Mortgage Rates Decline to 2 year Low!

30-Year Mortgage Rates Fall to 2-Year Low Concerns that a severe housing downturn and prolonged credit crisis could rattle consumer confidence and hurt the broader economy contributed to a sharp drop in mortgage rates this week, according to Freddie Mac. Interest on 30-year fixed loans sank to 5.96 percent from 6.10 percent last week, landing at the lowest point seen since September 2005.Borrowing costs on 15-year fixed products fell to 5.65 percent from 5.73 percent over the week and five-year adjustable-rate mortgages were down to 5.75 percent from 5.86 percent, but one-year ARMs bucked the southward trend by bumping up to 5.46 percent from 5.43 percent. "With lower consumer spending and personal income gains in October, interest rates on U.S. Treasury securities fell lower this week and mortgage rates followed," said Freddie Mac chief economist Frank Nothaft. Source: Baltimore Sun (12/07/07)

Snowbirds: Is Florida Out?

A Canadian friend e-mailed this link to me today. It's a story from the Toronto Star outlining the apparent reluctance of Canadian Snowbirds to commit to the purchase of Florida real estate now despite the abundance of properties for sale, a big decline in prices and a historic upsurge in the Canadian dollar or "Loonie." Reasons cited were the general negativity of the local professionals and press regarding Florida's real estate market, excessive insurance rates for coastal properties due to the threat of future hurricanes, and an unfair tax structure for non-resident owners of Florida real estate.

This bodes well for Arizona. Unlike Florida, non resident owners of real estate here are not punished at tax time, we have no hurricanes, and hazard insurance rates in Southern Arizona, although climbing, are not anywhere near what Floridians are paying. We also have an abundance of real estate for sale, and prices have dropped to more reasonable levels since 2005. This is a great time to buy, and sellers are more motivated than ever.

And the Sun shines here a lot! (over 300 days a year!)

So to my Canadian friends I say: Take a look at Tucson. Your Loonie goes a long way here. Bring your golf clubs too. Find out what Tiger already knows: Tucson is a great golf city as well.

Marana Buyers Beware!

There has been a lot of worry and confusion lately over FEMA's remapping the flood plain designations of a large area of Marana. The bottom line is this: If your home sits in a designated flood zone, your lender may require that you purchase flood insurance. The implications are huge, involving flood insurance fees that will be tacked on to homeowners (who have mortgages) monthly mortgage payments. Even if a homeowner paid cash for their home and has no mortgage that requires flood insurance, this new development will affect the resale of their home, since lender-required flood insurance may take potential buyers who require mortgages out of the running. The new monthly payment, which will include flood insurance, may make their payment higher than what they qualify for. Here is a link to Marana's floodplain page.

Opportunity Knocks or Another reason not to read the newspaper

The media helped inflate the "boom" in 2005 by urging buyers to pay whatever the Seller was asking or more, require no home inspections, and request no repairs in their offers. Now they are telling us that the market is going to Hell in a handbasket. Stories like this are why I no longer own a TV and rarely read the local papers.

Citing a nearly insignificant .29% drop in homes prices in Arizona last quarter and an even smaller .07% drop for Tucson, Capital Media services reporter Howard Fischer claims in an Aug 31 2007 Arizona Daily Star story that this drop of what would be about $580 in the price of a $200,000 home is “Good News for buyers” but signifies a “cold” Arizona real estate market. People spend more than this at Starbucks in 6 months.

Let’s put the market in perspective: In 1991, the average sales price for a home in the Tucson MLS was $97,352. That number steadily rose over the years to the current average price of $268,984. This is an increase in the average sales price of almost 180%. Those who have owned a home over the past five years have done just fine, seeing a 90.78% change in home values in Arizona and a smaller, although impressive 79.09% increase in Tucson.

New homeowners in Tucson who continue to live in 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, Tucson is a better place to live than in the Rustbelt, Snowbelt or California.

I lived in Toronto for 5 years and will take a Tucson summer over another winter in the Great White North any day. There are a lot of retiring Snowbird Boomers who feel the same way. Like it or not, our city will continue to grow.

Opportunity knocks.

Broadmoor is My Neighborhood

On one early morning walk a few weeks ago, I came upon this sight along the curb of Arroyo Chico. Walking a little further, another brick appeared, then another and another. "Someone went to a lot of time and effort to do this" I thought, and watching a family of quail scurry across the road and hop the brick on the way into the Arroyo, it was confirmed to me that it was time well spent. I later learned that this project was the brainchild of neighbor Cindy Elliott. What a labor of love and in fact, a great example of what is good about our neighborhood.
People make our neighborhood great. From those who drop in on our elderly neighbors to check on their welfare, to the ones who console us when we lose a family member or even a pet, the people in our neighborhood have a sense of community that values others and it is expressed in as many ways as there are households.
Some of our neighbors take on the often thankless job as an officer in the neighborhood association, organizing meetings, editing the newsletter, collecting the modest dues and in the course of duty, defend our neighborhood from unfeeling bureaucracy. Did you know that there once was a plan to turn the Arroyo Chico into a cement culvert? Well the tireless efforts of some of the members of the BBVNA brought a stop to that. The trees that shade us on the east end of the Arroyo are thanks to the vision and efforts of the association too, as are the stone gabions on the west end.
Some of our neighbors keep a close eye on the neighborhood while they are out and about, looking for graffiti and organizing paint-over details. Some keep a watch on the Arroyo Chico, notifying authorities of unusual activities. Don't get me wrong, this is not a neighborhood of snoops, but one with just the right mix of awareness, caring and community.
A great expression of that community is the annual Fourth of July parade. Probably one of the best attended neighborhood holiday parades in town, scores of people brave the Summer heat to express their love for our country by marching in full patriotic regalia around the neighborhood and at the end, share food, drink and stories. We probably have more flags per capita than any other neighborhood, thanks to a patriotic real estate guy who also lives in the neighborhood! (That's me!)
Halloween gives us an example of what the rest of the city thinks about our neighborhood. Apparently well known for its generosity on Oct. 31st, Broadmoor is visited with van loads of children from all over town. It is not unusual to give out hundreds of pieces of candy if you dare answer your door to the various ghosts, goblins and monsters who ring your doorbell.
What do you think makes our neighborhood great? E-mail me and I will include your comments. - Wayne To be continued....

HOA Sign Enforcement Relief

This just in from the Arizona Association of Realtors:

HOA; FOR SALE SIGNS: SB 1062 was signed into law by the Governor and will become law 90 days after the legislature adjourns. This legislation provides that notwithstanding any provision in planned community or condominium CC&Rs, an association can “not prohibit the indoor or outdoor display of a for sale sign and a sign rider by a unit owner on that owner's property, including a sign that indicates the unit owner is offering the property for sale by owner. The size of a sign offering a property for sale shall be in conformance with the industry standard size sign, which shall not exceed eighteen by twenty-four inches, and the industry standard size sign rider, which shall not exceed six by twenty-four inches.”

This is good news for property owners who have suffered the unreasonable enforcement of restrictive sign ordinances while trying to sell their home. The 48th session of the State Legislature adjourned on June 20 2007.

I Buy my Straw Hats in the Fall

"I Buy My Straw Hats In The Fall" Wise words from world famous financier and advisor to Presidents, Bernard Baruch when asked about his investment philosophy. Since he was a multi-millionaire when a million dollars was truly a lot of money, it might be profitable to heed his advice, because what was true then is certainly true now.

Smart people buy their winter clothing in the spring when coats and jackets are often half price. Clever buyers pick up boxes of Christmas items after New Years Day, often at savings of 50% or more. Savvy car buyers purchase their new car near the end of the year when the dealers are awaiting new models. Carrying that a step further, those buyers may wait until the end of the month when they negotiate a purchase, since dealers are often more generous then, wanting to bolster their end-of-the-month performance figures.

Timing is also important in Real Estate, and the time to buy, in some parts of town, is now. There are areas in Pima County where there are scores of homes for sale, some priced tens of thousands less than they were selling for a year ago. Some sellers are quite motivated and are offering incentives to home buyers in addition to discount pricing: Down payment assistance, additional appliances and flexible closing terms are more common now.

The people who were not hurt in the real estate boom and “bust” in the Tucson area were those who purchased their home to live in for years to come, because time will take care of them. Those who are suffering now are the speculators and “investors” who came in, often from out of town, and were convinced by someone, with the help of our own manic local media, that there was no limit to the upward move in home prices. The lucky ones have found tenants to live in their houses, reducing the strain on their cash flow. Others however, own vacant homes that were never lived in and in many cases, these homeowners are strapped for cash flow and are highly motivated to sell.

Where are these areas where one can find a great value? There are several around Pima County, and I will highlight one today:

In one particular square mile area in the Southwest side of town, there are, as this is being written, 11 four bedroom homes for sale ranging in price from $215,000 to $375,000. They vary in size from about 2150 square feet to just over 2900 square feet. Many are vacant. All were built in 2004 or later. Some will say, "Who would want to live out there, so far from the center of town?" I used to say the same thing when I drove out to the Northwest Side near Ina and Thornydale and saw homes sprouting up North for as far as the eye could see, or Southeast where Rita Ranch for years was an island to itself, but no more. Now there are food stores, shopping plazas and schools in a place where “nobody would want to live”. I believe that this will be true for the Southwest side of Tucson, just as it was for these other areas which have seen explosive growth.

The questions you should ask yourself are: Will Tucson continue to grow? Is it a place where I would like to live for a while? Does it have advantages over other parts of the country (lifestyle, climate, economy, culture?) For me, the answer is yes to all. Having spent some time in the Northeast part of the country where ice forms on roads and shoveling snow is a duty, not an option, I know that many Boomers living in the Snowbelt are itching to move to the Sunbelt upon retirement. Like it or not, the chances for growth here are good. The Tucson lifestyle is casual and friendly, the economy is healthy, and our wide ranging culture offers something for everyone. And of course, the University of Arizona adds a vitality to our community that other cities without such an institution envy. These factors will, in the long run, assure a healthier real estate market here than in the cold, rustbelt areas. And after 5 recent devastating hurricanes in Florida, Arizona is looking like a pretty good Sunbelt alternative.

So should you speculate and buy as many homes in the Southwest side as you can? That might not be prudent, but if you are looking for a place to live and want to place a bet on future growth and development, in an almost brand new home at a price hugely discounted from last year, this might be an area to study.

If you would like to discuss this in more detail, call or e-mail me and we can set an appointment to talk about this opportunity. As Bernard Baruch said so long ago, “I buy my straw hats in the Fall.” You should too.