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

Tucson Realtor - Michael Krotchie — Sat, 14 Jun 2008 16:27:53 +0000

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.

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

Tucson Realtor - Michael Krotchie — Thu, 15 May 2008 14:21:22 +0000

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.

The past several years in Tucson has seen a tremendous amount of growth and if you stop and think about it, these commercial “power centers” are fast becoming a mainstay of every burgeoning city. Here’s a list (I typed “short list” at first but then realized my mistake) of “power centers” in the Tucson area.

List of Tucson Power Centers

Rooney Ranch – Located on the SW corner of 1st Avenue and Oracle (technically Oro Valley), Rooney Ranch, developed by Barclay, sits on 65 acres and consists of a Home Depot, Fry’s, Target, Ross, Sport Authority, PetSmart, Office Max, and Starbucks.
Tucson Spectrum, a 1 million square-foot power center at the SW corner of I-19 and Irvington Road. Also developed by Barclay, this power center boasts giants such as Best Buy, J.C. Penney, Sports Authority, Pier 1 Imports, Old Navy, and a Harkins Theatre occupying 620,000 square feet.
Oro Valley Marketplace – Located at Tangerine/Oracle Road and developed by Vestar, Oro Valley Marketplace is 800,000 square feet and features merchants such as a Wal-Mart Supercenter, Best Buy, Century Theatres, Dick’s Sporting Goods, Cost Plus World Market, and a few restaurants to boot.

Upcoming List of Tucson Power Centers

Marana Spectrum – In my previous post I wrote about this development, to be located at the southeast corner of Camino de Manana and Linda Vista Boulevard (east of I-10 between Cortaro and Avra Valley) and will cover nearly 170 acres. Estimated to have roughly 100 stores, Marana Spectrum will carry 3 “anchor stores” of at least 100,000 sqft, making the total square footage approximately equal to that of the Tucson Mall.
Tangerine Crossings – a 1 million-plus square foot project at the NE corner of I-10 and Tangerine Road in Marana being planned by Westcor, developer of La Encantada in the Catalina Foothills. The new Tangerine road (realigned and 4 lanes) is officially set to open June 25, 2008.
De Anza Crossings – 20 acre spread located where the current De Anza Drive-In resides. Projected to be finalized late 2008.
Passages of Tucson – This may stand in category by itself. When (and if) completed, Passages of Tucson will be 4.3 million square feet of retail, commercial, and residential space. Featuring a series of villages, the developer plans on building eight themed areas, grouping similar stores, restaurants, offices and activity centers into one area. The villages would follow a Southwestern motif, incorporating “new urbanism” design principles, with pedestrian-friendly streets and open courtyards. With final buildout not scheduled until 2020 (wow!) it remains to be seen if this behemoth will ever take shape.

I think that growth overall is good for Tucson. The De Anza development will be first power center that actually is built in town, everything on the list above basically sticks to the lifeline of the freeway for traffic flow, and with the limited transportation system in Tucson, there are only a few ways to expand.

What do you readers think? Good or bad?

UPDATE 6/14/2008:

Just read an article in today’s Arizona Daily Star and the De Anza Drive-In is safe for now! The developer as decided not to go ahead with purchase plans!

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Tucson Real Estate Market – April 2008 Analysis

Tucson Realtor - Michael Krotchie — Tue, 13 May 2008 13:57:46 +0000

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!

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FEMA Revising Flood-Plain Maps in Pima County

Tucson Realtor - Michael Krotchie — Thu, 30 Aug 2007 14:47:39 +0000

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!

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

Tucson Realtor - Michael Krotchie — Tue, 21 Aug 2007 19:57:52 +0000

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 loose lending practices by banks the past few years. Now, there are whispers of Countrywide Home Loans 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, Freddie Mac is a large investor in the secondary market. They buy up mortgages from primary mortgage lenders do a few things with them:

package those loans into securities, and
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 First Magnus. 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?

.. It depends..

If you are scheduled to close on a home purchase in the next few days, be sure to stay in constant contact with your lending institution. It seems lending standards are changing almost overnight and there is nothing worse than showing up for closing and then having a nice surprise like “The lender would like to have at least 10% down” sprung on you.
If you are currently shopping for a home and are pre-approved from a lender, be sure to check with them to ensure that they still offer whichever mortgage program you originally qualified. Many institutions (including Coldwell Banker Home Loans) no longer offer 100% piggyback loans.
If you are a homebuyer, be aware that it will become more difficult in the coming months to buy a home for certain groups of people. If your credit is questionable or if you don’t have any down payment you may find your financing options limited.

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 Stewart Title, 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?

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Saguaro Springs – A New Subdivision Coming to the Tucson Real Estate Market

Tucson Realtor - Michael Krotchie — Tue, 29 May 2007 13:39:19 +0000

Greetings everyone! Just wanted to let you know about an upcoming subdivision in the Tucson Real Estate market, Saguaro Springs.

Saguaro Springs is a 2,500 home project being developed jointly by KB Homes and Empire Companies and is nestled behind Rattlesnake Pass by the intersection of Silverbell Road and Twin Peaks Road in NW Tucson. It is slated to be built in the same manner as the existing Gladden Farms subdivision north of Tangerine Road with large greenbelts, walking paths and tree-lined boulevards. A neighborhood Community Center will include a fitness center, pool area, youth center and banquet facilities with meeting rooms for casual or formal events. There are currently 6 floorplans being offered ranging from 1,422 to 2,273 square feet. More info here from the KB website.

Responding to the quickly growing senior population in the Tucson real estate market, Saguaro Springs will also have a 600 home “‘age-restricted” section of homes in the NW corner of the development. Currently zoned R-6, which means 6,000 square-foot minimum lots, the “age-restricted” section may include smaller plots of land.

One of the main concerns with the current residents of Continental Ranch is the growing traffic headache. With only one freeway entrance readily accessible to most of the community (Cortaro Farms Road) the new additions of thousands of residents at Saguaro Springs will become a headache very quickly. The Town of Marana has already set money aside to improve Twin Peaks Road west of Continental Ranch. There has been talk of creating a new freeway entrance by extending Twin Peaks Road east to I-10 for several years but nothing has come of it yet. Hopefully they can figure something out soon!

CLICK TO ENLARGE

On a side note, to pay for the improvements spurred by Saguaro Springs and all the recent and upcoming growth in Marana the Town is looking at implementing a higher property tax rate to generate more income.

CLICK TO ENGLARGE

I tried to include as much information in the included pictures as possible by showing where I took the pictures and in what direction, and also included a few panorama shots I assembled. Enjoy!

CLICK TO ENLARGE

EDIT: 5/16/2008:

I spoke with a KB Sales Rep at one of their other communities and asked about Saguaro Springs, and I was told the community is on hold “until further notice” because of the softened housing market. If you drive out there you can see the models are up, main street is paved, and the land is graded. We shall see when and if this development is ever brought back to life!

UPDATE: 5/16/2008:

The Saguaro Springs master-planned is now on hold according to this just-published article from the Arizona Daily Star. Too bad since all the infra-structure of the community is already complete! We’ll have to wait and see where this one goes.

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