January 2012…

“Is now the time to buy?” “Has real estate hit bottom?” “When will prices start to rise?” These questions dominate the minds of people considering Arizona Real Estate.  Because no one knows the future with absolute certainty, market experts rely on a broad range of statistics for answers.

At the following link, you’ll find current information that may assist you in making this very important decision.

Is now the time to buy Arizona Real Estate?

Arizona Turns to Short Sales

An agency in Arizona created to prevent foreclosures has turned instead to helping people sell their homes for less than they owe, officials said this week. “Save Our Home AZ” can’t modify more than a handful of Arizona’s sour mortgages, so the $268 million fund is aiding short sales.

The $268 million was allocated to Arizona by the US Treasury Department beginning in 2009 as part of the Hardest Hit Fund, which went to five states slammed by the housing crisis. The fund has since expanded to 18 states and the District of Columbia, all of which have programs specifically tailored to their needs. “The modification effort has been pretty much a failure,” said Michael Trailor, director of the Arizona Department of Housing. “The short sale may be the best tool we have considering the failure of modification.”

The fund will pay closing costs and can provide the seller with up to $4,500 to pay for a move in a short sale. The Treasury does allow fund money to be transferred from one program to the next so all of the money is, in essence, available for unemployment and short-sale assistance. But hurdles remain. Restrictions on debt-to-value ratios mortgages that are deeply under water – and on cash-out refinances keep many from tapping into the fund. “There are a lot of people who need this help, and they’re not able to get it,” said Todd Francis, chief operating officer of Neighborhood Housing Services of Phoenix.

Unlike many other states, Arizona currently does not assist homeowners who performed a cash-out refinance, which means taking out a loan on the property without repaying the original lien. The rule is meant to keep from helping irresponsible borrowers who took out loans to buy luxury items. Trailor estimated that 20% of Save Our Home AZ’s denials are because of cash-out refinancing. But some of those people used the money for medical bills, home improvements or other uses that are sensible in Trailor’s eyes. He said Save Our Home AZ is trying to exempt the more-responsible borrowers. That leniency could open up the unemployment program to many more Arizona homeowners, said Liza Vasquez, a foreclosure counseling supervisor with Neighborhood Housing Services of Phoenix.

Spending Bill Passes

A stop-gap spending bill won final US congressional approval yesterday to avert a threatened government shutdown that had subjected lawmakers of both political parties to public scorn. That will give the full 435-member House time to return from a week-long recess and provide anticipated final approval on Tuesday to a Senate deal that would fund the government through Nov. 18. Leaders in the Senate reached the bipartisan agreement Monday after the Federal Emergency Management Agency said it could get through Friday with the money on hand.

That ended a stalemate over whether additional emergency relief had to be offset with spending cuts. The battle marked the third time this year the sharply divided Congress had pushed the US government to the brink. Earlier fights took the government to the edge of a shutdown in April and to the edge of default in August, drawing outrage and ridicule from the public that pushed Congress’ approval rating to a record low of 12%. The newest deal would fund the government for an additional six weeks at an annual rate of $1.043 trillion, $7 billion below previous funding levels.

During this period, FEMA’s disaster relief fund would get $2.65 billion, beginning on Saturday, Oct. 1, the start of the new fiscal year.

NAR – Pending Home Sales Down

The Pending Home Sales Index,(PHSI) a forward-looking indicator based on contract signings, declined 1.2% to 88.6 in August from 89.7 in July but is 7.7% above August 2010 when it stood at 82.3, according to the National Association of Realtors (NAR). The PHSI in the Northeast fell 5.8% to 63.6 in August but is 1.3% higher than August 2010. In the Midwest the index declined 3.7% to 76.2 in August but is 8.2% above a year ago. Pending home sales in the South rose 2.6% to an index of 96.9 and are 7.6% higher than August 2010. In the West the index declined 2.4% to 108.1 in August but is 10.5% above a year ago. Lawrence Yun, NAR chief economist, said the market is underperforming given a pent-up demand in household formation. “We continue to experience a pattern in which financially qualified home buyers, willing to stay well within their means, are being denied credit – a factor in elevated levels of contract failures,” he said.

“Based on the improving fundamentals of population growth, some job additions, rent increases and higher stock market wealth, we should be seeing existing-home sales closer to 5.5 million, but are expecting just over 4.9 million this year. The unnecessarily restrictive mortgage underwriting standards are attenuating the housing recovery and are a risk factor for the overall economy.”

Weak Income Drives Spending Down

The Commerce Department said real consumer spending was unchanged after rising 0.4% in July. Nominal spending was up 0.2% after increasing 0.7% in July. The increase last month was in line with economists’ expectations. Consumer spending accounts for about 70% of US economic activity. Weak incomes as employment growth ground to a halt and earnings fell hurt spending in August.

Income slipped 0.1%, the first decline since October 2009, with private wages and salaries dropping $12.2 billion. Economists had expected income to edge up 0.1%. Consumer spending growth slowed sharply to a 0.7% annual pace in the second quarter after advancing 2.1% in the first three months of the year. Last month real spending on goods fell 0.2%, while services ticked up 0.1%.

Disposable income was unchanged for the first time since September, but when adjusted for inflation fell 0.3%, the largest drop since October 2009. With real disposable income weak, savings fell to an annual rate of $519.3 billion, the smallest since December 2009, from $550.5 billion in July. The savings rate dropped to 4.5%, also the lowest since December 2009.

Treasury to Help Military Qualify for HAFA

The Treasury Department clarified guidelines for the Home Affordable Foreclosure Alternatives (HAFA) program yesterday. The move is an effort help more military service members qualify for short sales and deeds-in-lieu of foreclosure. Enough military families raised an issue with a caveat in the program: a permanent change of station was not being considered a financial hardship. A Treasury spokesperson said enough phone calls through the Homeowner’s HOPE Hotline persuaded officials to make the clarification. “An example of such hardship includes a service member citing a ‘Permanent Change of Station’ order as the basis for his or her financial hardship when requesting HAFA even if such service member’s income has not been decreased, so long as the service member does not have sufficient liquid assets to make his or her monthly mortgage payments,” the Treasury said in a directive sent to mortgage servicers Thursday.

HAFA launched in April 2010 as another way for homeowners to avoid foreclosure if they fell out of a Home Affordable Modification Program trial or permanent workout. But the program has underwhelmed. Through July, servicers completed 12,888 short sales and DILs, up from 10,438 the previous month. Holly Petraeus, assistant director of the office service member affairs at the Consumer Financial Protection Bureau said too many military families are struggling with negative equity but remained current on their home up until they receive orders to move. “Service members in this situation face an array of tough choices that can include years-long separation from family, foreclosure, and even financial ruin,” Petraeus said. “I applaud the Department of Treasury for updating its program guidance to recognize that military orders to move can trigger a genuine hardship for military homeowners.”

Fed’s Balance Sheet Shrinks

The Fed’s balance sheet — a broad gauge of its lending to the financial system — was $2.834 trillion on Sept. 28, down from $2.841 trillion on Sept. 21. The Fed’s ownership of mortgage bonds guaranteed by Fannie Mae, Freddie Mac and the Government National Mortgage Association (Ginnie Mae) fell to $870.9 billion from $879.2 billion last week. The Fed’s holdings of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Bank system was unchanged from last week at $108.3 billion. Meanwhile, the Fed’s holdings of Treasuries totaled $1.665 trillion, up from $1.663 trillion the previous week.

On Friday, the US central bank will announce the first schedule for latest bond buying operation, which involves the sale of its Treasuries that mature in three months to three years and the purchase of US government debt with maturities of six years or more. Last week, the Fed announced this program with the goal to lower mortgage rates and long-term borrowing costs in a bid to stimulate borrowing and investments, whose combined sluggish growth has been a drag on the overall economy. It also said it will use proceeds from maturing agency debt and MBS to reinvest into agency MBS.

Meanwhile, the Fed’s overnight direct loans to credit-worthy banks via its discount window averaged $29 million a day in the week ended Wednesday, up from $23 million a day in the previous week.

Las Vegas Sales Spike

Las Vegas home sales jumped to their highest August level in five years, with 5,412 homes sold last month, housing markets analytics firm DataQuick said Thursday. That’s up 19.3% from July and 26.4% from a year ago. Investors and first-time buyers energized the market by snapping up homes in the sub-$150,000 market, DataQuick said.

Meanwhile, home prices either stayed the same or trended downward. Overall, the median sales price hit $112,500 in August, its lowest level in more than 16 years based on statistics from real estate data providers quoted by DataQuick. That is 63.9% lower than the median price peak of $312,000 reached in November 2006. In terms of financing models, government insured FHA loans represented 39.9% of all home purchase loans.

Cash buyers dominated the market, purchasing 52.3% of the Las Vegas areas homes in August, up from 48.8% last year. The median price paid by cash buyers was $84,000 for a home in Vegas, down from $85,243 in July and $100,000 a year ago. Absentee buyers – or those considered investors and vacation homeowners – bought up 47.1% of the homes sold in August. That is up from 43.3% a year earlier. Absentee buyers paid a median price of $92,000 in August, down from $110,000 last year.

New home sales played a small role in last month’s market, making up only 9.8% of all transactions. August condo sales represented 20.3% of total Vegas sales, compared with a 10-year monthly average of 13.5%. Distressed sales, meanwhile, represented 70% of Vegas resales. That segment includes both foreclosed homes and short sales. Additionally, Clark County – the county seat of Vegas – noted a spike in default notices in August, with filings growing 58% over July, hitting 5,354. ” A significant portion of the month-to-month gain in NODs reflects a nearly 190% increase between July and August in the number of NODs filed where Bank of America is listed as the ‘beneficiary’ – from 747 in July to 2,163 in August,” DataQuick said. DataQuick says the surge in filings is attributed to the fact that some lenders have new strategies for working more aggressively through backlogs of delinquent loans.