Greater Phoenix Real Estate Blog
Official Blog of Dreamcatcher Realty ~ Randy Hooker ~ Broker/Owner
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Archive of "arizona market conditions" Category
When Can a Short Sale Seller Buy Again?
Thanks to one of my favorite Mortgage Consultants, here’s some very interesting information for those involved in or contemplating a short sale of their home.
HUD recently released its ruling on when and how soon a borrower may use FHA financing after
survivingclosing a short sale. Here is how it is going to work (effective immediately).- A buyer can immediately purchase a home if they executed a short sale on a previously owned residence, IF:
- They were current on their mortgage and other installment debts at the time of the short sale (no 30 day late payments in previous 12 months from time of new loan application for new purchase), OR
- The proceeds from the short sale serve as payment in full.
2. A buyer must wait 3 years from the time of a short sale, IF:
- They did a short sale simply to take advantage of declining market conditions, AND
- They are looking to purchase at a reduced price, a property that is similar or superior and within a reasonable commuting distance from the property that was sold short.
- They were in default at the time of the short sale
The exact methods being used to determine bullet 1 of reason 2 were not discussed in the mortgagee letter. However, it is expected that they will need to explain and document a legitimate reason as to why the short sale was necessary. That reason would need to indicate that the client did not short sale merely to adjust their mortgage liability to current market values by selling one house short and buying a very similar or “better” house in the same marketplace.
Exceptions may be made to bullet 3 of reason 2 IF:
- The default was due to circumstances beyond the borrowers control (death of primary wage earner, long term illness etc…), AND
- The review of the credit report indicates satisfactory credit prior to the circumstances beyond the borrowers control that caused the default.
In my personal opinion, this new HUD ’statement of clarification’ provides many more questions than answers. Time will only tell, but I’ll be attempting to keep you updated.
Image courtesy of ebmorse.
Greater Phoenix Real Estate ~ December 2009 vs. December 2008
Here ya go, boys and girls. Take a look at the charts below, courtesy of the Arizona Regional MLS. They provide a quick overview of the greater Phoenix real estate market for the past year, with particular interest and focus on the period of December 2009 as compared to December 2008.
I have a personal conviction that real estate should not be micro-analyzed, so I’m electing to not draw any conclusions or speculations from the latest “averages.” It’s clear that prices, on the average, are on the rise. Other than that, all indicators point to a bottoming of the residential real estate market in greater Phoenix.
As always, the information and statistics contained in the above charts are deemed reliable, but not guaranteed. If you’re contemplating a major financial decision regarding residential real estate, please do yourself a huge favor and consult with a reputable real estate broker, attorney and accountant.
Greater Phoenix Real Estate ~ Snapshot of Current Market Conditions
Most of you know that I’m not a big fan of mathematical ‘averages’, since they can really distort the truth about a specific market segment. Once in a while, however, ‘averages’ can provide a quick overview of basic trends in certain markets and areas.
Take a look at the charts below, courtesy of the Arizona Regional MLS. They provide a quick snapshot of the greater Phoenix real estate market for the past year, with particular interest placed on the period of November 2008 thru November 2009.
On this first graph, notice the upturn the past few months in Active listings. Part of that is due to the seasonal nature of the greater Phoenix market. Others would speculate that it’s an increase in bank owned listings. But notice the recent downturn in new listings, seemingly running contrary to the uptrend in total listings (inventory). What’s your take on that observation? I’m wondering if it’s not a result of the upper end of this market, particularly above $350K, where prices are continuing to decline and properties are staying on the market considerably longer than the lower end of the market.
One other note: sales have been relatively consistent and stable, on the average, for the past 8-9 months. Seasonality would predict that we’ll see a slight downturn in the next few months, so it will be interesting to watch it play out.
On the following chart, notice that total inventory just up-ticked to slightly over 5 months – coinciding with the increase in total inventory. What I’m really watching for is any hint of an avalanche of bank owed listings that many people are predicting. I have my personal doubts about this so-called ’shadow inventory’ of bank owned homes, and even greater doubts that the banks will decide to dump them in one fell swoop. And even though I’m not EVEN a fan of banks, or their real estate acumen, I still have a very difficult time believing they will shoot themselves in the foot and dump all of their residential properties onto the market in one lump. Your thoughts?
As always, the information and statistics contained in the above charts are deemed reliable, but not guaranteed. If you’re contemplating a major financial decision regarding residential real estate, please do yourself a huge favor and consult with a reputable real estate broker, attorney and accountant.
Home Buyer Tax Credit Extension and Changes
It’s official, good people – President Obama signed it into law today, only one day after Congress finally came to a meeting of the minds and passed the home buyer tax credit extension bill. I’ve been opposed to the home buyer tax credit from the beginning, with the basic position that it feels extremely short sighted. Nevertheless, neither Congress nor the President seem to agree with me, so it is what it is, and it is now law. Here are the details.
The National Association of Realtors says the new provisions — a longer time frame for the $8,000 first-time home buyer credit, higher income limits and a $6,500 credit for certain repeat buyers — developed a handy “compare the tax credits” chart that you can find here, but I’ve also posted it below.
Here are some key aspects of the new law:
Tax Credit for Home Buyers
First-Time Home Buyers: First-time home buyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for first time home buyers is 10% of the purchase price of the home, with a maximum available credit of $8,000.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
New Deadlines
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.
Tax Credit Versus Tax Deduction
It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time home buyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.
Better still, the tax credit is refundable, which means the home buyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time home buyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!
Higher Income Caps
The amount of income someone can earn and qualify for the full amount of the credit has been increased.
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.
Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sale price of $800,000.
FAQ
Question: Existing homeowner credit: Must the new house cost more than the old house?
Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (11/06/2009). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.Question: I am a first time home buyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?
Answer: Yes. The new income limitations go into effect as soon as the President has signed it – which is today, 11/06/2009. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you’re within the phaseout range).Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a nonnegotiable price of $825,000. Will I be able to use any of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.Question: I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is “consecutive.” As long as he lived in that house for 5 years straight what he did since 3 years doesn’t impact eligibility.Question: I am an eligible first time home buyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
Answer: You do not have to close before December 1. It will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 – or July 1, worst case – the buyer will be eligible for the credit.As always, the disclaimer must follow that I am neither an attorney or a CPA, so please consult with the appropriate experts regarding your individual situation BEFORE making any financial decisions. In other words, the foregoing information is deemed reliable, but not guaranteed.
How To Buy A Bank Owned Home
This is a very funny video on the state of the current bank-owned/foreclosure market, and it applies to the greater Phoenix real estate market. And yet, while cartoon funny, it’s sadly an indictment of the insanely ridiculous and out-of-touch asset managers that control the sale of bank owned properties. Where is the Department of Real Estate when you need them the most?
Unreliable Information about The Real Estate Market, by Rob Kosberg
Stories on TV about the national real estate market are misleading to Americans. This is because there is no such thing as a “national real estate market”. Click here for the entire article. It’s a short read, and well worth the time. The greater Phoenix real estate market is a massive market that is fraught with incredibly complex and risky situations. Trust me, every home buyer considering purchasing a home in the Valley of the Sun would be well advised to consult with a local, experienced, professional real estate broker.
Image Courtesy of Shedboy
