The Phoenix Real Estate Advisor

Election day is turning out to be a great day for both bonds (MBS up 90 bps currently) and stocks (DIJA up 202 currently).  Mortgage rates are possibly at the beginning of the rally we talked about last week.  So far rates have improved by .25% today on 30 yr fixed with no stopping in sight.  I will be sure to keep you posted as the higher rates may have been keeping the “on the fencers” on the wrong side of the fence. 

I would invite you to also listen to my recent audio podcast about the market conditions in the Phoenix, Arizona area. It also digs into the northwest valley market conditions.

Click here to listen to the podcast!

 

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.

 

OK, I know you might be getting tired of hearing about proposal 100 but I need to write about it one more time. This proposal is really important to all of us. If this proposal doesn’t pass you could find yourself as a home seller or buyer paying a new tax. This new tax will hurt home sales in Arizona which does not need any help making it worse then it all ready is.

Example of tax-

If a home sold for $275,000, Arizona residents would pay an additional $5,418 and it could be worse. A YES vote on proposal 100 will protect you from:

• Double Taxation
• Loss of Equity
• Damage to the Real Estate market
• Punishment of homeowners
• An unfair impact on lower-income Arizonans

To learn more and to calculate what you might have to pay go to:

www.YES-ON-100.com

 

Here’s an interesting artile from the National Assoiciation of Realtors. They track home sales/price on a regular basis and each month release the information.

Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August. Home sales are 1.4 percent higher than the 5.11 million-unit pace in September 2007.

Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains.

“The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri, and Rhode Island,” he says. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.”

NAR President Richard F. Gaylord says low home prices and low interest rates have helped attract buyers.

“This is the first time since November 2005 that home sales have been above year-ago levels,” Gaylord says. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.04 percent in September from 6.48 percent in August; the rate was 6.38 percent in September 2007.

Yun says there may still be market disruptions.

“The credit markets are not settled yet, although the mortgage market stabilized with the government takeover of Fannie Mae and Freddie Mac,” Yun says. “Inventory remains high, and price declines are pressuring owners.”

Yun says that an additional housing stimulus would stabilize prices more quickly and help bring faster stability to Wall Street.

“Removing the repayment feature on the [$7,500] first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory,” Yun says.

A Closer Look at the Numbers

• Total housing inventory: at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July.

• National median existing-home price: $191,600 in September, for all housing types. That’s down 9 percent from a year ago when the median was $210,500.

“Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions,” Yun says. “These are pulling the median price down because many are being sold at discounted prices. The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms.”

• Single-family home sales: increased 6.2 percent to a seasonally adjusted annual rate of 4.62 million in September from a pace of 4.35 million in August, and are 3.8 percent above the 4.45 million-unit level a year ago. The median existing single-family home price was $190,600 in September, which is 8.6 percent below September 2007.

• Existing condominium and co-op sales: were unchanged at a seasonally adjusted annual rate of 560,000 units in September, but are 15.7 percent below the 664,000-unit pace in September 2007. The median existing condo price was $199,400 in September, down 10.2 percent from a year ago.

By Region

Here’s a breakdown across the country of existing-home in September:

• West: sting-home sales in the West jumped 16.8 percent to an annual rate of 1.25 million in September, and are 34.4 percent higher than September 2007. Median price: $253,600, down 18.5 percent from a year ago.

• Midwest: sales increased 4.4 percent to an annual pace of 1.19 million in September, but are 2.5 percent below a year ago. Median price: $152,500, which is 7.9 percent lower than September 2007.

• South: sales rose 2.2 percent in September to a pace of 1.9 million but remain 7.8 percent below September 2007. Median price:$167,200, down 4.1 percent from a year ago.

• Northeast: sales slipped 1.2 percent to an annual pace of 840,000 in September, and are 7.7 percent lower than a year ago. Median price: $246,800, down 5.4 percent from September 2007.

Source: NAR

Wow!  This is an incredible hike.  A little crowded for the first half, but many people  didn’t go all the way to the end, so it got better.  This is the canyon that Zane Grey, the western author fell in love with.  The novel he wrote “The Call of the Canyon” was set in this little portion of Oak Creek Canyon.  The West Fork Trail follows along a creek that flows into the Oak Creek.  The hike is about six and a half miles with only a total slight elevation change of about 300 feet, but the entire trail goes up and down constantly, so you are actually accumulating a much higher incline if you consider the arobic effects.

West Fork is probably one of the most beautiful hikes we have taken yet, except maybe the Devils Bridge trail.  The entire trip you are deep in the red rock canyon that was carved by this little creek and wind over the millinium.

You will see early into the slide show some ruins.  These ruins were once home to Bear Howard, one of Sedona’s early and legendary settlers.  Years later they were improved to form the Mayhew Lodge which was a getaway for many celebrities and diplomats.

You will also see a rock formation that is light colored and seems very much out of place.  Look at the full series of this formation, as you may see:  a fish, a mummy, or a Native American warrior.  I see all three, depending on which I am looking for.

We travel deep into ponderosa pine forests, some of which feels like it gets very little sun.  The temperature variance was probably about 10 degrees in some areas.  The end of this trail is at an area of the canyon that narrows significanly, to become just about unpassable.

The deeper we went into this canyon, the more fall color we saw.  Keep in mind as you look at the slide show that I did not enhance any of the colors.  There are differences in the vibrance of some of the rock only because much of this was in shadow.  We also crossed over the creek 15 times on rocks and logs that are percariously placed for passing.  We got pretty good at it about half way through as we found our center of gravity to balance!

As you look at these cliffs, keep in mind that most of them soar about 500 to 700 feet.  Some of the formations further out in the pictures are probably 1000 feet at least.  We are right at the cliffs edge, and can reach out and touch them in most spots.  This is incredible.  I can only imagine what the early explorers thought when they first found this place…