A realtor who agrees with AZJack? (Casa Grande, Maricopa: sales, 2009, foreclosures)

[sh9730]

Here is an article from the Casa Grande Dispatch on the state of the Pinal County housing market. Nothing super "new" here, but Im posting it mostly to counter those that say all realtors paint a "buy now" mentality.

Talks about the next wave of foreclosures to come later in year.

Casa Grande Valley Newspapers Inc.

Actually, I dont think all the doom and gloom is going to come true for several reasons, but that is just my opinion.

[rjrcm]

The article is not accurate regarding using the $8,000 credit towards a downpayment. From article: "A recent change allows it to be applied to the down payment through a bridge loan, rather than the homebuyer's having to wait months to receive the credit."

HUD issued guidelines yesterday (5/29) that the bridge loan can't be used for the 3.5% FHA downpayment. It can only be used to provide additional downpayment beyond 3.5% or towards other closing costs. Many buyers get the sellers to pay closing costs so the impact to first time buyers will probably be minimal.

[sh9730]

RJ,

Not really...in the end there needs to be so much cash in the transaction, one way or another....so now the sellers may just reduce the price rather than pay closing costs. In the end it works out the same. 8K into a transaction is 8K into a transaction, no matter how you look at it.

Plus, under the new guidelines you can use the 8K for additional down payment should the buyer wish, which would be a good thing too!

[rjrcm]

Yes, but the buyer still needs to come up with the 3.5% downpayment cash up front, so for buyers that are short of this, the $8K bridge loan won't help. The article implied that if it covered downpayment, then it would bring in more buyers that did not have the necessary cash. With new ruling, probably not going to happen.

I do agree with you that the bridge loan will help other buyers that have the upfront 3.5% that wish to pay more or cover other costs, or work out a deal with the seller.

[Rick Lee]

Anyone who needs $8k from the gov't to get into a house is probably going FHA anyway. So what difference would that money make unless the seller won't pay the buyer's closing costs? $8k will not get them out of the upfront or monthly MIP, it won't make more than a few dollars a month difference in PITI and it won't come close to making a down payment for a conventional loan. I just don't see how it's that useful.

Of course, it's totally useless for my wife and me, since I still own a house in VA and, though she's never owned a home, is subject to my status as a homeowner. So we don't get it. We probably make too much to qualify for it if that first time buyer rule didn't exist. Really chaps my hide that renters have to subsidize homeowners via this tax credit AND the mortgage interest deduction. But I'll take what I can get.

[rjrcm]

Rick, the bridge loan is only for FHA borrowers, so would not help conventional loans anyway. I basically agree with the rest of your points that it is not all that helpful without covering the FHA 3.5% downpayment requirement. If you read the details of the bridge loan guideline, there are also a number of conditions attached that may discourage borrowers from using it.

[azjack]

Wow, I'm famous.

BTW, I just re-watched a recorded copy of the CNBC special "House of Cards." It originally aired a few months ago. Interesting stuff, and I recommend it when it is run again (usually on holiday weekends, so maybe Independence Day weekend).

As far as foreclosure filings in post-moratorium Arizona, the number that really sticks with me is that we are currently getting more foreclosure filings in Maricopa County in less than two months than we got in an entire year back in supposedly normal years like 2002. That just floors me.
Actually, what floors me is that anyone would believe that there is some sort of long-term shortage of bank-owned houses in Arizona.

There were just under 16,000 foreclosure filings in the twelve calendar months of 2002, and there were more foreclosure filings (Trustee Sale Notices) than that just in the two months of April and May 2009. Wow!

Without checking, I can guess that the Pinal County numbers are also huge.

A lot of those houses will be foreclosed and when they are marked to market, will inevitably lead to lower prices.

[andrzejn]

Originally Posted by azjack

Wow, I'm famous.

BTW, I just re-watched a recorded copy of the CNBC special "House of Cards." It originally aired a few months ago. Interesting stuff, and I recommend it when it is run again (usually on holiday weekends, so maybe Independence Day weekend).

As far as foreclosure filings in post-moratorium Arizona, the number that really sticks with me is that we are currently getting more foreclosure filings in Maricopa County in less than two months than we got in an entire year back in supposedly normal years like 2002. That just floors me.
Actually, what floors me is that anyone would believe that there is some sort of long-term shortage of bank-owned houses in Arizona.

There were just under 16,000 foreclosure filings in the twelve calendar months of 2002, and there were more foreclosure filings (Trustee Sale Notices) than that just in the two months of April and May 2009. Wow!

Without checking, I can guess that the Pinal County numbers are also huge.

A lot of those houses will be foreclosed and when they are marked to market, will inevitably lead to lower prices.

I agree with you on a point that we are not out of this thing yet.
I do see a problem in your 2002 comparison to today which is total number of homes. Do you have this comparison in percentages of all total homes in Maricopa County? I fully expect % for 2009 be much higher than 2002 but I don't think its 600%

[markas214]

The $8000 dollar credit aside I believe the most telling part of the article is this:

"Dremler said people have overlooked the fact that lenders essentially had a moratorium on foreclosures the last several months. That allowed bargain-hunters to snap up some of the foreclosed properties on the market, reducing inventory and giving the impression that things were improving as sales numbers rose. But it also built a backlog of foreclosed properties about to inundate the market, and the apparent good news probably was fueled by worries over that next wave of foreclosures. Although sales rose, she said it's false hope given the number of foreclosures in the pipeline.

"What we're hearing is that it will be August, September when they would hit the market," Dremler said.

And that's just the first wave, she said. Another wave is likely by early next year."

We may be seeing a mini boom in sales but only a sucker or person totally ignorant of the current economic realities would get into a bidding war now. Investors are also buying but my personal observation is that the available rental inventory is rising. Rents may fall substantially. What will this do to prices?

[azjack]

"I agree with you on a point that we are not out of this thing yet.
I do see a problem in your 2002 comparison to today which is total number of homes. Do you have this comparison in percentages of all total homes in Maricopa County? I fully expect % for 2009 be much higher than 2002 but I don't think its 600%"

I used 2002 because many people would consider that to be pre-bubble. IMO, it was pre-rapid price acceleration portion of the Arizona bubble.

I am sure that the total number of housing units in Maricopa County is out there on the web, but I do not have it.

Certainly, as you indicate, the stark contrast remains valid because net housing unit growth was not high enough to account for the differences in foreclosure filing numbers.

I would have used 2004, 2005, or 2006 for comparison, but some would correctly call those unusual years where foreclosure was less common due to bubble price gains saving people from their own overspending/overborrowing.