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.
The Phoenix real estate market is wide open with exciting opportunities for prospective homebuyers. With astute research and some negotiating, opportunities abound. The downside to any imbalanced market is that the presence of a clear-cut winner also implies the presence of a losing party.
The Scottsdale real estate and Phoenix real estate markets currently face among the highest foreclosure rates of any major city in the United States. The huge boom cycle of 2002-2006 has created an echo where an increasing number of homeowners find themselves in financial distress. What can homeowners do in this situation to possibly avoid foreclosure and keep their homes?
- Don’t ignore the issue! They say ‘ignorance is bliss,’ but it’s also one that’s paid for in spades when you’re talking about financial delinquency. Act now & you will minimize the negative consequences.
- Let your lender know! Contact your lender the moment you recognize that you could be in trouble. Now more than ever, lenders are working hard to keep borrowers in their homes and keep their real estate holdings down. Banks aren’t in the business of owning homes…
- Read the mail from your lender! Be sure to open all mail that your lender sends to you. You need to know exactly where you’re at and what your options are.
- Seek professional advice! There are a few professionals that you should contact the moment you recognize that you may be in trouble: a good Phoenix Realtor, an attorney, your accountant, and the loss mitigation specialist at your bank. Each of these professionals can provide targeted advice to help you make the right decisions for your particular situation. It is critical to know your rights and the options that are available to you at every stage of the process.
- Call HUD! Did you know the US Department of Housing and Urban Development offers low-cost (sometimes free!) counseling for distressed homeowners? Why not let a knowledgeable HUD Counselor discuss your options with you? Call (800) 569-4287 to reach HUD.
- Pare down your budget! Take a close look at your household budget for miscellaneous expenses that might be pared down or even eliminated. Do you really need that subscription to Netflix? Or the premium cable TV subscription? Several small reductions in your budget can make a huge difference in your ability to make payments on your home.
- Increase your readily-available cash! Brainstorm on ways you might be able to increase your monthly household income and/or contribute to your savings. Is a 2nd job possible? Can you sell the quads or the boat to cover the next few months’ worth of payments?
- Beware! When your lender sends you the 3rd notice that you’re delinquent on your house payment, it also files a Notice of Public Default. The Notice is a public-domain filing that notifies those who look for it that you’re behind on your payments and at risk to lose your house to foreclosure. Some companies, both ethical and unethical, will approach you with options to prevent foreclosure. So-called foreclosure prevention companies will charge you fees to negotiate with your lender, which you may be able to do just as successfully on your own after consulting with a HUD counselor. Another common scam is for someone to approach you with the promise of stopping foreclosure action on your home by having you sign the home over to them and becoming a renter. Some services are ethical and above-the-board, but many are not. In general, if someone asks you to sign your house over to them and lease it back as a tenant, it means you have enough equity in your home to be able to sell it through traditional channels or to figure out a workout with your lender. In the worst cases, your property could be ‘given’ to the scammer who then sells it out from under you. If you decide to work with a foreclosure prevention specialty company, be sure to review VERY CLOSELY any documents that you’re asked to sign. Even better, have them reviewed by an attorney or a trustworthy Realtor.
A report released last week by Arizona State University revealed that property values fell 18% year-over-year from April 2007 to April 2008. Foreclosures are mostly to blame for the decline, as buyers gobble up deals as banks get more and more aggressive with their ever-growing REO holdings. In fact, estimates indicate that 20-30% of April sales were foreclosures.
Now is an awesome time to snap up some amazing investment properties or to consider moving up to a new Phoenix or Scottsdale home. Consult your Realtor for a list of foreclosures and short sale properties, or for deeper analysis of today’s market. A professional with experience in finding and acquiring the ‘right’ properties can be an invaluable asset in maximizing your return on investment.
If you’re a home seller in today’s market, it’s equally important to work with a qualified professional so as to maximize your chances of selling for top dollar in the shortest time possible.
An article in the Wall Street Journal today (read it here) claims it’s ‘very likely’ that April marked the bottom of the US housing market.
The article contends that our market is at or near all-time lows in several key categories so that the main ingredient in a healthy market, affordability, is back.
The correction means that it NOW takes a only 19% of a family’s household income to pay an average mortgage than it did just a few years ago, when it rose to 25%, causing many people to avoid buying homes. People that could not afford a home 3 years ago are suddenly able to consider purchasing.
With affordability and low interest rates, the article asserts, the market will begin a slow upward correction.
The article further points to historical market trends that show inventories begin to decline within 2 months of the bottoming of the market. The assumption here, of course, is that our market has bottomed out.
Well, has our market bottomed out? Is the housing crisis over? I have not researched enough recently to support my position, but from my vantage point as a busy, full-time Realtor, our market has picked up over the past 2 months. Phoenix real estate and Scottsdale real estate, in particular appear, to be turning over more quickly. As mentioned in another recent post, we’ve been involved in several multiple bid situations in recent weeks and investors are returning en masse to our market.
I believe a return to even modest appreciation levels of 4-6% per year, are still 18-24 months off, possibly more. However, I believe we will see prices hold steady and begin to slowly appreciate in the near term.
Congress and the President are going round and round over the right mix of reforms to help the flagging housing market.
Nothing has officially been settled yet, but recent moves by Republican Congressmen to back Democrat-proposed legislature could get the President’s attention.
Reforms proposed by Congress include:
- $300 billion in FHA insured loans for financially-strapped homeowners
- A $7,500 credit for first-time homebuyers
- Overhauls of the FHA, Fannie Mae, and Freddie Mac
- Permission to state and local housing authorities to use tax-exempt bonds to finance distressed subprime mortgages
President Bush vehemently opposes legislation that would assist lenders and/or speculators, and would prefer to focus on homeowner assistance. Case in point, the President is expected to veto a $15B assistance program to be offered to the states hardest hit by foreclosures, saying it would benefit the very parties who are most to blame for the current sub-prime meltdown.
The issues of who to help, and how, is incredibly complicated. There are so many different parties to blame, from lenders and loan officers, to homebuyers, to Realtors, to the government itself for not stepping in earlier to avert today’s foreclosure crisis. The challenge is that, while there may have been SOME opportunistic loan officers, SOME homebuyers who bought more than they could afford, and some Realtors who may have knowingly failed to council said homebuyers, the bulk of the blame does not lie squarely on the shoulders of any of these groups.
With respect to Phoenix real estate and Scottsdale real estate, I can’t help but feel for the responsible homebuyers who purchased properties at the height of the market, responsibly, often with 20% down, who now have no chance of even breaking if they had to sell today. What do you do to help these buyers, who were victims of nothing more than bad timing?
The following post draws heavily on points from a recent article written by Michelle Lind, General Counsel for the Arizona Association of Realtors, and merits the attention, in light of its relevance in today’s mortgage market:
Here are some options and resources for a homeowner in default.
Contact the Lender or a HUD-Approved Housing Counseling Agency
The natural reaction by many homeowners is to hide their heads in the sand in denial, until it’s too late. To the contrary, the sooner you approach your lender about your situation, the more likely you are to work out a favorable resolution to your difficult situation.
When you call your lender, ask for the “Loss Mitigation Department” or the “Department responsible for negotiating loans in default.” Explain the situation to them and find out if there are any loan workout options.
If you don’t want to talk to the lender directly, contact a HUD-approved housing counseling agency, who can contact the lender on the homeowner’s behalf.
When you call your lender or counselor to discuss your options, have the following information on hand: loan information, monthly income documentation (pay stubs, tax returns), monthly expense documentation (utilities, child care, car payments, etc.). The lender may also require the homeowner to complete and return a loan workout package.
Possible Loan Workout Options
Possible workout options include:
- Reinstatement: Paying the total amount owed in a lump sum by a specific date in exchange for forbearance.
- Forbearance: An agreement to reduce or suspend payments for a short period of time.
- Repayment Plan: An agreement to resume making monthly payments with a portion of the past due payments each month until they are caught up.
- Loan Modification: An agreement to change the terms of the original loan to make the payments more affordable. For example, missed payments can be added to the existing loan balance, the interest rate may be modified, or the loan term extended.
- Claim Advance/Partial Claim: If the loan is insured, the homeowner may qualify for an interest-free loan from the mortgage guarantor to bring the account current. If so, the homeowner will be required to sign a promissory note and a lien will be recorded against the home until the loan is paid in full.
The Option to Refinance with Another Lender
If the lender will not agree to a workout, you can look into refinancing the loan with another lender. Resources include:
Sale Options to Avoid Foreclosure
If neither loan workout nor refinance is an option, you may consider selling the property. The lender may elect to work with the homeowner to sell the home and avoid foreclosure. The options include:
- Work Out Sale: An agreement not to foreclose for a specific amount of time to allow the home to be sold and the loan to be paid off.
- Short Sale: In a situation where there is more debt owing against a property than the property’s value, the lender may agree to allow the property to be sold for less than the loan amount and/or accept less than the amount owed as payment in full.
- Assumption: The lender may allow a buyer to assume the loan and purchase the property even if the loan is non-assumable.
Deed in Lieu of Foreclosure
The lender may allow a homeowner to give back the property, an option that may not be possible if there are other liens against the property. Other resources include:
Be Aware of Predatory “Rescue” Scams
While there are many reputable and ethical groups that can help homeowners out of their desperate situation, there are also many predatory scam artists who troll the foreclosure lists for susceptible homeowners. Common scams include:
- Loans with high interest rates and unaffordable repayment terms
- Loan assumptions where the homeowner is not released from liability on the loan
- Offers to repay the loan or sell the property if the homeowner signs over the deed
- Counseling agencies that offer counseling for a fee when it is available at no cost
Remember, if it sounds too good to be true, it probably is. Be sure to report suspected scams to the Department of Financial Institutions.
Naturally, one of your best allies and advocates is an experienced and reputable Realtor.
I experienced what for me was a Phoenix real estate ‘first’ today.
I was asked to help short sell a property of a married couple with “perfect credit” and no delinquent payments to any creditors. To further complicate matters, a tenant is moving into the vacant property, thereby creating additional revenue. They claimed their expenses exceed their income, thus a case could be made for hardship. Unfortunately, in the eyes of a lender, perfect credit + no delinquencies = no hardship.
It would not be ethical for me to take a listing that I don’t believe is sellable if the owner’s expectation is that it will be sold, nor would it be right to represent a property as a short sale when it won’t qualify. I declined the opportunity.
Might it turn into a viable short sale prospect in the future? Sure, at which time I’ll be happy to help get it sold…