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Condos are a Different Animal

July 17, 2013 by · Leave a Comment 

Very often, I work with buyers who are more focused on specific property characteristics (e.g. square footage, # of rooms, interior upgrades, price, location, etc) than the type of property they purchase.  They’d equally entertain a house or a condo with no strong preference either way.  This is particularly true of seasonal “snow bird” residents, who tend to have stronger preferences for location.

Any home buyer who’s considering a Phoenix condo should be aware that they require a different set of considerations than a traditional home, patio home, or even townhouse.

For starters, lending guidelines have tightened across the board, but remain particularly strict for condos.  The owner 0ccupancy rate, reserve fund balance, dues delinquency rate, etc, all come into play in the underwriting process.  The guidelines are so strict that I know of reputable lenders who won’t even take applications for condo purchases.

Compounding the problem is that you’d think you could just call someone at the property management company to determine if a unit qualified for financing, right?  Unfortunately, no.  Even though I (as a Buyer’s Agent) can do some tax record research to assess the possibility of a condo qualifying for mortgage financing, the actual answer won’t be clear until the lender receives the HOA questionnaire from the property management company.  And since some of the variables change monthly, so can a property’s suitability.  Even if tax records and the property manager indicate there have been recent financed sales, a change in numbers could cause a property to no longer qualify once the underwriter actually reviews the questionnaire.

And here’s the kicker: The property management company charges fees of $150 and up to put the packet together and send it to the lender, and even more for expedited turnaround.  Though almost everything is negotiable, it’s customarily the buyer who pays for the HOA packet.

So a buyer could go through the emotional process of negotiating an offer, arriving at an acceptance, conducting (costly) inspections, making arrangements to move, and then learning late in the process that their condo won’t qualify for financing.  Even though the Purchase Contract’s financing contingency calls for a refund of the buyer’s earnest deposit, the fees (emotional and financial) paid up until that point cannot be recovered.

Now, what about cash buyers?  Indeed, underwriting guidelines are irrelevant to cash buyers.  However, cash buyers and non-cash buyers alike face some due diligence concerns that are especially important with a condo purchase:

  • Budgetary and financial health of the community
  • HOA fees and what do they cover
  • Special assessments?
  • Common area maintenance
  • Specific CCR and bylaw restrictions (e.g. no rentals allowed or no BBQs on patios)

So if you are in the market for a condo and will be taking out a mortgage on the property, be sure to have a detailed conversation with your lender before you begin your search.  That could save you valuable time and effort.

And if you move forward, regardless of the type of financing, ask your real estate agent what specific questions they’d recommend you ask to supplement yours when you call the HOA.

 

What Obama’s Re-Election Means for Housing

November 15, 2012 by · Leave a Comment 

Election Day has come and gone and regardless of who you voted for, there will be consequences on the domestic housing market.  This article is courtesy of Jed Kolko, Chief Economist at Trulia.com.

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Refinancing, new mortgage regulations, and the mortgage interest deduction all won on Tuesday. But the best shot at more principal reductions might have been lost.

Throughout the 2012 presidential campaign, both candidates were short on specifics about their housing policy, to put it very kindly. They ignored housing in the debates and acted as if the housing crisis were over. Neither their actions nor their policy statements gave a clear idea of what they might do about housing. But what the candidates DIDN’T do or say helps draw out the differences between what housing policy will look like during Obama’s second term and what housing policy would have looked like with a Romney administration. Here’s what Obama’s re-election means for housing:

1.  The refinancing push continues. The Obama Administration has made it easier for homeowners to refinance at today’s low mortgage rates and plans to make refinancing available to even more borrowers. Refinancing is economic stimulus since it gives homeowners with mortgages more spending money, but it doesn’t help most people on the verge of losing their homes. Although refinancing has been a priority for Obama, Romney made no mention of refinancing in his housing plan – despite strong support for refinancing from one of his economic advisors.

 2.  New mortgage regulations are coming. The Consumer Financial Protection Bureau, established by the Dodd-Frank Act, will set new mortgage standards by January 2013. These standards will define which mortgages are judged to be beyond a borrower’s ability to repay and would therefore trigger legal and financial implications for lenders. These standards, yet to be established, will need to strike a delicate balance between protecting consumers from high-risk loans and giving lenders the incentive to expand mortgage credit. Romney blamed Dodd-Frank for holding back mortgage lending, pledging to “repeal and replace” it. But with Obama’s re-election, Dodd-Frank–and the coming mortgage regulations–is a reality.

 3.  The mortgage interest deduction lives to fight another day.Romney proposed capping overall income tax itemized deductions at $25,000, which would have, in effect, reduced the mortgage interest deduction (which accounts for 35% of the value of total itemized deductions) even for many middle-income taxpayers. Obama, in contrast, is open to cutting the mortgage interest deduction only for the wealthy. Even if deeply cutting deductions finds bipartisan agreement in Congress–and it might–Obama is likely to resist gutting the mortgage interest deduction. Why? The ten states that benefit most from the mortgage-interest-deduction ALL voted for Obama on Tuesday (see table below). The average household in an Obama-voting state claims 66% more for the mortgage interest deduction than the average household in a Romney-voting state. If Obama takes a swing at the mortgage interest deduction, he’ll be hurting his supporters and putting his fellow Democrats in a tough political spot.

 

States with the Most Mortgage Interest Deducted Per Household
# State Average Amount Deducted, $*
1 Maryland $5,920
2 California $5,718
3 Virginia $5,100
4 Hawaii $5,009
5 New Jersey $4,890
6 Connecticut $4,739
7 Colorado $4,625
8 Washington $4,610
9 District Of Columbia $4,581
10 Massachusetts $4,490
* Average amount of mortgage interest deduction claimed per household. Includes households who do not itemize. National average = $3,343.

 

4.  A chance for principal reductions may have been lost. In his housing plan, Romney called for more “shared appreciation” loan modifications. This means that a borrower would get a reduction in their unpaid principal balance but would have to share some of the upside with whoever took the hit for the principal reduction if the home’s value appreciates. Shared-appreciation loan modifications reduce a borrower’s incentive to strategically fall behind on their payments in order to get a principal reduction. This “moral hazard” problem was one reason why many Republicans and the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, resisted the Obama Administration’s call for more principal reductions earlier this year. Shared-appreciation loan modifications are an approach to principal reductions that Democrats, Republicans, and even a financial regulator could all learn to love. It would be a shame if this approach to keeping more people in their homes goes down in defeat.

Via Jed Kolko, Chief Economist – Trulia.com

Experts see home prices increasing in Phoenix

October 30, 2012 by · Leave a Comment 

Metro Phoenix home prices are expected to continue climbing during the next few years.

Housing analysts agree that demand for homes in the region is strong, and many don’t appear to be concerned about prices rising too fast and shutting the door on regular homebuyers or investors.

Several experts are looking for metro Phoenix home prices to climb more than 10 percent annually during the next three years.

“We think Phoenix home prices will appreciate 12 percent in 2013, 12 percent in 2014 and 10 percent in 2015,” said national housing analyst John Burns of Los Angeles.

He said the price increases will be driven by “boomerang” buyers who purchase after waiting three years — as required under new credit standards — following a foreclosure or short sale.

“Our major assumption is continued strong economic growth (for Phoenix) and low mortgage rates,” said Burns of John Burns Real Estate Consulting.

The Phoenix area’s median home price has jumped by 35 percent during the past year, boosting the number of sales by homeowners who are not facing foreclosure or a distressed sale. The price gains in recent months have been smaller than earlier this year.

Matt Widdows, CEO of HomeSmart, Arizona’s largest residential-real-estate brokerage, is also bullish on a further rebound in home prices.

“I would say that in the next five to seven years, we will see (home) prices back to levels we saw in 2005,” he said. “Many (Phoenix-area) homes dropped to one-third of their value in 2005, and I have no doubt that we will be right back to those levels.”

These might sound like aggressive forecasts, but even Arizona economist Elliott Pollack, whose forecasts are often conservative, recently projected Phoenix-area home prices would climb 50 percent by 2015-16.

Metro Phoenix’s median home price is currently $150,000, so it would have to increase at least 11 percent annually over the next four years to reach $225,000, a 50 percent increase.

In May 2005, the median existing-home price in metro Phoenix was $228,000.

Other analysts aren’t as bullish.

Mike Orr, an analyst with the W.P. Carey School of Business at Arizona State University, tracks home sales daily but never forecasts home prices more than a month out.

“At the moment, pricing pressure is upwards, but there is always the potential for prices to dip,” he said. His monthly report on prices is due out this week.

An unknown for the housing market is what the handful of large investors who are buying thousands of homes in metro Phoenix plan to do with them.

If they decide to sell around the same time, the supply of homes could jump, dampening prices.

That’s unlikely to happen, at least in the short term, industry experts say.

“We wouldn’t sell now,” said Justin Chang, a principal with one of the biggest residential investors in the country, Los Angeles-based Colony Capital. “We think (Phoenix) home prices will recover more.”

He said the company wants to create a real-estate investment trust next year and put its metro Phoenix rental homes in the trust, then sell shares to individual investors.

Mark Stark, CEO of Prudential Arizona Properties, believes the increase in home prices has slowed and the market has steadied.

“If additional price increases do happen, I feel they will be gradual,” Stark said. “We’re not looking at any dramatic pricing changes.”

Homebuilding in metro Phoenix was a dominant factor in the housing market until the crash. Many buyers once again are opting for new homes so they don’t have to compete in bidding wars for inexpensive existing houses.

New-home building has more than doubled this year, and the price of new houses is climbing.

“We originally forecast 10,000 permits for new homes this year, but we are going to go well past 11,000,” said Greg Burger, co-publisher of the Phoenix Housing Market Letter.

He said he expects the trend of rising new-home prices to continue for the next few years. The median price for a new Phoenix-area home is $222,000.

“Buyers waiting for the bottom of the market missed out months ago,” Orr said.

Source: The Arizona Republic, 10/28/2012

Phoenix builders acquiring lots – anticipate continued market recovery

September 4, 2012 by · Leave a Comment 

As further evidence that the Phoenix real estate market is in full recovery, many homebuilders are aggressively expanding their land holdings in anticipation of continued recovery.

As noted in the Arizona Republic, Taylor Morrison Homes of Arizona, for example, has already purchased 700 lots in 2012,  has contracts on 1,000 more, and is seeking additional opportunities in Maricopa County.

The builder has communities under construction in the East Valley, but the current focus is on North Valley locations, such as Lone Mountain, Vistancia, Terramar, and parts of Scottsdale.

Charlie Enochs, Division President of Taylor Morrison Arizona, expects the builder to build twice as many homes in 2012 as it did in 2011.

Taylor Morrison isn’t alone.  The City of Scottsdale recently reported a 52% increase in building permits issued over the previous fiscal year.

The uptick in construction activity is a function of resale inventory scarcity, frustration over short sale logistics and waiting periods, and aggressive incentives offered by homebuilders.

From my perspective, it’s refreshing to drive through new home subdivisions and see and hear the hustle and bustle of construction.  For a few years, construction came to a virtual halt.  In fact, in some parts of the Valley you can still see skeletons of subdivisions abandoned mid-build, victims of the housing bust and weak economy.

 

2009 – Home Builders Abandoned Communities

 

 

 

 

 

 

 

 

Today – New Home Construction is Back

 

 

 

 

 

 

 

Considering a new home in Phoenix or Scottsdale?  I have helped many buyers save money by representing them on their new home purchases.  In fact, purchasing a new home without dedicated Realtor representation can cost you big time!

For more information on how a Realtor can help you buy a new home, read this posting.

Justin Interviewed by The Globe and Mail: In hard-hit cities like Phoenix, the home market rises

August 28, 2012 by · Leave a Comment 

When it rains, it pours.

Though I’m not featured as prominently (or with a photo!) as I was in my recent interview with the Phoenix Business Journal, I was contacted out of the blue by The Globe and Mail (Toronto, ON) to comment on rising investor participation in the Greater Phoenix real estate market.  Pleasant surprises like this are uncommon and I am privileged by the opportunity.  I do not advertise in either publication, so this was truly “earned media coverage.”

Read the full article here or below.  They saved the best comments for last…  😉

In hard-hit cities like Phoenix, the home market rises

By PAUL WALDIE

Foreclosures are down and bidding wars are back as U.S. real estate begins to bounce back in areas like Arizona, Miami and southern California

The Phoenix real estate market is suddenly experiencing something it hasn’t seen in years: Bidding wars.

Phoenix used to represent just about the worst of the U.S. housing market, with suburbs full of empty homes and foreclosures running so high that investors gathered like vultures at the county courthouse to snap up distressed properties.

But like its namesake, Phoenix’s housing market is rising. Foreclosures have dropped 20 per cent in the past year and the median house price has climbed about 25 per cent, making the city one of the hottest real estate markets in the U.S. But perhaps the most telling sign of a recovery is the return of heated bidding that has been a long time coming for agents like Maureen Porter.

“A good house in a good neighbourhood will go on the market for two days and they’ll already have five or 10 offers,” Ms. Porter said. “When I started my business [four years ago]there were around 56,000 homes for sale in Maricopa County [which includes Phoenix] Now there’s about 12,000 homes for sale.”

Ms. Porter said she recently took two clients from Vancouver to look at a 70-lot housing development in Goodyear, a community outside Phoenix.

“It was all dirt, there were maybe two homes built,” Ms. Porter recalled. “We walked into the presentation centre and everything but two lots were sold out.”

The housing market is showing signs of life across the U.S., with existing home sales and the median price up about 10 per cent year-over-year, hitting levels not seen since the summer of 2010. Sales and prices have been rising steadily for months, proof that the long-suffering real estate sector may have finally turned the corner. Buyers are returning thanks to an improved employment picture, record-low mortgage rates and near-bottom prices.

Housing is a critical component to the U.S. economy and improvements in the sector usually lead to a boost in consumer confidence, employment and spending. All of which is good news for the Canadian economy, as well.

The real impact of the recovery can be seen in places like Phoenix, Miami and southern California, which were among the hardest hit during the recession. The supply of homes for sale has dropped in all three locations as banks move quickly to unload troubled properties, often through “short sales” where mortgage holders get permission from lenders to sell their property for less than the amount owed. Banks often prefer short sales to foreclosures because they are a faster way to deal with borrowers.

In Miami, the median price is up 15 per cent from a year ago and the occupancy rates in downtown condominiums is 94 per cent. Southern California has a four-month supply of homes for sale, roughly two months less than what is considered a healthy market, and foreclosure sales have reached a four-year low.

Phoenix offers some of the most dramatic evidence of the turnaround. This is a city where house prices fell by up to 50 per cent during the recession and people walked away from their homes in droves, leaving vast stretches of empty neighbourhoods. Today the number of homes listed for sale has dropped by 64 per cent in the last year and foreclosures have fallen by 20 per cent. The market has tightened up so much that prices are jumping 5 per cent each month and buyers are competing fiercely for just about anything that’s available.

“We’ve now got a fully fledged buying frenzy going on while people try to buy something before they miss the boat,” said Michael Orr, director of the Center for Real Estate Theory and Practice at Arizona State University.

Last week there were roughly 12,000 homes listed for sale across the city. That compared to more than 50,000 around the same time last year.

Despite the current boom, the market still has a long way to go. The median price is now about $135,000 (U.S.). That’s still well below the peak in 2006, when it reached $265,000, and it puts prices at about the same level as in 2000. And although the number of existing homes sold in April across the country rose to an annualized rate of 4.6 million, economists say a healthy U.S. housing market would see almost 6 million sales of existing homes a year.

Much of the activity is also being driven by outsiders, many from Canada, eager to snap up investments. In Phoenix, the number of “investor flips,” people who buy houses and then re-sell them quickly for a profit, has increased 31 per cent year-over-year, according to Mr. Orr.

But with prices rising quickly, good deals are harder to find. Three years ago, dozens of investors lined the steps of the courthouse in downtown Phoenix to bid on foreclosed properties, many going for well below $100,000. This week only a handful of bidders showed up for the auction and just four houses sold.

“The days of getting a property under $125,000 are slim to nil,” said Diane Olson, a real estate agent who caters largely to Canadians.

The question for many agents like Justin Lombard is whether this is a blip or a real recovery. He is cautiously optimistic.

“We’ve seen such steady progress in the way of inventory absorption that I’d be really surprised if we took a big backward step,” he said. “We hit bottom a long time ago. It’s just that a lot of people didn’t realize it because our bottom was so bad.”

Justin Interviewed by Phoenix Business Journal: Investors Driving Up Phoenix Housing Prices

August 25, 2012 by · Leave a Comment 

Every now and then I have a media opportunity that’s too exciting not to share.

Recently, I was interviewed by the Phoenix Business Journal, complete with photo op.  The Phoenix Business Journal is the leading business publication in the state with wide readership and I do not advertise in the Journal, so this was a great honor.  Unfortunately, full online access to the story is limited to subscribers, so I can only include the preview.

Investors returning to Phoenix housing market, driving prices up

Real estate investors and short-term flippers are back in town — for better or worse — and once again they’re dominating the housing market for sales of less than $250,000.

Investors are buying those homes with cash, which is pushing up prices in the long-downtrodden local market, tightening inventories and squeezing out traditional home buyers.

Justin Lombard, owner of Stone House Realty of Arizona, says cash sales are starting to dominate the local housing market, preventing many buyers from finding homes.
Jim Poulin/Phoenix Business Journal

Justin Lombard, owner of Stone House Realty of Arizona, says cash sales are starting to dominate the local housing market, preventing many buyers from finding homes.

“It’s very much like 2005 all over again at the entry-level segment,” said Justin Lombard, owner of Stone House Realty of Arizona in Phoenix.

Lombard said cash sales are starting to dominate the market for less expensive homes, as some sellers are looking specifically for …

Only subscribers can read the remainder of the article…click here if you’re a subscriber.

Phoenix Area Real Estate “Shadow Inventory” – Fact or Fiction?

August 20, 2012 by · Leave a Comment 

There are few absolute certainties when it comes to Phoenix real estate, and the debate about the so-called “shadow inventory” is no exception.  If you’re not aware of that term, it refers to real estate that the banks have already acquired via foreclosure and are holding onto for the perfect moment to dump them back on the market.

Many real estate aficionados believe that the shadow inventory is not only going to quell our current market recovery, but is actually going to lead to a double-dip housing bust.

The truth will only be borne out in time, as it is impossible to accurately determine numbers of properties being held across all the different lending institutions, as well as the status of negotiations with existing homeowners in default.

A number of details seem to indicate that the Phoenix area housing market won’t be subject to a shadow inventory effect.

  • Mike Orr, real estate analyst at ASU’s W.P. Carey School of Business, recently reported, “There is still no sign of any significant new supply of homes coming onto the market, and those who anticipate a flood of bank-owned ‘shadow inventory’ are likely to be very disappointed.
  • The Mortgage Bankers’ Association reported last week that Arizona’s mortgage delinquency rate fell from 6.5% to 6.2% since the start of 2012, placing Arizona 35th in the nation in delinquency rates.
  • Filing of Notices of Trustee Sales in Maricopa County fell again to 3,219 in July 2012.  It was 4,328 in May and 3,711 in June.
  • Bank owned sales as a percentage of total monthly sales has also fallen steadily, despite a very tight inventory supply.  Here’s a graphic from R.L. Brown Reports that illustrates the trend:

At the moment, most indicators point towards the fact that there will not be a shadow inventory dump in the Greater Phoenix housing market, but only time will tell.  If the banks are holding significant inventory, with a 25% rise in the median sales price in the last 12 months and continued tight inventory levels, now would be a good time to start selling it off.

 

What do you think?  Are we going to see a shadow inventory release in the upcoming months?

Trust in Justin Standard of Service: I don’t take phone calls!

August 16, 2012 by · Leave a Comment 

WHAT?!

You read that right.  I DON’T TAKE PHONE CALLS…while I’m in appointments.

Have you ever scheduled an appointment to meet with someone only to find they spend more time on the phone and answering the phone during your appointment than they do actually meeting with you?  It’s a personal pet peeve of mine that I’ve addressed in my business.

Could the caller be a hot lead for a new listing?  Or a buyer hoping to interview me as their Phoenix Buyer Agent?  Absolutely.

But a have implemented a Service Standard that says scheduled appointments take precedence over all other interruptions, except in the case of a rare emergency.  You’ve waited your turn to meet with me, so why is it fair to allow someone else to essentially cut to the front of the line?

Does that make me less accessible to my real estate clients?  Not at all!

If the issue is important enough for someone to leave a voice message, I promise to return the call as soon as my appointment ends.  Anyone who interacts with me knows that I am super-accessible and that I return calls!

How about you?  Do you care when someone you’ve scheduled time with doesn’t give you their uninterrupted attention?

National housing market showing some signs of life

August 6, 2012 by · Leave a Comment 

This article from FoxNews.com highlights one of the main attractions to the Greater Phoenix area real estate market — even as our supply dwindles, prices remain low relative to “the boom years” of the mid-2000’s.  For those who qualify for financing, interest rates remain close to all-time lows.  Neither of these dynamics will last forever.

Here’s the article: 

It’s hard to make any firm categorical statements about today’s economy, but recent data and anecdotal evidence suggests that the battered housing market is finally on the rebound.

Homeowners, if they’re still fortunate to own a home through the past few years, have endured precipitous drops in valuation, and many still have homes that are worth less than what is owed to the bank. Nonetheless, in places across the country there’s evidence that prices are on the rise.

Analysts report that historically low interests rates, foreign investors and natural market forces are driving home prices back up. This week’s report by S&P/Case-Shiller showing prices in the nation’s largest metropolitan areas up by 2.2 percent gives credence to the sense that at least in some places the housing market is on an upward trend.

After delaying her retirement by a year because of the economy, Sheri Gingerich is now a new homeowner in one of the hottest places in the country–Phoenix. The housing market there is heating up, too.

“To find [a home] on a golf course that was affordable compared to five years ago was to me astronomically the exact thing that worked out to our benefit,” Gingerich said while taking a break from moving into her new home outside Phoenix. The Minnesota native paid $240,000 for the home far enough from the fairway–she hopes–not to attract wayward golf balls. She says the house would have cost considerably more a few years ago and that she wouldn’t have been able to afford it then. But now, the perfect retirement home fits perfectly into her budget.

Gingerich’s realtor says business really picked up at the start of the year and has kept on going strong even into the usually slow summer months. “Oh my God, it’s just been a really great experience the last couple of months with people coming in and really feeling like this is the time to buy,” Kathleen McMullen said. “So I think [buyers] attitudes are all upbeat and I think the economy is taking a shift and Phoenix is really coming back–bouncing back quickly.”

McMullen’s data shows homes that once were on the market for nearly a year are now selling in a month or two and that Gingerich is part of a trend. “Right now, the good news is, in the Phoenix area — all the cities around Phoenix — all of the home values have increased up to 3 percent. And in other places [too]. So, this is not a unique experience at all.”

The chief economist for the National Association of Realtors says while Phoenix may be a hotter market than other places it’s not too far out of line from the national picture. “The market is showing improving signs,” Lawrence Yun recently told Fox News. “We have seen the home sales rise roughly 10 percent higher this year compared to last year. And it looks to close out the year at a five-year high. So we are beginning to see a much improved condition after some tough years in the prior years.”

Yun attributes the rise in prices to an influx of buyers from overseas or investors with lots of cash who are able to buy homes as investments.  Nonetheless, he added, “the first time buyer still comprise about one-third of the market. So you are seeing a very broad-based recovery. Everything from New England, Florida, middle America to the Western coast, the sales are improving.”

As for the rest of the year, Yun predicts a modest increase in home prices and bases that on historical trends of supply and demand about inventory.

“Historically, the supply and demand balance has been about a six month supply of inventory. Now in the past few years it’s been in the double digit months of inventory so there are too many sellers in relation to the buyers.  Now the market is roughly in balance and historically when that is the case home values rise roughly three to five percent annually.”

Source: http://www.foxnews.com/us/2012/08/03/housing-market-showing-some-signs-life-513479913/

Phoenix sets pace in national real estate recovery

July 17, 2012 by · Leave a Comment 

This article from CBS News discusses the fact that the Phoenix real estate market is serving as a “beacon of hope” for other housing markets that were crushed by the real estate bubble.  Much of the success of the Arizona housing market in rebounding so quickly is being credited to the streamlined non-judicial foreclosure process, which has helped the inventory absorption rate.

Here’s the article:

PHOENIX — The Phoenix metro housing market is seeing a rise in home prices and a decline in the number of houses on the market, putting the area ahead of most other U.S. cities on the road to recovery, according to real estate experts.

Economists say the upward trend in the Phoenix area may serve as a beacon of hope for other cities across the nation that suffered when the housing bubble burst.

“The Phoenix market will be a benchmark city to monitor for residents in Las Vegas, the Inland Empire of California and … the Florida market,” said Lawrence Yun, chief economist with the National Association of Realtors.

The median price for Phoenix-area homes in May was about 30 percent higher than it was the same time last year, according to a monthly report released by the W. P. Carey School of Business’s Center for Real Estate Theory and Practice at Arizona State University. The report also shows there are about half as many houses on the market as there were the same time last year.

The Phoenix area market was one of the hardest hit in the nation in terms of distressed properties, but the state’s foreclosure system allows it to work through the backlog more quickly than states in which foreclosures have to go through the judicial process. Banks and mortgage companies have the power in Arizona to foreclose homes without a judge’s approval.

Nevada’s foreclosure system is largely the same. Nasser Daneshvary, director of University of Nevada, Las Vegas’s Lied Institute for Real Estate Studies, said speedy foreclosures are healthy for the market. Too many foreclosures can sink home prices, as happened in both Phoenix and Las Vegas, but Daneshvary said a return to the depths experienced during the housing collapse isn’t likely in either city.

Arizona’s job market, with an unemployment rate that’s down to 8.2 percent from its March 2010 peak of 10.8 percent, is also a factor in real estate improvements. Yun said other areas that have sluggish job markets are likely to see slower real estate recoveries, with fewer people able to buy homes.

Michael Orr, director of the Center for Real Estate Theory and Practice at ASU’s Carey school, said dwindling housing inventory, coupled with prices that are still relatively low, means sellers now hold the power in the Phoenix-area market, and receive multiple offers, many of which come from investors who are looking to buy and rent out houses.

“Now we’ve got too few homes. Everybody’s wishing the investors would go away and stop buying, but the investors are still here buying everything they can with cash, which makes it pretty difficult for ordinary home buyers to compete,” Orr said.

Sandy and Luis Solis said they found that to be true. The couple, who moved from Los Angeles to Scottsdale last year, said the rapid decline in homes available in their price range made them feel hurried to buy. They made offers on three homes but were outbid by cash offers twice, the second time by an investor. They’re in the final stages of closing on a house in Phoenix.

“We were kind of losing hope that we were going to find the right home for us,” Sandy Solis said.

Las Vegas and some cities in California are seeing similar situations. Daneshvary said investors who buy housing for the purpose of renting are better for the market than others in the past who have purchased houses just to flip them. He said by the time investors stop buying, the market will be healthy enough to remain stable.

With houses in short supply, the construction industry will step in to fill the void. Orr said home building in the Phoenix area is slowly beginning to pick up, but it will likely be stifled by a shortage of construction workers in the state. He said Arizona has lost “80 to 90 percent of that skilled workforce” in the last six or seven years because workers have gone elsewhere or left the industry altogether.

Orr said the Phoenix-area’s home market recovery will likely level out over the next few months.

“I just don’t want people to think the next quarter is going to accelerate at the same rate,” Orr said. “That’s not likely to happen.”

That, Yun said, is a sign that the market will recover in a more healthy way.

In the long term, some city’s housing markets may end up in better shape than they were before the housing market crash. Yun said parts of Texas, Oklahoma, Nebraska and the Dakotas didn’t experience huge housing market losses but are benefiting from widespread improvements in economies.

 Source: http://www.cbsnews.com/8301-505245_162-57473281/phoenix-sets-pace-in-national-real-estate-recovery/