Phoenix Real Estate: 2014 Single Family Real Estate Trends

February 25, 2015 By

February 25, 2015

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Existing Single Family Sales Go Up at End of Year. Mortgage Purchases Increasing.

  • December 2014 existing single family sales ten percent higher than December 2013
  •  Overall sales were less in 2014 than 2013, but trending upward
  • Watch listings: 2014 new monthly listings less than 2013  
  •  Median sale price in December highest month in 2014
  •  Sale Volume $160,000,000 higher in December 2014 than December 2013
  • 2014 Distressed Property Index lowest since 2006
  •  2014 cash purchases lowest since 2008
  • More purchases with a mortgage in 2014 than 2013
  • Grand Canyon Title acquired by Fortune 500 Company. See page two.
  • Big changes coming to residential real estate closing process starting on August 1, 2015. See page seven.

This report covers existing single family property sales in Greater Phoenix. Greater Phoenix is defined as Maricopa County. The data in this report, unless otherwise mentioned, is from the Arizona Regional Multiple Listing Services, Inc., also known as ARMLS.

In this report we compare performance for sales, sales volume, cash purchases, mortgage purchases, and new monthly listings. The report includes the Distressed Property Index covering foreclosure starts, auctioned properties, lender owned sales and short sales for the last twelve years. Most of the comparisons are year-over-year, comparing a time period in 2014 to the same time period in 2013.  Year-over-year comparisons are an effective way to measure performance, highlight differences, and negates the effect of seasonality.

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On January 1, 2015 Grand Canyon Title Agency was acquired by a Fortune 500 company. Grand Canyon Title became a division of Fidelity National Title Agency (FNTA). FNTA is a subsidiary of Fidelity National Financial (FNF). FNF is ranked 316 on the Fortune 500.

http://fortune.com/fortune500/fidelity-national-financial-inc-316/

FNF has more claim reserves than any other company in the industry.  With more than a billion dollars in claim reserves to protect you, contact me to open your next commercial real estate transaction.  

http://fidelitydfw.com/page/Financial-Strength.aspx

Existing Single Family Sales and Sale Volume

 Sales were dismal for much of 2014. There were 6,563 less existing single family sales in the first three quarters of 2014 compared to 2013. Then the course reversed. In December 2014, there were 420 or ten percent more sales and $160,000,000 more in sale volume than in December 2013. These numbers made December 2014, on a year-to-year basis, the best month of 2014. Sale volume in the first eight months of 2014 was less than for the same months in 2013.

Not only were December 2014 existing sales higher than December 2013, but so were purchases with conventional, FHA and VA loans!

Distressed Property Index

Disappearing cheap distressed property for sale was a reason for less sales in 2014. According to the Arizona Regional Multiple Listing Services, Inc. (ARMLS), there were 2,149 less lender owned sales and 4,934 less short sales in 2014 compared to 2013. The Distressed Property Index in 2009 was 186,643 compared to 18,932 in 2014 for a decrease of 90%. However, the disappearance of cheap sales diminished cash sales. Cash sales were less every month in 2014 compared to 2013, resulting in 7,370 less cash purchases in 2014. Cash sales in 2014 were the lowest since 2008.

Sales under $50,000

Gone are the days when there were thousands of sales under $50,000. In 2014, there were 207 existing single family sales under $50,000 compared to 625 in 2014. From 2009 through 2013 there were 22,513 sales under $50,000. So the good news is that the glut of cheap distressed properties for sale that previously drove down home values are gone.

6,154 more sales in 2013 than 2014

7,368 more cash sales in 2013 than 2014

1,214 more sales with a mortgage in 2014 than 2013

On August 1, 2015 new rules apply to residential real estate closings.

Do you know what they are?

On August 1, 2015 new rules apply to most closed-end consumer mortgages. The rules effect existing and new home purchases, refinances, loans secured by vacant land, construction only loans, and timeshare loans. Excluded are reverse mortgages, home equity lines of credit, mortgages secured by a mobile home or a dwelling that is not attached to real property.

The Consumer Financial Protection Bureau or the CFPB a creation of the Dodd-Frank Act, has integrated mortgage disclosures and created new forms. For loans originated on August 1, 2015 or later, the Good Faith Estimate and the Truth in Lending will be replaced with a new document called the Loan Estimate. And the final Truth in Lending and Settlement Statement are replaced with a new document called the Closing Disclosure.

How will this affect the closing of real estate transactions? The timing of workflow and closings will be impacted by the new rules. The Closing Disclosure has new time tables associated with it. There is a Delivery Period and a Waiting Period before the borrower is allowed to sign loan documents.

Ken Trepeta, Government Affairs for the National Association of REALTORS suggests adding fifteen more days to the normal closing process time in this video.

http://www.realtor.org/videos/hud-1-going-away-understand-new-closing-forms-procedures

There is much more to the upcoming changes, for more detailed information contact me, Fletcher Wilcox, at FWilcox@gcta.com or 602.648.1230. I will be representing Grand Canyon Title Agency in meeting with real estate designated brokers and their agents, and builders, and banks and lenders and their loan officers. Don’t wait to learn about the changes, but find out what you need to know, what you need to do, and how the changes impact your clients.      

Number of Buyers Purchasing with a Loan Improves. Fourth Quarter 2014 Best Quarter Year-To-Year

Purchases with a mortgage were 4.7% less in the first quarter of 2014 compared to the first quarter of 2013. As the year went on mortgage purchases gained momentum. In 2014, mortgage purchases up 1.3% in the second quarter, up 5.8% in the third quarter, and up 9.5% in the fourth quarter compared to the same quarters in 2013. However, the increase in mortgage purchases in the second and third quarters of 2014 was not enough to overcome the decrease in cash purchases resulting in less sales.

Segmenting Mortgages into Three Categories: Conventional, FHA and VA Loans

When segmenting mortgage purchases by conventional loans, FHA loans, and VA loans, we find the following results: Year-to-year conventional loan purchases were down the first three quarters in 2014 compared to 2013. A likely, partial reason for the decrease in conventional loans was the implementation of the new Dodd-Frank mortgage rules effective on January 10, 2014.

FHA loans were less only in the first quarter of 2014 compared to 2013, and VA loans were a hero all year long in 2014, up ever quarter of 2014 over 2013.

Keep Your Eye on Listing Inventory

The chart below is for new monthly listings of existing single properties in Greater Phoenix. The chart does not represent the total number of existing single family listings, but only new monthly listings. New monthly listings in 2014 were less from June through December compared to 2013.

Fletcher R. Wilcox

Fwilcox@GCTA.com  602.648.1230

Author of  TheWilcoxReport.com(TM)

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Filed Under: Arizona Real Estate Market, Buyer or seller market, cash purchases, cash sales, CFPB, Chandler, claim reserves, CLosing Disclosure, consumer financial protection bureau, conventional loans, distressed properties, Distressed Property Index, FHA and VA mortgages purchases, FHA loans, Fidelity National Title, Fletcher Wilcox, Fortune 500, Gilbert, grand canyon title agency, Greater Phoenix Real Estate, home loans, Homes for Sale, Listing inventory, Mesa, Mortgage Purchases, Paradise Valley real estate, Phoenix real estate, Phoenix real estate sales, real estate sales, Scottsdale listings, Scottsdale luxury market, Scottsdale luxury real estate, Scottsdale real estate, Scottsdale relocation, Scottsdale retirement, The Wilcox Report, Uncategorized, VA loans, VA mortgages Tagged With: , ,

Phoenix real estate market is coming back, report says. Will Phoenix real estate in 2015 be a buyer or seller real estate market?

January 29, 2015 By

http://roselawgroupreporter.com/2015/01/phoenix-housing-market-coming-back-report-says/?utm_source=The+Dealmaker+by+Belfiore+and+Rose+Law+Group&utm_campaign=2f82789d80-1_28_15_Dealmaker&utm_medium=email&utm_term=0_6de1c69ebc-2f82789d80-32164057

Phoenix housing market is coming back, report says

Posted by   /  January 27, 2015  /  No Comments

Wilcox graph

By Philip Haldiman, Editor-in-Chief | The Dealmaker

The Phoenix housing market has moved into recovery mode, according to a new report on single-family home sales, mortgage lending and job growth trends.

Arizona real estate analyst Fletcher Wilcox, author of the report, told The Dealmaker that while there is still pain in the local housing market, it’s now bouncing back because distressed properties have declined greatly, preventing home values from sky-rocking downward.

Another important factor is job growth in metropolitan Phoenix, he said.

“While job growth is lower than it has been historically — around two percent compared to four percent — greater Phoenix has gained back about 70 percent of jobs that were lost,” Wilcox said. “For the housing market to grow there has to be jobs.”

In greater Phoenix in 2009, 186,643 single-family properties either went into foreclosure, were auctioned, were sold as lender-owned properties or were short sales, Wilcox said.

Last year that number was 18,932, a 90 percent decrease.

The 2014 Distressed Property Index, which includes foreclosures, auctions, lender-owned properties and short sales, is now the lowest since 2006, Wilcox said.

“(Home values) have appreciated from the low point in August 2011,” he said. “Back then the median sale price for a single family property was $120,000.  In December 2014, the median sale price was $222,000.”

Highlights from 2014, Maricopa County

  • Foreclosure returned to 2005 levels.
  • Auctioned properties returned to 2003 levels.
  • Lowest lender-owned sales since 2007.
  • Lowest number of short sales since 2008.

(Source: ARMLS, compiled by Wilcox Report)  Posted by   /  January 27, 2015

Will 2015 be a buyers or sellers real estate market?  Stay tuned for the next report on the decrease in new listing inventory and the increase in mortgage purchases.

Fletcher Wilcox

Filed Under: Arizona Real Estate Market, Buyer or seller market, cash purchases, conventional loans, FHA and VA mortgages purchases, FHA loans, Fletcher Wilcox, grand canyon title agency, Greater Phoenix Real Estate, home loans, Homes for Sale, Listing inventory, Mesa, Mortgage Purchases, Paradise Valley real estate, Phoenix real estate, Phoenix real estate sales, real estate sales, Scottsdale listings, Scottsdale luxury market, Scottsdale luxury real estate, Scottsdale real estate, Scottsdale relocation, Scottsdale retirement, The Wilcox Report, Uncategorized, VA loans, VA mortgages

Phoenix Real Estate: Explaining President Obama’s plan to stimulate home buyers with FHA Loans

January 9, 2015 By

Today, January 8, the President visited my alma mater, Central High School in Phoenix, Arizona.  He announced a plan to increase homeownership.  The Federal Housing Administration will change the FHA annual mortgage premium from 1.35% to .85%.  So, a future FHA mortgage payment will be cut by .5% or ½%.

Until FHA puts the change in writing, the annual mortgage premium stays at 1.35%.

The annual mortgage premium is mortgage insurance that a borrower pays for obtaining an FHA insured loan. The premiums are used as capital reserves for outstanding FHA mortgage guarantees.  There is also a one-time mortgage insurance fee a borrower pays when obtaining an FHA loan.  That fee stays the same.

The monthly saving for most borrowers purchasing a single family home in the Phoenix area would be $70 per month.

According to data obtained through the Arizona Multiple Listing Services, Inc., the median FHA mortgage amount for purchasing a single family home in December 2014 in Greater Phoenix was $168,000.  Below is table comparing a FHA loan of $168,000 with the old and new mortgage premiums.

I estimate this change will increase overall single family sales by 2%-5%.  Most likely at the lower end of this range.  This estimate assumes the change applies not only to first time homebuyers, but also boomerang buyers.

The change benefits buyers only in certain price ranges. The maximum FHA loan amount is $271,050 in Maricopa County.

Today’s announcement will increase buyer activity.  Media attention on the President’s plan will cause some potential buyers to contact real estate agents and lenders to find out more information.  This is a good thing.

This move most likely will stimulate the refinance market more than it does the  purchase market.  This is why: If a borrower’s current FHA interest rate is 4.0% and their monthly premium is 1.35% they are paying about 5.35% interest on their loan. (It does not quite work out to the aforementioned but is close enough for an example).  If a borrower refinances to an FHA interest rate of 3.5% and now their mortgage insurance premium is .85% they are now paying 4.35% on their loan or 1% less. Paying 1% less will encourage a mini FHA refinance boom.

Today’s cut of .50% in the annual premium will be muted if the mortgage interest rate goes up .50%.

There may be some opposition to today’s announcement. There was a reason for the premium to be 1.35%.   As mentioned earlier these premiums are used as capital reserves for outstanding FHA mortgage guarantees.

The last time the President was in Phoenix, August 2013, I was on channel 12 Brahm Resnick’s show Sunday Square Off  discussing the President and the Phoenix real estate recovery.

Loan amount $168,000 $168,000 Monthly saving Yearly saving
Annual mortgage insurance premium 1.35% .85%
Annual amount $2,268 $1,428
Monthly payment (annual amount divided by 12) $189 $119 $70 $840

(12 months x $70)

 

         
     
     
         

 
Filed Under: Buyer or seller market, FHA loans, Fletcher Wilcox, Gilbert, grand canyon title agency, home loans, Mesa, Mortgage Purchases, Paradise Valley real estate, Phoenix real estate, Phoenix real estate sales, real estate sales, Scottsdale real estate, The Wilcox Report, Uncategorized, VA mortgages

Gilbert Real Estate: Is it a Buyer Or Seller Market? An interview with Amy Golba. Also December 2014 real estate results for Gilbert, Mesa and Chandler.

January 5, 2015 By

In this edition of TheWilcoxReport.com I discuss with Amy Golba the state of real estate market in the Southeast Valley of Greater Phoenix and specifically Gilbert, Arizona.  Amy is the owner and designated broker of Century 21 Platinum Real Estate.  Amy and her agents spend a lot of time in the Southeast Valley markets of Gilbert, Mesa, Chandler and Ahwatukee.  Amy is also a principal in the Golba Group, which manages over a thousand single family property rentals.    This interview was conducted in November 2014.

Year-to-Year Comparison of Existing Single Family Sales for the month of December

Below the video is a comparison of December 2014 to December 2013 existing single family homes sales for Gilbert, Mesa, and Chandler.  Median sale prices were up in all three cities this December over last December.  Gilbert shined with 23% more sales, while Chandler sales were about the same.  Mesa sales were up 6%. The data is from the Arizona Regional Multiple Listing Services, Inc.

 

Sales Sales Median Sale Price
City Month 2013 2014 Change Change 2013 2014 Change Change
Gilbert December 306 377 71 23.2% $254,375 $256,000 $1,625 0.6%
Mesa December 466 495 29 6.2% $187,000 $192,000 $5,000 2.7%
Chandler December 292 290 -2 -0.7% $245,000 $258,000 $13,000 5.3%
Filed Under: Arizona Real Estate Market, Buyer or seller market, Chandler, Fletcher Wilcox, Gilbert, grand canyon title agency, Greater Phoenix Real Estate, Homes for Sale, Listing inventory, Mesa, Phoenix real estate, Phoenix real estate sales, real estate sales, The Wilcox Report, Uncategorized Tagged With: , ,

Phoenix Real Estate: Were September 2014 sales results a market quip or trend?

October 27, 2014 By

The September Surprise

September 2014 was best month year-over-year for existing single family sales, sales volume, and mortgage purchases

September brought some good news for sales, sales volume, and mortgage purchases. The existing single family housing market gained a little momentum. The information in this report analyzes existing single family home sales in Phoenix. The use of the term Phoenix is a general term for those cities located in Maricopa County. The information was compiled from the Arizona Regional Multiple Listing Service, Inc. (ARMLS).

To see full report go to https://gcta.com/wp-content/uploads/2014/10/September2014ExisitingHomeSalesforPhoenix-.pdf

In this report we compare performance for sales, sales volume, cash purchases, mortgage purchases, total active listings, new monthly listings and estimated months of supply. Most of the comparisons are year-over-year, comparing a time period in 2014 to the same time period in 2013. Year-over-year comparisons are an effective way to measure performance, highlight differences, and negates the effect of seasonality.  Are you ready?

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Sales of Existing Single Family Homes. September 2014, was the first month this year in which there were more sales compared to the same month of last year. Well, the number of sales was small. There were 20 more sales. While 20 may not be much, it is a lot better than May 2014, when there were 1,360 less sales than the previous May. See Table One, page six.

Sales Volume. Better than the slight increase in September sales was a much larger increase in sales volume. Home appreciation over the last year, and the slight increase in sales made September the first month this year that the total dollar volume of sales was higher than for the same month of the previous year. Total sales volume in September 2014 was up 4% or $48,000,000 more than September 2014. In May 2014, the 1,360 less sales resulted in $310,000,000 less in sales volume. See Table Two, page six. Total sales volume is determined by adding up the number sales and their sale prices. The average (mean) sales price in September 2014 was $274,019 or $9,316 higher than September 2013. The median sales price this September was $216,900 or $5,000 higher than last September.  See Table Three, page seven.

Cash Purchases and Mortgage Purchases. Purchases with cash continues to decline. They are down every month year-over-year. There were 968 in August and 959 in September. The last month that there were less than 1,000 monthly cash purchases was almost six years ago, in November 2008, when there were 894 cash purchases.

Less cash purchases should be no surprise. Investors make up the majority of cash purchases. Investors want to buy cheap. Most cheap sales are distressed sales. The number of distressed properties for sale is down considerable from the flood a few years ago. In the month of September 2010, 14,301 properties fit into one of these four distressed categories: foreclosure start, auctioned property, lender owned sale or short sale. In September 2014, only 1,535 or 12,766 less properties than September 2010 were in one of these four categories.

In the first quarter of 2014, sales were not only down because of less cash purchases, but also because there were less mortgage purchases. There were 2,207 less cash purchases, 354 less conventional loan purchases, 197 less FHA loan purchases, but 119 more VA loan purchases in the first quarter of 2014. See Table Seven, page ten.

Thus, the media reports of a flamed out Phoenix real estate recovery. But something changed. The mortgage purchase market gained vigor. September 2014, was the fourth consecutive month year-over-year there were more mortgage purchases. For the months June through September, there were 719 more FHA purchases, 303 more VA purchases, 56 more conventional loan purchases, while there were 2,807 less cash purchases. See Table Eight, page 10.

Conclusion and Prediction

When segmenting the single family market into cash versus mortgage purchases, it should be no surprise that cash purchases are decreasing and mortgage purchases increasing. As the residential market recovers, there will be less foreclosures and short sales available for cash investors to buy. And as the number of jobs, population and eligible boomerang buyers continues to increase, mortgage purchases should increase. While job growth and population growth are slower than hoped for, they are still positive. As to boomerang buyers, their numbers increase every day. Every day more of them have met the FHA three year wait period to buy again after a foreclosure or short sale.

So, were this September’s year-over-year increase in sales, total sales volume and mortgage purchases a quip or trend?

Table Seven year-over-year results for June through May shows that the number of conventional loans purchases about even, but FHA loan purchases up 16% and VA purchases up 4%. Early October 2014 numbers support sales at the same pace as October 2013. The numbers mirror September results in that they show a year-over-year decrease in cash purchases and an increase in mortgage purchases. The momentum of the mortgage purchase market should make the last quarter of 2014 the best quarter year-over-year in 2014 for home sales and total sales volume. Excluding of course some unforeseen economic event or other crisis.

I go with September 2014 results as part of a positive housing trend and not a quip or blip.

An interview with National Fox Business News Host Gerri Willis on Phoenix real estate.

Gerri Willis of the Willis Report In May 2014, said things may be cooling off in the Phoenix real estate market because cash deals were down. My response to this cooling off and less cash deals is because our market is normalizing. Normalizing in that the market is becoming more of a mortgage purchase market, and less of a cash purchase market because the foreclosure crisis is over.

https://www.youtube.com/watch?v=4WkUe7KhfGU

Filed Under: Arizona Real Estate Market, Buyer or seller market, cash purchases, conventional loans, FHA and VA mortgages purchases, FHA loans, Fletcher Wilcox, grand canyon title agency, Greater Phoenix Real Estate, home loans, Homes for Sale, Listing inventory, Mortgage Purchases, Paradise Valley real estate, Phoenix real estate, Phoenix real estate sales, real estate sales, Scottsdale luxury real estate, Scottsdale real estate, Scottsdale relocation, Scottsdale retirement, The Wilcox Report, Uncategorized, VA loans, VA mortgages Tagged With: , , , , ,

Paradise Valley Real Estate: Video makes Inman News featured story!

August 25, 2014 By

The Power of Video:  Video of Paradise Valley luxury home makes Inman News featured story and shows seller praising listing agent.

On August 15, 2014 Inman news included a video in their featured story 6 tips to get your clients to brag about you.  The seller of a luxury home in Paradise Valley, Arizona sings praises of her listing agent in the video.  Right before the luxury home closed, I contacted the listing agent to see if she and the seller would let me interview them.  They both said yes.   I thought there was a story to be told about the home.  The property sold for $6.8 million and was 16,000 square feet.  The listing agent Victoria Felice used a different video of the property to send to potential long distance buyers.  She credits this video for helping to get the attention of the buyer who turned out to be a local buyer.

The testimonial from the seller gives a powerful boost to the skills and credibility of the real estate agent.  But there is another side of the story not told in this video.  The video was first released about seventeen months ago.  So about a year and a half after the video was released, the video receives national attention in the Inman News story.  So remember, video has a long life.  And long life is especially good when a client is praising you.  Below is link to the video and the Inman News story.

INMAN NEWS, August 15, 2014

https://www.youtube.com/watch?v=MjqasY8WS1E

We’ve all heard it said that it’s easier to keep a happy client than to lose an unhappy one. The unfortunate truth is that unhappy people are more likely to spread their ill feelings about something or someone (whether justified or not). Here’s a few excellent ways to get your happy clients to spread the word about you.

Video testimonials — Video is an extremely valuable marketing tool in today’s high-tech world. Ask your clients if they would be willing to give you a video testimonial. Set a time with them and start recording. Put all your testimonials together in one video and post it to YouTube, your website and blog site, and social media. Victoria Felice did an awesome job of creating a testimonial video below. It certainly has the WOW effect!

To read the full article in Inman News by Pamela Cendejas of Second Self Virtual Assistance that was posted on ActiveRain.

http://www.inman.com/next/how-to-get-your-happy-clients-to-spread-the-word-about-you/?utm_source=20140815&utm_medium=email&utm_campaign=dailyheadlinesam

Have a great day!

Fletcher R. Wilcox

V.P. Business Development, Real Estate Analyst

Grand Canyon Title Agency, Phoenix, Arizona

FWilcox@gcta.com   602-648-1230

Filed Under: FHA and VA mortgages purchases, Greater Phoenix Real Estate, Homes for Sale, Listing inventory, Mortgage Purchases, Phoenix real estate, The Wilcox Report, Uncategorized

Phoenix Real Estate and Housing Market

August 13, 2014 By

Phoenix Business Journal reporter Mike Sunnucks writes on the Phoenix real estate market based on a recent report I released.  He makes a good point that even though sales are down, also down are foreclosures and other distressed sales.  Two areas that are up which I mentioned in my last report are FHA mortgages, most likely because of boomerang buyers, and VA mortgages, most likely because of the 527,400 veterans in Arizona. Aug 13, 2014, 9:53am MST

Phoenix housing market in tortoise mode, slows across the board

http://www.bizjournals.com/phoenix/blog/business/2014/08/phoenix-housing-market-in-tortoise-mode-slows.html The Phoenix housing market is in tortoise mode, having slowed on pretty much every indicator — good and bad. Foreclosures are down, and overall that’s a good indicator. But so are sales volumes, investor buys, rentals and price increases, according to various indicators. Numbers from Fletcher Wilcox, a vice president for Scottsdale-based Grand Canyon Title Agency, show there were 28,945 Phoenix-area home sales in the first half of 2014. That’s down from 34,175 for the first half of 2013 and the lowest volume since 2008. Cash purchases — which often come from investors — are also at their lowest levels since 2008. From January through July of this year, single-family homes listed for rent and leased are also down from the same time period in 2013, according to Wilcox. The drop in homes for rent could correlate directly to a drop in foreclosures. Wilcox estimates there were 1,700 foreclosures and distressed sales in July. That compares with a whopping 17,770 in July 2009. The foreclosure wave has come to shore, but the post-recession recovery in home prices is also subsiding. Research from Fiserv Case Shiller shows no growth in Phoenix home prices between the first quarters of 2013 and 2014. In addition, the research also expects only 0.9 percent annualized growth when comparing 2012 prices with what’s expected by 2017. Phoenix home prices dropped more than 52 percent during the recession. Nationally, home prices are expected to grow 3.9 percent by 2017 and increased 5 percent from Q1 2013 to Q1 2014. Part of that stems from slow job gains and population growth. Wilcox shows Arizona’s monthly job growth averaging 2.1 percent so far this year. That’s better than during the recession, but down from 2.8 percent in 2013, 2.6 percent in 2012 and no where near the pre-recession growth. Slower job growth stunts population gains — long key to real estate and economic growth in Phoenix and Tucson.

Mike Sunnucks writes about politics, law, airlines, sports business and the economy.

Filed Under: Uncategorized

June 2014 Real Estate Sales, Listings, Mortgages and Job Growth Trends in Greater Phoenix

August 1, 2014 By

To view the full report with charts and graphs go to

http://issuu.com/iwantyourescrow/docs/june2014thewilcoxreport__/0

June 2014 Trends

  • June 2014 data shows increase in mortgage purchases. Page 2
  • No precedent on how homes are being purchased. Historic Review 2000 through 2014. Pages 4-6
  • More conventional loan purchases in June 2014 than June 2013, finally. Page 7
  • More purchases with FHA in second quarter 2014 than in 2013. Page 8
  • VA purchases surge. At highest numbers this century. Pages 8-9
  • Sales from 2000 through 2014. Page 13
  • June 2014 new monthly listings drop below last year’s level. Page 14
  • Breakdown by city for new monthly listings, sales, median sales price. Pages 17-26  

While Overall Sales are Down, Sales with a Mortgage Gain Momentum

Noticeable lower in the first half of 2014 compared to 2013 are the number of sales for existing single family properties in Greater Phoenix. Conspicuously lower are the 4,990 less sales purchased with cash. A majority of cash purchases are by investors. Cash purchases are down because purchase prices went up. Prices went up because distressed inventory went down, way down. The number of cash purchases under $100,000 were 937 in the first six of months of 2014, 3,672 for all of 2013, and 38,620 from 2010 through 2012. Cheap properties are gone. The market is becoming more stable. Home sales are more dependent on mortgages. Mortgages are dependent on job and wage growth.

Not as noticeable, as the decrease in sales, is the increase in the number of sales in which a buyer purchased by qualifying for a mortgage.

Comparing Mortgage Purchases in 2014 to 2013

Even though purchases with a mortgage increased every month in 2014, overall sales took a double hit in the first quarter of 2014 compared to 2013, in that cash purchases were not only down, but also mortgage purchases were down. Mortgage purchases this April and June gained a little momentum and were higher than for the same months in 2013.

When we break out mortgage purchases by conventional loan, FHA insured loan and VA guarantee loan, June 2014 was the first month this year that there were more conventional loan purchases, 98 more, compared to the same month in 2013. FHA purchases were 175 higherthis June than last June. This is most likely due to an increase in purchases by boomerang buyers. Boomerang buyers are those who went through a foreclosure or short sale. The reason many are using FHA financing to purchase is that after going through a foreclosure or short sale, FHA generally has a shorter wait period to obtain financing than does Fannie Mae or Freddie Mac. The FHA three year wait period after a foreclosure is shorter than the Fannie Mae and Freddie Mac seven year wait period. The FHA three year wait period after a short sale is shorter than the Freddie Mac four year wait period. Fannie Mae’s wait period after a short sale goes from a minimum two year period to a four year period on August 16, 2014. Sales with FHA loans will continue to rise as more boomerang buyers enter the home buying market and qualify with the shorter FHA wait period. I spoke with a loan officer who closed a transaction in which the buyer put a $100,000 down payment on a purchase with an FHA loan. This would have been unheard of before the great real estate recession. The buyer went with FHA because they could get a loan today, and not have to wait to qualify under the longer Fannie Mae and Freddie Mac guidelines. For more information on the increasing number ofboomerang buyers that may be eligible to buy with FHA in 2014 in Greater Phoenix go pages 11 and 12 in the following TheWilcoxReport.com   https://gcta.com/wp-content/uploads/2014/02/GreatPromiseforGreaterPhoenix-.pdf

The maximum FHA loan amount allowed in Maricopa County (Greater Phoenix) is $271,050. The required FHA down payment is three and one-half percent. So, if a buyer purchases with the maximum loan amount of $271,050 and puts down the required down payment of three and one-half percent or $9,830 in this case, the purchase price will be $280,880. Of course a buyer could purchase a property with FHA financing for more than $280,880 if they put down more than the minimum down payment of three and one-half percent.

Surging are sales with VA loans. In June 2014 there were 425 purchases with VA loans in Greater Phoenix. In reviewing ARMLS data, this is the highest number of VA purchases in a month this century, and the second month in a row with over 400 VA purchases. VA purchases of existing single family properties averaged 4.0% of sales from 2009 through 2012, then 5.7% in 2013, and 7.2% for the first half of 2014. A VA loan does not require a down payment for purchases up to $417,000. Some lenders will allow a VA loan on a purchase price up to $1,000,000. ARMLS data shows in June 2014 eight sales over $500,000 in which there was a VA mortgage. According to the United States of Department of Veteran Affairs, the veteran population in Arizona is 527,400 as of September 30, 2013 http://www.va.gov/vetdata/Veteran_Population.asp

The likely outcome for mortgage purchases in the second half of 2014 should be more FHA and VA loans than the second half of 2013. Purchases with conventional loans in 2014 will struggle to meet 2013 levels.

 No Recent Precedent on How Single Family Properties are being Purchased: A Review of 2000 through 2014

Reviewing the first half of 2014 as to how existing single family properties were purchased we find 26% by cash, 42% by conventional loan, 23% by FHA loan, 7% by VA loan and other at 1%. When going back fourteen years to find similar percentages there is no precedent. 2014 Cash purchases of 26% are lower than when they were in 2011, 2012 and 2013, but much higher than the years 2000 through 2008. Conventional loan purchases of 42% are the highest since 2008, but much lower than when they were 77% in 2007. FHA purchases of 23% are higher than in 2012 and 2013, lower than 2009, 2010, 2011, and higher than the years 2000 through 2008. VA purchases of 7% are the highest in fifteen years. To see purchases trends for the fifteen years go to pages 5 and 6.

New Monthly Listings in June 2014 Drop Below June 2013 Level

The number of new listings in June 2014 were 393 less than June 2013. This is the first time this year there were less new listings in a month compared to the same month of last year. See page 14. Overall, there are 63% more listings on the market today than last year at this time. Listings have increased in every price range except below $100,000 and over $10,000,000. See page 15. For a breakdown of new monthly listings for twenty cities in Greater Phoenix go to pages 17-26.

Filed Under: Arizona Real Estate Market, FHA and VA mortgages purchases, Greater Phoenix Real Estate, Homes for Sale, Listing inventory, Mortgage Purchases, Phoenix real estate, The Wilcox Report, Uncategorized

Putting into Context the Greater Phoenix Housing Market: Looking at the Numbers

June 4, 2014 By

To read full report go to     http://gcta.com/v2/wp-content/uploads/2014/06/April2014-HousingReport-.pdf

The WilcoxReport.Com Insight on Single Family Housing, Lending and Job Growth Trends 

By

Fletcher R. Wilcox

V.P. Business Development, Real Estate Analyst at Grand Canyon Title Agency, Inc.

FWilcox@gcta.com  602-648-1230

   April 2014 Report on Existing Single Family Home Sales for Greater Phoenix

  • Cooled Down: Sales under $200,000, Except for FHA Purchases
  • Cooled Down: Cash Sales
  • Cooled Down: Distressed Sales
  • Warming Up: Mortgage Purchases with FHA Insured Loans and VA Guaranteed Loans
  • Warming Up: First Time Homebuyers and Boomerang Buyers
  • Hot: Luxury Sales
  • Cooling Down: Number of New Monthly Listings

Conclusion

The single family housing market in Greater Phoenix has transitioned from a dominant cash purchase market fueled by inexpensive lender owned sales and short sales into a housing market more dependent on purchases with a mortgage.

When it comes to picking a mortgage, if a potential buyer has a choice between choosing either a conventional loan or an FHA loan, most will go conventional over FHA for the following reasons: The buyer has more money. They have at least the minimum required down payment of five percent which is higher than the FHA minimum required down payment of three and one-half percent. A higher down payment means a lower loan and lower mortgage payment for the borrower; Mortgage insurance is another reason. A borrower has to pay monthly mortgage insurance on a conventional loan if their down payment is less than twenty percent. With an FHA loan, a borrower not only pays monthly mortgage insurance, but there is an additional mortgage insurance premium added to the principle balance of the loan. If during the life of a conventional loan the borrower’s equity reaches eighty percent, the monthly mortgage insurance may be removed by the lender. This is not so with an FHA loan. FHA monthly mortgage insurance stays for the life of the loan.

If a potential buyer cannot qualify for a conventional loan, they might qualify for an FHA loan for the following reasons: As mentioned above, FHA has a lower down payment requirement; A borrower may qualify for FHA with a lower credit score than with conventional; Finally, someone who went through a foreclosure has to only wait three years to buy again with FHA, while most conventional loans require a seven year wait period.

The research in this report showed an increase in FHA purchases in April 2014 over April 2013. I believe this data suggests the emergence of an increasing first time homebuyer and boomerang buyer market who are able to qualify with FHA, but not with a conventional loan. I also believe that purchases with FHA loans will likely increase because of population growth and the high number of people who went through a foreclosure and want to own again.

Purchases with VA loans continue to be an important segment of the mortgage market. In 2012, VA loans were 4.4% of the existing single family purchase market. In 2013 VA loans were 5.7% of the purchase market, and year to date in 2014, 7.2% of all purchases. If a veteran went through a short sale or foreclosure a VA loan only requires a two year wait period.

Overall, the Greater Phoenix housing market will continue to improve. The speed at which the mortgage purchase market will grow and fuel the housing market depends much on job growth. Greater Phoenix has a mediocre 2.2% job growth number. If job growth once again reaches and sustains a growth rate of 4% to 5% the housing market would flourish.

Filed Under: Arizona Real Estate Market, Greater Phoenix Real Estate, Homes for Sale, Mortgage Purchases, The Wilcox Report, Uncategorized

My interview with National Fox News Network Host Gerri Willis on Phoenix Housing

May 16, 2014 By

http://video.foxbusiness.com/v/3569427950001/phoenix-housing-market-cooling-off/?playlist_id=2677472857001#sp=show-clips

On May 15, I was interviewed on the Willis Report.  The topic was the Phoenix Housing Market.  The title of the interview was Is the Phoenix housing market cooling off?  The answer is the Phoenix housing market has transformed from a dominant cash purchase market to a dominant mortgage purchase market, and transformed from a market full of foreclosures and short sales to a more traditional sales market.

Yes, the reduction in the number of cash purchases has dramatically reduced the number of overall sales.  But the reasons for the reduction in cash purchases is not a bad thing.  Two reasons why is that prices reached a point where it did not make sense for some investors to invest, and the number of cheap distressed properties coming on to the market is now very low.  In fact, the number of single family foreclosure starts is at pre-real estate recession levels.

The effect of less cash purchases and more purchases with mortgages means sale prices will not likely increase at the level they did last year, but may flatten and even decrease a little in certain areas.  The number of days to close a transaction will go up, slowing sales, since inventory has increased and many buyers are taking their time to find a home.

I will be coming out soon with a report on trends in how single family properties were purchased in April 2013.  I think you will find it interesting.  Have a great weekend!

Filed Under: Uncategorized
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