The Phoenix Real Estate Advisor

First let me say that if you’re in a position that you have to sell your home, it feels really bad. People all across the country are feeling the pinch of the homes values dropping and I know we all understand the feeling of watching our values drop.

On the brighter side I found this chart that I thought might put some of this into perspective. If you do not have to sell your home you can rest assured you will see your home’s value go back up. If you look at your state you’ll see that overall home prices are the one thing that will always show an increase over time.

If you look at Arizona, over the last year things have dropped but look at 5 years with an increase of 40% and since 1980 you’ve seen an average increase of 251%. Does you 401k look that good? This means if you bought your home in 2003-04 you could see a 40% increase over what you paid.

Not sure this brighten your day but there’s always a bright side to everything if you just look hard enough!

I’ve had my clients asking for months now how will we know when we’ve hit the bottom pricing. That’s not an all or nothing question because it depends on location and sometimes even neighborhoods. I have areas of 85382 here in Peoria that has shown signs of increasing and other areas in that zip code that hasn’t.

So one of my comments have been “if we wait for the media to start talking about how it’s getting better we might be on the way up”. We’ll the media last week started to pick up on the market conditions and it’s amazing…they are saying good things about it.
Here’s a few videos that were released this week-
http://abcnews.go.com/video/playerIndex?id=6799577

http://abcnews.go.com/video/playerIndex?id=6801655

http://www.abc15.com/content/news/investigators/consumeralerts/story/Some-new-encouraging-signs-for-Valley-real-estate/zBEGtnoF1Uy7FJ2wOt_q5A.cspx?articleID=19273

http://www.cbsnews.com/video/watch/?id=4767376n%3fsource=search_video
Are we at the bottom? Can’t say for sure but I know things are heating up in certain areas! For more information about this read my blog at www.ThePhoenixRealEstateAdvisor.com

To bits of good news-

1- The Az Republic had a front page article about how foreclosures are down month to month and hopefully this will be the new trend for a while!

2- A National Association of Realtors index that gauges pending sale of resale homes dropped 1 percent in October compared to the same month last year.

Regionally, the Pending Home Sales Index — which is based on contracts signed for transactions that have not yet closed — rose 17.4 percent in the West while falling 14.1 percent in the Northeast, 6.8 percent in the Midwest, and 2.9 percent in the South year-over-year in October, NAR reported.

The national index stood at 88.9 in October — an index score of 100 is equal to the average level of contract activity during 2001, which was the first year examined for the index. The PHSI hit a low of 83 in March and an annual high of 93.5 in August.

Are we at the bottom yet? I can’t say that but most of us are seeing more buyers coming forward and some areas have already started a small (real small) climb in resale prices. if you want more specicif information please give me a call at 623.362.3060.

Its official, we are in a Recession and have been for nearly a year.  It is a sign of our market when the reaction to what was so feared was relatively calm.  Of course we have all known or been hip to the fact that we were in a recession for some time.  In fact, a CNN study showed that the economy became public concern #1 in November 2007 and has not let up since.  On average, a recession lasts 16 months so if you are a glass half-full kind of individual this is relatively good news!  Check out this article for more info (full text link - http://money.cnn.com/2008/12/03/news/economy/karydakis.recession.fortune/?postversion=2008120312)

Volatility has continued in the mortgage rate market, but things are still looking extremely positive.  Our expectation is for rates to stay low while moderately bouncing off into the 6%’s as a ceiling for some time.  Down the road, when inflation will likely come back into play (especially considering the recent  increase in the Money Supply) we may see rates start to change course.  For now, let’s enjoy this and spread the word on the rate environment we are in.  (attached is an excerpt from our client only Blogsite that you may want to use or pull from for a communication to your database – feel free to R&D).

I know interest rates alone do not help you sell homes, but they do play a part (purchase applications were up 38% nationwide last week).  Another factor that may help is an increase in your clients confidence in their personal investments.  If their wealth improves, so may their attitude about purchasing Real Estate.  I had a client mention to me today that he now has a 200.5K.  Yikes!  Here are a few key dates to put on your calendar and even share in your newsletters, emails or regular database calls. 

  December 9^th – Could be big news for the auto industry

2.       Dec 16^th – Good chance of a global rate cut

3.       Jan 2^nd – SEC Chairman Chris Cox may relax FASB 157 (Mark to Market). 

DeDepending on the outcome of these 3 key dates – we may very well see a big comeback in the stock market.  Some experts are predicting a pretty wild comeback, so stay tuned!

Please let me know if you have any questions.  Thank you for your time!

Jeremy A. House, a Certified Mortgage Planner

480-755-1404 office or 602-435-2149 mobile/direct or JHouse@PrimeLending.com – Email

Prime Lending, A Plains Capital Company

The roller coaster ride continued with the Dow Jones Industrial Average exploding up 889.35 points or 10.88% in trading today.  Much of this was due to stocks being on clearance and in anticipation of a possible .75% rate cut by the Fed tomorrow.  A .5% cut is virtually guaranteed and some expect a larger cut that would take the target rate under 1% for the first time. 

As we have talked about in the past, often times money will flow into stocks and out of bonds and vice versa.  The price and demand of mortgage backed bonds on Wall Street is the ONLY thing that moves long term mortgage rates.  So right now, mortgage rates are being pounded a bit.  However, if we see a dramatic cut in the Fed Funds Rate tomorrow you can bet  at some point we will see investors begin to move back into mortgage back securities (MBS’s).  The result for MBS’s could very well be a nice rally, higher yields and most importantly lower 30 year fixed mortgage rates.   Stay tuned!

Take a peek at the chart below showing daily activity over a the past 3 months for Mortgage Backed Securities.  Up equals lower mortgage rates and down means….well we don’t like down J  As you can see there has been a TON of volatility as this market starts to heal.