Mountain Oyster Club

Last month I had some buyers who used to be members of the Mountain Oyster Club, which was at the southwest corner of Stone and Franklin in the old Jacome Mansion. The Mountain Oyster Club's website states that according to legend, the club was originally founded in 1948 by ranchers who got thrown out of the more staid country clubs. The Jacome mansion was the club's home for 30 years until for various reasons the members moved to a new location.















Subsequently, someone tried without success to open a restaurant in the former club headquarters. Now the old 14,000 square foot mansion is for sale for $1,000,000 and my buyers wanted to see whether they could turn their old club back into a home.

While the project wasn't feasible for my buyers, it was fun to see the inside of this amazing building. A dome visible from the outside covered a second story swimming pool, surrounded by columns.

I was particularly intrigued by the murals done by a naive Tucson painter named Corona. I couldn't find out more about him, but I'm told his murals were all over town. I especially liked his use of small round mirrors in the paintings.

I sure hope someone can rescue this old Tucson treasure. It is listed with Ron Campbell of Long Realty Company.

Solar Power

A few weeks ago, I went to a solar power workshop sponsored by Congresswoman Gabrielle Giffords and Tohono Chul Park. I have often wondered why Tucson isn't the solar capital of the world. I learned that for solar power to be practical on a large scale, we would need not only a lot of sunshine, but also a lot of water. A solar power plant uses the sun to heat salt water solution. The steam turns turbines, which produce electricity. So solar energy production is not feasible for public utilities in deserts with the current technology.

Getting off the grid is very expensive, and is only practical in remote areas where connecting to the power grid costs more than $100,000, which is the cost of an off-grid system.

The good news is that homeowners can generate their own electricity and send the power to the public utility company for storage. Then the homeowner will have power at night and on cloudy days. However, if TEP's power is down, the homeowner will be without power unless they have a battery back up. Power outages are not currently a problem in Tucson, so this back up is not essential at this time.

Installing 3,000 kilowatt hour (kWh) solar hot water requires a $4,500 investment. TEP will give the homeowner at $1,500 rebate. State and federal tax rebates are also available, making the out of pocket cost about $1,000. The pay back time is about three to five years.

The typical home uses 11,000 kWh per year. Installing a system that could produce that much power would cost about $44,000. The TEP rebate would be $20,000 and the state and federal tax credits would be $1,000 and $7,000, leaving a net cost of $16,000.

For every kWh produced by a solar electric system, the owner can save 10 cents on his TEP bill. A typical 3 kW system will reduce the monthly bill by about $40.

For more information, go to www.Giffords.House.Gov .

Of course, before considering any solar energy projects, it's important to improve the energy efficiency of your home and adjust energy use patterns to minimize wasted energy.

Tax credits are available for installing energy efficient products like water heaters, furnaces, air conditioners, building insulation, window, roofs and doors. I received a tax credit for installing Solatubes because they don't transfer heat to the extent that skylights do, and they enable me to leave the lights off in rooms that used to be dark during the day. For more information go to www.energystar.gov.

Surprise! Mortgage Application Audits

A couple weeks ago, one of my buyers signed all the loan documents to buy his house, and I told him I'd see him in a few hours to give him his keys after the deed recorded. Unfortunately, I was wrong.

The lender called me just two hours before we all thought the deed would record to inform me that the borrower's loan application was being audited, and this could take up to three days. My buyer's plans to move into his new home over the weekend and have out of town guests stay with him were ruined.

No one had ever heard of a quality control audit after the loan documents were signed, and that's because it had never happened before. Fannie Mae and Freddie Mac, the quasi-governmental agencies that buy bundled loans so mortgage lenders can keep on lending, have started to refuse to buy loans if there is any hint of fraud in the loan application. They already own enough foreclosed houses because of borrowers who lied about their intent to occupy the house, provided bogus employment information, or obtained inflated appraisals.

In order to convince Fannie and Freddie that the loans they are buying are good, lenders have implemented this QC audit procedure. Some lenders are comparing the tax return the borrower provided with his loan application against the tax return submitted to the IRS. Background checks on borrowers are also occurring.

My borrower's application survived the QC audit, but not without a weekend of anxiety and inconvenience.

Bottom line is that it is taking longer to get a mortgage loan processed because of this new QC audit procedure. Anyone who intends to do anything slightly fishy on their loan application should forget it.

March Residential Sales Statistics

Instead of taking their usual two to three weeks to leisurely compile the residential sales statistics, The Tucson Association of Realtors published the March stats on April 3. I think providing these sale data is the most important function of TAR, so I'm glad they finally agree with me.

After a 6.8% increase in average sale price from January to February, we saw an 8.1% decrease from February to March. Number of listings continues to decline, down to 7,415 in March. Happily, the number of sales was up 35.36% from February to March, with 892 homes sold last month. 7,415 listings divided by 892 sales equals an 8.3 month supply of listings. This is a huge improvement over the 13 month supply we had a few months ago. When we get back to a six month supply, the market will be considered balanced, with no advantage to the buyer or the seller.

The low prices combined with unbelievably low interest rates (4.5% owner occupied! 5.5% investor!) are the primary movers of houses right now. Savvy buyers see this as a once in a lifetime opportunity.

The luxury market remains weak, with only 15 sales over $750,000. Eighty-six percent of the sales were of properties under $300,000.

In my own business, I am seeing several first time home buyers who are excited about the $8,000 tax credit. This is free money that no qualified buyer should pass up.

Open House at 211 E 2nd St

When you're through walking around the Fourth Avenue Street Fair this weekend, head a few blocks northwest to the fabulous house I will be holding open from 1 to 4 on Sunday. 211 East 2nd Street is two blocks south of Speedway between 5th and 6th Avenues.

This 1912 Craftsman style bungalow is quintessential West University. Of course, it has an embracing front porch, maple floors, big windows, French doors, high ceilings, rich wood accents and character galore. But there are surprises, too. You'll say "I'm going to do that at home!" when you see the shower that reminds me of a Japanese garden.

The kitchen has been updated and rearranged so you can happily cook holiday meals here that you will serve in the formal dining room. The pool is the highlight of the back yard oasis.

This property is listed by Susan Denis of Realty Executives Southern Arizona for $435,000. The seller (a fellow Realty Executives agent) has a fabulous sense of design, and the furnishings are enchanting. You can have everything in the house except the art, electronics, and the kitchen knife set for only $5,000 more. Move into this dream home and you don't have to buy a single chair, towel or dish. You won't want to leave this warm and serene retreat, and here's a rare opportunity to buy the ambiance along with the house.

National Appraisers

Effective May 1, all lenders must submit a request to a national appraisal clearinghouse and an appraiser will be assigned to appraise the property. Currently, lenders choose their appraisers. This usually means the lender is able to get the appraisal done quickly by a competent appraiser. The perceived downside is that some lenders may pressure their appraisers to cook the appraisal and overvalue a house so a sale can close or a mortgage refinance can occur. This is the problem the national appraisal clearinghouse is supposed to fix.

I don't know if anyone has any statistics on how many bogus appraisals were the results of collusion between the lender, the real estate agent and the appraiser. It would be interesting to know whether this problem was big enough to warrant this "solution". In general, I don't think borrowers are going to benefit from this new policy. They are going to pay more for their appraisal--perhaps $150 more--and that fee will go to the clearinghouse to pay them for the appraiser referral. The appraiser will make less. The worst part is the delay caused by this added layer of bureaucracy. It can take up to three weeks to get an appraisal by this system, which some lenders have voluntarily adopted ahead of the May 1 deadline. We will no longer be able to get sales closed in 30 days. If the interest rate is favorable to the buyer on the day his contract is accepted, he won't be able to lock the interest rate for 45 days for free. He will have to pay at least 1/8 point (one-eight percent of the loan amount) for the 45 day lock. Locking for 30 days is free, but 30 days locks will be useless under this system.

I would like to know which industry lobbied for this legislation. Follow the money. I don't think this originated with a consumer group

February Residential Sales Statistics

The Tucson Association of Realtors has released the Residential Sales Statistics for February. Finally, some positive news. From January to February 2009, average sale price in Tucson increased 6.76% to $222,207 and median sale price increased 9.04% to $178,000. Is the downward tumble over? It's too early to tell, but other indicators are encouraging. Number of units sold were up 12% from the previous month and number of active listings were down 2.11%. With 7,352 listings and 659 sales in February, we have an 11 month supply of listings. This is far from the 6 month supply of listings that indicates a balanced market, but at least we are now heading in the right direction.

The increase in the FHA loan limit was a big help. Last year, FHA had practically no market share. Because conventional financing requires at least 5% to 10% down payment, FHA is the loan of choice for many borrowers with limited savings. FHA and VA loans accounted for 33% of the sales. Conventional mortgages (not government-insured) were 39% of the market, and cash accounted for 25% of the sales.

What is selling? The entry-level market is strong. Eighty-one percent of the sales in February were of properties priced under $300,000. While there were 1,297 houses priced over $500,000, only 38 of them (less than 3%) sold last month.