Investors Scooped up the Bargain Priced Foreclosures.

Phoenix metro was one of the hardest areas hit by foreclosures. As a result the areas list prices were at record lows and attracted many cash buyers such as investors who purchased rental property.  The influx of investors resulted in the rapid reduction of distressed property inventory.

The Phoenix foreclosure market was helped by cash Investors from Canada, seeking to purchase their winter homes and/or rental properties.

Now Phoenix is experiencing a Sellers market where the supply of homes for sale is less than that of the buyers demand. The median list prices are up 26.94% in the first quarter of 2012 compared to the first quarter in 2011. Phoenix experienced the largest increase in list prices of all of the metro areas monitored by Realtor.com

Helping the housing market recover faster here in Phoenix is the unemployment rate of 7.8% which is below the national average.

If the buyer demand continues at the pace it is now and inventory remains in check, it’s only a matter of time before Phoenix stabilizes and has lasting home value appreciation.

As the housing recovers, so does the job market.

Some Stats:
Year/Year MLP Appreciation up 26.94%
Year/Year Median Age of Inventory down32.94%
Year/Year Inventory down 48.04%

Nationwide we are seeing upbeat signs that the real estate market is turning and beginning it’s recovery across all price points with the exception of a few weak housing markets.

USA Today reported that the number of existing homes for sale (inventory) dropped to 22% from a year ago.

The National Association of Realtors reported a rise in home prices in 74 of the 146 housing markets they track in the first quarter of 2012 vs. declines in 72 areas.

Let’s look at some upbeat statistics for first quarter 2012:

• In Phoenix the March Inventory was down 64% from a year ago.
• The National Association of Realtors reported that there are a shortage of inventory of homes for sale in Phoenix, Orange County, California, Naples, Florida, Seattle, Suburban Washington, DC and North Dakota.
• According to TransUnion mortgage delinquency rates dropped from 6.19% in the last quarter of 2011 to 5.78% in the first quarter of 2012.
• Investors accounted for 22% of buyers.
• Condo prices rose 3.4%.
• All cash transactions made up 31% of all sales.
• Existing home prices were up 5.3% and are the highest level since 2007.
• The hardest hit markets are now among the top recovering markets.

Yesterday we blogged about BofA’s offer of Mortgage Principal Reduction for 200,000 underwater homeowners.

Today there is more good news from the nation’s second largest bank. Bank of America announced that it will be offering short-sale relocation assistance to delinquent borrowers who work with the bank to obtain a pre-approved short-sale price before submitting purchase offers.

These borrowers could be eligible to receive $2,500 to $30,000 in relocation assistance and owe no more on their mortgage.

A short sale is when a lender allows a homeowner to sell a home for less than the amount owed on the mortgage.

What to Know About this Program:

• The relocation assistance payment is calculated based on the appraised value of the property.
• The total amount will be no less than $2,500 and no more than $30,000.
• The payment will be delivered at the time of closing if the homeowner complies with all terms and conditions of the short sale agreement which include but are not limited to a full walk through appraisal, satisfaction of all junior liens (relocation funds can be used to clear liens), and ability to provide clear title.
• The amount of any deficiency and relocation assistance will be reported to the IRS on appropriate 1099 forms.
• Homeowners are encouraged to contact the IRS or their tax preparer to determine tax liability.

This program was tested in Florida last year, with Bank of America offering payments of $2,500 to $30,000 to help homeowners move out of their homes.  Now BofA is offering the relocation assistance program nationwide.

This is a limited time offer. The short sale must close by September 26, 2013.

If you have a mortgage with Bank of America you may be one of the thousands of homeowners to receive a letter from the bank offering to forgive a portion of the principal balance on your mortgage by an average of $150,000 each.

The effort to reduce troubled homeowners’ mortgages comes under the terms of a historic settlement announced in February. In the settlement the nation’s five largest banks including BofA, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial agreed to pay the $25 billion after negotiating with the federal government and state attorneys general over alleged abusive foreclosure practices. BofA is paying the largest portion of that settlement.

The settlement includes roughly $13 billion to be used to reduce the principal owed by borrowers who are delinquent and owe more than their homes are worth and also earmarked for homeowners who are current, but underwater on their loans.

For the homeowners who qualify they could save up to 30% of their mortgage payments monthly.

Here’s the criteria for eligibility:

• Owes more on the mortgage than the property is worth today.
• Was at least 60 days behind on payments on January 31, 2012.
• Has a contractual monthly payment for principal, interest, property taxes, hazard insurance and any applicable homeowner association fees totaling more than 25 percent of gross household income.
• Has a loan that is owned and serviced by Bank of America, or serviced for another investor that has given the bank delegated authority to do such modifications.

The bank said it planned to contact more than 200,000 homeowners who could be candidates for the offers, sending letters to a majority of them by the third quarter of this year.

The letters from the bank are expected to arrive at customers’ homes this week with much of the remaining to be sent out by July.

The lower rates will likely spur some homeowners to refinance, economists say. But mortgage standards remain so tight that many people won’t qualify for a loan if they want to buy a house.

Disappointing economic growth helped drive fixed 30-year mortgages down to an average of 3.84% this week, says mortgage giant Freddie Mac. That bested the previous record low of 3.87% in February.

Low rates are traditionally good for housing demand, but this time may be different. Rates are dropping on signs of slowing economic growth, which isn’t good for consumer confidence or housing demand.

“We should not be excited about lower rates for home purchases,” says Jed Kolko, economist for housing website Trulia.

The housing market has been showing signs of improvement. Existing home sales were up 5.2% in March from a year ago, the National Association of Realtors says.

Declines in home prices are smaller, and there are signs of bottoming in some markets.

Strong demand and tighter inventories sparked a nearly 2% rise in asking prices on homes for sale February through April, compared with the prior three months, new Trulia data shows.

After adjustment for seasonal factors, 92 of the USA’s 100 largest metro areas showed increases, Trulia says.

Demand for home loans is also up. The latest data from the Mortgage Bankers Association shows applications for home purchases on the upswing for the week ended April 27.

That shows people who need mortgages are beginning to add to improving home sales, says economist Paul Diggle of Capital Economics.

Consumers shouldn’t hold out for lower rates, says Guy Cecala of Inside Mortgage Finance.

“We’re near the lowest you’ll ever see,” he says.

Despite the latest drop, Freddie Mac still expects 30-year-fixed-rate loans to rise later this year to 4.25% or even 4.5%, Freddie Mac economist Frank Nothaft says.

Source: USA Today

• HOT SUMMER PREDICTED FOR SELLERS
• It’s a Sellers market again….Homes getting multiple offers.
• Less people “underwater” every week as prices rise.
• Inventory (Under 13,000 Homes)…49% drop YoY
• 2.83 Month Supply
• New Inventory was DOWN (9100)
• NEW HOMES prices rising….waiting lists for buyers.
• AVG Sale price UP again in April (189k)… 20% since August!
• TRENDS: Mid Range pricing (100-300K) still strengthening…now 55% of market
• TRENDS: REO’s/ Short Sales continue to shrink…. now only 42% of market
• TRENDS: Rental Absorption rate softening slightly: 50%
• TRENDS : New leases were down and pending leases were down.

(All Data provided by Arizona Regional MLS)

PHOENIX MLS INVENTORY: Through Boom and Bust

TODAY: 13,000
1 Year ago: 27,000
2 Years ago: 42,000
2008: 58,000
June 2005: 4,800

Don’t forget to email us for a current home analysis, or to get on auto listing updates!

If you think a homeowners insurance policy will cover you when you turn your current home into a rental property or buy an investment property, think again.

Rental properties require their own type of coverage—landlord insurance, which is different than the homeowners policy you buy when you live in a house yourself. Landlord insurance protects you against losses from fire, lighting, falling trees, wind and hail, water damage, and injury to your tenants and their guests.

But it doesn’t cover the renters’ household goods. So encourage tenants to buy a renters policy to cover their stuff. You can even include a clause in your lease saying they have to buy renters insurance, so everyone is clear about what’s insured and what’s not.

Landlord insurance is expensive

You’ll pay 15% to 20% more for a landlord insurance policy than you will for a homeowners policy on the same house—and even more if you offer short-term rentals. Start your policy shopping by calling the company that sold you your homeowners insurance, then check with an independent insurance agent selling commercial and business policies.

Ask how you can get discounts if you have fire prevention devices, burglar alarms, or multiple properties.

What a landlord insurance policy probably will cover:

• Lightning, windstorm, hail, explosion, riot and civil commotion, smoke, falling objects, snow, ice, sleet, vandalism, sonic boom, sprinkler leakage, frozen pipes, water damage, burglary, volcanoes, and sinkholes.

• Things that belong to you that stay at the property, like appliances, furniture, or lawn care equipment. Keep an inventory of what’s on site.

• Outbuildings, like sheds or garages, although this coverage will have its own limit (probably 10% of the overall insurance policy amount).

• Costs to defend yourself against lawsuits filed by tenants or guests, as well as the costs awarded if you lose the case. Some policies cover medical bills for injuries; some don’t.

• Lost rental income if the property is damaged and you can’t rent it.

What a landlord insurance policy probably won’t cover:

• The tenants’ belongings.

• Your rental property if it’s vacant for more than 30 days. Seek an exemption in advance from your landlord insurance company as soon as you know the property is going to be vacant.

• War and nuclear, biological, chemical, or radiological attacks.

Optional coverage you might want to buy:

• Flood

• Earthquake

• Vandalism (if the policy you buy excludes it)

• Pool and tennis court insurance

• Liability for personal injury, wrongful eviction, wrongful entry, libel, and slander

Don’t forget liability coverage

To cover yourself in case you lose a big court case filed by an injured tenant, buy an umbrella insurance policy that gives you liability protection for $1 million to $5 million or more if you have a lot of assets to protect.

Don’t file a claim unless you absolutely have to

There’s a limit to how many claims you can file before insurance companies start charging you more or canceling your policies. Claims can quickly add up as you buy more rental properties.

One time you always want to file a claim is when someone says they’ve been injured on your property. One claim you’ll want to avoid filing: water damage for less than $10,000 because worries about mold growing in water-damaged properties will lead some insurers to immediately cancel your insurance policy.

But these so-called mass joinder lawsuits being advertised in mailings are fraudulent — sent out by companies purporting to be law firms, according to a consumer alert posted on the Federal Trade Commission’s Web site.

The F.T.C. last month filed a lawsuit against one operation based in Santa Ana, Calif., asserting that it had persuaded more than 1,000 homeowners nationwide to pay $6,000 to $10,000 each to join “mass joinder” suits, which are akin to class-action suits. Homeowners ended up with little or nothing in return, the F.T.C. said.

“It is an emerging trend,” said Reilly Dolan, the agency’s assistant director of financial practices, describing these fraudulent operations as part of a wide range of scams linked to loan modifications.

Consumers can lose valuable time to these dishonest players — not to mention money. The nonprofit Lawyers Committee for Civil Rights Under Law, which has brought seven lawsuits nationwide involving fraudulent loan modifications, estimates that homeowners nationwide who reported scams to its database have lost over $60 million in the last two years alone, and that $4 million of those losses were suffered by New Yorkers.

Of course, there are many credible law firms around offering legitimate Mortgage Relief to help homeowners. But Mr. Dolan noted that some businesses might be promoting themselves as providers of legal services, though they might have, say, only one lawyer on retainer, as a way around F.T.C. rules that allow only lawyers to collect upfront fees on mortgage aid. And these businesses may not meet all the requirements of the rule, which also mandates that the lawyer be licensed to practice law in the state where the homeowner lives.

“We definitely get people who think they have attorneys, who have retained attorneys who are not adequately assisting them,” said Erica Jo Gilles, the deputy director for advocacy and outreach at the South Brooklyn Legal Services.

Such firms, and people posing as lawyers, are fueling a 60 percent jump in complaints about mortgage relief scams this year, according to a report this month by the Homeownership Preservation Foundation, which helps distressed homeowners. The nonprofit group says the increase coincides with the announcement of new federal relief programs for homeowners.

So how can consumers protect themselves from unscrupulous operations? Here are some suggestions from industry experts.

CHECK CREDENTIALS State bar associations have lists of licensed lawyers. (And the National Organization of Bar Counsel Web site has links to state bar associations.) When speaking with a lawyer, consumers might ask about the lawyer’s track record, including documentation of successes via media reports or signed court documents awarding borrowers money or relief. Local bar associations can provide the names of lawyers who specialize in foreclosure and loan modification, as can housing counselors from nonprofit groups in some instances.

BEWARE OF PROMISES “Legitimate lawyers don’t make guarantees, just like doctors don’t,” said Colleen Hernandez, the chief executive of the Homeownership Preservation Foundation. In particular, Mr. Dolan of the F.T.C. suggested avoiding firms that promise to restore credit.

DON’T PAY IN ADVANCE “If they’re asking for any kind of money, you want to say, ‘N-O,’ ” said Martha Cedeno-Ross, a counselor at Neighborhood Housing Services in Waterbury, Conn. She notes that there are plenty of free services available at nonprofit groups certified by the Department of Housing and Urban Development.

A version of this article appeared in print on April 22, 2012, on page RE6 of the New York edition with the headline: Avoiding Legal Scams.

Click here for our recommendations of experienced, ethical Lenders

Home prices are down 34% since 2006 and mortgage rates are at historic lows. The mortgage rate reached a record low today.

Housing markets are beginning to stabilize, and in some cities, such as Phoenix we see the rebound beginning as home prices are starting to rise. Phoenix recorded an 8.4% jump in during the three months ended April 30, compared with the three months ended January 31, according to Clear Capital.

Some key indicators:

• Foreclosures are diminishing
• Demand for home is picking up
• Mortgage rates remain low

Foreclosure inventory is shrinking

The percentage of mortgage loans 90 days or more late, a good predictor of future foreclosures, is “falling fast.” That percentage dropped 15% year-over-year to 3.1% through the end of 2011, according to the Mortgage Bankers Association. And the decline is accelerating: More than 70% of the decline came in the last three months of the year.

Before things slow down, however, buyers should prepare for a temporary spike in the number of foreclosures as banks start expediting the processing of their shadow inventory which totals hundreds of thousands foreclosures that were stuck in the system following the robo-signing scandal. That backlog should move more quickly now.

Investors have been key in the clearing out the foreclosure inventory in Phoenix, and many are still out there snapping up foreclosures and turning them into rental properties.

Home buying is now much cheaper than renting.

An age old question; is it smarter to rent or buy? The demand for rentals escalated when hundreds of thousands of homeowners lost their homes and needed to find rentals for their families. This demand has caused the rental rates to rise over the last couple of years.

Mortgage Rates are at record lows.

Mortgage rates have been at or near historic lows for much of the past six months. The average interest rate for a 30-year, fixed-rate mortgage has not topped 4.5% since July 2011 and this week, it hit 3.84%, a new low. But rates aren’t expected to remain at these record-low levels much longer. This may be the last chance you have to get a 3.8% mortgage.

The Mortgage Bankers Association is forecasting that the 30-year fixed will hit 4.5% by the end of the year.

As housing markets stabilize and home prices stop falling and jobs continue to grow, home buyers will be even more confident about buying….homes have never been more affordable and may never be this affordable again.

We have been blogging about the rebound here in Phoenix for the last couple of weeks.  Clearly Phoenix is leading the way in the housing recovery.  We are experiencing rising home prices as our supply of homes diminish,  yet our buyer demand remains strong.

Contributing to the decrease of homes on the market and the rising home prices here in Phoenix has been the small supply of new build homes on the market. The home builder’s are playing catch-up with buyers demand or new homes.  Adding to the challenge of keeping up with buyer’s demands is the difficulty home builders are having with finding skilled workers.

New home building here in Phoenix is robust and all indicators are the demand for new homes will continue through 2012 and beyond.

Some of the latest statistics made available for March suggest that the new-home permits are up 61%.  There were 1,036 single-family permits issued in March, compared to March 2010 when there were only 645 single-family permits issued.

The inventory of homes for sale include only 383 ready to move in homes builders call spec homes. This compared to the 50,000+ spec homes left on the market at the beginning of the housing crash.

In Phoenix the recovery was waiting for the over supply of foreclosures and new home specs to be purchased before a rebound could happen.  Investors have played a huge part in reducing our inventory of homes for sale, and contributed to our earlier rebound compared to other cities in the nation.

New home building during the housing crash from 2008-2010 was almost non-existent. In 2010 and continuing into 2011 less than 8000 new homes were built.  However, with the demand for new homes heating up Phoenix is expected to see as many as 11,000 being built in 2012.

As buyer foot traffic soars, home builders expect to make more sales in the next 6 months than at any time since the housing market’s collapse.  Builder confidence is at a 5-year high.

Statistics used in this blog were published in The Arizona Republic’s article written by Catherine Reagor.