Home In Five Money Gone

Remember back just 2 days, when I wrote about the Home in Five program that makes Maricopa County buyer’s down payments?  In 1 short day, the entire allocation of over $3 million was gone. Wow! 

You can get the inside scoop on how fast this happened by reading my colleague Shailesh Ghimire’s Arizona Mortgage Guru post about the Home in Five money going fast.

The County seems to release more money periodically (usually 3 or 4 times a year), so hopefully they will do so again soon. I’ll keep you posted!

What’s Your WalkScore?

photo credit to photographer Michal Zacharzewski, known as mZacha at StockXchng.com

Found a cool new resource for buyers. At WalkScore.com you can check the walkability factor of your potential new neighborhood. For a great explanation of the way WalkScore works, see my blogging colleague Laurie Manny of Prudential.

Sadly, most of Phoenix isn’t very walkable. In metro Phoenix, you almost have to have a car to get around. We’re working on that with the uber-expensive Metro Light Rail project which debuts this winter.

According to WalkScore, 47% of Phoenix residents live in a car-dependent neighborhood. But I believe WalkScore doesn’t know everything.

My favorite walking spots don’t make WalkScore’s radar. They include the entire communities of Pointe Tapatio and Pointe Squaw Peak, and North Mountain Park at 7th Street & Dunlap. The whole vast spread of the Moon Valley area at 7th Street & Coral Gables (between Thunderbird & Greenway) also is super for walking.

The Moon Valley HOA maintains a bike/walk path on the main drag of Coral Gables road from 7th Street all the way around to Thunderbird Road, measuring about 2.2 miles. Besides being a good walking or running spot, it’s a fantastic place to say HI to your neighbors as you pass by. In Moon Valley you still see kids playing in their front yards, teens out washing the car in the driveway in anticipation of an exciting Friday night cruising around, and folks playing Frisbee with their dogs at the the local Moon Valley Park.

Phoenix residents! Do you have a favorite walking spot in your neighborhood that doesn’t show up on WalkScore’s matrix? Comment and tell us all about it.

Homes for sale in the areas mentioned in this blog post run the gamut from $50,000 condos to $1,000,000+ luxury homes on huge tracts of land. The local schools are excellent (Washington Elementary District and Glendale Union High School District), shopping and dining are nearby, and best of all you’re only about 20 minutes from downtown Phoenix and Sky Harbor International Airport.

Want to see the homes for sale near the areas mentioned here? Email or call me. I’ll happily email you some listings, or even setup a customized MLS search so you can find The Perfect House for You. 

Home In Five Makes Your Down Payment

One of the provisions of the housing stimulus package kills AmeriDream by doing away with the federal law loophole that allowed sellers to make buyers’ down payments. With that program on the chopping block, what’s left for first time buyers with good credit and a good job history but little ready cash?

Maricopa County’s Home in Five program might be just the thing for these cash-strapped first timers. The County has just released $3.45 million in funding for their program, which gives buyers a 5% gift for their down payment and closing costs, and provides a fixed-rate, 30-year mortgage at a very respectable 6.59% interest rate. Think of that! Your down payment is a gift. Your closing costs are a gift. You never pay the money back!

Want to use this program? Act fast. The money is released several times a year by the county, and it always goes fast.  Funds are available on a first-come, first-served basis. Update July 31, the money is gone. But the program will probably get more money later in the year, so keep reading.

There are income limits and purchase price limits to be aware of (see below). Buyers must have an executed purchase contract to be eligible for the money. Your purchase must be complete by December 15, 2008.

You can find all the info you need at the County’s Home in Five website. You can talk to a lender experienced in handling these loans by calling one of my preferred lenders, Jeannie Bolger of Suburban Mortgage, at (602) 216-2300 ext 115.

Income Limits for Eligible Borrowers

Family of:	Non-Targeted Areas	Targeted Areas
Two or fewer	$64,524	$74,203
Three or more	$74,203	$77,542

 

Purchase Price Limits 

	Non-Targeted Areas	Targeted Areas
New or Existing Housing	$311,625	$380,875
Duplexes	$350,988	$428,985

First time buyers – Don’t miss out! Home in Five is a super way to take advantage of the current buyers’ market in the metro Phoenix area. Want more advice for your unique situation? Please feel free to call or email me. We’re in a great buyers’ market but that doesn’t mean everyone should buy now. I can help you decide if it’s the right time for YOU to buy.

Statistics on Sundays – Jul 27, 2008

photo credit to MiamiAmia,  via StockExchange

Here’s a snapshot of sales activity in the past week, broken out by ZIP code. Don’t see your North Phoenix ZIP code listed here? Contact me and I’ll be happy to add it to those I track.

This week, I added color to indicate the direction of the trend. Red shows the numbers moving in the “wrong” direction, while green shows numbers that are moving in the “right” direction. At this point in the Valley of the Sun’s housing correction right means less homes for sale and more homes selling.

Our main obstacle right now is we have too many homes for sale and not enough buyers. Remember your high school Economics 101 class? Too much supply and not enough demand means prices go down.

THIS WEEK

There’s a lot of red on this chart. At least in the very short term, the trends aren’t good.

LAST WEEK

Last week’s snapshot isn’t colorized (sorry) but compared to the week prior, most trends here were positive. Had last week’s chart been color coded, there would have been a lot of green.

What changed? Who knows. It could be as simple as the weather was a little nicer this week. Not quite so oven-hot and maybe people went out to enjoy outdoorsy activities instead of buying real estate. Or maybe a lot of Realtors were in the office tinkering with our new MLS software instead of out signing deals. It could be anything. I’m not too concerned, since the general trend since last fall has been slow & sure in the right direction. Check back next Sunday to see what’s selling (or not) in your ZIP code.

Want to receive these updates by email? Send me an email with “Sunday Stats” in the subject line. No email spam and I do not sell, rent, share or trade your email address to anyone. Ever.

First National Bank of Arizona Fails

Photo credit to I Can Has Cheezburger

A Scottsdale-based bank has failed – The First National Bank of Arizona was shut down by the FDIC on Thursday, July 25. The foregoing link leads you to the FDIC’s website press release about the closure.

FNB-AZ merged with FNB-Nevada in late June. FNB-NV was shut down, but FNB-AZ was included in the closure.

Contrary to the graphic, not much changes right now for people who did business with FNB-AZ.

What Happens if You Had Less Than $100,000 In FNB-AZ

All deposit accounts have been transferred to Mutual of Omaha Bank, Omaha, Nebraska (“assuming institution”). All deposit accounts will be available as usual.

You may continue to use the services to which you previously had access, such as automatic teller machines (ATMs), safe deposit boxes, night deposit boxes, wire services, etc.

Your checks will be processed as usual.

Your automatic direct deposit(s) and/or automatic withdrawal(s) should be transferred automatically.

All your deposit account histories and records will be transferred.

If you had a loan with First National Bank of Nevada, you should continue to make your payments as usual. The terms of your loan will not change under the terms of the loan contract because they are contractually agreed to in your promissory note with the failed institution. Checks should be made to your former bank and sent to the same address until further notice.

What Happens if You Had More Than $100,000 in FNB-AZ

Contact thee FDIC at 1-866-674-8944 or 1-800-523-8089 or visit EDIE, the FDIC’s Electronic Deposit Insurance Estimator.

From the EDIE website: “If you or your family’s deposit accounts at one FDIC-Insured Institution total $100,000 or less, your deposits are fully insured. If you or your family has more than $100,000 at one insured institution, you can still be fully insured if your accounts meet certain requirements. You can use EDIE to determine your insurance coverage beyond the basic $100,000 amount.”

So there’s the scoop. Remember not to panic in the streets people. It’s messy.

Where Does The Commission Go When I Sell?

In metro Phoenix where I work, sellers typically pay the Realtors’ commissions. Buyers don’t pay any Realtor commissions. The biggest chunk of change buyers come up with is their down payment. For sellers, the biggest hit you take on closing day is the Realtors’ commissions.

Comissions are negotiable. So not every scenario will fit this one exactly, but this is pretty common.

Let’s say the seller agrees to pay a Realtors’ commission of $12,000 for selling her house. I can almost hear readers screeching already — “Wow! That sounds like a LOT of money! How could it possibly cost anybody that much money to sell a home?!@?!  Realtors make too much money!”

That’s why I’m posting, to explain where all that money goes.  Let’s skip ahead to closing day. The title company subtracts $12,000 from the seller’s proceeds at sale. It goes to the seller’s Broker. Not the Realtor with whom the Seller dealt every day, but to the Realtor’s “employer”, the Broker (see below about how Realtors aren’t really employees at all).

Usually there are 2 brokerages involved in 1 deal, the Seller’s Broker and the Buyer’s Broker. The Seller’s Broker splits the commission with the Buyer’s Broker according to what was agreed between them in the MLS advertisement. In metro Phoenix in today’s market, the Brokers usually split the commission 50%-50%. In this case, the Seller’s Broker gets $6,000 and the Buyer’s Broker gets $6,000. 

Then the Brokers turn around and split that commission with their respective Realtor agents. Again, the way they split it up is determined by individual employment agreements between the Realtors and the Brokers. Sometimes the Realtor gets 80% of the commission and the Broker takes 20%. Sometimes the split is 70% – 30%, 60% – 40%, or even 50% -50%. Sometimes the Realtor gets 100% of what the Broker ‘earned’, but in that case the Realtor paid the Broker a fee every month in lieu of splitting the commissions when they come in. I’ve never worked for this type of Broker, but I’ve heard other Realtors talk about fees approaching $2,500 a month.

In any case, that $12,000 was split into two 6’s. Now it’s split again; let’s say in this case it’s split 70% – 30% between Realtor and Broker.

The Broker gets 30% of $6,000, or $1,800. From that, the Broker pays for the cost of running an office, providing phones, computers, printers and toner. The Broker also provides Errors and Omissions Insurance for the Realtors. Brokers have to pay the clerical staff who handle data entry, phone service, and general document and transaction managmenet. Most Brokers are so busy managing the business that they do very little in the way of conducting actual real estate deals. So they have to take a big enough split to create a salary for themselves. This scenario probably describes the big boys like Coldwell Banker, Prudential, and RE/MAX. Smaller brokerages do things with fewer staff but the jobs listed here still have to get done & paid for. Whether the Broker takes a split or a monthly fee, they pay the bills somehow off of the work their Realtor agents do.

What about the Realtors? In this scenario the Realtor in the example got 70% of 50% of the $12,000 it cost the seller to hire that Realtor. Seventy percent of half of $12,000 is $4,200. Already, the Realtor who did all the work of selling the house watched his “paycheck” get whittled down from $12,000 to $4,200! Out of that, the Realtor must pay for:

• Federal Taxes – Realtors are independent contractors and, unlike W-2 employees who only pay 6.25% of their gross wages to Social Security, Realtors pay about 12.50% of their income to the feds (I might have my percents a little off but the idea is dead-on, we pay double whatever wage-earning employees do);
• State & Local Taxes – don’t forget ‘em!;
• Liability Insurance in case a client gets hurt while they’re together;
• Auto insurance at above-normal rates because Realtors drive a lot with other people in the car who aren’t covered by their own auto or medical insurance;
• Medical Insurance – Realtors are independent contractors and don’t get insurance through their employers;
• Dental Insurance – same as above;
• Vision Insurnace – again, same;
• Disability Insurance – same again;
• Annual MLS dues;
• License renewal fees (in metro Phoenix, we renew once every 4 years);
• Annual lockbox access dues;
• Individual lockboxes for use at listings;
• The cost of attending various seminars to continue learning and growing as a Realtor;
• Staging Supplies, if any (I have a bedroom closet & dresser filled to bursting with towels, soaps, baskets, shower curtains, sofa-sized art, fake greenery and decorative tchotkes);
• Website developer fees and monthly or annual maintenance fees;
• The costs of buying and installing yard signs, sign riders, posts, and so forth to put at listings (and the cost of removing them all at the end);
• Advertising costs including web, print, billboards, radio, TV, newspaper, supermarket checkout divider thingies and whatever else the Realtor threw into the ad mix;
• The costs of maintaining a home office complete with color printer/fax/scanner/copier, computer with high-speed Internet access, data backup resources, hi-quality digital camera & supplies;
• Buying your own business cards if your Broker doesn’t provide them (most don’t);
• Maintaining a big car that holds lots of people;
• Open house supplies like drinks & snacks, pre-open advertising and buying the actual open house signs;
• The cost of client entertainment and closing gifts;
• Referral fees to other agents who sent you business based on your good reputation;
• The costs of various supplies for printing flyers, postcards and the like as well as buying general office supplies; and finally
• Astronomical monthly cell phone bills – because you’ve gotta have unlimited data, text, web if you’re going to compete in today’s mobile market

Not every Realtor pays for every item on this list every time he/she sells a property or works with a buyer. Me? I run a medium sized business on a very tight ship with minimal expenses. For the past 3 years running, it’s cost me about $30,000 to $40,000 each year to be in business. Big operators spend more. Russell Shaw wrote a post a while ago in which he revealed he’d plowed $500,000 into his business by May 18 of this year. For me, I’ve got to make at least $30,000 in gross commissions before I can begin thinking about my earnings in terms of a salary instead of overhead. That’s a lot of houses sold at $4,000 to $6,000 a pop.

I guess my point is that Realtors pay for all the above out of their own pockets, and do it because doing so helps us service our clients’ needs better. If we don’t focus on our client’s needs, that shows over time and pretty soon we’re out of business.

In any case, next time you catch yourself thinking that Realtors make too much money, remember this post.

And please don’t let this post give you the mistaken impression that I spend all day, every day thinking about me and how much I earn. In fact, I don’t. This post took me longer to write than most because I had to go through last year’s tax files to compile the list of my expenses.

I spend my days and nights just like my clients do – thinking about about how I can get your house sold, or whether now is the right time for you to buy. In short, I spend my days thinking about my clients and their needs. The money follows.

Housing Bill Update

I woke up this morning to find I’d made a major boo-boo in my post yesterday about the housing stimulus bill.

The bill passed the HOUSE on Wednesday, not the Senate. However, the Senate is expected to pass the bill as soon as Saturday (tomorrow).

I’m sorry! To the 300 to 500 people who read me daily, mea culpa. I changed the original post.

I guess it’s an indication of how complex the bill actually is. I was so intent on visiting a half-dozen trusted news outlets’ websites to get the lowdown on all the pertinent provisions of the bill that I mixed up House and Senate. Yikes. It’s a bit off-putting that a very expensive bill being rushed through Congress is so complex that even biggies like the Los Angeles Times, the Wall Street Journal and NPR each report different specific bits of the legislation and none of them ran a complete story.

BTW, in the midst of that research, I found one blog that said the housing stimulus bill contains a provision that requires vendors like eBay and PayPal to report nearly all of their transactions to the federal government. That blogger links to what appears to be the actual text of a Senate document.

But, that document was circulated by the Senate Republican Policy Committee (they’re the minority party and therefore not in complete control of what gets passed into law). The document, dated June 18 (and therefore surely much changed by now) details provisions of the Senate’s substitute bill to the bill passed by the House on Wednesday (HR 3221).

And in any case, the way I read the language in that Republican substitue bill (page 11), any transaction under $10,000 is exempted from being reported. So unless you’re buying and selling very expensive things on these websites, your activity won’t be reported to the feds. But again, this was written by the minority party over a month ago. Who knows what our government is up to today.

Update on Scott Coles Story

The Arizona Republic reports today that Valley financier Scott Coles’ death was officially ruled a suicide.

Note: This post is not accepting comments due to the libelous and dematory nature of the comments previously made, which have been removed.  This blog is not the forum for gossiping about the intimate personal details of others. Try Dirty Scottsdale or The Dirty.

WP Blogs Targeted

It seems there’s a malicious person out there who’s targeting WordPress blogs by adding comments to bloggers’ old posts that contains a virus or something. The code inserted into the comment makes visitors’ anti-virus programs flag your blog as a Malware distributor. Obviously, people aren’t going to visit your blog if their resident anti-virus shield is warning them your site is harmful!

My partner Chris Butterworth got hit.  He’s rebuilding his blog now and having some difficulty with categories.  His categories aren’t displaying properly, but you can rest assured that his blog is NOT a Malware distributor.  I don’t think I know anybody less malicious than Chris Butterworth. You can absolutely visit the ButterHomes Blog safely!

To protect my own blog, I’m temporarily changing the comments policy. All comments must be approved by me before they’re posted. Sorry for the inconvenience. I know from experience that part of the fun of commenting on a blog is seeing your words in print immediately.

Worried about your own WordPress blog? Here’s the info Chris and I found while trying to fix his blog:

The commentor inserts code into several of your old posts. You can see this if you view your old blog posts in html mode. Best I can tell from reading various discussion boards about fixing this problem, you need to search individual posts for the offending text, then remove it.

The comments start and end with the phrase “Traffic Statistics” and contain this info:

• tripleW DOT wp-stats-XXXphp DOT info SLASH iframe SLASH wp-stats DOT  php

(obviously you’d need to replace my DOTs and SLASHes with the real thing when you search the text of your old posts)

See also http://www.pdxtc.com/wpblog/viruses-and-scams/virus-in-a-wordpress-post/

See also http://www.sophieslist.com/2008/trojan-wordpress-blog-get-rid-of-it

 

 

Housing Stimulus Bill Passed, President Says He’ll Sign

President Bush lifted his veto threat and the House passed a housing stimulus package on Wednesday.  Some key provisions of the bill include:

1. $300 Million to help homeowners facing foreclosure refinance their mortgages into FHA loans. The lender would have to agree to take a loss on the original loan and lender participation in the plan is voluntary.
2. $3.9 Billion in block grants to help local communities buy up (often vacant) foreclosed homes, rehab them, and resell them. Fred Karnas, Arizona’s Department of Housing director says Arizona can expect to receive about $100 million of that money, based on a formula that favors states with the greatest number of foreclosures.  With the median home price in the Valley hovering the mid-$200’s, this will help the city buy about 500 homes. (AZ Republic)
3. $15 Billion in housing tax breaks, including a $7,500 tax credit to first time home buyers. This provision applies only to buyers who purchase between April 9, 2008 and July 1, 2009. The full tax credit is available only to homeowners making less than $75,000 (or couples earning less than $150,000). Finally, the tax credit must be paid back, interest-free, over the next 15 years.

The bill addresses Fannie Mae and Freddie Mac’s recent woes. The bill will:

1. Grant an unlimited line of credit to stabilize mortgage giants Fannie Mae and Freddie Mac and allowing the federal government to buy equity in those institutions. (AZ Republic). The Congressional Budget Office estimates that there’s a 50% chance F & F will weather this crisis without resorting to using this money. The two companies back or own $5 trillion in U.S. mortgages — nearly half the nation’s total. (NPR)
2. Create an independent regulator to ensure sound management and operating standards for those lending institutions, including the power to limit the compensation o the companies’ executives. (AZ Repub and LA Times)
3. Impose a new cap on the size of mortgages that Fannie or Freddie can buy or guarantee. In certain high priced locales, the cap will be $625,000, while other in areas the cap will be up to 15% of the median home price. (NPR)

Herbert Kaufman, a finance professor at ASU who used to work at Fannie Mae in Washington, said the legislation should help to lower mortgage interest rates. (AZ Republic).  This is the most interesting to me. Metro Phoenix housing prices have dropped enough in many neighborhoods to be affordable again for folks who were priced out of the market during the boom-boom years of 2005-6. The combination of lower rates and lower prices could be just what the doctor ordered to get metro Phoenix real estate moving again.

The bill includes some important changes to the FHA loan program. 

1. The required down payment on FHA loans is increased from the current 3 percent to 3.5 percent.
2. Another provision of the bill effectively shuts down AmeriDream and Nehemiah Corp, and nonprofits like them, who help sellers pay for buyer’s down payments. The bill bans federal insurance for mortgage loans if the seller pays the buyer’s down payment through a nonprofit intermediary. Can’t get mortgage insurance? You’re not getting a mortgage.

As big as AmeriDream is, they probably don’t have the financial wherewithal to insure mortgages by themselves, so in effect they’re out of business. But this could present an opportunity for a new breed of for-profit companies to issue PMI (private mortgage insurance) on loans where sellers made the buyer’s down payment.  There is a documented slightly higher risk of default among buyers who didn’t save their own down payment. But there are probably also companies out there willing to underwrite that risk.  Give it time.

Interestingly, neither AmeriDream nor Nehemiah has any press releases or other info posted on their websites today. As long time readers of my blog know, I’m a big supporter of these programs, and am very sad and discouraged to see them go. HUD has been trying to get rid of Down Payment Assistance programs since at least October of last year. I’m saddened, but somehow not at all surprised, that HUD very quietly used this popular housing stimulus bill to kill the programs when every other means they tried didn’t succeed. See my entries of October 21, November 1, December 30, March 3 and June 17 for more history.  

Update, 5:30pm Jul 24: My colleague, blogging Realtor Jamie Geiger has more information about the demise of AmeriDream type programs. Jamie is a great resource for buyers and sellers on the far East side of the Valley. I can’t help you out east of Scottsdale Road, but Jamie can!

The following news sources were used in compiling this article:

• AP News Wire, July 23
• Arizona Republic, July 24
• LA Times, July 24
• NPR, July 23

 

New Tech Toy – Wordle

Create a word picture of the content of your blog at Wordle. Like a tag cloud but with colors, and it’s editable. Here’s mine.

 

What You Get for the Money ($2 Million Plus)

This blog is focused on North Central Phoenix, where I live, work, and grew up. So the What You Get for the Money series will include only the ZIP code areas of 85020, 85022, 85024, 85028, 85032, and 85050. You can see these on a ZIP code map here http://maps.huge.info/zip.htm and here http://www.dreimaz.com/phoenix-zip-map2.pdf

Price Band $2,000,000 Plus

North Central Phoenix isn’t hoity toity. As of this writing, there are a mere 88 properties currently for sale in the entire city of Phoenix that are listed at $2M and higher. Contrast that with Scottsdale where you’ll find 632 homes to choose from in this price range or the geographically small town of Paradise Valley which boasts 292 homes above $2M.

In my ZIPs, 7 homes are listed at $2M or higher. Here, $2,000,000 buys you a big home. Of those for sale today, the average size is 5,800 square feet and most sit on about an acre of land. Pricing runs from $2.1M to $2.5M.

 

Four of the 7 homes on this For Sale map are located in the gated Tatum Foothills subdivision (numbers 1, 3, 4 & 6 on the map). This is a neighborhood of only 49 custom-built homes dating to the early 1990’s. They have vaulted coffered ceilings, vast kitchens with luxury finishes like cherrywood & slab granite, and often marble or travertine flooring. Backyard pool areas are large and lavish and some homes have truly beautiful mountain views. Don’t miss up the chance to click the link above to the Tatum Foothills HOA. It’s is too much fun to pass up! The HOA website shows a satellite map of the neighborhood with clickable links to multiple exterior photos of each of the 49 homes. Wow! That’s a proud HOA.

Beyond the luxury homes and beautiful views, a real drawing card of Tatum Foothills is that children here attend the “Three C’s” schools – Cherokee Elementary, Cocopah Middle, and Chaparral High – widely viewed as some of the best in the city. They’re actually in the Scottsdale School District, but these homes are situated to take advantage of the best views and the best schools, neatly wrapped up in sumptuous surroundings. You pay big bucks to live this life – between HOA dues ($3600/year, paid quarterly) and property taxes (avg $9000/yr) you’re shelling out $1,000 per month.

     

The other interesting home in this price band is the former home of Senator John McCain and his wife Cindy. It’s for sale (again!) for a whopping $12,000,000. Yikes! I hear Mike Myer’s Dr. Evil in my head as I type that – Twelve Meeeelllliooon Dollars!

   

This price seems simply silly. The curent owner bought it in Decmeber 2006 for $3,200,000. So in a 2-year stretch of time in which property values dropped about 10% Valleywide (and much much more in outlying towns like Surprise and Queen Creek), the McCain’s former home appreciated an astounding 400%!?  Hmmmmm.  Of course there’s the celebrity factor. And it is 14,000 square feet of livable space situated on just over 2 acres at Central & Glendale.

The home has obviously been  remodeled extensively since it was built in 1951. But it’s difficult to tell if the current owner did anything more than seal the patio pavers, because when Senator McCain’s Realtor had it listed, there were no interior pictures. The descriptive text used by the current Realtor is a word-for-word copy of that used in 2006 by McCain’s agent. Again, hmmmm.

Finally, it is worth noting that house #2 on this list is being sold for its land value. It’s zoned PAD11 wth a potential for 16 multifamily units, per the listing agent. This is prime infill land located just south of Central & Butler and off the Arizona Canal. Will be interesting to see what goes there when the market recovers and small developers come back to our town. Luxury townhomes, anyone?

All in all though, $2,000,000 buys you a pretty nice pad in Phoenix. And of course it goes without saying that if you need help finding your $2M baby, I’m ready to step up. Call me for references.

PPI, CPI, and Others Bump Mortgage Rates Higher

We began last week with the market-bolstering news that Fannnie & Freddie could borrow at the Fed window if they needed to, and this gave mortgage rates a little boost (meaning they dropped). But by the end of last week, fears about inflation and a couple of negative economic reports took over the media space and mortgage rates closed the week generally up about .375 from where they began. 

News You Can Use Tip – When Bond prices move higher, home loan rates move lower…and vice versa.

The bad economic news last week was that the Producer Price Index soared to it’s highest year-over-year increase since 1981. Meanwhile, the Consumer Price Index rose to it’s highest year-over-year level since 1991. The Retail Sales Report was negative too, indicating that retail sales didn’t rise as much as forecasters expected. Seems those tax rebate checks aren’t going so far after all.

This week Thursday and Friday are the big econ news days. On Thursday expect the Jobless Claims report and Existing Home Sales numbers for June. Friday brings the release of the Consumer Sentiment Index and New Home Sales numbers. Forecasters are predicting a little bump in the wrong direction for all these numbers. Me? I’m with ‘em. I think we’ve got a few more months of bad news before we see the light at the end of the tunnel. The AP newswire backs that up.

You can sign up to receive weekly mortgage news from Kristi Collins, my favorite lender at Maricopa Mortgage. Email Kristi at “Kristi AT Marcopa Mortgage DOT com

You can view today’s mortgage rates online at CappMortgage. Or view the Arizona Mortgage Guru’s info-packed blog.

 

Statistics On Sundays, July 20, 2008

photo credit to MiamiAmia,  via StockExchange

A continuing weekly look at For Sale, Pending and Sold statistics by ZIP code (for the ZIPs in which I primarily work which includes 85020, 85022, 85024, 85028, 85032, and 85050). Check back on Sundays for a drill-down look into the numbers in your ZIP code. Have a North Phoenix area ZIP that doesn’t show up here? Email or call me and I’ll add it for you.

This week shows continued slow & steady improvement over last week. The PENDING numbers in every ZIP code covered are up, which is a great sign. The numbers of SOLD homes are up in all but 1 ZIP code, also a great sign.

However, we’re still nowhere near normal for most ZIPs. Most forecasters & Realtors agree that a 6 months supply of inventory is about “normal”. It’s interesting to note that 85024 is very close to that ideal. Sellers in 85024 – don’t despair! You’re near the bottom. Buyers wanting to get into 85024 – hurry up, it might not be a buyer’s market there for much longer.

Want to receive these updates by email? Send me an email with “Sunday Stats” in the subject line. No email spam and I do not sell, rent, share or trade your email address to anyone. Ever.

Real Estate Road Signs – “We Pay Off, You Keep”

I’m noticing an uptick in the number of roadside cardboard signs that have something to do with real estate lately. You know the kind – here in Phoenix they’re usually hand-inked, on cardboard or oak tag, stuck in the ground with a stake.

Surely it’s a function of the bad economy, the looming recession, the credit crisis and the housing ‘bubble’.  Whatever, I figured it would make a good blog post or two. Here’s today’s Real Estate Road Sign:

I didn’t call to find out exactly what scam they’re peddling, but rest assured it isn’t as good as it sounds. No one is going to pay off your mortgage out of the goodness of their heart and not expect something for it. Either they’ll refinance you under their own (probably dubious) terms, or they’ll pay off the mortgage and let you stay in it, as a tenant.

There are some instances where it might be beneficial to let someone buy your home from you and then arrange to stay in it as a tenant. But contact a trusted Realtor or mortgage lender to do it. Placing your single largest financial asset into the hands of someone who advertises on roadsides with hand lettered cardboard signs is not in your best interests.

If this is a refinancing “plan” it probably involves people who look and sound a lot like the Sopranos and there are a lot of other, better options for refinancing if you’re facing foreclosure.

If it’s a plan to buy your home and rent it back to you, be very careful. There are a lot of scams out there now that start out this way, and then whack you with huge penalties if your rent is even an hour late. Worse, some of those rent back to owner schemes allow the company you’re dealing with the evict you from your home without notice if you pay late.

If you’re having financial troubles large enough to even think about calling the number on this sign, you’re probably better off contacting someone about a refinance or a short sale.

Related Posts

1. Real Estate Road Signs – Buy A House with $500 Down
2. Hire a Professional Lender, Not Your Buddy Who Does Mortgages Part Time
3. How Your FICO Score Determines Your Mortgage Interest Rate by the XBroker (not light reading but highly worth your time)
4. The AZ Mortgage Guru updates the status of the federal housing assistance bill
5. Try the federal Hope Now campaign designed to help you stay in your home