Terry Bishop

Tucson real estate sales, although improving, now is also adversely impacted by the Home Valuation Code of Conduct (HVCC), a de facto regulation promulgated by Andrew Cuomo, Attorney General of the state of New York in conjunction with Freddie Mac and Fannie Mae. Loans which are not Fannie Mae or Freddie Mac loans are not governed by the HVCC.

The intent originally was to insure appraisals are done in accordance with independent safeguards, that appraisers were not coerced to hit a value specified by the lender or loan officer. The HVCC lays out ten areas of concern Cuomo had regarding lenders and appraisers. But rather than independent appraisers, Appraisal Management Companies (AMC) have surfaced and are a profit center for large banks which underwrite many of the Fannie Mae and Freddie Mac loans. Appraisals must be ordered and "The Code requires the lender or any third party specifically authorized by the lender to select, retain, and provide for all compensation to the appraiser"1

As a result, many independent appraisers and small appraisal companies can not longer afford to remain in business unless they join one of the AMC pools. Lenders, erring on the side of caution, may no longer use these small independent companies because they are not an AMC.

Additionally, the cost of an appraisal has escalated. There is another level of management involved with the AMC. Appraisals used to cost between $325 and $375; now they are $400 plus. Ironically, the appraiser, the person with the expertise, is now paid at least $100 less than pre-AMC. The differential goes to the AMC.

Appraisers new to the market join the pools to beef their resume and gain experience. Lenders request the appraisal from an AMC approved by the entitity subsequently underwriting the loan. Appraisals may be done by people who do not know the area,

Appraisers have guidelines and take some of their comps from within a mile of the property. Tucson properties have been appraised by out of area appraisers and these appraisals may come in unusually low. In a one mile segment, one 1/2 mile area may have custom built homes valued at $800,000 whereas the other 1/2 mile segment may have tract homes valued at $250,000. Each property may be 3,000 square feet but looking at paper, the appraiser does not know the difference. This skewing would occur with automated valuation models which are not prohibited by the code. (http://en.wikipedia.org/wiki/Automated_Valuation_Model)

As a Realtor representing my client, I often spoke with the appraiser and provided my comps with other pertinent information. If I represented a property and knew the comps showed two distressed properties, I made sure the appraiser understood. Perhaps I knew a property had been flooded or there had been a fire, this information materially impacts the value of that home...it should not materially impact the value of the home I am trying to sell. Understanding the area or the history of the area and properties is part of the knowledge base used to make good decisions.

1- Fannie Mae guidelines FM 0109 page 2 2009

Resources:

Home Valuation Code of Conduct

http://www.freddiemac.com/singlefamily/pdf/122308_valuationcodeofconduct.pdf

http://www.appraisalinstitute.org/ano/current.aspx?volume=10&numbr=11/12

https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/appraisalguidance.pdf

http://www.freddiemac.com/singlefamily/hvcc_faq.html

http://www.fhfa.gov/webfiles/277/HVCC122308.pdf

http://narblog1.realtors.org/mvtype/president/2009/06/all_is_not_quiet_on_the_midwes.html

http://narblog1.realtors.org/mvtype/appraisalinsight/cuomo_agreement/

http://appraiseractive.blogspot.com/2009/07/hvcc-update-nar-president-charles.html

I posted this to my blog at http://www.terrybishop.com/ blog this morning. Feel free to comment.

Any number of life events can cause a homeowner to become delinquent on his or her mortgage payment: loss of job, divorce, death, incarceration, medical bills, caring for children's children, caring for parents, adjustments in mortgage terms, accident. These are life's events. Mortgage delinquency is not planned.

The State of Arizona, through Attorney General, Terry Goddard, and the Arizona Foreclosure Task Force, has issued a booklet about foreclosure which can be download from your computer. The workbook, which provides timely and accurate information, is at:

http://www.arizonaforeclosuretaskforce.com

Although this information was written for the citizens of the Grand Canyon State, the worksheets and general information pertain to anyone. The specifics of foreclosure in Arizona may differ in your state; check with your local HUD office or your own Attorney General's office, or seek the counsel of a qualified attorney and Realtor who understand the foreclosure process.

The booklet warns against "scams" where people promise to keep you in your home or suggest you can get a better interest rate. The old adage applies: "If it's too good to be true, it probably is".

Although it is often frustrating, people who believe they may be in financial trouble, should contact their lender immediately and determine if any "work-out" can be done. Keeping a journal of information detailing the time and date, plus the general conversation and to whom you spoke is important. Chances are you will not speak to the same person when you make calls and having this ready reference will be be invaluable.

You should be prepared to detail the "hardship" you face and a "hardship letter" will be required if you eventually go to a "short sale". The worksheets in the booklet help the consumer detail how and when the hardship took place.

For the state of Arizona, a list of housing counselors is provided. If you are located outside of Arizona, call your local HUD office (Department of Housing and Urban Development listed under the Federal Government). Housing counselors are trained to work with the lenders and may have more success than you as an individual homeowner may have. They will need your information from the worksheets.

Budget forms are provided since the lender will want to know about your personal assets and liabilities. Easy to use forms help determine what type of loan (s) you may have on your property. Once you complete this information, you should have a good understanding of your financial situation and whether a short sale or foreclosure is the only option, or whether you can keep your home.

Options are detailed if you elect not to keep your home which also includes bankruptcy and the types of bankruptcy. Finally there is a segment on scams and how to recognize a scam.

Remember, this is public information and as soon as Notice of Sale if filed with the Recorder's Office, people will come out of the woodwork offering to "help" you. If you know of someone who may be facing financial difficulties, share this information with him or her.

Be proactive and knowledgeable, for in knowledge there is power.

Resources:

http://www.arizonaforeclosuretaskforce.com/wp-content/uploads/2009/05/2009-arizona-consumer-foreclosure-info-wrkbk.pdf

www.hud.gov

Tucson summer is here...temps are plus 100 and the humidity has brought monsoon weather. The dew point has reached 54 for three successive days. Tucsonians who want a respite from the warm weather often trek to Summerhaven, a small village in the Catalina Mountains at an elevation of about 8,000 feet. But now that the pie lady is no longer, going south for wine tastings is another option.

Sonoita, Elgin, and Patagonia are cool places, both in the euphemistic term and in the literal term. At an elevation of about 5,000 feet and within 45 minutes from Tucson, Sonoita is located off of I-10 traveling west on Naugle Avenue, otherwise known as State Highway 83. Elgin is to the east of Sonoita about nine miles, and Patagonia is about 12 miles south on Route 82.

The three communities are surrounded by mountains and national forests; the Santa Rita Mountains, the Patagonia Mountains, and the Coronado National Forest. Parker Canyon Lake, a popular recreational areas is to the south of Elgin on Route 83. Patagonia hosts a word class birding area.

Gently slopping grassy hills contrast with Tucson's craggy mountainous rocky terrain. The topography is dramatically different and one understands immediately how Sonoita became a big horse country area. The temperatures are cooler because of the elevation and in the winter, dustings of snow are not unknown occurances.

The amount of rainfall is conducive to wine growing, combined with cool summer nights. Traveling the back roads, grape arbors are a common sight. Several family owned wineries produce award winning Arizona wines. A jaunt to Arizona wine country, less than an hour from Tucson, is an interesting, educational and fun Saturday or Sunday excursion.

Known as the Mountain Empire, these areas also have small cafes and bistros which serve up vittles ranging from Mexican to gourmet, to cowboy. There are art galleries, gift shops, bookstores, as well as an abundance of bed and breakfasts, including a bed and breakfast where you can also board your horse.

The Mountain Empire Rotary, the Patagonia Area Business Association and the Sonoita/Elgin Chamber of Commerce offers a Mountain Empire Passport which provides discounts for many of the businesses in the area. For additional information, contact Charlie Kentnor of Realty Executives at 520-455-5560 or Tom Anderson at 520-250-7205, both of whom can assist in obtaining a passport.

Take a ride this weekend south...rather than to the Catalinas and enjoy what the Mountain Empire has to offer!

Resources:

http://www.patagoniaaz.com/

When people don't know what is about to transpire, they do nothing. The total Tucson real estate sales volume between January 2009 and June 2009 definitely reflects that sentiment with an 88% increase in June over January. In February, the stimulus bill passed and people felt relieved that they now knew what Congress was doing. The sales numbers reflect people coming out of hibernation to purchase property.

January	February	March	April	May	June
126,459,654	153,410,306	187,802,298	178,509,827	206,198,371	237,996,501

The median sales price crept up slightly from $163,500 to $165,000 or about 1 1/2%.

January	February	March	April	May	June
$162,500	$ 177,500	$ 165,000	$ 163,900	$ 169,900	$ 165,000

Two years ago in June, the median sales price was $225,000. That is a drop of more than 26%. However, the average sales price tops $200,000 and is within a little more than one percentage point in June over January.

January	February	March	April	May	June
$206,282	$ 221,371	$ 203,464	$ 192,315	$ 202,747	$ 208,952

Tucson has 14 Multiple Listing Service areas and once again, the average sales price in the North- the Catalina Foothills area is the highest at $387,629, followed closely by the extreme Northeast which is the Redding Pass area at $375,000. The Northeast area follows with an average sales price of $342,160; this is the Sabino Canyon area.

Dropping to an average sales price of $263,894 is the Northwest area which encompasses Dove Mountain, Oro Valley, and Continental Ranch. From that price point, decreasing in value is the extreme south at $201,082--the Green Valley Sahuarita area. From there, the extreme southeast or the Vail area is at $191,743.

The west side average price is $182,821, followed by the central area which includes the University of Arizona area at $180,320. The east side of town includes areas around Davis Monthan Air Force Base and is next in line at an average sales price of $161,749.

The extreme northwest or west of the Tucson Mountains in the Arva Valley area has an average price of $136,050, followed by the extreme southwest where STar Valley master planned subdivision is located and Diamond Bell Ranch, at $125,449. The southwest encompasses Midvale Park at $107,664 and finally the south area of Tucson at $97,291.

Price points follow the value of land and in the north, few building lots are available, whereas in the southwest, building lots are readily available. However, one should remember 82% of all the land in Arizona is held by some type of governmental entity. Only 18% of the land mass is available for development.

Zip codes also tell a story of what areas are selling, compared to the numbers of properties active on the market.

Zip Code	# Listings	# Sold	% Sold		Zip Code	# Listings	# Sold	% Sold
85601	11	0	0.00%		85718	422	13	3.08%
85614/22	408	19	4.66%		85719	198	12	6.06%
85619	17	0	0.00%		85730	180	19	10.56%
85629	214	22	10.28%		85735	94	9	9.57%
85641	350	20	5.71%		85736	48	3	6.25%
85653	179	12	6.70%		85737	288	20	6.94%
85658	228	9	3.95%		85739	272	13	4.78%
85701	36	1	2.78%		85741	140	30	21.43%
85704	253	12	4.74%		85742	275	16	5.82%
85705	175	13	7.43%		85743	332	29	8.73%
85706/56	369	46	12.47%		85745	258	17	6.59%
85710	301	32	10.63%		85746	276	31	11.23%
85711	186	36	19.35%		85747	209	25	11.96%
85712	167	7	4.19%		85748	131	10	7.63%
85713	274	38	13.87%		85749	231	9	3.90%
85714	54	3	5.56%		85750	340	17	5.00%
85715	176	11	6.25%		85755	325	14	4.31%
85716	171	13	7.60%		85757	100	17	17.00%

Click the following link for a map of Tucson and Zip Codes.

http://www.tucsonaz.gov/planning/maps/city/wardzip.pdf

Resources:

http://www.tucsonrealtors.org/tar-v2/MLS_Stats_June.pdf

Once again, thank you Scott Weidamoyer of the Tucson Association of Realtors who compiles the statistics which I use on these blogs.

This was posted to my blog today at http://www.terrybishop.com

Don't believe what people say. Look at the empirical evidence. The stimulus package was signed into law by President Obama on February 13 of this year. Human nature attests when people do not know or understand what is transpiring , they often do nothing. This certainly has been true of the real estate market since the August presidential conventions. Once the stimulus bill passed, the Tucson market began to emerge from hibernation---not because of the stimulus bill, but because people understood government action.

The chart below shows the total unit sales for each month between January 2009 and June 2009. There is an 85% increase in total unit sales from the January numbers to the June numbers. Putting the numbers further into perspective, this represents more units sold in a month since July 2007 when 1182 homes closed escrow. Althought on one hand, this is good news, we will see tomorrow, prices have declined dramatically. The monthly inventory in June is 18.5% + less than January. Each month, inventory has been steadily decreasing. Decreasing inventory bodes well for a stable market.

Total new listings also decreased almost 20% since January. Pending contracts have risen by 52% from 941 in January to 1432 in June. These numbers further indicate the housing inventory is gradually decreasing.

This is all good news for the Tucson real estate market.

	January	February	March	April	May	June
Total Unit Sales	613	693	923	931	1024	1139
Total Units on Market	7694	7532	7415	6890	6506	6261
Total New Listings	2361	1799	1989	1703	1704	1892
Pending Contracts	941	1020	1208	1345	1302	1432

According to the Tucson Multiple Listing Service, the monthly comparision of the types of properties which sold, is as follows:

Type of Property	Jan-09	Feb-09	Mar-09	Apr-09	May-09	Jun-09
Single Family /New Construction	518	577	771	774	851	968
Town House/New Construction	44	53	74	80	80	84
Condo/ New Construction	16	34	30	30	45	54
Manufacture Single Family	28	24	39	29	33	28
Mobile Homes	7	5	9	7	15	5

Once again we see an increase in the sale of single family homes, townhomes, and condominiums. Manufactured homes and mobile homes are a much smaller part of the housing inventory. Sales remain steady at the January levels during the subsequent six months.

Tomorrow: Pricing

Resources:

Tucson Association of Realtors - June 2009 Residential Sales Statistics

http://www.tucsonrealtors.org/tar-v2/MLS_Stats_June.pdf

Statistics come from the June housing report produced by the Tucson Association of Realtors prepared by Scott Weidamoyer.

This was posted to my website blog this morning July 14. 2009, http://www.terrybishop.com