Housing Doom

KTAR in Phoenix said that there is New hope for underwater borrowers: [Thanks L!]

PHOENIX – Some people who go through a short sale of their home can now buy a house the next day.

Normally, a short sale means you have to wait a few years before buying a new home, but now the federal government is relaxing standards for some people.

Mortgage expert Dean Wegner said there are three rules.

"When you short-sale your house you have to be current on your loans and have no mortgage lates in the last 12 months," he said of the first rule.

Second, you have to be moving because of a life event, such as a job in another state or a new baby. There is one more condition after that.

"Your new FHA loan is going to require a 3.5 percent down payment, a 620 FICO score, and full employment and income verification – just like a normal loan," he said.

Like a lot MSM articles these days though, you can often learn more by reading the comments below.  As one commenter stated: Read the rest of this entry »

There were some interesting articles that said a lot about the state of the new home market in the Phoenix area recently- if you could get past the headlines. The first was an article in the East Valley Tribune entitled Blandford Homes buying up East Valley developed lots: [Thanks L!]

Gilbert-based Blandford Homes continues to amass hundreds of fully developed vacant lots across the East Valley, Pinal County and Maricopa that were slated for development by other builders before the market went bust.

Since mid-December, Blandford has purchased 775 developed lots from Wachovia Bank for more than $15.36 million. The builder was represented by Scottsdale-based Westland Properties Group in the acquisitions. Wachovia foreclosed on all of the properties.

With terms like buying up and amassing, it sounds like Blandford was acquiring a good percentage of these lots.  Not so.  Further down the article states:

There are about 70,000 vacant, developed lots in the Phoenix metro area right now, but we only started (construction on) less than 8,000 homes in 2009. It will take a few years to use all of those lots at the current pace, so there’s not a lot of interest in buying the raw land right now.

A few years? At 2009's rate, it would take nearly NINE years to use up all of the lots.  But maybe that's being too pessimistic. Maybe things have been looking up recently.  In a word, nope: Read the rest of this entry »

The problem with tracking the shadow inventory is that it's so, well, shadowy.  I thought it might be good to just take a look at one neighborhood and see what's going on.

I decided to look back at the Villages of Queen Creek, in Queen Creek, AZ a neighborhood I've been watching since I talked a friend out of buying there several years ago. [Adam Geller of AP featured this neighborhood in a piece he wrote after M and I gave him a tour.]

When I first started driving around the Villages back in 2006, it was clear to me that I was looking at a foreclosure factory.  Most of the development was done by KB Homes, part of the neighborhood was Richmond American.  In the sections of the development that the builders had closed out, there were "For Sale" signs everywhere.  KB Homes and Richmond however, were still opening up new sections and offering a number of incentives to buyers.  It was clear that existing owners would not be able to compete.

By 2007, large numbers of homes were being abandoned.  As we drove around, I remember we estimated some sections of the neighborhood as being nearly 10% abandoned.

I pulled up the Village on the Maricopa County Assessors website a few weeks ago, thinking that there must be lots of bank owned inventory in the neighborhood these days, and I would see how much of that inventory was unlisted.

I was in for a surprise.  M had told me that sales had been good out in the Queen Creek area in the rush to snap up foreclosures, and he was right.  I did not find a lot in the way of bank owned inventory.  I still think the Villages is a good place to see a lot of shadow inventory though.  Here's why:

Let's take a look at one of the properties I did find, a property on Via Del Rancho:

This property was originally sold by Richmond American in 2005 for $192K.  It was taken back by the lender at the trustees sale in April 2009 for $150K. The home was not listed by the lender until November when it was listed for $120K, although you'll note that the photo was taken in July. The listing was allowed to expire after 38 days on the market, and remains off of the market. [MLS# 4222894 if you have access]

The photos from July show the house was occupied at the time. The Realtor remarks in November stated:

Tenants 48 hr. rights. Call tenant to show. Offers MUST include AS-IS, HOA, LSR or proof of funds

The house was apparently a rental, the NOT showed that the owners lived in CA.

So at this point your probably asking yourself, So what's the big deal?  Twist found one property that the bank isn't currently listing.  Where's the shadow inventory?  Let me show you: Read the rest of this entry »

It looks like Daniel Clark of Chandler, AZ didn't understand that when the lender forecloses on the home, they foreclose on the ENTIRE home.  You are not entitled to the parts: [Thanks L!]

CHANDLER — Chandler police arrested a man who reportedly removed doors, toilets, sinks, a water heater and other essential items from his foreclosed home, which was scheduled to be sold by the bank next month.

 

On Thursday, a person in a neighborhood near Germann and Dobson roads told a patrol officer that a previous neighbor was "deconstructing" his foreclosed home.

 

The officer responded to the 2200 block of West Wildhorse Drive where workers were removing various essentials from the home, including two air-conditioning units, a water heater, a water softener, interior doors, toilets, sinks, cabinetry, countertops and the garage door opener.

Read the rest of this entry »

Home sales are up in Phoenix, but recovery is still not in sight.  As ASU's Dr. Butler points out, it's hard to have a recovery without jobs:   [Thanks L!]

Foreclosures remained a dominant force in the Phoenix area's housing market in January, as foreclosures and resales of foreclosure homes accounted for two-thirds of existing-home transactions during the month, according to an Arizona State University report.

Even with brisk sales, a key to the housing market's recovery remains creating new jobs, said Jay Butler, the report's author.

"The whole thing is the return of the job market," said Butler, associate professor of real estate at the W.P. Carey School of Business. "If the job market strengthens, that will create consumer confidence. Job growth is the key."

Lenders foreclosed on about 3,500 homes in January, down from 4,060 foreclosures recorded in December.

Butler said it is too early to tell whether the monthly decline represents a slowdown of foreclosures, because some lenders imposed moratoriums on new foreclosures toward the end of last year. Read the rest of this entry »

Considering a short sale in Arizona?  It pays to be careful.  M forwarded me the following information that he received, which came from a discussion with Tom Farley, CEO of the Arizona Association of Realtors. It stated:
 

One issue that Tim made perfectly clear, and we all felt was important to get out to those of you who may not have attended, is this.  In Arizona, there is anti-deficiency protection for a large number of property owners who go through foreclosure, however, there is no statute that proves anti-deficiency protection to any property owner in the case of a short sale.  Our anti-deficiency laws only cover foreclosure.

Tom Farley stressed that it is important that we not make incorrect representations to the sellers in this regard.  The deficiency protection they may be able to receive is only found in the terms of the short sale approval letter provided by the lender. If the lender does not fully release them from the lien, but only releases the property to close and transfer, there is not any guarantee that the lender will not pursue the seller for the remainder of the unpaid balance on the note.

One popular myth that was dispelled at yesterday's meeting is that there was protection if it was purchase money.  This is not true.  While some lenders are providing the release in these cases they are not obligated to do so.  Tom stressed the importance of legal counsel for sellers facing short sale with regards to this issue once again. Read the rest of this entry »

Our old friend Jay Butler of ASU's Realty Studies department has issued his monthly sales report, and gave some interesting statistics: [Thanks L!]

Lenders in 2009 foreclosed on about 41,000 single-family detached homes in Maricopa County
, according to a report from Arizona State University. That's more foreclosures than the Valley has seen during any previous year on record, accounting for more than 35 percent of all existing-home transactions, the report said.

Its author, Jay Butler, associate professor of real estate at the W.P. Carey School of Business, said overall home-resale volume in 2009 rivaled that of the real-estate boom's peak year of 2005, but for all the wrong reasons.

"That (2005 sales volume) was … due to rising home values and a type of euphoria about real-estate investment," Butler said. "Now we're seeing a totally different type of activity driven by foreclosures."

I do beg to differ with Butler on a couple of different points.  First, one of the mistakes that people made in 2005 was the belief that home "values" were rising, as Butler states.  In fact, home prices were rising astronomically, but values were not.  There was definitely a housing euphoria in the air that you would have had to witness to believe.  I know agents were calling me constantly wanting to know if I was thinking of selling my house, asking if I knew anyone thinking of selling a house.  All you needed to do to start a frenzy was to put a "For Sale" sign in the yard.  Really.  And not just in "choice" neighborhoods.

Once more we are seeing a housing "euphoria" in foreclosures.  This time it is not the rising home prices that are driving the market, but the belief that we have hit "bottom" and prices can only go up from here.  Once more, the lack of owner-occupiers is a sign that home "values" are not rising because long term, sustainable demand is not there.

Butler had some other interesting statistics: Read the rest of this entry »

The state of Arizona is desperate for money, and has started to sell everything that’s not nailed down.  Strike that- I imagine these properties are securely attached to the ground:  [Thanks L!]

Arizona’s state buildings will go on the market next week, as state officials look to raise $735 million to boost the state’s depleted coffers.

The offer, which includes Veterans Memorial Coliseum on the state fairgrounds, the headquarters of the Department of Public Safety and legislative buildings, will go on the market Tuesday and Wednesday, said Alan Ecker, spokesman for the Department of Administration.

Investors can buy certificates of participation in the buildings in $5,000 increments by working through the state’s underwriters, Morgan Stanley and Citi. Ecker said the certificates, which are tax-exempt, will likely carry an interest rate of 4 percent to 5 percent. Read the rest of this entry »

America’s Treasury Secretary should, in my opinion and for a variety of reasons, resign.  I have been forcefully setting forth this thesis with everything I’ve got ("Recuse Me Timothy" was of course name calling, but arguably funny) from our humble corner of the blogosphere for some time now, especially since Treasury’s actions of 12/24; however, …

I fear these two recent offerings from the MSM may not be supportable.

First up, from the NY Post.¹

Geithner’s fielding a fresh round of criticism after e-mails surfaced last week that showed he forced insurance giant AIG to keep quiet about tens of billions of dollars in payments it made to several Wall Street banks — payment that represented full payouts funded by taxpayer cash that the banks otherwise wouldn’t have received.

The difference between ‘he’ and ‘his staff’ is material here, and I’d like that assertion to come with some fresh meat.  The Obama White House’s continued support of the Secretary has been specifically based on that very point not being true.

Next, from the venerable Sunday Times in London.²

Now it appears that as the money started to roll, the Federal Reserve Bank of New York, then under Geithner, was urging AIG to limit disclosure on payments made to banks. Emails show AIG staff, soon to become social pariahs and the target of death threats, arguing for more disclosure only to be discouraged by officials.

Ladies and Gentlemen, I do believe that one goes beyond rhetoric.

Read the rest of this entry »

So how is this for a special- straight from Paradise Valley, AZ- – you can "temporarily" get $1 million off of asking price, and get a 3% cobroke for your agent: [Hat tip M!]

Now is the time for your client to become a part of this unique community with prices momentarily adjusted for savings up to $1 million and a $100,000 credit exclusive to buyers who act now.

Read the rest of this entry »