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That is not entirely true in my experience this year. My client just bought a $750k home that was a bargain. They were out bid on some of the previous bargains that were available.
Another client just bought a million+ dollar home for cash that was a bargain.
Neither of those homes will be available again for many many years.
People are paying cash for these high end homes, or a large down payment to get a conforming interest rate mortgage.
I agree we need more high paying jobs, but what you're not seeing is that high end homes are being bought by people who have the money and recognize the bargains.
Location: In a city within a state where politicians come to get their PHDs in Corruption
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Per the US Census, AZ has a vacancy rate of close to 17% which translates to 463,000 homes. That is enough to absorb ten years of population growth(when the times were good). Do the math.
The key is J-O-B-S. As long as the high paying jobs continue to be outsourced only the low end houses will be a bargain. A bargain this year, a bargain next year, a bargain the year after...
Let's do the math. For a moment, let's forget about any distressed sale.
Let's say I hire a builder to design me a home for $210K and I put down $10K (FHA down payment with good credit is still at 3.5%). In 2011, that is probably a 2000 sq footer or larger in the less expensive suburb.
$1135 / month (5.5% interest rate @30 years) + $170 (taxes) + $60 for insurance. That's $1365 a month. So we lost a lot of J-O-B-S. Agreed! But 92% of the people still have jobs. Maybe they are making less. We also agree. The big difference is they won't have as nice of a garage sale in the years to come. That's all. You can drop the desire and mandate for things to go back to the way they were for a lot of people. This is the new reality. The new reality is homes will be smaller for most, cars driving on the road will be less expensive and most peoples standard of living will be reduced. With a higher unemployment rate, families will have to figure out how to get by on one income. Our parents figured that out.
Let's do the math. For a moment, let's forget about any distressed sale.
Let's say I hire a builder to design me a home for $210K and I put down $10K (FHA down payment with good credit is still at 3.5%). In 2011, that is probably a 2000 sq footer or larger in the less expensive suburb.
$1135 / month (5.5% interest rate @30 years) + $170 (taxes) + $60 for insurance. That's $1365 a month. So we lost a lot of J-O-B-S. Agreed! But 92% of the people still have jobs. Maybe they are making less. We also agree. The big difference is they won't have as nice of a garage sale in the years to come. That's all. You can drop the desire and mandate for things to go back to the way they were for a lot of people. This is the new reality. The new reality is homes will be smaller for most, cars driving on the road will be less expensive and most peoples standard of living will be reduced. With a higher unemployment rate, families will have to figure out how to get by on one income. Our parents figured that out.
I hate to sound like a crusty curmudgeon, but I have been in shock the last decade over the level of consumption expressed in home sizes, RV sizes, automobiles, eating out in restaurants, sports tickets, designer clothing and I could go on and on. The median house that everyone prices in their reports went from maybe 1000 sf when I was first buying to almost 3 times that size when the bust hit a couple years ago. My first had no granite, vinyl flooring, cheap appliances, and a carport. We were proud to own it. Trimming back the excesses is long overdue. I just hope it does not apply only to the little guy as it mostly has been so far, but across the spectrum.
Last edited by Ponderosa; 05-12-2011 at 06:31 PM..
It seems as though our inventory reduction could be related to the banks slowing down the speed of the foreclosure process. Less supply, means (temporarily) higher prices.
It seems as though our inventory reduction could be related to the banks slowing down the speed of the foreclosure process. Less supply, means (temporarily) higher prices.
Could be, but notices, which would filed regardless of how long the process might ultimately take, are way down from their highs in Arizona. So the input side of the pipeline may actually be drying up here. I think we need to be careful about generalizing what is going on in other areas to this market. Not to mention that a lot of the reports of gloom I have been seeing of late are based on data from late 2010. Things can change quickly. The feeling on the street that I got when looking at homes is that the unusually favorable situation for buyers is about over with. The biggest thing buyers and sellers complain about is getting a loan approved.
Parenthetically, I was surprised at the consumer confidence number this morning. I would have bet my bootie that gas prices would have devastated outlook, but apparently not. Consumer confidence is a critical element in any housing recovery. Now if we could just get rid of deflationary expectations in the housing market buyers would move, banks would lend and it would be Katie-bar-the-door.
Last edited by Ponderosa; 05-13-2011 at 08:47 AM..
I hate to sound like a crusty curmudgeon, but I have been in shock the last decade over the level of consumption expressed in home sizes, RV sizes, automobiles, eating out in restaurants, sports tickets, designer clothing and I could go on and on. The median house that everyone prices in their reports went from maybe 1000 sf when I was first buying to almost 3 times that size when the bust hit a couple years ago. My first had no granite, vinyl flooring, cheap appliances, and a carport. We were proud to own it. Trimming back the excesses is long overdue. I just hope it does not apply only to the little guy as it mostly has been so far, but across the spectrum.
I don't wish to get to political here but I guess I am.
With the advent of Rupert Murdoch's empire and all of the talking heads with outright falsehoods or partial facts and much opinion on all of his print and television media - people's perceptions have been twisted.
Almost everyone I talk to thinks that they are middle class. The gal at the hardware store making $9.0 per hour or my executive friend making over $500,000 per year. Both think that they are middle class.
After WWII many GI's got a free college education. A college of their choice with all tuition paid. They and others could afford a new/used home. They worked for companies that paid pretty good. Some were places with unions that asked for a decent wage. When wages go up for line workers wages went up for lower/middle management. It all worked.
At some point the politicians decided that Nafta and other agreements were good for the larger businesses. Those businesses could still make profits selling goods but could manufacture them in Mexico and China and some countries that still use child labor. Countries with no polution rules. Whole factories were crated off to Mexico and China.
Now with no manufacturing jobs - those people are out of work. Some have moved on to service jobs. And one big service job is health care. Lots of money to be made in health care. The corporations that own the health care facilities are doing quite well. Can you see here why so many of these talking heads are against health care reform? These middle class wage earners that did not go into health care and other service jobs are out of luck. Many of these new wage earners make just above minimum wage and can never afford a home. Nafta and other agreements along with big business have done away with this part of middle class.
Now the next group to remove from the middle class are the civil servants. And that is what is happening all over the country.
Without a viable middle class this country will never come out of this recession.
The fact remains that the rich get richer and the poor get poorer.
And most reading this have voted for these politicians that don't give a hoot for anyone in the middle class. Just cut the wasteful money spent on welfare people, social security, veterans hosptitals, parents with spina bifida children, those that are disabled. Those people are "cheating". Heck those homeless people you see seem to be doing quite fine. And who gives a hoot about some healthy looking veteran with PTSD. Heck that guy or gal can go get a job. All those veterans have to do is just forget that they viewed one of their friends heads being blown off and parts of their brains were splattered all over them. Get over it, right?
Keep listening to Rupert Murdoch's talking heads. Simple solutions. Right?
It seems as though our inventory reduction could be related to the banks slowing down the speed of the foreclosure process. Less supply, means (temporarily) higher prices.
Once the NOTS (Notice of Trustee Sale) has been filed, the time to a successful short sale, or to Trustee Sale can be measured.
Prior to the NOTS it would be more difficult for someone to track the late payments before the NOTS is issued; and it's different in each state.
In AZ the owner must be in arrears 90 days before the NOTS is issued. Then the Trustee Sale can be scheduled on the 91st day after the NOTS. (Total is 180 days)
If a home is foreclosed on (sold at the Trustee Sale) then it takes a month and up to 3 or more months for the REO department to get the home on the market. Each bank operates differently.
Bank of America REO dept uses a national field service unit to rekey, trash out, clean up, etc. to get ready for market. That is the Pre-List phase.
The listing agent has to go photograph and make reports during this period. It's a very unproductive way of doing it because there is no one here making sure the work is being done in a timely manner. The reports all go through the Equator online software system to various managers responsible for each segment.
I have two BofA Listings that are in the pre-list stage and it's very frustrating. I'm assigned a task to go out and have utilities turned on, but the field service unit has not done the trash out, and the bare copper electrical wire has not been repaired. There is no coordination. It's a continuous process of going out to do an assigned task that is not ready to be done.
Other banks will have the listing agent hire the vendors to do the work, and that is more efficient.
Are (some) banks not issuing NOTS after 90 days in arrears in AZ? I don't think we have any way of knowing that.
A few months ago Wells Fargo issued a policy of no more extensions of trustee sale dates even if there was a contract in escrow. They since stopped that. They're working very well with me on a short sale listing I have. They seem to be more cooperative in getting them sold.
The short sale purchases some of my clients are making have also been going well.
I can't dispute any facts the article may have, because I don't have access to their information. However, from what I'm seeing here, and what the stats show, and my reliance on the statements of the people at the Cromford Reports, I don't see that there is any holding back by banks in the Phoenix valley.
Part of the slowness of getting the REO's on the market has to do with the inefficient procedure I described.
One more thing is that if there is "personal property" of any kind, then they're going through a legal process before doing the trash-out so people can't claim that the broken toy they left behind was a rare mint condition Schwinn worth several thousand dollars.
With BofA, when the field service unit goes out to rekey, they make an appointment with me to be there at the same time. They rekey and I place a lock box. We both go through and take pictures and make sure to not touch anything if there is personal property (trash). So the bank has 2 sets of photos of what's in the house.
The photos below are from one of my pre-list REO's.
Now with no manufacturing jobs - those people are out of work. Some have moved on to service jobs. And one big service job is health care. Lots of money to be made in health care. The corporations that own the health care facilities are doing quite well. Can you see here why so many of these talking heads are against health care reform? These middle class wage earners that did not go into health care and other service jobs are out of luck. Many of these new wage earners make just above minimum wage and can never afford a home. Nafta and other agreements along with big business have done away with this part of middle class.
Now the next group to remove from the middle class are the civil servants. And that is what is happening all over the country.
Without a viable middle class this country will never come out of this recession.
I have said this many times - falls on deaf ears.
And we still have folks here locally that believe AZ's economy can continue to be dependant on real estate speculation. LOL - "its just a matter of market recovery" they say.
The median price home (new and resale) for an out-of-state buyer was $124,500
The median price home (new and resale) for an in-state buyer was $118,000
60% of out-of-state buyers purchased with cash
32% of in-state buyers purchased with cash
41% of all homes purchased in Maricopa County were cash purchases
69% of out-of-state buyers plan to live in the homes they purchased
79% of in-state buyers say they will occupy the home they purchased
In April 2005, Californians bought 2,153 home; Canadians, 38
In April 2011, Californians bought 453 homes; Canadians, 540
The top-ten list by state and the number of buyers: CA, 453; WA, 194; CO, 124; MN, 95; NY, 86; OR, 72; TX, 66; IA, 61; WI, 59
2 buyers from WV—more wanted to come, but vehicles broke down crossing Ohio
Maricopa had a least one buyer from all 50 states with the exception of MS and VT
The median price for investors was $71,250…. 24% of all sales... 69% paying cash
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