A new down payment assistance program offers down payment grants to qualified home buyers in Tucson and Pima County. The buyer's income must be under $65,500 and the buyer needs a credit score of at least 640. The house doesn't have to be a vacant foreclosure like that cumbersome Neighborhood Stabilization Program grant, and the house can be anywhere in Pima County, including the City of Tucson.
To see whether you qualify, please call loan officer extraordinaire Catherine Ellinwood at Fairway Independent Mortgage. 520-954-1907. Or email her at cellinwood@fairwaymc.com.
Saturday, January 26, 2013
What's a REALTOR®?
Many people use the word Realtor as a synonym for real estate agent. I was surprised to learn that only 30% of the real estate agents in Arizona are Realtors. Most real estate agents are in sole proprietorships or small companies where they have little oversight and training. In Tucson, the largest companies require that their agents be Realtors.
Why does this matter? Realtors (or REALTORS® as the National Association of Realtors wants us to spell it) have sworn to uphold the 17 page Realtor Code of Ethics. Eighteen years ago this March, I actually had to stand up in a room with one hundred other new agents, raise my right hand, and swear to uphold the Code of Ethics.We need to take a refresher course in the Code of Ethics every four years when we renew our real estate licenses.
This Code is over 100 years old, and has been updated to keep up with changes in the business and technology. I think these are the two most important paragraphs:
The term REALTOR® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no
instruction from clients ever can justify departure from this ideal.
In the interpretation of this obligation, REALTORS® can take no safer guide than that which has been handed down through the centuries, embodied in the Golden Rule, “Whatsoever ye would that others should do to you, do ye even so to them.”
Oh, by the way, it's pronounced just the way it is spelled, not Reel-lah-ter!
Why does this matter? Realtors (or REALTORS® as the National Association of Realtors wants us to spell it) have sworn to uphold the 17 page Realtor Code of Ethics. Eighteen years ago this March, I actually had to stand up in a room with one hundred other new agents, raise my right hand, and swear to uphold the Code of Ethics.We need to take a refresher course in the Code of Ethics every four years when we renew our real estate licenses.
This Code is over 100 years old, and has been updated to keep up with changes in the business and technology. I think these are the two most important paragraphs:
The term REALTOR® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no
instruction from clients ever can justify departure from this ideal.
In the interpretation of this obligation, REALTORS® can take no safer guide than that which has been handed down through the centuries, embodied in the Golden Rule, “Whatsoever ye would that others should do to you, do ye even so to them.”
Oh, by the way, it's pronounced just the way it is spelled, not Reel-lah-ter!
"Flip This House" Coming to Tucson
The television show "Flip This House" will be here next week recruiting people who want to buy houses to renovate and resell, which is called flipping. Whether this will do anything for the flippers remains to be seen, but it will probably generate some positive national interest in Tucson.
Sunday, January 13, 2013
Too Cold for Tucson
Tuesday, January 8, 2013
December Residential Sales Statistics
The Tucson Association of Realtors has published the Residential Sales Statistics for December 2012. The average sale price was $183,011, the highest average for any month in 2012. This is unusual, because sale prices in Tucson usually peak in the summer, and then go into a seasonal decline until the market picks up the following spring. We are back to the prices of 2004, the last normal market before the housing bubble started to expand.
Cash sales are still 33% of the sales. Many of these cash purchases are made by investors. Cash buyers have an advantage over buyers who are getting a mortgage, because mortgage companies require that the house be in habitable condition. A stolen air conditioner, leaking water heater, termite damage or even a broken window can prevent a buyer from getting a mortgage on a house. Many of the distressed properties are neglected and vandalized, so only a cash buyer can purchase them.
15% of the sales were short sales, and 24% of the sales were foreclosures. Distressed sales still have a grip on 39% of the market. These distressed sales must be used as comparable sales on appraisals, and they drag down the value of non-distressed houses. It seems we still have a long way to go to get rid of all the distressed inventory.
The LA Times says that short sales are now more common than foreclosures there. The real estate boom started in California, and the real estate bubble burst in California first. We can only hope that Arizona catches this wave of more cost-effective and productive distressed sales.
Cash sales are still 33% of the sales. Many of these cash purchases are made by investors. Cash buyers have an advantage over buyers who are getting a mortgage, because mortgage companies require that the house be in habitable condition. A stolen air conditioner, leaking water heater, termite damage or even a broken window can prevent a buyer from getting a mortgage on a house. Many of the distressed properties are neglected and vandalized, so only a cash buyer can purchase them.
15% of the sales were short sales, and 24% of the sales were foreclosures. Distressed sales still have a grip on 39% of the market. These distressed sales must be used as comparable sales on appraisals, and they drag down the value of non-distressed houses. It seems we still have a long way to go to get rid of all the distressed inventory.
The LA Times says that short sales are now more common than foreclosures there. The real estate boom started in California, and the real estate bubble burst in California first. We can only hope that Arizona catches this wave of more cost-effective and productive distressed sales.
Wednesday, January 2, 2013
We All Benefit from the Extension of the MFDRA
The best real estate news this year is that the Mortgage Forgiveness Debt Relief Act of 2007 has been extended through the end of 2013. Until today, we thought it expired two days ago and went over the Fiscal Cliff. Without the extension of this Act, homeowners whose mortgage debt has been forgiven through loan modification, short sale or foreclosure would have the forgiven debt taxed as regular income.
For example, a homeowner owes $200,000 on his house, and his bank approved a short sale for $100,000, because that's all the house is worth in today's market. As far as the IRS is concerned, that homeowner has $100,000 in taxable income. If he is in the 28% tax bracket, if the MFDRA hadn't been extended, he would have owed $28,000 in income tax.
In order to qualify for a short sale, a homeowner has to prove he has a hardship: job loss, death, divorce, and moving out of town are among the few qualifying reasons. A homeowner who is capable of making his payments but just doesn't want to pay an underwater mortgage will not get much sympathy from his mortgage holder.
Homeowners who do qualify for a short sale are not likely to have thousands of dollars to pay income tax on money they didn't receive. Saddling homeowners with debt they can't pay is pointless for two reasons: 1) noncollectable income tax owned to the IRS won't help balance the Federal budget, and 2) defaulting on this obligation will prevent the former homeowners from getting back on their feet. Who wins in this scenario?
It is stressful enough for the homeowner to do a short sale, and the prospect of being responsible for income tax on income that wasn't received would have caused a lot more homeowners to walk away from their home. They would still have owed the income tax if the house were foreclosed, but the prospect of paying the tax bill would have given many homeowners a disincentive to jump through all the short sale hoops.
Foreclosed houses sell for less than short sale houses. These lower sale prices depress the value of nearby houses, putting more homeowners under water. The cycle of short sales and foreclosures will continue until we deplete the back log of short sales and foreclosures. Failure to extend the MFDRA would have dragged the housing market down and could have reversed the recovery we have enjoyed in the past year in Tucson.
Still to be resolved in debt reduction negotiations: whether the once-sacred mortgage interest deduction will be eliminated. Stay tuned.
For example, a homeowner owes $200,000 on his house, and his bank approved a short sale for $100,000, because that's all the house is worth in today's market. As far as the IRS is concerned, that homeowner has $100,000 in taxable income. If he is in the 28% tax bracket, if the MFDRA hadn't been extended, he would have owed $28,000 in income tax.
In order to qualify for a short sale, a homeowner has to prove he has a hardship: job loss, death, divorce, and moving out of town are among the few qualifying reasons. A homeowner who is capable of making his payments but just doesn't want to pay an underwater mortgage will not get much sympathy from his mortgage holder.
Homeowners who do qualify for a short sale are not likely to have thousands of dollars to pay income tax on money they didn't receive. Saddling homeowners with debt they can't pay is pointless for two reasons: 1) noncollectable income tax owned to the IRS won't help balance the Federal budget, and 2) defaulting on this obligation will prevent the former homeowners from getting back on their feet. Who wins in this scenario?
It is stressful enough for the homeowner to do a short sale, and the prospect of being responsible for income tax on income that wasn't received would have caused a lot more homeowners to walk away from their home. They would still have owed the income tax if the house were foreclosed, but the prospect of paying the tax bill would have given many homeowners a disincentive to jump through all the short sale hoops.
Foreclosed houses sell for less than short sale houses. These lower sale prices depress the value of nearby houses, putting more homeowners under water. The cycle of short sales and foreclosures will continue until we deplete the back log of short sales and foreclosures. Failure to extend the MFDRA would have dragged the housing market down and could have reversed the recovery we have enjoyed in the past year in Tucson.
Still to be resolved in debt reduction negotiations: whether the once-sacred mortgage interest deduction will be eliminated. Stay tuned.
Saturday, December 15, 2012
Really Special Jefferson Park Home for Rent
Two bedroom, one bath home with Arizona Room, which can be used as a study, playroom, or extra bedroom. Living room fireplace.
Dining room, tiled floors and central air conditioning. Skylight in the kitchen. Great Catalina Mountain views from living room.
Northwest of Grant and Campbell at 1440 E Silver Street; 0.5 mile from University Medical Center. One mile from University of Arizona on the Mountain Avenue bike route.
Beautiful front and back yards with large trees for shade. Carport and storage sheds. 1,150 square feet. Water paid by owner. Pets negotiable
$1,050 per month. Rented to summer 2013.
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