Interest Rates Going Up

Buyers usually assume that when the Federal Reserve cuts the short term interest rate, the mortgage interest rate will also drop. It's a lot more complicated than that. The Fed's most recent cut will probably cause fixed mortgage rates to go up. Adjustable rates may go down, which is a relief for people who currently have adjustable rate mortages (ARMs), but I think most people have heard enough horror stories about ARMs that few home buyers will choose that option anymore.

Suppose you can buy a $200,000 house with 20% down at 6% interest today. Your principal and interest payment would be $959.28 per month. Suddenly interest goes up to 7%. Your P&I payment will be $1,064.48. This might be enough that you now longer qualify for a loan.

Some buyers are waiting for the market to hit bottom before they buy. Experienced investors know that it is impossible to time their purchases perfectly. If, in the hypothetical situation I described, the interest rate went to 7%, the price of the house would have to drop to $180,233 in order for the P&I to be $959.28. This would be a 10% drop in price. I think the chances of interest rates going up more than 1% are greater than the chances of property values dropping more than 10% in the next few months, especially in the under $250,000 price range where most of the sales activity is occuring.

So it's a gamble. While waiting for prices to drop, buyers may see interest rates increase to the point where their buying power is severely reduced.

Hummingbirds!

A hummingbird zoomed by as I was watching the mourning dove on her nest on my back porch yesterday. I watched the hummer and saw her land on a branch about 4 feet off the ground. Then she thought better of it and flew away, but quickly came back. I could see a tiny bag of woven grass attached to the branch, so I went for my camera. I fired off this shot while the hummer mom bravely buzzed around my head. I left quickly so she wouldn't feel harassed any longer.

The inside of this nest is less than 1" in diameter! Another day, another reason to be grateful for a home in Tucson.

February Residential Sales Statistics

The February Residential Sales Statistics have been published. The Arizona Daily Star chose to further suppress real estate sales by exclaiming that the median sale price has dropped below $200,000. It was $199,900 in February 2008, or 9% lower than in February 2007.

Of course they didn't mention that the average sale price in February 2008 was $262,155, which is a 1% increase from a year earlier.

With friends like the Star, who needs enemies?

Most wizards who are gazing into economic crystal balls say interest rates are heading up. Way up. So get off the fence and buy while the buying is good.

Certified Deed Scam

The Tucson Multiple Listing Service sent this email to all its agents:

"Be aware that a national company is mailing out letters to homeowners (many will probably be your clients) making it seem imperative that they acquire and retain in their household records a certified copy of the deed to their house which the company will happily provide for a total cost of $89.95. As you know, the homeowner may obtain a copy of their deed from the Pima County Recorder for $1.00 per page plus an additional charge of $3.00 to have the deed certified should they believe certification is important."

The Fossils are In!

Two years ago I went to the Tucson Gem and Mineral Show on a mission. I had decided that I would set ammonites in my back splash at Desert's Edge, the house I am renovating in the Tucson Mountains. I went nuts and bought 40 pounds of these gorgeous 110 million year old fossils from Madagascar. They look like nautilus shells, cut open to expose the chambers, which can be filled with gold, peach, rust or lavender minerals. Some of the chambers have quartz crystals in them, and some of the septa between the chambers have been replaced with pyrite (fool's gold). I am completely enchanted with my ammonites, and have been admiring them on the buffet for two years, but no more! Now they are set among the four-inch travertine tile above the astoundingly gorgeous granite counters.










I hired Jack Langley with Southwest Design, who hired Kevin who hired Juan, who figured out how to do this. I had talked to a few tilers about what I wanted to do, and everyone but Jack had said it would be impossible to set these fossils, which taper from 1/4" to 3/4" deep, among the tile. I hate it when people tell me something's impossible. Anyway, Jack was game, but it was Juan who figured that instead of punching holes in the drywall to make the fossils lie flat, he could saw off the backs in his whetsaw. I watched him hold the first fossil in his hands against the spinning saw and told him to forget it, I didn't need these fossils in my back splash as much as he needed his fingers. It looked really scary, and Desert's Edge already has enough bad karma without adding the blood of a tiler. But Juan assured me he could to this without cutting his fingers off. The results exceeded my expectations by 110 million years.

December Residential Sales Statistics

The Tucson Association of Realtors has released the Residential Sales Statistics for December 2007. Fortunately for owners and buyers of Tucson real estate, they show the same ol' same ol'. Not much change in average and median sale prices. Active listings are at their lowest level since December 2006, which means the balancing act between supply (listings) and demand (sales) is becoming more stable. Only 682 properties sold in December, but I'm not too worried about that. In my own business, I am starting to get more calls from buyers, who are realizing the sky most likely is not going to fall.

On January 9, 2008, the chief economist of the the National Association of Realtors spoke to the Tucson Association of Realtors. He had some very encouraging news about Tucson's unique qualities that will enable us the weather the economic storms better than other parts of the country will. Tucson Association of Realtors president Judy Lowe summarizes his remarks on the first page of the Residential Sales Statistics for December 2007.

The Rogue Theatre: Fear No Art

Fear No Art. That's the message on the tee shirt worn by male lead actor Joe McGrath when he and the cast of "The Goat, or Who is Sylvia?" sat down facing the audience for the after-play discussion. The female lead is Cindy Meier, who co-founded The Rogue Theatre with Joe. As always, their performances were jaw-dropping. These two theater professionals have worked together so long, their stage interactions are perfectly in sync.

I can't say this play is entertaining, but it is by far the best I have seen in the three year history of The Rogue Theatre. Joe plays Martin, a successful architect at the pinnacle of his career. He enjoys loving relationships with his wife Stevie, and his gay eighteen-year-old son, Billy (Matt Bowdren). I am so proud of our friend Cindy, who is amazing as Stevie, a smart, self-assured, witty woman. Martin shatters the family's perfect life when he announces he is in love with a goat. The play is shocking, horrifying, violent, vulgar and intensely thought-provoking. Because of the last quality, the performance is a work of art, albeit very disturbing.

Joe said The Rogue Theatre does not want to do plays that reinforce the audience's preconceived notions. The troupe wants to challenge the audience to question their values and assumptions, and "The Goat" effectively does exactly that. Why do certain behaviors disgust us? Where does aberration end and mental illness begin? Where is the line between moral and immoral? Why do these lines shift with time, circumstances and communities?

Cindy's real-life husband Tom Wentzel is very involved with the theater group. Web site designer is one of the many hats he wears, and The Rogue Theatre web site is one of the most beautiful I've seen.

Tom warned us not to sit in the front row of this play's intimate venue, the magical Cabaret Theater, located upstairs from the Temple of Music and Art. He said it would be too intense. He was right. The people in the front row fled as soon as the actors took their bows. Most of the rest of us remained in our seats, wide-eyed and stunned. Tom said we looked like that guy in the stereo speaker ad, gripping his chair with his hair blown back, and that is just how I felt.

I recommend you go on one of the nights when the post-play discussion will be held, so the actors can help you start the process of evaluating the complex issues presented in the play. I know I will be thinking about this play for a long time.

"The Goat, or Who is Sylvia?" will play through January 20. Post-performance discussions on January 10, 13 and 17. Call 551-2053 for reservations and information.