Ok I know that there is still tons of bad news out there and plenty of reasons to believe it but here are a few things that MIGHT indicate that the real estate market is starting to firm up in Phoenix.
1. A mortgage lender friend of mine says that April will be his best month since 2005.
2. I wrote purchase contracts on two different properties today and received offers on two different listings this weekend. This constitutes the busiest weekend I have had in four years. One of the offers I received was for full price.
3. My wife, an escrow officer, says that April will be her busiest month since 2005. About 50% of the transactions are refinancing of existing mortgages and 50% purchase contracts. Yes, most of the contracts are of lower priced foreclosures but its still promising to see that so many people believe prices now "make sense".
4. We have received more buyer leads over the last two weeks than we have in four years.
5. We are finding properties priced low enough that one can easily enjoy positive cash flow if they buy and then rent the property out.
I'm not saying that we can now declare that the bust is over and full steam ahead but if things keep going in this direction we very well may be seeing the beginning of a recovery.
We just learned about a steep price cut on high rise condo rentals in downtown Phoenix. Condos ranging in size from one bedroom with one and a half bathrooms to two bedroom with a den and two bedrooms and priced as low as $1300 per month in an "A-Cabin" building walking distance from everything that downtown Phoenix has to offer. High ceilings, floor to ceiling glass, exposed ductwork and conduit, upgraded lighting, wood floors and more.
Despite the slowdown in the national housing market, condominiums remain a popular option among home buyers. But they're also at the heart one of one of the biggest misperceptions surrounding FHA loans.
There are some strings and limits, but make no mistake - you can obtain FHA financing to help purchase a condominium.
The Federal Housing Administration offers a program geared toward prospective condo buyers. The single largest hurdle is that buyers must find a condominium that's part of an FHA-approved complex. You can search a database of approved condo complexes by state, city and Zip code through the U.S. Department of Housing and Urban Development here. There are almost 6,000 FHA-approved condo complexes in California and more than 1,200 in Texas.
Prospective buyers can get a 30-year loan on a condo unit. There are other restrictions concerning the building, like that it must contain at least four units. But many condo complexes, both old and new, meet these and other FHA stipulations.
Beyond that, the FHA already opens doors to competitive rates and unique savings opportunities for qualified buyers. For example, you might only have to put down 3.5 percent as a down payment. On top of that, the recently passed federal stimulus package includes an $8,000 tax credit for new home buyers that can be used to defray closing costs or even that minimum down payment. Remember, though, that the FHA does not actually issue loans - it insures them through qualified lending institutions.
The FHA's condo program does have a few financial restrictions. If the apartment is in a building that was converted from rental housing, no mortgage insurance may be provided under unless: (1) the conversion occurred more than one year before the application for insurance; (2) the potential buyer or co-buyer was a tenant of that rental housing; or (3) the conversion of the property is sponsored by a tenant's organization that represents a majority of the households in the project. Eighty percent of FHA-insured mortgages in the project must be made to owner-occupants.
The developer of Century Plaza finally filed for bankruptcy; no big surprise...except that it took so long to happen. So what's likely to happen next? In our opinion the value of the note just went down. AZCentral.com reported that M&I Bank, the construction lender, claims that the building is worth approximately $19M (we think the value is closer to $12M but let's use $19M for now for the sake of argument). IF Century Plaza is worth $19M then there is trouble on the horizon. Why? Because M&I Bank is owed approximately $42M and other parties are owed an additioanl $3.5M, so things aren't adding up. To make matters worse only 40 or so of the remaining 141 condos are actually finished. So, if an investor wants to buy the building with the intention of completing it, selling condos, and making a profit there are HURDLES ahead. The investor would have to come to some sort of an agreement with M&I Bank, namely M&I would take a big loss on the $42M owed, the investor would have to settle with the other parties who are owed $3.5M, the investor would have to finish the condos, and figure out a way to sell high rise condos at a price that would compete with all the other high rise condos currently being sold by other lenders that acquired the condos via foreclosure, AND make a profit. Oh, and don't forget, now that the developer filed bankruptcy the investor would have to feel very comfortable that he or she would actually get the property in a reasonable period of time or be able to sell the note at a profit even IF they have to fight it out with the developer in bankruptcy court.
The reason I question the claim that the building is worth $19M is that at that price and with 141 condos remaining that equates to a value of approximately $135,000. This may sound cheap until you know that only 40 or so of the remaining condos are finished, that there are rumored to be infrastructure issues (namely problems with one of the two chiller units and rumored sewer issues), the previously mentioned debt to value disparity and potential legal battles with the developer, AND the fact that whoever buys the note or property will want to make a profit in a currently stagnant (at best) high rise condo market! $19M seems high to me.
Having said all this I really do want to see Century Plaza succeed. I really like most of the floor plans, the common areas are fantastic, the location is one of the best in the Valley (that is if you are into using light rail and walking and enjoying great (non-corporate) restaurants and bars etc...) and more. I just think that it will be a while before the dust settles and I feel confident enough to recommend that people buy th
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WeKnowUrban specializes in the high rise & loft condo market in Phoenix, Tempe, Scottsdale & more. It's agents have been the number one resale agents of high rise & loft condos in Phoenix since 2003.
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