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.
Friday, June 25, 2010
Sunday, June 13, 2010
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.
Saturday, June 12, 2010
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.
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.
Monday, June 7, 2010
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.
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.
Monday, May 24, 2010
Saturday, May 15, 2010
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.
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.
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