (at the top of the page) is that a few years ago all, or most, of those items COULD have mortgage insurance. So now you can see what they consider to be risky. Basically everything except 20% down !

Phoenix homes for sale ranked 21st most affordable in Metro area

Phoenix homes for sale ranked 21st most affordable at $78 per square foot in Metro area

This table ranks Metro Phoenix cities and their corresponding homes for sale by their annual average sales price per square foot. Only single family detached homes are included in these numbers. Information for major and secondary cities is current as of September 30th, 2009. Data for the small cities is updated on a monthly basis, and is measured on the 13th of each month. As you can see, Phoenix homes for sale are more affordable than those in many surrounding communities.

The primary function of this table is to show the least and most affordable homes for sale in the Phoenix metropolitan area together with longer term pricing trends.

Annual averages are based on a relatively large number of sales. Therefore they are not as subject to rapid change as monthly averages. The downside is that they do not necessarily represent the "current" market (or market right at this moment on 9/30/2009) very accurately, since they include sales from up to a year ago. Pricing may have moved a great deal since then. However, the information is consistent for all homes for sale in the Phoenix area and will give good trending information.

Note that Higley has been included in Gilbert and Ahwatukee included in Phoenix. Desert Hills is still counted separately though it is increasingly being incorporated into Phoenix.

Note that Phoenix is second only to Tonopah Arizona with the largest year over year (YOY) decrease in average price per square foot for all homes for sale in a range that extends from $337 to $59 per square foot.This can be attributed to the large number of new home communities built in west Phoenix over the last seven years, complete with all of the bad financing and other troubles that led to the classic foreclosure profile we have now come to know.

Statistical Information courtesy of the CromfordReport.com

Greater Phoenix Area named Best Place to Start a Business by Entrepreneur.com

Greater Phoenix Area named Best Place to Start a Business by Entrepreneur.com

Entrepreneur Magazine ranked the Greater Phoenix Metropolitan Area as one of the 10 Best Places for an investment to start a business in its August issue. The growth of the area for the last 20 years has led to a need for many kinds of business, according to the publication. The writer also indicates that an emerging tech scene and coordinated revitalization efforts are attracting more startup and tech-savvy business. Even in this economy there are opportunities for investment in the Phoenix area. Read more: http://www.entrepreneur.com/magazine/entrepreneur/2009/August/202666-1.html Entrepreneur, an online and print small business publication, provides information to help people start, grow or manage a small business. Entrepreneur.com is a top 5,000 site that reaches more than1.2 million people monthly, according to Quantcast.com.