What’s the Deal?

Cash buyers have come out of the woodwork in Tucson and are snapping up properties left and right. Take a look at the trends over the last five years:

And just an FYI, to keep things simple I only included Single Family Residences (SFRs) in these statistics but I”m sure if I included everything else (condos/townhomes/rental properties/land) the trend would be similar; cash buyers are just making moves left and right.

Where Is This Happening?

This trend is not just in Tucson but is occurring all over the US:

Las Vegas:

Buyers who appear to have used cash to purchase their homes accounted for 46.7 percent of all May sales, down from 48.0 percent in April but up from 42.0 percent a year earlier, based on an analysis of public property records. The median price paid in these seemingly all-cash deals in May was $105,000, down from $112,000 in April but up from $89,250 a year ago.

…

All-cash deals have become popular in many Western markets where prices have dropped sharply, luring investor buyers who can’t always qualify for traditional mortgages. Moreover, sellers favor the relative speed and certainty of all-cash transactions.

Los Angeles:

Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 27.1 percent of March sales. In February it was a revised 30.0 percent – an all-time high. The 22-year monthly average for Southland homes purchased with cash is 13.8 percent.

Miami:

With financing still difficult to obtain, all-cash buyers and deep discounts on distressed properties are propping up sales, said Peter Zalewski, a principal at Bal-Harbour-based Condo Vultures.

About 60 percent of South Florida sales have gone to foreign buyers, who are more likely to pay with cash and were never eligible for the tax credit.

So What Does This Mean?

Cash buyers coming out of the woodwork can only be a good sign. It shows people are finally seeing opportunity for investment/growth/return and are willing (and able) to put their cash back into the market.

Any market recovery will start with investors trying to make their money and while the rest of the economy may be sluggish the real estate market will be the first to turn around.

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New Vista and the National Community Stabilization Trust are working together to create a unique opportunity to assist NSP homebuyers and help rebuild the Tucson community. The great part is 35 local area properties will be part of this event and they have all homes have been removed from the market, inspected, repaired, and are ready for purchase by an eligible.

Here are the basic details:

YOUR WAY HOME ARIZONA PROGRAM
Eligible Purchasers May Receive:

• Up to 22% NSP Down Payment Assistance for Buyers
• Current Home Values are between $51,000 – $235,000.
• Seller to pay 3% toward buyer’s closing costs, 2 year Home Warranty and a Refrigerator
• Properties have already been inspected and repaired
• Exclusively for NSP Home Purchaser. They will not be marketed on MLS to the general public.

Please Note the Following Dates:
OPEN HOUSES August 14th and 15th
OFFER DEADLINE August 18th

For more information go to Live the Solution.

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Take a look at the map below, I did a quick search for all bank-owned properties that sold in Tucson since the beginning of the year and expected to see localized clusters of REOs.  I was surprised to see that the carnage was pretty uniformly widespread with total sales in the amount of 1,863.

Tucson Foreclosure Map - Jan 1 2010 to Aug 9 2010

Guess everyone is feeling the pinch now; with the large amount of short sales we currently have on the market these REOs will be around for awhile. Give me a buzz if you’re interested in some great investments!

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The Tucson market has shown a level of stability over the past few months that we have not seen for quite awhile; most of the past few years has been a story of gradual but continual decline.

It appears that the market is beginning to right itself from the foundation up as evidenced by the data below. The bulk of sales in the Tucson market resides with homes under the $250,000 level (as it always has) and just as this segment of the market was the first to fall out in the sudden decline 4 years ago it also is the first to recover and appears to indicate a coming upswing in the market.

Market Comparison Snapshot

The data above paints an interesting picture, that of the “luxury market” (homes priced at least twice the market average) still feeling the effects of the economic slowdown while the foundation of the market is already in recovery mode. I wonder if this lag time is indicative of natural progression of a recession where the lower classes are affected immediately while the upper class feels the pinch later as the economy contracts?

Also, the average sales price of homes from $250k-$500k dropped nearly 25% from 2006 to 2010 but that makes sense as the bulk of foreclosures and short sales originate in this same section of the market.

At the very least the data above is encouraging in that it shows a stable market is beginning to emerge and I expect the trend to continue. With mortgage rates at historic lows and with Obama pushing for a small-business friendly bill that will loosen community bank purse strings, lending money should become available for consumers to help aid the recovery of the housing market.

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July market statistics are in and the market did not have much movement. Days on Market (DOM) is up from last month and the absorption rate also had a slight uptick to 7.74 months, a nearly 20% improvement from July of 2009.

I anticipate the next couple of months being fairly productive as the fall season approaches before slowing down again during the winter lull.

To read the complete MLS report published by our local board click here.

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With the surge in home sales this spring due to the home buyer tax credit, we are now seeing, as expected, a slight decline in the number of homes being sold. According to the National Association of REALTORS® Chief Economist, Lawrence Yun, we will likely see a decline in home sales in July and August as well. Yun also noted 4.4 million Americans took advantage of the now expired home buyer tax credit. Two-thirds of those were first time homebuyers who received up to $8,000 towards the purchase of their home. One third were repeat buyers and were eligible to receive a $6,500 credit. One million out of the 4 million bought a home due to the credit.

Below are some highlights from the June Statistics:

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This is the fifth and final installment in my Tucson Short Sales series.  I would suggest reading part one (Tucson Short Sales – Part 1 – What are Short Sales?) part two (Tucson Short Sales – Part 2 – I’m Ready to Short Sale My Home.. What Are The Repercussions?)  part three (Tucson Short Sales – Part 3 – How to Short Sale My Home) and part four (Tucson Short Sales – Part 4 – The Offer is in to the Bank) before reading this article.

Once your purchase package has been submitted to the bank it will typically pass through several levels before reaching someone who has the actual authority to make a decision on the offer.

Larger lenders have different negotiators at each level who each have a specific task. A bottom level negotiator will typically review a package for completeness and ensure that everything is signed as required. A mid-level negotiator will typically order an appraisal or BPO on the property to find current market value and then attach that to the file and pass it on. And a high level negotiator will take all of the information provided along with the valuation of the home and render a decision.

The same process applies for smaller banks but usually one negotiator handles all of the tasks listed above.

“How much will the bank accept?” is the question I am usually asked by potential clients.

You will usually hear that there is a magic formula that lenders use to decide whether or not a short sale offer is sufficient. And truthfully, there probably are. But there isn’t an industry standard that can be cited in this article that you can use to accurately gauge your chances of obtaining a short sale acceptance.

It is different for every lender and for every situation. I’ve had deals with the same lender (Bank of America) where they were willing to accept different percentage of payoffs for properties just months apart. By the time you read this article the standards will have probably changed again and they will continue to evolve for the next few years as we work our way out of this mess.

If you would like to search the Tucson MLS for Short Sale, Bank-Owned, or Foreclosure homes, search for Tucson Homes for Sale or contact me for a comprehensive list.

If you would like assistance in avoiding foreclosure feel free to contact me for a no-cost consultation.

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3. Tucson Short Sales – Part 3 – How to Short Sale My Home This is the third installment in my Tucson Short Sales...

After waking up this morning and having a cup of coffee I came across the following article in the LA Times while progressing through my daily news read:

 Homeowners forced to buy flood insurance after FEMA redraws maps

I had eerie flashbacks to our own situation here in Marana back in 2006 after moving into my house because .. well.. the same thing happened!

Some background to catch you up:

http://www.michaelkrotchie.com/fema-revising-flood-plain-maps-in-pima-county/
http://www.michaelkrotchie.com/marana-floodplain-issue-closer-to-being-resolved/

I find it frustrating that FEMA proposes “revised” floodplain maps without first consulting with the areas involved. In most cases the town/city/county(s) end up coming out of pocket for a private study to be performed to find out if FEMA’s assessment really is valid.

Here in Marana, most of the areas placed in the new floodplain were removed, with only a small portion being re-classified into the floodplain.

Essentially what is happening is that FEMA is playing the “better safe than sorry” card and drawing new maps to be in “danger zones” and then placing the onus on homeowners or government officials to prove them wrong. Don’t get me wrong, no one wants to be unsafe, but no one wants to suffer from the effects of being in a floodplain if they don’t have to.

(Just a brief note if you didn’t read the above articles, for federally backed mortgages (almost all of them are), flood insurance is required if you are designated to be in a floodplain.)

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1. Marana Floodplain Issue Closer to Being Resolved! For those of you located in Marana (including me!) we...
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3. Gray and Rainy.. I Love It! Here is the followup article from the AZ Daily Star...

Information is taken from ARMLS, TARMLS, WARDEX, GV/SAH MLS, PAAR MLS & White Mntns MLS on 12/16/09 and includes All Residential Actives, all dwelling types. Solds are for the period 11/15/09 – 12/15/09. REOs are Foreclosures (Real Estate Owned)

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Actives: The average price for the 6,447 properties is $331,419.
The average Market Time is 119 days
Solds: The average price for the 1,031 properties is $188,582.
The average Market time was 73 days

Property Type  Residential     Areas  Extended Southwest, Central, Northeast, Extended Northwest, Extended West, Pima Northwest, Pima Far West, South, Extended Northeast, Southwest, West, Extended South, North, Northwest, Pima Southwest, Pima East, East, Southeast, Pima South Statuses  Active, Active Capa, Active Contingent. Statistic from TARLS. Listings as of 11/7/2009. Information deemed reliable but not guaranteed.

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