The tiny beads of water dance on the orange plastic wrap which encloses the morning paper. Although it is nearly 9 am, the dark grey skies look like Connecticut (from where I migrated) on a day which bodes snow. A gentle rain, actually what I would call a sprinkle, dampens the earth.
This is a day to stay home and do paperwork, catch up on phone calls, and not drive around town for whatever reasons. These days are like snow days back in Connecticut when the glistening snow and ice weighs down the tree branches and sparkles like a million diamonds.
This lovely and welcome greyness is part of the Tucson winter monsoon season. The surrounding mountain ranges are covered by low lying clouds and I suspect there is snow on top of the Catalinas. When this storm clears out, we will have snow capped mountains for a short period of time contrasting against the Arizona sunshine.
The leaves from the Arizona Ash, a deciduous tree in the back yard, will shed even more green turned yellow leaves and fall into the pool, rippling with tiny raindrops. The pomegranates, nearly bare, have an abundance of fruit filled with holes, thanks to birds seeking the sweet juices. And the citrus trees, always green, are slurping up the rain as the branches of the oranges and grapefruits sway somewhat in the wind.
We need this slow, gentle rain. The water has time to seep into the ground and is not violent or rapacious like the heavy rains which pelt the earth and run off without percolating and benefiting the vegetation.
We Tucsonans love this weather. It is infrequent and needed. This is "dancing in the street" weather. Out of towners, who are accustomed to rain are puzzled by our excitement and gratitude for these beads of moisture. Certainly the winter monsoons are not like the summer monsoons which often present dazzling lightning shows with the rays of rain.
I hear the trickle of the raindrops flowing down the gutters...oh what a beautiful day...the white grey of the sky obscures even the houses in the distance and my mind is playing the refrain, "let it rain, let it rain, let it rain!".
Resources:
Weather and Monsoons
http://ag.arizona.edu/maricopa/garden/html/weather/monsoon.htm
http://geography.asu.edu/aztc/monsoon.html
I posted this this morning on my blog at http://www.terrybishop.com
Celebrations of the winter solstice marked the full rotation of the earth around the sun. The shortest day of the year is behind us. Daylight increases with every passing day. Holiday cheer is abundant and in less than ten days, we will be welcoming 2009 with First Night celebrations.
Snowbirds, or to be politically correct, winter visitors will soon arrive. While much of the remainder of the country has snow, sleet, freezing weather, and bone chilling cold ahead of them, those people who make a pilgrimage to Tucson will be in for high 60's and 70's weather and increasing daylight - especially since Arizona does not turn it's clock back!
For anyone thinking about purchasing a winter home, this is the time! Although many people pay cash, it may be worthwhile to think about taking a mortgage, especially since rates are 4.625% for a person with good credit scores who can put 20% down. The 1% loan origination fee charged on this $100,000 loan has a break even point of about four years. Principal and interest at that rate on $100,000 would be $514.14.
Wrapping the loan origination fee of 1% or $1,000 into the loan at a higher rate of 5% makes the payment $536.82. The difference is $22.68 a month. Dividing the $1,000 by $22.68 gives a break even point of 44.209 months, or nearly four years.
Although it has been the dream of everyone to be mortgage free, the exercise of examining one's own mortality may be worthwhile. Looking at a 30 year mortgage, assuming I am 68 years old, what is the probability I will live to be 98? When really do I think I will die? Let's see, my Mom died when she was x years old, and my Dad died when he was y years old...what does that say about my own gene pool? Hmmmm....I will probably die about 86 years old.
So if I have a 30 year mortgage, that means there will be an additional 12 years to pay off when I die. History has told us that inflation is inevitable... and let's just calculate a mere 3% inflationary factor each year...interesting...that $100,000 in 2009 will become $245,684.22 in 2039! It may be more prudent for me to let my estate worry about that remaining 12 years...a consultation with a financial advisor or CPA, might be in order here.
History also tells us that regardless of the political affiliation of the administration, whenever we have a budget deficit, the government pays it off by printing money...i.e. inflation. So perhaps 3% is a low rate. If we were to experience 5% - a rate which has been consistent for Tucson between 1993 and 2004, the value then jumps to $446,774.49!
And then we add the income tax deduction which is calculated on the marginal tax rate...and the fact we keep our $100,000 in tact for other safe but more liquid investments...
Financing is a personal decision. But with the price of properties in Tucson now, including Active Adult Communities, people thinking about a second home should consider the advantages of acting now.
Resources:
Tucson Weather and Precipitation:
http://www.weather.com/weather/wxclimatology/monthly/graph/USAZ0247?from=tenDay_bottomnav_undeclared
Lenders:
Nova Home Loans:
Sundt Mortgage:
Realtor:
e-mail: terry@terrybishop.com
Housing Statistics 1993-2007:
I posted this to my blog this morning.
Tucson lies within the Sonoran Desert which extends south to Mexico and westerly to southern California and the Baja Penisula. Often called a "green desert", people are surprised that the Sonoran does not look like miles and miles of sand...the Gobi Desert or the Sahara. A gem within Tucson is the Arizona-Sonora Desert Museum.
The Museum is a delightful place to visit, but plan on at least a morning or afternoon...if you are a trooper, plan for most of the day. And wear comfy shoes. I backpack water bottles and quartered oranges and sometimes plan for a late lunch at the restaurant.
The Desert Museum is off of Kinney Road on the west side of town. Crossing Gates Pass, stands of stately beautiful saguaro cactus salute you and when you cross the crest, the sky appears to be more brilliantly blue. Old time movie goers will recognize the scenery, the backdrop to many a John Wayne western movie.
Wandering the paths of the desert museum is a different world. Climbing through the caves with the replicas of bats is an adventure for young and old; the huge room with all of the exquisite rock formations...precious and semi-precious gems found in the Sonoran desert, some irridescent and deep gorgeous colors, reminds me I'm in a mining area...famous for copper, silver, and gold.
Craning necks, people cluster to see the various types of rattlesnakes which inhabit the area as well as a multitude of tiny and not so tiny lizards, and of course the infamous gila monster with which you don't want to tangle! Insects and critters occupy one entire building, including the scorpions which have attracted an undeservedly nasty reputation.
Meandering down the paths are the larger animals, delights to children; bears, cougars, mountain liions, and the prarie dogs whose antics one can watch and can't help but smile. The Sonoran Desert is a birders' paradise, and hundreds wing their way in the aviaries. Photographers have a field day focusing close up shots ...including the hummingbird aviary which has more than 17 species. The javalina and the coyotes are a big draw, just like the roadrunner, local wanderers within Tucson city limits.
You can walk from the desert floor with the spiny types of cactus, to the top of the Catalinas at an elevation of 8,000 feet plus, to what looks like the pines of Maine, in the exhibit of the flora of the Sonoran Desert. Some animals migrate up and down the mountains rather than flying south.
A don't miss treat, the Arizona- Sonoran Desert Museum is an outstanding collection of all that this Desert presents. Stopping at the Tucson Convention and Visitors Bureau downtown to purchase a Tucson Passport for $15. will get you into the Desert Museum on a two for one basis as well as many other attractions.
Put the Desert Museum on your list of things to do and see and give yourself a treat!
Resources:
Sonoran Desert Museum:
http: www.desertmuseum.org/
Tucson Convention and Visitor's Bureau:
The Sonoran Desert:
http://www.desertusa.com/du_sonoran.html
en.wikipedia.org/wiki/Sonoran_Desert
" What's old is new and what's new is old." That adage stands today. As we all know, no more NINJA loans, no income, no jobs, no assets. And sometimes the old fashioned way is the best.
Putting 3.5% down on an FHA loan after January 1 is prudent. And conventional loans with 5% or more down, is also prudent. Where else could you purchase something costing $350,000 with no money down? It makes no sense.
But in 1999 Congress repealed Glass Steagall through the passage of the Gramm-Leach-Bliley Act. This permitted commercial banks and investment banks to compete.
Congress deserves to take it's lumps. The repeal of the Glass Steagall Act at the end of the Clinton administration combined with the loosening of terms and government encouragement to banks to make unworthy loans through the Community Revnvestment Act, lead us to this debacle.
Money was loose and abundant. And builders took advantage of this free for all, as did lenders, Realtors, investors in housing stocks, investors in property... anyone who thought they might make a buck. If you could fog a mirror, you could buy a house!
But now, returning to saner times, people are lamenting the lack of easy money. But in the 1990's, people needed a down payment, and they needed closing costs to purchase a house. In some areas of the country, there are 40 and 50 year mortgages...years ago, a 20 year mortgage was considered long.
If people have a vested interest in their home, chances are they will work hard to keep it and they will make their purchasing priorities accordingly. But if I have no vested interest in my home, why should I deprive myself of something I want in order to make a mortgage payment?
That simplifies the problem, I know. We have 80-20 loans out there with adjustable rates...there are rates resetting at much higher rates...and I know the forclosure rates are at their peaks. There is plenty of blame everyplace...some of which should be laid at the doorstep of Congress.
Let's hope this financial mess ushers in a period of stability where people begin to count their pennies again before making huge purchases. And maybe some reflection for all those people who tried to make a fast buck...and some consideration of business ethics and the fact we are dealing with people's lives and the lives of their families...and maybe...just maybe...some reflection about self responsiblity.
It's a blame game alright, but ultimately, the person responsible is oneself.
Resources:
http://my.opera.com/richardinbellingham/blog/show.dml/1796860
http://en.wikipedia.org/wiki/Glass-Steagall_Act
http://www.federalreserve.gov/dcca/cra/
We all are familiar with the person who needs to buy "whatever" at a discounted price, but doesn't act. When when the price goes up, he/she begins the "I coulda....I woulda...I shoulda..." refrain. Things are miserable because he missed the "golden opportunity" to buy at rock bottom prices.
But how many of us are intelligent enough or savy enough to get what we want at rock bottom prices? Too many factors impact pricing and especially the price of real estate. You may follow interest rates, but do you follow the bond market, and the stock market? And what impact does the bond market and the stock market have on the price of real estate?
In my experience, I have had potential investors tell me they wanted to buy "a good property"...and I ask, "what is a good property?"...The standard answer is ..."I need a property with a positive cash flow"...and then I ask, "is that on paper or is it actual?"
There is a big difference here. The potential buyer wants the money in hand, month after month. The greater gain may be on paper through capital appreciation by inflation and plus the tax advantages.
I ask the buyer if he/she has an investment philosophy....and I have rarely received a satisfactory answer. I begin to explain philosophies of investmen; A properties, B properties, C properties; university properties, active adult communties, snowbird rental properties; Section 8 properties...areas of town, concentrating properties all in one area, or throughout town ...and the big question, who will manage the properties...?
What is the point of all of this? For the investor willing to dig a little deeper, willing to do some elbow grease, willing to have a bit of patience on short sales, or purchase bank owned properties, this is the Tucson time now which will be "woulda, coulda, shoulda" in another six months to a year.
With a well thought out investment philosophy utilizing 1031 Tax Deferred Exchanges, doing the homework necessary, and understanding the potential of leveraging, combined with today's lower interest rates and low prices, the time is now. The key to the puzzle is an excellent Realtor and a desire to suceed.
Coulda, Woulda, Shoulda, are a dime a dozen and in three years a lot of people will be crooning that tune.
Resources:
http://en.wikipedia.org/wiki/Internal_Revenue_Code_section_1031
http://www.realtor.org/library/library/fg408
This was posted to my web blog this morning at http://www.terrybishop.com
Having been in the Tucson real estate market since 1993, I have counseled hundreds of buyers and sellers and welcome referrals. I have earned my CRS, my GRI, my Associate Broker's license and am a Cer
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