Tucson Real Estate

Tucson Short Sales – Part 1 – What are Short Sales?

Since the real estate boom of 2003-2005 the Tucson real estate market has been flooded with homes going into foreclosure, short sale homes, and bank-owned homes. Many consumers aren’t completely clear on what a short sale is, but the easy explanation is this: Whenever you are trying to sell your home for less than what you owe on it (your mortgage), it is considered being short, or a short sale.

Why would a bank want to accept less than what you own on it? Well for the same reason that banks are in the banking industry: to make money! The average foreclosure process (notices, paperwork, court proceedings, publications in the local newspapers) costs a bank on average $50,000! That isn’t including the market value loss from the house, just the cost of actually processing a foreclosure.

You can understand why banks are much more receptive to a short sale than a foreclosure (in most cases).
In many cases banks will be more open to renegotiating terms of a loan (forbearance, principal reduction, loan modification, deed-in-lieu) instead of accepting a short sale.

A homeowner in distress should always call the lender first if you are having trouble making payments, or foresee trouble making payments in the future. National foreclosure statistics indicate too many homeowners are not calling their lenders for assistance and are instead falling into foreclosure.

Believe me, the banks don’t want you to lose their home and they will try hard to keep in your house.

Stay tuned for:

• Tucson Short Sales – Part 2 – I’m Ready to Short Sale My Home.. What Are The Repercussions?
• Tucson Short Sales – Part 3 – How to Short Sale My Home
• Tucson Short Sales – Part 4 – The Offer Is In To The Bank
• Tucson Short Sales – Part 5 – End Game Short Sales

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

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

Tucson Real Estate

The Rise of Tucson “Power Centers” – Good or Bad?

In today’s Arizona Daily Star, there is an article about the final gasp of the De Anza Drive-In to make way for another big-box “Power Center”. A short excerpt:

A developer is finalizing a deal to buy the De Anza Drive-In, at 1401 S. Alvernon Way, and has already started marketing it as a retail complex.

Evergreen Development Co. is calling the project De Anza Crossings, a 20-acre retail “power center,” in marketing materials distributed by Picor Commercial Real Estate Services.

Gregg Alpert, Evergreen managing principal, declined to say when he expects the sale to be final, saying only that it would be “later this year.” As far as Alpert knows, De Anza Land and Leisure doesn’t have plans to keep running the theater after the sale, but “we would be open to it,” he said.

Tucson Real Estate

Tucson Real Estate Market – April 2008 Analysis

Good Morning everyone, the Tucson Association of Realtors, (TAR), has released the Tucson Housing Market sales statistics for April 2008. Here is a summary of the important points:

Sales Analysis

Average and Median Sales Price Decreases
Average and median sales price both decreased in April 2008. Average sales price declined to $253,729 – down 8.91% from April 2007 and down nearly $6,000 from last month! Median sales price also declined nearly $30k from April 2007.

Active Listings Continue Declining
Active listings have declined since January and in April 2008 stood at 8,808 units. With the summer season coming up we should see a slight rise in inventory.

Days on Market Rises Again
Average time on market continues to float near our highest level in several years with 78 days the average DOM for April 2008.

Home Sales Snapshot
Home Sales Volume Decreased 49.31% from $367,164,710 in April 2007 to $246,878,039 in April 2008. Graph on page 5.	Average Days on Market Increased 35.3% from 65 days in April 2007 to 78 days in April 2008. Graph on page 10.
Home Sales Units Decreased 26.17% from 1,318 in April 2007 to 973 in April 2008. Graph on page 4.	Pending Contracts (not yet closed in escrow) Increased 27.11% from 1,217 in April 2007 to 1,547 in April 2008. Graph on page 7.
Average Sales Price (all residential types) Decreased 8.91% from $278,577 in April 2007 to $253,729 in April 2008. Graph on page 6.	Active Listings Decreased 15.2% from 10,387 in April 2007 to 8,808 in April 2008. Graph on page 9.
Median Sales Price Decreased 13.3% from $2224,921 in April 2007 to $195,000 in April 2008. Graph on page 7.	New Listings Decreased 20.87% from 3,085 in April 2007 to 2,441 in April 2008. Graph on page 11.

Tucson is feeling the final repercussions of the housing market decline and credit crisis. All market indicator bearings are in the red and the sole statistic that is on the rise is the Days on Market! All of this points to the Tucson market finally coming to terms with the events of the past few years and sellers who are finally realistic about the value of their home.

As I wrote about last year (Tucson May 2007 Housing Report), a large part of the inflated market that seemed to exist in Tucson were the homeowners who still believed that they could fetch top dollar for their homes like they could back in 2004-2005. Once it became apparent this was not the case homes began to fall off the market and/or were priced more realistically.

Foreclosures and short sales continue to have a place in the Tucson market but it certainly seems that these two issues are not nearly as rampant as they were in the better part of last year. Perhaps a sign of things to come?

So there you have it, Tucson real estate news for April 2008. If you have any questions or are in the market for a home in Tucson please feel free to contact me on my Tucson Real Estate website!

Tucson Real Estate

FEMA Revising Flood-Plain Maps in Pima County

The Arizona Daily Star published an article today detailing an effort started in 2005 by the Federal Emergency Management Agency (FEMA) that is just now coming to fruition. The bottom line is that many areas in the Southwest US (including Pima County) that are currently designated as “safe” in terms of flood protection may be re-designated as flood plains.

How are they deciding what is a flood plain?

“Marana Mayor Ed Honea received a letter July 20 from FEMA stating that the agency had done an overview of the area and determined that various structures within the town’s limits fall under the definition of a levee.

Brann said FEMA issued similar letters to all parts of the Southwest U.S. around the same time, starting a 90-day clock, by thee end of which each jurisdiction must supply FEMA with proof of which levees have provisionally accredited levee agreements.”

I’m curious to see just what a “provisionally accredited levee agreement” means but I assume that levees have to be periodically re-certified in terms of reliability and have some sort of federal stamp of approval. Here is a link to the FEMA page of the document in question.

Will it affect me?

The article states that homeowner’s who currently have home insurance in a low risk zone (Zone X) will be grandfathered in with their current rates once (and if) their home is re-designated to be in a flood plain when the new maps come out on September 20th. The people who will feel the crunch are the new homebuyer’s to the area with a federally backed mortgage; flood-insurance is required for all federally backed mortgages in a [tag]Zone A flood plain[/tag]. (Learn about different flood plain designations)

For anyone who is in the San Lucas subdivision I would suggest checking into a Zone X policy; be aware that the premium will have to be paid up front for the entire year. I called up my insurance representative and he said that if homeowners haven’t purchased flood insurance and their home is then re-designated to be in flood-plain, not only will they have to purchase a Zone A flood insurance policy but their lender will also probably require them to pay for a surveyor out of pocket to come out to their property and draw up a survey map (could cost $500-$600). Check with your lender/insurance company to be sure.

(Am I in a flood zone? <- Click here to find out!)

EDIT: 5/14/2008

Since I’ve written this post there have been a few notable developments, namely the issuing of a stay order by FEMA until October 2008 to allow the Town of Marana time to conduct it’s own floodplain study to present to FEMA officials.

Here is a short excerpt from a the Town of Marana’s website:

The Town of Marana has selected a drainage consultant to perform this large scale drainage study to show the actual floodplain hazards in these areas. FEMA has given the Town until October 2008 to submit the study information to affect the final maps. The Town and its consultant are on schedule to make this submittal in late May or early June 2008. It is expected that much but not all of the areas will be shown to not be classified as a FEMA special flood hazard area (SFHA), which is an area that requires the purchase of flood insurance.

Until we hear about this issue a lot of Marana residents (including me for the time being) are feeling antsy. Having to pay flood insurance would certainly slow down the incredible expansion towards the NW side of town until that issue is resolve; I have no doubt the pending Fry’s at Tangerine/Lon Adams would be postponed (again) and the super complex being planned at I-10/Tangerine may be put in jeopardy too. Will keep you posted!

Tucson Real Estate

First Magnus Financial Corp. Files for Bankruptcy – Will I Be Affected?

A headline from the Arizona Daily Star’s “Breaking News” section – “First Magnus Financial Corp. has filed for Chapter 11 bankruptcy, the company announced today.” The seemingly overnight meltdown of First Magnus last week was just the latest consequence of the [tag]loose lending practices[/tag] by banks the past few years. Now, there are whispers of [tag]Countrywide Home Loans[/tag] having financial issues and Capital One just closed their wholesale mortgage unit yesterday.

How did this happen, you ask? Here is the short and sweet of it: When banks began loosening their lending standards several years ago, allowing “no-doc” loans and option ARMs and Interest Only mortgages, everyone was happy. After evaluating a potential buyer’s ability to repay the loan, and if the lender’s criteria were met, the buyer was given a loan. The primary lender may then hold onto the loan itself in it’s portfolio, but more commonly they sold the loan on the “secondary market.” They then used the profits from the sale to continue lending money to other potential buyers.
The secondary market is simply a marketplace where investors can buy the loans. For example, [tag]Freddie Mac[/tag] is a large investor in the secondary market. They buy up mortgages from primary mortgage lenders do a few things with them:

1. package those loans into securities, and
2. sell the securities to investors on Wall Street.

For the past few years this cycle has been a very fruitful one; with interest rates at historic lows and practically everyone qualifying for a loan, the housing market experienced an absolute explosion in growth. Investors were happily investing their money in the secondary market and primary mortgage lenders continued lending money. But then… home growth slowed. More houses came onto the market, whether by investors trying to quickly unload a home or actual homeowners deciding it was time to sell. New home builders were suddenly left with excess inventory. And what happens when inventory goes up? Prices go down!

Investors no longer had the rabid interest in the secondary market that they did when the housing industry was booming. Primary mortgage lenders suddenly found themselves holding millions, or billions of dollars worth of loans that they could no longer sell. Essentially, this is what happened to [tag]First Magnus[/tag]. Whether through risky lending practices or decreased activity in the secondary market (maybe both), First Magnus is the latest casualty in the mortgage industry. Keep in mind, there are other factors involved in the lending industry causing these effects (take a look at Asset-Backed Commerical Paper (ABCP)).

Will I Be Affected?

I truly feel sorry for all of those employees left in the dust by First Magnus. Thankfully the blow has been softened somewhat by community assistance in the form of a job fair co-sponsored by [tag]Stewart Title[/tag], the National Association of Professional Mortgage Women Tucson Association, the Arizona Association of Mortgage Brokers and the Southern Arizona Mortgage Lenders Association. More information on that job fair here.

I’m curious, is anyone else seeing the same types of events with local lenders?

[tags]First Magnus Bankruptcy, Tucson Mortgage, Tucson Real Estate[/tags]

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