Larry Luenser

As President Obama stated this week, things are looking better...but there are still rough times ahead. That is not an exact quote, but it gives you the idea. That same sentiment is a reflection of the real estate market in the Phoenix, Valley of the Sun area.

The stimulus plan to forestall foreclosures with loan refinancing and modifications will not be very helpful for most distressed homeowners in the Phoenix area. But, to do nothing is worse. If you are facing the possibility of foreclosure or are in the foreclosure process, do not assume that they will not work for you. You can read more about available help here: Hope for Phoenix Area Homeowners.

The rate of sub-prime loan foreclosures continues to decline. Sub-prime foreclosures reached their peak around January of 2007. However, sub-prime foreclosures will be with us to some extent until late 2010. Alt-A loan foreclosures are now coming in to play. We will also see foreclosures in the future from the second mortgage field. The recession will bring more foreclosures due to job loss. Foreclosures will continue to impact our real estate market but the worse appears to be over. So, there is the bad news. There is still more rough road ahead.

It is not all gloom and doom in our bright Valley of the Sun. Home prices have returned to 2001 levels in many areas, making pricing, once again, extremely attractive to home buyers and investors. Plunging home prices have begun to taper off. Although home values may still see a decline in the coming months, the rate of decline is expected to slow to a rate of 1% or 2%. We may not be out of the woods and the road ahead may still be bumpy but things are slowly turning around.

The Valley of the Sun is packed with homes in diverse neighborhoods offering real bargains to homebuyers. With interest rates at a 40-year low, mortgage payments can be cheaper than rent. If you are looking for the real estate "flip it" market, that is a long way off. If you are looking for a home, your time has arrived. If you are looking for a long time investment as a rental property owner, then the Valley of the Sun should be on your list of best places to invest in the US. According to a recent article appearing on the RIS Media Real Estate News website, the Phoenix area is in the top 10 best places to invest.

Buyers should take a cue from the stock market advisors and real estate investors. Financial investors are once again encouraging their clients to purchase stock and to begin looking at real estate investment.

Larry Luenser, Phoenix Real Estate

Prices continued to fall in the Phoenix area. But, it is all good, folks. You may be asking what is good about declining property values. Well, the upside to this question is the blunt truth. As home prices become more affordable, home sales go up. We need to get to the bottom line so that the Phoenix (as in the legend) can rise again.

For several years, Florida led the nation in foreclosures and falling prices. Florida is now experiencing multiple offers on properties available for sale. California home sales have jumped statewide by over 80% compared to last year. The pulse is being felt all over the nation.

There is good news for us locally as well. Homes sales in the Phoenix area increased by a whopping 64% over the number of sales for the same time last year! The average days a property is on the market has decreased from 104 days to 86 days. The ratio of what a home is listed at and what it actually sells for has increased from 97% to 105%. It looks like our affordable home prices and the current low interest rates are enticing buyers to get off the fence and buy now.

Now, we may not be out of the woods yet. But the increase in home sales seems to indicate that we have reached the bottom of the market. The way the stock market and economic news have been yo-yoing, I don't want to make any great predications. However, it appears that the Phoenix area may be turning the corner.

Larry Luenser, Your Phoenix Real Estate Expert

The FHA Hope For Homeowners program is still in effect and will continue to offer homeowners assistance with loan modifications through 2011. The FHA Hope For Homeowners was initiated by Congress in October 2008. President Obama's administration has implemented the Home Affordable Program offering loan modification and refinance options for distressed homeowners. The Home Affordable plan applies to home loans which are held by Fannie Mae and Freddie Mac. The plan includes refinancing and loan modification options for homeowners who are not behind in payments. The Home Affordable Refinance option helps eligible non-delinquent homeowners take advantage of today's lower fixed interest rates. The program is primarily directed towards homeowners facing imminent hardship. In addition, the Home Affordable Refinance program allows upside-down homeowners to refinance their home. How helpful this will be for homeowners in the Phoenix, Glendale and Peoria areas is questionable, as the loan to value ratio may not exceed 105%.

The Home Affordable Refinance program will end on December 31 of this year. Only loans which were orginated before January 1, 2009 qualify under the program's guidelines. The Home Affordable Loan Modification option is being offered to deliquent and non-deliquent homeowners. Loan modifications include such options as extending the loan to a 40-year term and/or reducing the current interest rate to as low as 4.5%. In some cases, a balance reduction may be possible as well.

The goal of the modification program is to reduce the monthly payment so that it does not exceed 31% of your gross monthly income. The Home Affordable Loan Modification program will be available to homeowners through December 31. 2012. Loan modifications are avaiable on a one-time only basis. The Making Homes Affordable website offers an online tool to determine your eligibility for either program.

Foreclosures continued to rise in Phoenix and the Sun Valley in both January and February. If you find yourself facing an income reduction, suffering a job loss or seeing your home payment increase, please contact your lender to apply for a loan modification or home loan refinance. In closing, I would like to say that, if you do not qualify for either a loan refinace or modification, a short sale is an option that you should consider. Many lenders are finding that cooperating in a short sale is a win-win situation for everyone.

Larry Luenser, Home Smart Real Estate

The new stimulus program for homeowners (The Homeowner Affordability and Stability Plan) was announced last week by the Obama administration. The program includes a change regarding taxes that may be owed by sellers who sell their homes through the short sale process. Last week, in my blog Short Sale Advantages for Buyers and Sellers, I told you that possible tax consequences could apply for sellers who sell their homes through a bank approved short sale. This is no longer true in certain circumstances.

Before the announcement last week, a lender could report the difference in the amount actually received by the lender at the time of closing and the balance owed as income to you, which was then reported to the IRS as income. Lenders will no longer exercise this option if:

1. The property is your primary residence.
2. The property is a purchase money loan.

If you have refinanced your property, your loan is no longer considered a purchase money loan. In this circumstance, you will want to consult with a qualified professional financial or tax adviser. In my next post, I will let you know why Short Sales may be easier to arrange due to the Homeowner Affordability and Stability Plan.