Here we discuss all matters Real Estate, with an emphasis on Tucson Arizona. We welcome your story ideas. Via Realty is a boutique real estate company founded on Jan 1 2000 by 2nd generation Arizonan Wayne D Anderson, a Realtor since 1989. www.ViaRealty.com 520) 327-1550. Equal Housing Opportunity.
Saturday, December 15, 2007
According to the media, there has been an "explosion" of foreclosures in our marketplace. This is not necessarily the case. The average percentage of defaulted loans in Arizona since the early nineties has been about 1.5% of the total mortgages, now it is about 3%. Of course, that is a 100% increase in defaults, but the media neglects to mention that 97% of the borrowers out there are still current with their loans. Of course, things may get worse, but let's save the bleak headlines for when (and if) it really gets bad.
Another misconception is that the main cause of all of the secondary loan market problems are non-performing loans (defaults) Not true. The primary problem that lenders have encountered is a lack of liquidity. Managers of retirement funds, insurance company portfolios and others who have traditionally invested in mortgages are now holding back and are reducing their exposure to mortgage backed securities.
The current solution to this crisis is to "freeze" adjustable rates for some sub-prime borrowers. My question to you is: Do you think that government tinkering with mortgage yields will help or harm the secondary mortgage market? Will an investor want to buy a mortgage if the yield can be arbitrarily changed by the government, in the name of rate relief for the consumer? I think not.
So what is a "Short Sale"? A short sale is a sale of a home for less than the mortgage that encumbers it. The Seller will net no money in the sale. The lender will not agree to a short sale if the seller has other assets (IRA, other property, etc) Properties that are listed in the MLS as a "short sale" may not necessarily sell for the price that it is listed for since the lender has to sign off on the deal. Response times can be long. It is not a sure thing. There is a lot of homework for the seller and listing broker to do, and you may not know how far along they are in the process when you make your offer.
So how many properties are involved in "short sales" here in Tucson? Let's look at central Tucson for now. According to the Tucson Association of Realtors MLS, since June 18th 2007, there are currently 19 single family homes listed as "short sales," 5 more with offers on them, 4 "Expired," 7 sold, and 23 withdrawn or released. These are not huge numbers, but bear watching. I will later post the numbers for all of the MLS.
Next Post: Foreclosures!
Saturday, December 8, 2007
New homeowners here who can hold on to their homes for the long term and those who buy now with the expectation of living in their home for the next 5 to 10 years should be OK, because frankly, Southern Arizona is a better place to live than the Rust belt, Snow belt, Florida or California. Freezing, retiring Boomers are coming, and they have their parents money as well as their own to spend. This will help our market.
Some people ask: “How can the Boomers move here if they cannot sell their existing homes?” People all over the United States, even in this slow market, are selling their houses, although sometimes at prices that are lower than they expected. We are not in a "no houses are selling" market, just a slow market after a big up tick. Interestingly, the National Association of Realtors once defined a "stable market" as having 180 day market time, something we have not seen here in years. Perhaps we are a little spoiled.
The Boomer generation is massive, not just what uninformed skeptics call "few old people.” Those future retirees who have not mortgaged themselves to their eyeballs have a lot of accumulated wealth. According to an ABC news story, median household wealth for boomers is estimated to be $600,000. Many of these Boomers will come here to live.
I am optimistic about Southern Arizona’s future for several other reasons. Our community has a great University, excellent hospitals, and a friendly population. Houses are still cheaper here than in in many west and east coast cities. Canada is another wild card: with a strong Loonie (Canadian Dollar) an aging population and a generally unpleasant climate many will choose to buy a winter home here. Until you have lived in the Snow belt (and I have) you will never value a Tucson winter as much as a snowbird.
A final observation:: Some of these "old people" will bring skills, expertise and abilities that will vitalize our community. The days of the geezer on the front porch are diminishing fast. Seniors are increasingly adept with technology and will bring a lot to the table, even in their last years on this planet. I welcome them here.