2223 E Calle Alta Vista

OPEN SUNDAY NOVEMBER 21 FROM 1 TO 4 PM

Just one house away from beautiful Connor Park in a fabulous neighborhood. Owned by perfectionists, this immaculate home is a welcome relief after all the depressing fixer uppers you've been seeing. All original construction, with a floor plan that makes sense. Vaulting ceilings. New tile and paint through out. Updated bathrooms. The kitchen is spacious with vintage 50s tile. Classic built-in cabinets in hall. All bedrooms have ceiling fans and lovely new entry doors. Metal 8'x10' shed. More storage in the carport shed.
Sit on the wide, north-facing covered porch and admire your big, private, shady yard.
Under two miles to UMC. You snooze, you lose.
This house sold in December 2010 for $160,000.

Foreclosure Moratorium

Bank of America, GMAC and JP Morgan Chase have halted foreclosures in several states. Only BofA has stopped foreclosures in Arizona.

Banks have illegally used a system called MERS (explained in this blog on October 1) to transfer bundles of mortgages between investors. Deeds weren't recorded as required by law, and no one is sure who actually has the right to foreclose on some of these properties.

People who knew nothing about mortgages were hired by the banks to "review" foreclosure documents. These "robo-signers" sign thousands of foreclosure authorizations per month. Obviously, signing is all they are doing.

While a moratorium on foreclosures may be welcome news to homeowners facing foreclosure, it will prolong the housing market recovery. All the homeowners who can not pay their mortgages will eventually have to lose their homes. Only after the glut of foreclosures and short sales work their way through the system will we see the housing market turn the corner toward normalcy.

The following is from The Wall Street Journal, Dawn Wotapka (10/12/2010):

Best-Case Scenario for Foreclosure Freeze
Gregor Watson, a principal with McKinley Partners, a development company that buys foreclosed homes, told listeners on a Citi home-builder conference call that there were three potential outcomes from the foreclosure fiasco:

· Best case: These are technical issues that can be resolved quickly so the foreclosure process can continue and the glut of foreclosed homes is cleared from the market.

· Medium case: There is significant litigation that takes years to sort out and this slows the troubled housing market even further.

· Worst case: The market grinds to a halt and title insurers refuse to insure mortgages involving foreclosed homes. “It would be devastating for the resale market if this robo-signer issue spiraled out of control,” Watson says.

Tarantula

We can now add tarantula to the wildlife we have seen at Desert's Edge. Fortunately, this stunning creature was outside, unlike the pack rats who took over the attic. I think I have won the battle with the pack rats, thanks in part to Desert Wildlife.

This tarantula was especially impressive because instead of the usual black back, this one was honey-colored.

After the paparazzi harassment ceased, the tarantula continued its fascinating eight-legged march into the desert behind our house.

September Residential Sales Statistics

The Tucson Association of Realtors has published the Residential Sales Statistics for September.

Average sale price was $181,612, down 7.7% since September 2009. Median price was down 10.5% over the past twelve months to $145,855.

With 7,217 active listings and 873 sales in September, we have a 8.27 month supply of listings. In September 2009, we had a 6.36 month supply.

Changes to FHA financing have made housing less affordable to first time buyers. Effective October 4, an FHA mortgage on the average priced house ($181,612) will cost $46.98 more per month than it did in September. See my August 7 post for details on the changes to FHA financing. The monthly mortgage insurance payment is now 0.9%/12 of the loan amount, compared to 0.5%/12 in September.

One bright spot is that interest rates are around 4.5%, which is a huge benefit to buyers with good credit, employment and a 3.5% down payment, which can be a gift from relatives.

Rampant Mortgage Fraud Puts Foreclosures on Hold

GMAC recently stopped foreclosure proceedings in most states. Now JP Morgan Chase has also stopped foreclosures. The reason? Consumers who have wrongfully had their houses foreclosed are fighting back.

The problem is that after a home buyer signs for a mortgage, the mortgage is bundled with other mortgages and sold. To save money, the companies that buy and sell the mortgages decided not to publicly record the lien transfers as is required by law. They just decided to keep electronic records among themselves. Incredibly, this seemed like a good idea to them.

Watch this video clip from Florida Representative Alan Grayson.

Citizenship

Yesterday Steve and I went to Saguaro National Park West to see our Aussie friend Chris become a U.S. citizen. It was a very moving ceremony, and the setting among the saguaros was perfect. Chris said when he saw the saguaros during his first visit to Tucson in 1982, he knew that living in the Sonoran Desert would compensate for leaving his home in Tasmania.

Of course, a slide show of our country's astounding beauty was accompanied by "I'm Proud to Be an American". I knew I should have brought some tissues.

Chris and the other new citizens registered to vote and posed for pictures in front of the national park they now co-own with those of us lucky enough to be born here.
He was also interviewed by Fox News, and was quoted in the Arizona Daily Star.
Chris then made the brilliant suggestion that we go out for some American food. We had a great meal and tasty local beer at Barrio Brewing Co.

Papel o Plastico?

Picante's got both! This charming store in Arizona's oldest and most Mexican shopping plaza, Broadway Village, has papel picado for your Day of the Dead celebration, or any other festivities.

Papel picado means cut paper. Strings of papel picado flags are used to announce special events in Mexico.

As residents of a former Mexican outpost, Tucsonans can and should brighten their celebrations with papel picado.

Picante is a delightful store with decorative items, jewelry and clothing from Mexico. It's a great place to buy a Southwestern flavored gift.

Desert Museum

As members of the Tucson Gem and Mineral Society, Steve and I get free admission to the Arizona-Sonora Desert Museum one summer night per year so we can ogle the minerals in the museum's vault. Then we can hang around and shine black lights on fluorescent scorpions and attend lectures where we saw hawks, a pelican, a skunk, a porcupine and a ringtail.

It was raining when we went into the lecture hall. We noticed an ironwood tree with a snaky cactus draped all over it. It had huge buds that looked just like our night-blooming cereus buds. When we came out of the lecture, the rain had stopped and the tree was covered with 48 huge blossoms. One of the museum staff said the cereus waited until the rain stopped so it wouldn't lose any of its pollen. It was a spooky sight to behold.

I Was There When Levon Turned 70

If you look up the definition of gentleman in Webster's, you will see a picture of Levon Helm.

In May, my sister and I went to Levon's 70th Birthday Bash at his barn studio, which is attached to his home in beautiful Woodstock, NY.

CNN was there, too. Here's the video.

Oh, what a night!

Meet the New Ride. Same as the Old Ride. Sort Of.

When I bought my 2007 Camry Hybrid in May 2006, there were fewer than 10 in Tucson. It was still on a slow boat from Japan when I signed the contract. I bought it because my beloved 2003 Hyundai Sonata, a gorgeous gold Korean Jaguar, got 17 MPG. I didn't want to be part of the reason that we were occupying Iraq.

The Camry turned out to be a big bummer. Minor irritations were compounded by disappointing mileage. The last straw was the Toyota recalls due to brake and acceleration problems. Toyota gambled their sterling 50 year reputation, weighed the cost of the recalls against the lives of their customers, and made the wrong decision. They covered up the dangerous manufacturing flaws until they were forced to come clean. The Toyota reputation and resale value, for which I had paid a premium price, are damaged goods.

I thought about buying my seventh Honda. My three Honda motorcycles and three cars were paragons of care-free reliability. But the allure of my favorite car ever, the 2003 Sonata, reminded me to check out the new Sonatas. Hyundai's bumper to bumper warranty--five years or 60,000 miles--is the best in the car industry. Sonata has the best fuel economy in its class. When I learned one of the Sonata colors is black plum pearl, I had to see this wonder.

One of the disappointments with the Camry hybrid was that during its first year of production, it was still being made in Japan. I am pleased that my Sonata was assembled in Alabama.

The new Sonata has gotten raves from Edmunds, J.D. Powers and others. It is quite pretty, and a little more daring than the homogeneous Honda/Toyota/Volvo/Ford models. By the time I accepted how much I have to pay for a new car, all the black plum pearl Sonatas in southern Arizona were sold. All dealerships are awaiting their new inventory, with no delivery date in sight.

I have spent the last week having very unpleasant interactions with car salesmen. With two exceptions, they didn't listen to me, they put their needs ahead of mine, and they didn't hesitate to show their frustration when I didn't immediately do what they wanted me to do. This is the opposite of how I treat my clients, and it was nasty to be treated this way.

I finally found a salesman at Hyundai of Tempe who does business my way. Ron Rinaldi remembered what I told him about my car criteria and he was interested in learning about me. He told me his sales philosophy and why he is proud of his dealership. We both believe the way to stay in business through the turbulent market cycles is to put the customer first, and earn their referrals and repeat business. If you are thinking of buying a car, I highly recommend you consider letting Ron find the Hyundai that's right for you.

Of course, he also sells used cars, and unlike many salesmen, will look for the car you want, even if it's not at his dealership and he might not make as much on the sale. Imagine that.

I expect most people won't even notice I have a new car. In the photo above, the Sonata is in front, and the Camry is behind it. They are almost the same color red, with the same rounded mid-size sedan styling. The Sonata looks a little racier and of course its red is richer and shinier than the Camry's.

Ron gave me a complete orientation to all the features of my Sonata. It really has almost everything the Camry had, but I never used the Bluetooth because no one explained it to me. Ron linked the car to my phone so a display on the dash shows who's calling me. Don't worry, your phone number is not stored in my car, just in my phone. Before I got to Tempe yesterday, Ron had just spent an hour and a half explaining the navigation system to another of his customers.

Hyundai of Tempe is just off I-10 at Elliott. An easy ride when it's not rush hour. Ron gave me a Hyundai Santa Fe to drive home from Tempe last night. As soon as my moon roof is installed, Ron will drive my Sonata to my door. I'm so impressed. His number is 602-799-7226.

Snakes Have to Eat, Too

One morning a couple months ago I heard a flapping commotion outside our den door. I looked out to the porch and saw a dove bravely beating a king snake with his wings.

It was morning, so the male dove was on duty on his nest while his wife rested. The snake was after the dove's chicks, and the snake won.

Now I don't want any of you carnivores shrieking "Eeew!"

A Better Way to Do Short Sales

A short sale occurs when the seller owes more on his mortgage than can be recovered by the sale of the house. Banks have made the short sale process so painful, that most buyers won't even make an offer on a house that is listed as a short sale. Buyers know they will wait several months before the seller's bank will look at their offer, and then the lender will refuse to make repairs and may counter at a higher sale price. At the last minute, the real estate agent's commissions can be reduced, and the agents have no recourse. So of course agents are not eager to get involved with these high risk/low reward transactions.

Since August 1, the U.S. Treasury has made Home Affordable Foreclosure Alternatives (HAFA) short sales available to borrowers whose loans are owned by Fannie Mae and Freddie Mac. Borrowers with FHA and VA loans are still not eligible.

Here are the enlightened advantages of the HAFA short sale:
1) The seller has at least 120 days to market the house, during which time foreclosure is postponed.
2) The seller's lender sets a sale price that they will accept, preferably before the house is on the market.
3) If a buyer submits an offer that meets the the terms of the seller's lender, the lender must accept the offer within 10 business days.
4) Seller is released from all liability on all loans. No deficiency judgements, and no surprise repayment notes appear in the closing documents.
5) U.S. Treasury pays up to $6,000 to subordinate lien holders. This is a big deal, because typically the holder of the second mortgage is offered $3,000 by the first lien holder, and the second lien holder can refuse to accept this settlement, so the short sale can not occur.
6) Seller receives $3,000 cash from the U.S. Treasury at closing for moving expenses.

How can the U.S. Treasury get lenders to agree to streamline the short sale process? They give cooperating lenders $1,500. So the downside of all this is that the taxpayers are again on the hook for the mortgage industry meltdown.

I just took a class on the HAFA short sale process, and I would be glad to discuss this option with you if it seems like something that would be helpful to you.

Why Do Banks Prefer Foreclosure to Short Sale or Home Loan Modification?

I have long wondered why banks reject perfectly reasonable offers on houses that need a short sale. The banks take months to respond to an offer on a house, they refuse to do repairs required to make the sale happen, and they cut the agents' commissions at the last minute. They really seem to prefer to foreclose on the house, rather than work out a home loan modification with the underwater home owner, or accept a short sale offer at market value. When the house goes to foreclosure, it typically sells for far less that it would have by a short sale. What gives? How can the banks stay in business by willfully choosing to foreclose, and thereby receiving much less than they need to?

The guys at Think Big Work Small think they have it figured out. The FDIC seized the assets (bundled mortgages) of some inept mortgage lenders, and then sold the assets to other lenders at a deep discount. Then when the new lenders foreclose, FDIC compensates the new lenders for their losses, but not for their actual losses, but for the loss the lender would have incurred if the new lender lost the difference between the original mortgage amount and the foreclosure price. Of course, the new lender is not really losing that amount, because they bought the mortgages for less than was owed!

If this scenario is true, the FDIC is using tax-payer dollars (or I should say, increasing our deficient and borrowing against future tax-payer dollars) to enrich the lucky, well-connected banks that bought the assets of defunct banks. All these unnecessary foreclosures drive down the values of the neighboring properties, making it impossible for neighbors to refinance or to sell at a fair price. As long as the FDIC pays banks to foreclose rather than do a short sell or a loan modification, market value of all houses will be unjustly dragged down by the value of the foreclosed houses.

Are you horrified yet?

Go Solar with No Installation Cost

The amazingly fabulous Center for Biological Diversity (CBD) has found a unique and affordable new way for you to lease solar panels for your home, and at the same time raise $500 for the CBD. If you get the panels installed, please let me know how it worked out for you. Here's the plan:

Sungevity, a home-solar installer serving California, Arizona and Colorado, puts up solar panels on your house for free when you sign up to lease them.
You pay Sungevity on a monthly basis for your home-solar lease, usually the same or less than what your pre-solar electric bill used to be.

Sungevity pays the CBD a $500 referral fee for sending you their way.
Sungevity pays you an additional $500 cash bonus for joining the solar lease program, plus $1,000 credit toward your future lease payments.
In the end, you could end up having home-solar power for nothing more than you were paying in electricity bills before, plus $500 cash back and the chance to earn a generous donation for the Center for Biological Diversity. Not to mention the fact that the atmosphere will be spared roughly 8.24 metric tons of CO2 a year (roughly what you'll conserve by using solar on your home). It's a win-win-win situation.

To take advantage of this offer, please follow the steps below:

Go to the Sungevity home page to request an iQuote: www.sungevity.com
After you submit your request, you'll be taken to a page that asks you where you heard about Sungevity. Enter the following referral code: CBD.
Within 48 hours, Sungevity will send you an iQuote with your estimated monthly lease payment and savings. You then decide whether to enter a lease agreement.
If you are excited about this promotion and about raising funds for the Center's work, please spread the word among your friends and colleagues who live in Arizona.
This offer is good through the end of 2010.

If you have any questions about this program, please contact Brian Somers at Sungevity (bsomers@sungevity.com).

FHA Changes Coming

FHA, the federal agency that insures loans for millions of homeowners who have limited down payment, needs a cash infusion. FHA's reserves have been below the required level for several months, and they must figure out how to increase their reserves so they can continuing insuring loans. In July, 36% of the home buyers in Tucson who financed their purchase used FHA loans.

On October 4, 2010, FHA will be changing the Mortgage Insurance Premiums that they charge to borrowers using FHA financing. The Up-Front Mortgage Insurance Premium (UFMIP), which is added to the buyer's loan amount, will decrease from from 2.25% to 1.0%. On a $100,000 purchase, at the current 4.5% (!) interest rate, this will reduce the monthly payment by $6.11. So far so good.

The problem for home buyers is that the Monthly Mortgage Insurance Premium (MMIP) will increase from 0.55% to 0.80% or 0.90% annually. The exact amount hasn't been determined yet. If the MMIP goes to 0.9% annually, the net effect of the UFMIP and MMIP changes will be this: using FHA financing at current interest rates on a $100,000 house will cost $21.77 per month more.

July Residential Sales Statistics

The Tucson Multiple Listing Service has released Residential Sale Statistics for July

While the average and median sale prices held steady from June to July, the number of sold units dropped 32% in that one month. Most buyers had to complete their home purchases by June 30 to qualify for the $8,000 tax credit. In July, we saw not only the usual lack of interest in summer home buying, but also the abrupt loss of one huge government subsidy for home buying.

FHA accounted for 36% of the financed sales. Changes are coming in September that will make it harder for buyers to use FHA financing.

Amazingly, 27% of the sales were cash. Many of the foreclosed houses are too damaged or neglected to qualify for financing. Investors are buying these sorry wrecks at incredibly low prices, renovating them, and reselling a few months later for twice as much. While the investor purchases drag down the values of neighboring houses, the resale of renovated houses to homeowners pulls the values up, and helps stabilize neighborhoods.

Seller-Funded Down Payment Assistance Program

The home buyer tax credit program is history, and no one is really sure if the $12.6 billion investment was worth it. I myself have not seen any decline in home buying, probably because of the incredibly low 4.5% fixed mortgage rates combined with house values that in some cases are half what they were three years ago.

These guys at ThinkBigWorkSmall make a good point. Just a few years ago, we had programs that allowed sellers to contribute to the buyer's down payment. The down payment had to be laundered through a non-profit that skimmed some of the money for handling the paper work, but a lot of houses were sold to people who had no savings.

HUD decided that because the default rate on these loans was considerably higher than average, they had to put a stop to seller-funded down payment assistance programs. They concluded that when people don't have much "skin in the game", meaning their own savings invested in a houses, they are more likely to walk away from the house when they get into financial trouble.

But is this the reason for high rate of defaults on these loans? Maybe partially, but HUD needs to remember that many of these loans were made to people with no income and bad credit. Additionally, the unemployment rate has soared, and the glut of foreclosures had depresed property values, making houses impossible to sell or refinance. The defaults should surprise no one.

Almost immediately after the seller-funded down payment programs were eliminated, HUD came up with a new idea: $6,500 to $8,000 tax credits for home buyers. The problem with this is that instead of the home buyer having their skin in the game, now they have the tax payers' skin in the game. $12.6 billion of it. This doesn't seem like an improvement to me.

HR 600 is a bill that will restore seller-funded down payment assistance programs. These programs could help keep the housing recovery chugging along, and they don't cost tax payers a dime.

For the most part, lenders are no longer making loans to people who have no business buying a house. In fact, lenders have swung so far in the other direction, that I am now having trouble getting loans closed for people with perfect credit, savings and secure jobs. If the down payment assistance program could be used to help people who are actually qualified to buy houses, we would all benefit.

June Residential Sales Statistics

The Tucson Association of Realtors has published the Residential Sales Statistics for June. Average and median sale prices are down 9.4% since June last year. From May to June this year, average price declined 2.9% to $189,231 and median price declined 1% to $149,450. This is the first time the median has been below $150,000 since January 2004.

Once again, 87% of the sales were below $300,000. With 5,979 listings under $300,000 and 1,015 sales under $300,000, we have a 5.9 month supply of listings in that range. This is below the six month supply that is considered a balanced market, so the advantage is tipped slightly toward the seller for an appropriately-priced house in this price range. However, sellers are being asked to contribute to buyers' closing costs and make repairs.

Overall, we had 7,997 listings and 1,170 sales in June, for a 6.8 month supply of listings in all price ranges.

Your Opinion Needed on FHA Plans

FHA temporarily increased the amount that the seller can contribute to the buyer's closing costs from 3% of the sale price to 6%. Now they are thinking of reducing it back to 3%.

This is another example of the government getting in the way of a housing recovery. FHA is looking for opinions on this proposed change. Remember, as the government makes home sales more difficult, more houses will stay on the market and home values have to drop. Even if you aren't buying or selling in the immediate future, vacant houses affect you because of 1) the loss of property tax revenue to the city and county, resulting in reduced services, 2) the blight of vacant houses and 3) the reduction in your home's value, potentially making refinancing impossible.

Make your comments here.

10660 E Rusty Spur Drive

This is the Arizona Dream. Horse property out in the country, with miles of riding trails in the wash across the road.
Extensive remodeling in 2005 raised the living room, foyer and kitchen ceilings to almost 12 feet.
Lots of wildlife and native vegetation. Serenity next to your diving pool. Family fun on the basketball court and playground. Dinner parties on the deep back porch.
Cozy fires in the family room. An eye-popping view of the Catalinas from your airy living room, with its huge arched window.
Custom-built painting studio with beautiful north light. Check out the interactive floor plan.

10660 E Rusty Spur Drive was offered at $299,000. This was a fabulous opportunity. Sadly, the bank refused to accept a reasonable short sale offer. AARGGGHH! This is part of the reason why the housing market is such a mess.

Back Home Again

I started my real estate career in 1995 with Long Realty. In 2003, I moved to Realty Executives, and thought I would stay there forever. In March this year, the local Realty Executives franchise became Keller Williams. In the following weeks, about 70 of the agents from the old Realty Executives moved to a new Realty Executives franchise in Tucson. Along with 230 of the old Realty Executives agents, I transferred my real estate license to Keller Williams, because I could stay with my mentors from the old Realty Executives, and I wouldn't have to leave my sweet private office on River Road.

After four months with Keller Williams, I concluded it wasn't a good fit for me. Amazingly enough, the new Realty Executives signed a lease on an office building at 2251 E Grant Road last week. I called just minutes after the lease was signed to inquire about a private office, so I had my pick. Serendipity! This is a beautiful Southwestern style building in a great Central Tucson location. Bookman's! Ragin' Sage!


You walk past the white stuccoed walls with their vigas and rusted gates into a pleasant, leafy court yard. My office has French doors going out to another court yard. Needless to say, I am thrilled to be home and to have lucked into this wonderful office.

NFIP and New Home Buyer Tax Credit Extended

Buyers, sellers, real estate agents and mortgage loan officers have had a frantic few weeks. The $8,000 tax credit for first time home buyers was scheduled to expire June 30. Buyers had to have their home purchases in escrow by April 30 to qualify. Everyone worked feverishly to meet the June 30 deadline to close escrow. It is estimated that without the extension of the deadline, 220,000 sales would not qualify for the tax credit.

Also, as noted in my blog on June 25, Congress failed to reauthorize the National Flood Insurance Program, leaving buyers of houses in FEMA-designated flood plains unable to get mortgages.

Not a moment too soon, Congress awoke from its slumber.

The House and Senate have passed H.R. 5623, the "Homebuyer Assistance and Improvement Act," extending the first-time homebuyer tax credit to October 1, 2010 for any borrowers who've entered a binding contract by April 30, 2010.

Also, the Senate approved House-passed H.R. 5569, the "National Flood Insurance Program Extension Act," extending the NFIP through September 30, 2010 and reauthorizing the program retroactive to May 31, 2010.

President Obama is expected to sign both pieces of legislation into law today.

Flood Insurance

The National Flood Insurance Program expired on June 1, leaving homeowners without access to reasonably-priced flood insurance. The National Association of Realtors begged Congress for months to extend the NFIP, to no avail. This means buyers have been unable to buy houses in the flood plain for over three weeks.

The National Association of Mutual Insurance Companies estimates that due to Congress's inaction, about 1,200 real estate transactions requiring flood insurance fail to close every day in our country.

You might think any one who builds their house in a river bottom shouldn't be able to sell it anyway, but this affects a lot more people than you may think. Much of Central Tucson requires flood insurance, including parts of Winterhaven, Sam Hughes, Broadmoor, north and south of U of A, Casas Lindas and many other seemingly high and dry locations.

Way to put the brakes on the housing market recovery, Congress.

Cowtown Keeylocko

Last night Steve and I drove out the Ajo Highway past Three Points to Cowtown Keeylocko. This is a working cattle and horse ranch owned by Ed Keeylocko, who bought the land after returning from the Vietnam war. Ed loves the Wild West myth, and has built a small town that he proclaims is "The Way the West Really Was".
Actually, he has improved on the way the west was and is, because his house rules require a level of civility that has never been seen in the real world.
The Blue Dog Saloon is a barn with a sand floor and two bars. Suspended from the ceiling, hanging on the walls and crowded onto every surface are saddles, ropes, photos, animal heads, a baby buggy and an accumulation of decades of dusty old stuff.

Inspired by the movie "Lonesome Cowboys", filmed by Andy Warhol in southern Arizona, French-born Tucson singer Marianne Dissard filmed part of "Lonesome Cowgirls" at Keeylocko last night. Thanks to incorrect directions in The Tucson Weekly, we missed the filming, which must have been fun. By the time we finally found this ranch at the end of six miles of dirt roads off Highway 86, the costumed actors, including Tucson's own magical Flam Chen, were busy drinking and listening to Marianne crooning in French.

Keeylocko is a delightful Tucson treasure that reminds me of Valley of the Moon. Generous, imaginative men of vision created their versions of utopia, and then invited the world into their homes.

May Residential Sales Statistics

The Tucson Association of Realtors has announced the Residential Sales Statistics for May.

Average sale price in Tucson in May was $194,838 and median sale price was $151,000. This was a decline of 3% in average price and 5% in median price from April.

This decline may indicate the increased prices we saw in April were due to the first time home buyer tax credit that expired April 30. Buyers needed to have an accepted contract by April 30, and they need to close by June 30, so we will continue to see the effects of the federal stimulus for another month. Because lenders are overwhelmed with buyers trying to get that $8,000 tax credit, some of the sales in escrow will not close by June 30. For this reason, the deadline to close may be extended.

The 6,603 active listings outnumbered the 1,227 sales in May 5.38 to 1. This is below the magic 6:1 ratio that is considered a balanced market. When we get below a six month supply of listings--which is another way of saying a ratio of six listings to one sale--we have what is considered a seller's market. Sellers of homes priced over $300,000 may find that hard to believe, but here's the explanation: 87% of the sales were of houses priced below $300,000 and 55% of the sales were under $160,000.

We had 2,080 active listings priced over $300,000 in May, of which only 164 sold, indicating a one year supply of houses in this price range. We have a 23 month supply of listings priced above $500,000.

First time home buyers and investors still dominate the market. Government-insured loans--VA and FHA--accounted for 36% of the sales, and 23% of the sales were cash.

A Sign of Home Value Recovery?

Catherine Ellinwood with Fairway Independent Mortgage (520-954-1907) sent me an email this morning saying the market's looking good because interest rates are low and "values are coming in under purchase price." The first part sounds good, but to me, the second part didn't.

When a property appraises for less than the price in the purchase contract, this is bad news to me, because the buyer can't get a loan for the purchase price. One of two things has to happen: the seller has to reduce the sale price to the appraised price, or the buyer has to pay the difference between the sale price and the contract price as additional down payment. The seller usually doesn't want to do this, and the buyer often is unable.

Catherine explained that when the contract price is more than the appraised price, it means buyers are willing to pay more than what the comparable sales would indicate the house is worth. This is how prices went up so quickly from 2003 to 2006.

Way too many of the comparable sales on appraisals today are distressed sales. These sales drag down the value of non-distressed properties. Now that buyers are realizing that there are bargains in this market, we are seeing bidding wars and serious offers. This renewed interest from buyers is bringing the sale prices up.

When the appraisal is lower than the contract price, cooperation between the seller and buyer can keep the sale on track. If the seller reduces his price a little, and the buyer brings a little more cash to the table, the house can sell for more than the appraised value. Although they may not feel like winners when making these concessions, this is a win-win situation. The seller sells, the buyer buys, and when the house has a new owner, everyone realizes that they got what they wanted.

When prices start going up (sloooowly, this time), fewer homeowners will be underwater, and more will be able to sell or refinance. Then we can start climbing out of this worrisome housing market.

The low rates Catherine referred to were 5% with 0 origination fee, or 4.75% with 1% origination fee for FHA loans. Conventional loans are a little higher. Ask Catherine about Fairway's contribution to the buyer's closing costs.

Guess Where I Went on Saturday?

Hey rock and rollers, do you recognize this house?

Javelinas

Just before dusk one evening in March, Steve and I noticed our cat Sunbeam was very alarmed about something going on in the driveway of our Central Tucson home. We looked over the wall, and as expected, we were about ten feet away from the biggest family of javelinas we have seen in our yard. Four adults, two juveniles and two tiny babies were planning to knock over the 50 gallon garbage can again.

We had never seen such tiny babies. They were about the size of a Chihuahua, but much stouter, of course. One of the adults gave the can a heave, and it crashed to the ground. They seem to be getting smarter about which way to push the can so the lid lands at a good angle and they can get to all the yummy stuff inside the can.

They were pulling bags out of the can, and one javelina went right inside the can to look for the choicest morsels.

The babies kept trying to nurse as their oblivious mother stomped around among the garbage. We wondered how they avoided getting trampled.

Steve and I watched all this with fascination, but we know we shouldn't encourage this behavior. I asked Steve if we should scare them away, and he said no, so I was satisfied to keep taking pictures.

Even after darkness fell, and my camera started flashing, the beasts continued their feast, unconcerned about the people they could clearly see, smell and hear just a few feet away.

For those who don't know what a full grown javelina looks like, here's one. I have always thought that with their huge heads and tiny legs, they looked like a child's drawing of a pig.

April Residential Sale Statistics

The Tucson Association of Realtors has released the Residential Sales Statistics for April. The $8,000 tax credit for first time buyers really had its intended effect: number of homes sold was up 31% from April 2009. Buyers needed to be in escrow by April 30 to get this tax credit, and will need to close by June 30, so the strong numbers will continue for a few more months. What happens then, no one knows for sure.

The tax credit also helped stabilize home prices. Average sale price was $199,986, which is 4% higher than April 2009. At $159,000, the median home price is 2% lower than last April, but almost 1% more than in March 2010.

FHA financing, with allows loans up to $316,000, accounted for 30% of the sales. Conventional financing (not insured by FHA or VA) was 31% of the sales. A whopping 27% of buyers paid cash. So many of my buyers who wanted to buy their first home this spring were been beaten out by investors who paid cash for foreclosed and otherwise distressed properties. Most of these houses that sold for cash would not qualify for financing because they are in terrible condition. The fixer upper bargains that can be bought with cash are astounding. Houses priced under $100,000 that are move-in ready are rare.

Eighty-six percent of the sales were under $300,000. Hmm, do you think the $316,000 limit on FHA loans has anything to do with that?

The easiest place to sell a house was in zip codes 85706, 85714 and 85741, where over 38% of the houses on the market sold last month. These areas are in South Tucson. In the Tucson metro area, the lowest rate of turnover was in Northeast Tucson zip codes 85749 and 85750, Central Tucson west of First Ave (85705) and the West Foothills (85718). In these zip codes, fewer than 13% of the active listings sold. Rural areas are struggling even more. In all the Tucson MLS, 19% of the active listings sold, or 1,227 sales out of 6,603 listings.

834 S Lehigh Drive

What an opportunity for you. This three bedroom, two bath home is in good condition at a bargain price. Solid adobe construction and located in a quiet neighborhood near Park Mall. The sunny and spacious oak kitchen has plenty of storage, with more cabinets in the laundry room, right next to the built-in desk. The kitchen is open to the dining area, which has a sliding door leading out to the covered patio.

Just enough lawn to provide an oasis. Bougainvillea, orange tree and shade trees on irrigation.

New ceiling fans and light fixtures.

Ceramic tile everywhere but the bedrooms. Upgraded shower and tub surrounds. Half of the roof was replaced in 2007. Gas heat and evaporative cooler. The air conditioner was installed in 2006.

Close to Palo Verde Park with its walking path, numerous playing fields, play ground and picnic tables. Hey, isn't that snow on the Catalinas spectacular?

This fine home sold for the unbelievably low price of $133,000 in September 2010.

FlexMLS

Last Monday, Tucson Association of Realtors switched us to a new Multiple Listing Service software provider, called FlexMLS. Chaos has ensued. Nobody, not even the people at tech support, can explain how to do the simplest things. It took three days for me to do a comparative market analysis on my most recent listing. See the delightful 10660 E Rusty Spur Drive, posted below. I had to scribble all over my listing presentation because the new system does not display the information we need. I used to be able to prepare a listing presentation in about four hours, and it would look great. FlexMLS needs a lot of improvement.

If you were receiving auto-prospecting listings from me by e-mail, and they abruptly ceased on Monday, this is the reason. Unlike previous switches to new MLS systems, this time, our prospect searches were not carried over to the new system, so I need to enter them all over again. I'm running as fast as I can.

I've Moved to Keller Williams. Or Did KW Move to Me?

On March 9, the agents of Realty Executives Southern Arizona, where I had happily worked for five years, were told that the owner had done a year of research and decided that Realty Executives was not the franchise he wanted to own, and henceforth his company would be affiliated with Keller Williams Realty. This was stunning news to all involved.

At the time, Keller Williams was virtually unknown in Tucson. However, it is the third largest real estate company in the United States, behind Coldwell Banker and Century 21. According to REAL Trends 500 Report, from 2008 to 2009, Keller Williams Realty gained 6% in number of transactions, 35% in number of offices, and 19% in number of agents, while all the other national realty estate companies lost market share in those areas. Coldwell Banker's transactions declined 32%, they lost 18% of their offices and 25% of their agents in that one year. The numbers for Realty Executives were -32%, -35% and -32%. I had no idea. Realty Executives had steadily been gaining market share in Tucson for the past five years.

The same day that Keller Williams Southern Arizona was born, Realty Executives International opened a new office on Oracle Road. About 70 agents from the old Realty Executives are now with the new Realty Executives. Of the 317 agents that were with the old Realty Executives on March 10, at least 234 have moved to Keller Williams Southern Arizona. I am one of them. I still have my sweet office overlooking River Road, and I still get to work with the wonderful mentors I've come to admire and appreciate over the past five years.

Keller Williams's business model is more agent-centric than that of any other real estate company. The agents make decisions about company management through the Agent Leadership Council, which is open to the top 20% of the company's agents. Yesterday I went to a meeting to learn more about the ALC so I can decide whether I want to participate this year.

We agents are receiving lots of training, and will be eligible for profit sharing. While of course the company wants its agents to be profitable and successful, success is defined by our quality of life. This is quite different from the usual emphasis of working harder to make more money.

But this isn't all about the agents. Of course, we agents need to give superior customer service in order to have successful businesses and the rewarding lives that successful businesses can fund. For the past two years, Keller Williams Realty has won the J. D. Power award for Highest Overall Satisfaction for Home Buyers.

So, I invite you to join me on this journey. Keller Williams intends to be the leading real estate company in Southern Arizona within three years. Can you help? Who do you know who is thinking of buying or selling a house? Please let me know, and you can be assured that as usual, I will treat his or her real estate transaction as if it were my own.

Daisies

African daisies, a warm spring day, the song of a mocking bird. I feel sorry for anyone who isn't in Tucson today.

Sunbeam has spring fever, too.

Mortgage Rates Could Spike When Government Subsidy Ends This Month

This is by Alan J. Heavens in the Philadelphia Inquirer.

As the spring real estate season kicks in and the tax credit deadline for sale agreements approaches, the government is ending a program that has kept interest rates low and housing-affordability levels high for months.

On March 31, the Federal Reserve will stop buying mortgage-backed securities from Fannie Mae and Freddie Mac, returning control of interest rates to private investors.

For months, industry observers have predicted that once government supports are removed, interest rates will rise quickly, pushing many of the first-time buyers critical to housing’s recovery out of the market.

In late summer and fall 2009, lured by fixed 30-year mortgage rates under 5% and the first $8,000 tax credit, which expired Nov. 30, first-timers pushed sales of previously owned homes to the highest levels in at least three years, reducing record inventories and braking price declines.

That tax credit was renewed Nov. 5 and expanded to buyers who had not purchased a property in five years, although the credit for repeat buyers is $6,500. The second credit expires April 30, is unlikely to be renewed, and remains the engine moving buyers.

As the date for the Fed pullout approaches, analysts now generally agree that an immediate rate spike is no longer the likely result. “We think there will be a significant increase in private demand for mortgage-backed securities to take the place of the Fed,” said David Berson, chief economist at PMI Group in Walnut Creek, Calif. Not enough to offset the Fed’s departure, he said, with rates possibly increasing a quarter of a percentage point, “but a significant one.”

On the other hand, said Holland, Pa.-based economist Joel L. Naroff, low rates are not sustainable, and “the only way to get the market to stand on its own is to get people to become realistic again about prices and rates.” Rates will likely rise, but “the level will still be historically low,” Naroff said.

When rates do rise, likely by year’s end, it won’t be because of the Fed’s action, but “natural macroeconomic forces” like a recovering economy and the high budget deficit, said Lawrence Yun, National Association of Realtors chief economist.

Many Fed officials have emphasized that “high unemployment and tame inflation warrant a continued promise to hold rates very low for a long time,” said Peter Buchsbaum, of Arlington Capital Mortgage in Horsham, Pa.

January Residential Sales Statistics

The Tucson Association of Realtors has released the Residential Sales Statistics for January.

Average sales price was the same as in December, and at $201,219, was 2.37% lower than than January 2009. Median sale price was $160,000, which is 3.9% more than in December, and 1.84% less than January 2009.

With 6,618 active listings and 712 sales in January, we have a nine month supply of listings. This is the highest supply we have seen in months. The high inventory can be explained by the 2,424 new listings that came on the market last month, a 35% increase from the previous January. Fortunately, last month also saw a 16% increase in units sold compared to a year ago.

An interesting new table was added to the statistics this month. On page 2, you can see the percentage of active listings that sold in January, arranged by zip code. The highest inventory reduction was southeast of Irvington and I-19 in 85706, where 27% of the listings sold. Unfortunately, 20 of the 34 sales, or 59% were bank-owned houses, meaning the previous owner lost the house to foreclosure. The second highest inventory reduction was southwest of Irvington and I-19 in 85746, where 22% of the listings sold, with 17 out of 30, or 57% of the sales being foreclosures.

I was shocked to find that ever-popular 85719 along Campbell Avenue had the lowest rate of inventory reduction, with only 6 out of 171 listings, or 3.5% sold last month.

As usual, most of the demand is for houses priced under $250,000. With 4,975 listings and 543 sales in this price range, we have a nine month supply.

In the $250,000 to $500,000 range, we have 1,788 listings and 140 sales, for a 13 month inventory.

A 35 month supply plagues owners of homes priced over $500,000, with 1,010 listings and only 29 sales in January

Castle Apartments

I have admired the Castle Apartments at 721 E Adams, on the northwest corner of Euclid, for two decades. Built in 1906 as a hospital, this grande dame of the desert has seen numerous incarnations as a nursing home, convent, and most recently, apartments.

I have always wanted to get inside, and today I did. My newest clients are Zack and Amy Busch, the property managers of the Castle. The building has been in their family since 1998, and it is looking a lot spiffier these days than it did when I first saw it as a grad student.

I was delighted by the lobby, with its suit of armor, saltillo floors, stained glass window, gargoyles, stenciling and medieval banners. The massive wooden arches are everywhere, including in the apartments.

Most of the apartments are long term rentals, but Zack is turning a few into short term for U of A visitors, snow birds, gem show fans and anyone else who wants a unique lodging experience in the center of Tucson.
Check out their web site here for lots more photos.