Here's an article that came across our desks this week that we wanted to share with you .  Due to the volatility of the financial and real estate markets right now, our goal is to provide you with as much information as possible.

Please give us a call if you have any questions that we might be able to help you with.



Is Now a Good Time to Buy a Home?

Q: Given what's happening in the financial markets, is now a good time to buy a home?

A: For some people, yes. If you…

• have access to credit
• have fat cash reserves
• aren't already over-exposed to real estate
• have a secure job or income stream
• expect to hold the property for at least two years

…then now is an excellent time to buy.

Everyone else should take a breather.

The reason: It's still too early to tell whether the dire predictions many government officials and economists are making about the potential collapse of our economy without a bailout are crying wolf--or if the wolf is really at our door.

For those who are cash-rich, either because they are too wealthy to be badly hurt by any economic swing, or because they were presciently pessimistic and liquidated their portfolios before the meltdown, the coming months—and perhaps years-- of uncertainly will provide an unprecedented real estate buying opportunity, of both trophy estates and income-producing investment properties. "The smart people know that the world is not coming to an end," says Lanse Robb, an agent with LandVest, a brokerage on Boston's toney North Shore. "They're making their moves."

But the average buyer probably doesn't have the cash to gamble on real estate--and shouldn't, at least for now. Income growth has stalled for the vast majority of Americans for the past eight years, and home equity has been vanishing rapidly since the peak of the boom in 2005. (Last month, median existing home prices nationwide fell 6%, to $221,900.) The roiling stock market is hardly a comfort either, as everyone who has peeked at a 401k statement over the past week knows.

More critically, jobs are evaporating at an alarming pace. According to government statistics, the unemployment rate rose to a five-year high of 6.1% in August. There have been eight consecutive months of job losses, with a year-to-date total of 685,000. And layoffs aren't likely to end soon, since factory orders fell 4.5% last month—twice the rate that analysts expected.

Without healthy job growth, it's likely that the supply of unsold homes will grow. Currently it's at 11 months, more than double the median supply of two years ago. Until that inventory is burned off, home prices will continue to stagnate or fall in most markets. A government bailout that unfreezes credit markets and staunches the flood of foreclosures that are also depressing prices should help, but the fix will take a long time.

That doesn't mean that the housing market is doomed; ultimately, it will get better. There's even an upside: certain markets, particularly on both coasts, were driven up by speculators and became wildly overpriced during the boom. Falling prices means that housing in those markets will eventually become more affordable for average families. Credit Suisse estimates that, nationally, the ratio of median home prices to household incomes will return to their historical average of 2.86 in another 18 months.

In the meantime, if you're feeling insecure about your job or low on cash, hang tight and save your money. And if you must move, rent.

The cost of gasoline is a huge topic on everyone's mind today. I haven't run across anyone who is not making changes in their habits in order to use less gas. 

The question I have, is why NOW are prices at the pump going up so steadily and dramatically.  I know that supply and demand is a big cause, but in my mind that doesn't necessarily account for the seemingly abrupt and continuing increases.

From the research I've done recently, there are 3 major factors for rising gas prices:

1) Increased demand - mostly from India and China
2) Devaluation of the dollar
3) Commodities speculators buying up gas futures

Of these three, speculation seems to be the biggest problem.  I still need to do more research on this, and will do that and talk about it later.  For today, here's what I know:  demand does out strip supply, but this would account for why oil would be $60 or $70 a barrel instead of $40 or $50 a barrel. The reason it is  $150 a barrel has to do with speculation.


I'm attaching an article by Neil Cavuto about his bi-partisan thoughts on how to solve the energy problem.


All right, I'm going to solve this energy problem once and for all.

I've said it many times on this show, let me make it very clear now at the close of this show.

1. Stop the political grandstanding. And this goes for Democrats and Republicans. You're both to blame. Now, both do something.

2. Democrats, stop this nonsense about not looking for more oil here. We have it here. Let's drill for it here. It hardly means we're going to destroy every tree, spotted owl, and polar bear while we're doing it here.

3. Republicans, stop protecting energy companies with billions in subsidies they don't need and tax credits they don't deserve. It's one thing to say don't tax their profits, but don't tax my patience. They're doing fine on their own.

4. Democrats, quit picking and choosing what energy alternative you want. Pick them all, explore them all — solar, wind, nuclear, and yes oil. Jump ball. Have at it.

5. Republicans, stop resisting conservation. You look clueless and frankly, stupid, opposing simple step solutions to saving energy. Because here's a news flash: we need to save energy.

6. And this is for Democrats and Republicans. We know you each blame each other...one for not exploring for oil, the other for not exploring options to oil. Get over it, get on with it, explore for it, all of it, all here, all now.

Demagoguing the issue won't solve the issue. Working together just might. I want to see you doing so now. There's hell to pay on this show if you do not.

You have been warned.

Here is a frightening article from Business Week about ARM's and how they will be bringing on the next wave of foreclosures.  It's somewhat lengthy, but definitely worth the read.

The Next Real Estate Crisis

By April, 2009, hundreds of thousands of option ARM mortgages will begin resetting, bringing on a fresh wave of foreclosures

by Prashant Gopal

The American homeowner must feel like one of those characters in an old cartoon who has just been hit by a falling piano. After dusting himself off and touching the large bump on his head, he probably doesn't expect another piano to be dangling overhead. But he'd be wrong.

But what's often funny in a cartoon is anything but in real life. With the subprime mortgage crisis already crippling the U.S. economy, some experts are warning that the next wave of foreclosures will begin accelerating in April, 2009. What that means is that hundreds of thousands of borrowers who took out so-called option adjustable-rate mortgages (ARMs) will begin to see their monthly payments skyrocket as they reset. About a million borrowers have option ARMs, but only a fraction have already fallen due.

That was the catch to option ARMs; borrowers were offered low initial payments that would recast higher after several years. Many home buyers thought they could resell their homes before their payments increased. But instead, many of them got trapped. According to Credit Suisse (CS), monthly option recasts are expected to accelerate starting in April, 2009, from $5 billion to a peak of about $10 billion in January, 2010. Some of these loans have already started to recast. About 13% of option ARMs that were issued in 2006 were delinquent by 60 days by the time they were 18 months old, Credit Suisse said.

California: Problem's Bellwether

Among the states expected to be worst-hit is already battered California. Today, outstanding option ARM loans in the U.S. total about $500 billion, about 60% of which were sold to California homeowners, according to Credit Suisse. Option ARMs were especially popular in the state, where they were heavily marketed during the boom by such companies as Countrywide Financial (CFC) in Calabasas, Calif.; Washington Mutual (WM) in Seattle; and Wachovia (W in Charlotte, N.C. Moreover, on top of their ARMs, many homeowners also refinanced their homes, driving themselves even deeper into a debt they thought they could escape by flipping their homes.
But California won't be alone. Homeowners are also frighteningly vulnerable in states such as Arizona, Florida, New Jersey, and others.

The Mortgage Bankers Assn. said on June 5 that the option ARM problem is growing. The group reported that the national rate of foreclosure starts for prime ARMs, including option ARMs, increased to 1.55% in the first quarter, up from 0.53% a year earlier. In California the foreclosure start rate in the first quarter was 2%, vs. 0.5% a year earlier. In Florida, the rate was 2.57%, compared with 0.5% in the first quarter of 2007. "California, Florida, Arizona and Nevada combined…represent 62% of all foreclosures started on prime ARM loans, and 84% of the increase in prime ARM foreclosures," the group said.

The option ARM loan defaults could accelerate next year even if subprime defaults subside, said Chandrajit Bhattacharya, vice-president and mortgage strategist at Credit Suisse Securities. He said California will see the bulk of the option ARM foreclosures and the rest will be spread out across the country.

Underwater and Gasping for Air

"Most of the public is thinking that the subprime thing is over, but this is another thing waiting," Bhattacharya said. "The problem for these borrowers is that once you go underwater, it's very hard to refinance, and if you cannot refinance there is very little option for you."

But it gets worse.

Option ARMs, which were originally designed for self-employed people with fluctuating incomes, gained popularity with other workers during the peak of the real estate boom in 2004, when rapidly rising home values would have otherwise kept many buyers out of the market.

The loans, which were generally given to borrowers with better-than-subprime credit, give homeowners the option of making a minimum monthly payment, which covers none of the principal and only a portion of the interest, the rest of which is added to the loan balance. With years of unpaid interest accumulating and house prices falling, some homeowners have seen their equity disappear and now owe even more than their initial loan balance.

The loans automatically recast after five years, but many will recast sooner as loan balances hit specific principal caps—typically between 110% and 125% of the initial loan amount. Many of these loans are expected to recast within the next two years, meaning that borrowers' monthly payments will swell to include both principal and interest.

Walking Away from a Collapse

Some borrowers say they signed up for the complicated loans without understanding the terms, or expected to be able to refinance or sell their homes before the loans recast. Instead, home prices fell and the credit crunch made refinancing impossible for many borrowers.

Some homeowners are simply walking away because with their equity vanishing, there's little incentive to stay.
William Purdy, a lawyer at Simmons & Purdy in Soquel, Calif., a firm that specializes in home refinance issues, said some borrowers with option ARMs are defaulting before the loans recast because they couldn't afford even marginal increases in the minimum payments.

"It's a ticking time bomb inside your house that you can't get rid of," Purdy said. "They can try to slow down the inevitable, but sooner or later their loan is going to cap. …This year is going to be a blood bath. Next year, we'll start out just about the same."

New FHA Loan Guarantees

But options are available—even if refinancing isn't possible. Lenders have been working with borrowers to reduce loan amounts and interest rates and, in some cases, simply accept the deed in lieu of foreclosure.

The Mortgage Bankers Assn. says it appears that a growing number of homeowners are avoiding foreclosure by getting help from the Hope Now hotline (888 995-HOPE), a mortgage-counseling phone line backed by lenders and the federal government that gets 4,000 calls a day. Hotline counselors help borrowers negotiate with banks and offer advice on refinancing options. Even though foreclosure rates are rising in California and Florida, they've slowed elsewhere, the bankers association said.

Some callers to the hotline have complained about long wait times, but the group says it has beefed up its counseling staff and now gets to calls quickly.

Other option ARM borrowers could benefit from government plans now in the works. A bill approved by the House in May would allow the Federal Housing Administration to guarantee up to $300 billion in new loans to help homeowners facing foreclosure. Borrowers could get more affordable loans worth no more than 90% of the home's value, meaning that participating lenders would have to take a significant loss on the loan. The bill was sponsored by House Financial Services Committee Chairman Barney Frank (D-Mass.). Senate Banking Chairman Christopher Dodd (D-Conn.) has a similar measure.


Foreclosure Is Not Inevitable

"The fact is that people didn't really understand the transaction at the outset and were counting on being able to refinance when the loan got recast," said Colleen Hernandez, president of Minneapolis nonprofit Homeownership Preservation Foundation, which owns and operates the hotline. "That combination means a lot of risk, a lot of danger in the situation. But it isn't inevitable that they foreclose, and foreclosure isn't the best option."

Moe Bedard, founder of LoanSafe.org in Corona, Calif., a free online forum that helps homeowners negotiate loan modifications, said the larger problem is that banks, many of which laid off scores of loan officers, are so swamped that many borrowers can't get the attention they need.

Many California homeowners, including some with $2 million homes, are simply making their minimum payment, waiting for the recast. Then they plan to walk away, even if it damages their credit, Bedard said.
"A lot of people are just walking," Bedard said. "It's just a business decision; they don't have a lot of skin in the game." But for many others it will be devastating.

 

 

There was an interesting article in the Ahwatukee Foothills News the other day talking about how frustration over the proposed South Mountain Freeway extended to ADOT's advisory team.  Nice to know that those of us living in Ahwatukee are not the only ones that are frustrated by the proposal and it's impact on our community.

It turns out, that the plan to build the freeway was created in 1988 and has not been updated since then!  It appears that assumptions were made in 1988 that are not true, or are no longer true. One of the big fundamental assumptions being challenged is the environmental impact of blasting 4 million cubic yards of rock out of South Mountain Park to make room for the freeway.  Apparently the impact of this blasting on water runoff and overall geology has not been explored.

So, let's look at Ahwatukee in 1988 when the plan was drawn up, and Ahwatukee as it stands today.  The population of our community has doubled in that time, and the homes that are going to be impacted by the freeway were not even built back then.  I am amazed that ADOT would even be talking about building this freeway through an area that looks nothing like it did when the plan was first drawn up!  They are talking about spending $1.7 billion on this freeway and they do not have an accurate view of the impact on the environment or on the families living any where near the area where the proposed freeway is going to run.

The more I learn about this, the more ludicrous the whole scenario seems.

At the end of January I put some numbers together for our clients about what was going on in the market in Ahwatukee at that time.  The news the media was disseminating was pretty grim - it still is.  Yet, even then, with negative perception coming from the media, homes were selling and interest rates were low.  Today, even more homes are selling, and interest rates are still low.

Additionally, the median home price in Ahwatukee in 2000 was $167,800.  If you bought a home for that price in 2000,  that home was selling for $326,995 at the end of 2007!  Almost double the price.  Nice investment.

Here is a comparison of the numbers I put together at the end of January and those today:

Interest Rates:
     January - 5.41%
     Today - 6.0%

Monthly Supply of Inventory:
    January - 11.8 months
    Today - 6.6 months

Homes on the market:
    January - 1108
    Today - 1101

Homes sold:
    Janaury - 79
    April - 125

% of New Listings Sold:
    Janaury - 48.63%
    April - 53.42%

% of Residual Listings Sold:
    January - 10.11%
    April - 20.06%

For those of us who live and work in Ahwatukee, the seemingly endless negotiation of the South Mountain Loop 202 freeway is always lingering in the back of our minds somewhere.  I’m not going to talk about whether the freeway is or is not going to be built or what the impact is going to be if the freeway is eventually built.  Today, I just want to address the impact the dialogue about the freeway is having on the Ahwatukee Real Estate Market.

You could pick up any number of publications and read that the freeway is going through or is not going through.  You could read that it is going on Indian land or that the Indians have passed multiple resolutions opposing the freeway.  You could read that South Mountain has been declared a sacred place and nothing can be built or that they are going to cut through the South Mountain ridges.  There is much speculation, but no answers.

The result of all this is, the freeway proposal is having a huge impact on the Real Estate Market.  For residents who have homes that are even remotely near the freeway, the proposal itself makes those homes almost impossible to sell.  There are whole neighborhoods that are proximate to the proposed freeway that are in limbo.  The values of their homes have dropped dramatically, and no one in their right mind would buy a home in those neighborhoods until the decision about the freeway is made. 

Currently, the proposal is to demolish 317 homes in Ahwatukee to accommodate the 10 lane freeway!  So, those homes are impacted, not to mention the homes that are next to those homes and would then have a 10 lane freeway in their backyard!

As a Realtor, I just wish they would make a decision and bring some closure to the endless dialogue and speculation about the freeway.  There’s really nothing we can do about the freeway, but it would be nice to be able to give our clients some information one way or another.

On a personal note, and as a resident of Ahwatukee, I pray they decided not to build the freeway at all.  Sure the traffic problems can be a nightmare, but one of the main reasons I moved to Ahwatukee was the beauty of South Mountain Park and how the community was nestled up into the foothills with the only way out to the East! I really like the fact that we are not a community that cars just buzz by on a 10 lane freeway.

 

Tempe Junior Crew first attended the Brentwood Regatta in April of 2004.  The team brought up two 4+ crews, neither of which made it out of the heats.  Last year, TJC rowers earned their first medal at Brentwood when Jordan Bonadio and Sydney Sutton-Liswith earned silver in the WJV2X. I don’t think anyone could have guessed what would occur the very next year.
 
The team arrived in Mill Bay mid-afternoon on Thursday and the coaches arrived with the trailer shortly after.  Rowers and coaches agreed that the rigging could wait until morning and that the team would probably be best served by getting some well-needed rest and relaxation before the heats started, less than twenty-four hours later.  While the weather seemed nice that evening, we all went to bed anxious about what tomorrow would bring.  Mill Bay is notorious for mid-day winds in the spring brought on by the thermal layer warming in the bright sun of late morning and early afternoon.  Additionally, there was a weather front looming off the coast just waiting for the right conditions to allow it to come ashore and prey upon young scullers.
 
Friday morning went as scheduled.  Boats were rigged while the coaches handled the final registration processes.  Updated schedules were reviewed with anticipation, as we all tried to guess which of our competitors would be fast this year.  As early evening approached the heats began.
 
The MN8+ (Rob March, Matt Holmes, Kyle Nilsen, Lane Kelly, Ryan Hemelt, Chris Burghart, Jonathan Charlton, Briggs Hoyt and Lance Moyer):  The crew had been rowing well and was hoping to build on the momentum from their outstanding performance the week before at Long Beach.  Looking at the heat sheet it was clear that the crew didn’t have a cakewalk ahead of them.  In fact, they faced some of the toughest competition in the region.  The guys needed a top three finish in order to qualify to move on to the final.  By the end of the race the boys held on to second place edging out Everett by a little more than a second.  The final saw TJC in a true “David and Goliath” scenario.  However, in the final 500 meters the crew showed no sign of slowing as they held off the crew from Rose City to win the SILVER medal.
 
The W1X (Chris Erhart):  After a fairly relaxed heat, in which she placed second to secure her spot in the final, Chris new she faced some of the fastest scullers in north America, including Cara Linnenkohl from Lake Union Crew that stroked the US Women’s pair at World Championships last year.  In the end Chris was mere seconds behind Cara and took home the Silver.
 
The WJV2X (Meghan Farrell/Sophie Heywood): The heat sent shockwaves of fear down the spines of every sculler making it to the final in this event.  Farrell and Heywood had a very commanding lead through the entire race and were rowing four to six beats lower than any crew out there.  The duo easily won the heat, finishing almost fifteen seconds ahead of the second place crew.  The final proved to be more of the same as Farrell and Heywood blazed down the course holding the first place slot the entire time.  This is the first GOLD medal ever earned by TJC at the prestigious Brentwood International Regatta.
 
The WB2X (Jesse Burns/Sophie Heywood): Burns and Heywood rowed a very relaxed and smart heat.  They comfortably held the second place slot throughout and earned a berth in the final.  Immediately after winning gold in the WJV2X Heywood hot-seated into the WB2X.  It was clear that Sophie was ready to throw down the hammer again and give everything she could for her partner Jesse.  The final was a photo finish for the gold between Lake Union Crew and TJC.  In the end, Burns and Heywood’s time of 6:04.12 came up just shy of LUC’s 6:03.92.  This was by far one of the most exciting races of the entire regatta.
 
The M2X (Stephen Wainwright/Richard Milne): The heat was raced at a fairly hard pace, but it was worth it in order for the guys to guarantee their place in final.  The first place finish in the heat put Milne and Wainwright in one of the best lanes for the final.  In the final the crew from TJC battled for medal position all the way down the course.  In the final three hundred meters it was clear that Gorge had the first place position, but the fight for silver became fierce in the final two fifty.  In the end it was another photo finish for TJC as Wainwright and Milne earned the BRONZE a mere second behind Lake Oswego.
 
The W2X (Chris Erhart/Sydney Sutton-Liswith): The duo rowed a smart heat, keeping a relaxed pace and applying just enough pressure to keep their competition off of their stern where they could keep an eye on them.  After winning the heat quite handily the girls faced a very strong field in the final.  In the end Erhart and Sutton-Liswith earned the SILVER medal placing about one length behind the crew from Lake Union.
 
This regatta was one of the best by far on record for TJC.  In the end, 16 rowers earned 18 medals.  Every rower that attended earned a medal.  While there is no efficiency trophy awarded, it has been confirmed that TJC earned the average most points per entry of any of the teams in attendance.  I am most impressed with the range that the team showed this past weekend.  Not only did the crews race well in both sculling and sweep in boats from 1Xs all the way to 8+s, but they did it at the Varsity, JV and B level!  Congratulations to all of you and thank you for making this trip a historic one for TJC!
 
 
Next up - AZ State Championships!

Below is a chart of the last 6 months of home sales in the metropolitan Phoenix area. I got the data from
Land America Transnation.

The areas that have been hardest hit during the housing slump, the West Side and SE Valley, are trending up STRONGLY—a great sign.

Scottsdale and Central Phoenix are holding their own.  Those areas were not as damaged during the downturn in the market.

 

I've got remodeling on my mind today.  We have a listing that we are having trouble selling that needs updating, and there was an article in the Ahwatukee Foothills News recently about remodeling your home.

As Realtors, what we are seeing in Ahwatukee is that buyers are looking for homes that have been upgraded.  A lot of the homes in Ahwatukee are 15-20 years old and are beginning to look a little tired.  Those home owners that make the effort to spruce up their home before they list it, seem to be getting more attention from buyers.  Actually, what we are seeing is that if a home does not have granite in the kitchen, stainless appliances and upgraded fixtures, buyers consider it in need of work.

We have a home listed that has been on the market for about 6 months.  It is in a great area, has a good floor plan,  a wonderful yard that is on a greenbelt and is priced competitively.  Because of all these we are getting a lot of traffic, but that traffic is not translating into offers.  Buyers get into the home and decide it needs too much work.  Don't get me wrong, it's not in bad shape, it's just a little outdated and could use new flooring, countertops and appliances.  Buyers decide that there are enough homes on the market today that they can find just as nice a home, for a reasonable price, that has already been updated.  A majority of the buyers we are seeing want a turn key home.

The article in the Ahwatukee Foothills News recently talked about a homeowner who was updating his home and got fleeced by a contractor, and it went on to talk about making sure that if you hire someone to work on your home that they are a solid, licensed contractor.

So, here's where I'm going with this.  In Ahwatukee:

• Buyers are looking for upgrades when they go into a home, and they are remembering the homes that have upgrades. 
• Curb appeal, staging and upgrades are selling homes.
• As the homes in Ahwatukee approach their 15th -20th year, they are in definite need of sprucing up
• Be careful when selecting a contractor to work on your home.  Be sure they are licensed through the Registrar of Contractors and their license is in good standing
• Prepare to be patient with the work.  It ALWAYS takes longer than you expect and costs more than you expect!