Gilbert Real Estate Blog
~ by Randy Hooker of Dreamcatcher Realty
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Archive of "arizona market conditions" Category
Exceptionally Low Interest Rates for an Extended Period Of Time?
Yesterday the Fed announced that they would like to see ”exceptionally low interest rates for an extended period of time.” They have committed to purchasing long term securities that directly impact mortgage interest rates. Experts see a need to help our economy recover and low interest rates are one tool in the Fed shed for promoting economic activity.
The last time the Fed did this was in early 2009, right around the time interest rates for long term mortgages went into free-fall! Rates dropped because the Fed’s purchasing presence spiked both the demand and price of mortgage bonds which directly lowers mortgage rates.
This latest development will likely provide reinforced support for what are already historically low mortgage rates. It may even provide enough pressure to push rates a bit lower. I don’t expect the dramatic decrease we saw when the Fed initiated this type of buying in early 2009. Overall, I do expect our interest rate market to flirt with historically low levels for some time.
Stay tuned, as I am sure there is more to come.
Greater Phoenix Real Estate ~ May 2010 vs. May 2009
Courtesy of the Arizona Regional MLS, the below two charts offer up a quick overview of the current market conditions in the Valley of the Sun. Whether you’re into comparing consecutive month over month stats (like May 2010 vs. April 2010), or year over year (like May 2010 vs. May 2009), the charts are provided to help us grasp the overall picture.
Greater Phoenix Market Conditions
Greater Phoenix Market Conditions
I’m always extremely cautious about using real estate “averages”, as they can and do often skew the true picture of individual communities and areas. Nevertheless, there are a couple of points that are worth noting in the above charts.
It’s interesting that normally at this time of year we experience an increase in listings – and yet the past 2 months has seen a decrease in listings. Anybody care to speculate on the reason(s) for this anomaly?
The next observation is that the greater Phoenix market is holding fairly steadily in the number of Active listings as well as sales.
Additionally, at roughly 4.5 months inventory, the greater Phoenix market appears to be showing some consistent stabilization. As always, time will tell.
NOTE: 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/or accountant.
FHA Updates
The FHA Reform Act of 2010 has passed the House in an overwhelming fashion. The amendments calling for increased FHA down payment requirements have been rejected. A second potentially damaging element that called for FHA exposure to be limited to 10% of the market has been shot down. Bottom line is that FHA loan default rates are down significantly and the program is operating more effectively than it has in quite some time.Another hot FHA issue still in the “proposal” stage surrounds monthly mortgage insurance premiums (MIP). Right now, FHA’s MIP is calculated at .55% of the loan amount per year. This translates to a $91.67 MIP on a $200,000 FHA loan. The current FHA Reform Act requests a monthly mortgage insurance cap lift to 1.55% (from the current .55%). This represents a nearly 300% increase. HUD/FHA has stated that while it is requesting the “right” to go up to 1.55% they will likely only raise the factor to .90% for the time being. If so, the change would take that same $91.67 MIP payment to $150.
Stay tuned, folks. The FHA ride is likely to be a long and wild one!
Proposal to Extend Federal Tax Credit for Home Buyers
There is currently a buzz on Capitol Hill surrounding the possible extension of the closing deadline for the Home Buyer Tax Credit. Currently, eligible transactions that had an executed contract on or before April 30, 2010 must close escrow by June 30, 2010 in order for the buyer to receive the federal tax credit. This proposed change would extend the closing date for eligible tax credit recipients out to September 30, 2010. A buyer would still need to have been under contract by April 30th. At this point this is just a proposal – nothing official – and let’s hope it doesn’t pass.
The motive behind the extension is apparently that the ‘Government’ feels lender volumes have made it impossible to get transactions closed by the original deadline. They are now estimating that 180,000 people will miss out if the extension is not granted. While this may be true with loans that are being processed by many of the big banks, I know for a fact that there is at least one solid mortgage lender in the greater Phoenix area who can and does fund loans in as little as two weeks. Current volumes have not slowed them down at all, regardless of the type of loan - they are doing as long as they can do it house (Conventional, VA, FHA and Jumbo). If you are one of those buyers whose lender is being wishy-washy about closing your loan before the end of June, or your lender has flat out stated that they cannot get it done for you, then please feel free to contact me. I would be more than happy to refer you to an outstanding lender who would love to have your business and get your loan funded and transaction recorded before June 30, 2010.
Flickr Image by wstryder
I have been an outspoken critic of the federal tax credit for home buyers from the beginning, and I continue to hope that the tax credit for home buyers is not extended or resurrected by Congress. If we are ever to have a real shot at returning to a ‘normal’ market, and hopefully ‘free’ market, then the government intervention has to stop. Don’t you think?
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.
