For nearly six years, we’ve been following the Maricopa County [Phoenix area] Home Sales Report done by Dr. Jay Butler, ASU professor emeritus of Realty Studies.  Back in 2008 there was a bit of a scandal when it was shown that Butler’s inclusion of trustee’s sales was skewing the sales numbers.  After that, Butler’s broke sales out into “traditional sales” and “foreclosures”.  It has also not uncommon for listings to indicate whether or not they are a “traditional” sale.  Here’s one example from L’s spam mail: You might think, based on the listing, that this home is sold by an…
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This former Countrywide loan officer may not be the worst mortgage fraudster to operate in the Phoenix area, but she’s got to be up there.  Using straw buyers, she had them purchase a total of 60 properties at inflated prices.  This was achieved using bogus appraisals, allowing her to pocket the profits.  And that’s just the beginning.  Check this out: [Thanks L!]   How likely is it that the victims will ever see any of that $22 million dollars in restitution she is to pay?  I suspect that if this woman has to do an honest day’s work to earn…
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Back in 2005 when real estate had become insane in Phoenix, homes were selling so fast it was not uncommon to hear about “double escrows”.  What’s a double escrow? A double closing is simply two back-to-back closings wherein the proceeds from the second closing is used to fund the first closing. Both closings are done in escrow so that the “middleman” can buy and resell a property for profit without using any of his own cash. Of course, once the insanity was over and the bubble popped, a lot of would-be flippers ended up being known as “bag holders”, the…
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What caused the housing bubble?  In general, the short answer you’ll get to that question is “Alan Greenspan kept interest rates too low for too long”.  I’m not going to argue with that, but I wouldn’t argue with another point made by Matthew O’Brien of the Atlantic, either: Alan Greenspan is still to blame. Just not for the reason most people think. Where the Fed really failed was as a regulator. It could have gone after the predatory lending in the subprime world, if it had wanted to. At least one Fed governor suggested doing so. Greenspan rebuffed him. Counter-factuals…
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Catherine Reagor, real estate reporter for the Arizona Republic, must have taken the easy way out a few days ago and just published a press release as “news”.  She “reported” on a “penny auction” for a home in Phoenix: [Thanks L!] Penny auctions are popular for selling everything from gift cards to cars at discount prices. Now in metro Phoenix, a former foreclosure home is scheduled be auctioned off cent by cent. Real-estate agent Todd Talbot plans to hold an online penny auction for a Glendale home next week. The house at 6214 W. Acoma Drive, Glendale, was purchased for…
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What has happened to the housing inventory in Phoenix?  Inventory has dropped to an extremely low level.  In 2005 when inventory dropped, prices shot through the roof.  In January though prices only showed an insignificant increase: At the beginning of 2011, there were 40,000 single family homes for sale on the Maricopa County Multiple Listing Service, which was way above the 25,000 level considered a healthy market by local realtors. Today, that number, which includes foreclosures and short sales as well as regular listings, has plunged to 13,000 homes listed for sale. But prices? While Miami and Phoenix were the…
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Long time readers know that I have reservations about down payment assistance programs.  Buyers that use DPA have been shown to have a higher rate of default.  One of the big barriers to home buying is the lack of a downpayment though, and if we don’t buy homes, banks don’t make money. Wells Fargo has recently announced that they are setting aside billions of dollars for down payment assistance programs in the cities of Phoenix, Los Angeles and Atlanta.  Borrowers in Los Angeles can receive up to $30,000.  In Phoenix and Atlanta, borrowers can receive up to $15,000.  Here’s what…
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I thought this video was funny.  It’s a Fox news report from Phoenix about homebuilders scaling down the luxury features in new homes.  The report said that homebuilders are eliminating features like outdoor kitchens and whirlpool tubs because “most people don’t use them”.  I couldn’t help but wonder if the builders are now trying to tell us, “We can’t put luxury items in homes and compete with existing home sales, but that’s OK.  You folks are too practical for these features.” Luxury Items Being Dropped From New Homes: MyFoxPHOENIX.com My guess is that people do still want the luxury items,…
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I was reading a USA Today yesterday called Cheaper by the Dozen, which discussed how many people are now out there buying in bulk to get in the landlord business.  I couldn’t help but be struck by the naïveté of this wannabe landlady: [Thanks L!] When Vena Jones-Cox entered the foyer of the once-grand Colonial-style home in downtown Columbus, Ohio, she stepped onto a wood floor that was so moldy and mushy that it actually wiggled. As Cox proceeded down the basement stairs, they disappeared from underneath her. “I found myself lying on the floor,” says Jones-Cox, 45. “Staring at…
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Hat tip to ZeroHedge for the Op-Ed in the New York Times by the Treasury Secretary, Tim Geithner. It’s annoying to read him patting himself and the administation on the back for all their whizbang government “stimulus” [Which can be read "massive, unprecedented borrowing] that “saved” the economy after the 2008 financial crisis.  As ZeroHedge points out, Geithner conveniently forgets who triggered the crisis– he needs to look in a mirror. It’s bad enough to read him going on at length on all the great things this “stimulus” money is doing, but then he has the nerve to say: American…
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Back in March of 2009 we first started looking at home sales by price bracket in Phoenix.  The numbers looked like this:   Three years later I thought we would compare the numbers and see how the market compares.  Here is January’s chart, based on the January report from ARMLS: [February numbers are not yet available.]   The most striking difference is the inventory, which has dropped by 50%.  Sales are 32% lower. (Part of that difference should be seasonal, January sales are generally slower than in March. Inventory also starts to build this time of year as more people…
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If you weren’t in the Phoenix area in 2005, you couldn’t possibly understand the level of insanity in the real estate market.  It seemed that the phone would ring daily.  Agents would call asking, “Are you thinking of selling your house?  Do you know anyone who is thinking of selling their house?” Listings would be snapped up, sight unseen, by investors desperate to own real estate in Phoenix.  This kind of furvor meant that people would almost any price for a property, no matter how unusual, or how inconveniently located. L sent me a perfect example of such a property…
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Yesterday the FHFA released a report entitled, The State of the U.S. Housing Market: Removing Barriers to Economic Recovery. The title is somewhat misleading.  This prepared congressional testimony is more about how the FHFA proposes to manage the next phase of its conservatorship, and doesn’t really address removing barriers to economic recovery.  By the way, the report had to be among the most redundant I’ve ever read.  If you eliminated all the repetitive bits, the nine page statement with 25 pages of supporting documentation probably could have been reduced by nearly half.  But in spite of that there was a lot…
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Yesterday the National Association of Realtors announced that Pending Home Sales are up.  Sales may be up, but prices continue to go down:  [Thanks L!] U.S. home prices fell in December from a month earlier, ending 2011 at the lowest levels since the housing crisis began in mid-2006, according to Standard & Poor’s Case-Shiller home-price indexes. During the fourth quarter, home prices reached new lows, falling 3.8% sequentially and 4% year-to-year. Prices are down 33.8% from their peak in the second quarter of 2006. “While we thought we saw some signs of stabilization in the middle of 2011, it appears…
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As I was surfing the internet last night, I ran across one more article (Out of who knows how many) that asked “Has the U.S. housing market finally bottomed?”  Invariably these articles go on to indicate that somehow “bottom” = “recovery”.  For instance, last night’s article said: With building activity and builder confidence increasing, and mortgage rates close to record lows, the overall trajectory is clearly upwards. In fact, there really is no “trajectory” at the moment.  Even Warren Buffett, who’s been bullish on the housing market for years, admitted this week he was wrong about an early recovery and…
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