Bob's Blog

Phoenix Real Estate Blog: Is do-it-yourself buying really made easier by the Internet?

Bob Stahl (MyPhoenixMLS) — Tue, 22 Jul 2008 13:36:39 -0500

An article yesterday in the Boston Globe suggested that the wealth of information available on the Internet has made using a real estate agent when buying a home less necessary.

Actually, I should be fair. This is what the article said, exactly:

“Many buyers still prefer to work with a real estate agent, of course - they might not have the time or inclination to do their own research. Or they decide an agent with years of experience can conduct research more effectively. But the Internet does give do-it-yourself buyers an opportunity. And that is a fundamental change.”

Okay.

But with that opportunity comes a slew of new challenges. So let’s explore, more objectively, the value that a real estate agent brings to the table and exactly what the “opportunity” that the Internet opens up really is.

Window of opportunity

I don’t discount the power of the Internet. I wrote a blog last year called “If you’re not using the ‘Net to buy or sell your home, you could be losing out.” Here’s a relevant excerpt:

“A savvy real estate agent will know how to use the web to help making your home buying or selling process easier – and more successful. At MyPhoenixMLS.com, for example, we offer free access to our Time Saving HomeFinder program (http://www.myphoenixmls.com/hot-new-listings.asp), which helps homebuyers find the right home for them in minutes a day. Forget scouring newspaper classifieds and spending the entire weekend driving around town to find the right house; now you can have the best listings sent right to your e-mail inbox.”

But with all of the opportunities the Internet opens up, you run the risk of being overwhelmed by too much information. It’s like trying to sort through for-sale listings in the newspaper – times a million.

The power of a Realtor

While the Internet offers amazing opportunities for home buyers and sellers, the real estate agent still plays an important role. Consider this statistic: Nearly 67% of home sellers who sold their homes on their own say they would never go it alone again.

Granted, that’s home sellers. And buying a home may be a less complicated/time-intensive endeavor than selling one. But still, with all of the information that’s available on the Internet, how do you distill it all? That’s where a service like Time Saving HomeFinder comes in. How do you know what’s good information and what’s not? That’s where the expertise of a real estate agent comes in.

And best of all? As a buyer, you don’t have to pay a thing for your agent’s time and expertise. (Buyer’s agents’ commission comes out of the sale of the home.)

Phoenix Real Estate Blog: What Just Happened?

Bob Stahl (MyPhoenixMLS) — Tue, 22 Jul 2008 13:35:34 -0500

A recent segment on NPR’s Fresh Air highlighted really well the sequence of events that got us where we are today. Host Terry Gross interviewed Paul Muolo, executive editor of National Mortgage News and co-author of Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis.

The segment offers a pretty accurate, yet easy-to-understand view of how we got here. First, it’s important to understand that a single underlying premise – held by mortgage brokers, homebuyers, builders, Wall Street, and investors – is the root cause of all this trouble: the belief that housing prices would keep rising – what Muolo called an “investment in the belief that there was no gravity to housing prices.”

Oops.

But let’s step back a minute to understand the process of originating and packaging loans into these bundles – mortgage-backed securities – which have been called the downfall of the mortgage market:

A mortgage broker originates the loan (basically, sells the loan to the homebuyer) – this is the guy who’s on the front lines dealing with borrowers. The broker is originating the loan on behalf of the wholesaler (the institution that’s actually lending the money).
The wholesaler – Countrywide, AmeriQuest, for example – pays the broker a hefty commission (which is higher the higher the interest rate on the loan) and then sells the loan to a Wall Street investment firm.
The Wall Street investment firm (Merrill Lynch, Bear Sterns, Lehman Brothers, for example) pays the wholesaler a commission for the loan, then takes that loan – along with thousands of others – and bundles them into a security. The Wall Street firm then sells that security to an investor and makes a commission on the bond sale.

In that scheme, Muolo said, “it’s all about the yield.” The higher the interest rate on the loan, the higher yield that the security can pay. The safest securities are Treasury bonds, which at the height of the boom were paying 4-5% yield. The mortgage-backed securities paid 7% yield, in exchange for the higher risk.

“That all sounds great unless people can’t pay their loans,” Gross said.

And that’s what happened in the end.

As it turned out, default rates on those subprime loans -- which had been packaged into securities and labeled as relatively low risk to investors – pushed 30% in many cases (market-wide, default rates on subprime loans are at about 21% right now).

Muolo blames Wall Street for creating the mess. He says that Wall Street firms pushed underwriters to approve loans even if they were too risky, under the rationalization that home prices would keep rising.

It’s true that the market for subprime mortgage-backed securities – which Wall Street created – allowed subprime loans to flourish. Certainly I don’t want to let Wall Street off the hook (of course, with Bear Sterns in the pot and Lehman Brothers on the brink, I don’t think you could say they’re off the hook). But everybody played a role.

And the greatest culprit of all? The belief that housing prices would keep rising 20% a year and never stop.

What do you think?

Phoenix Real Estate Blog: More Woes in the Mortgage Market

Bob Stahl (MyPhoenixMLS) — Wed, 16 Jul 2008 19:13:35 -0500

Last Friday the Office of Thrift Supervision (OTS) – which regulates some U.S. banks – stepped in and closed IndyMac Bank, putting the FDIC in charge of operations. Regulators estimate the move will cost taxpayers $4-8 billion.

IndyMac is the second-largest U.S. bank to collapse (it had $32.01 billion in assets as of March 31). The largest was Continental Illinois National Bank, which had nearly $40 billion in assets when it failed in 1984.

According to an ABC News article, IndyMac customers began a run on their deposits following a June 26 letter from Senator Charles Schumer, D-NY, urging banking regulators to take steps to prevent IndyMac’s collapse.

Between June 26 and July 11, IndyMac depositors withdrew more than $1.3 billion, prompting concerns from the OTS about the bank’s ability to satisfy its deposit, most of which are insured by the FDIC.

The run on IndyMac, prompted by suggestions from Senator Schumer that the bank was in trouble, is akin to what happened last week after former Federal Reserve Bank President Bill Poole suggested that the government shouldn’t bail out Fannie Mae and Freddie Mac.

In a Bloomberg interview, Poole said “Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer.” Shares of Fannie and Freddie, both public companies, dropped to 17-year lows after Poole’s concern swept through the markets.

The companies were already on the rocks after Fannie Mae paid a record yield relative to Treasuries on the sale of $3 billion in two-year notes last Wednesday. The record-high yield reflects an increasing concern among investors that the company might have trouble repaying its debts.

In response, the Bush Administration this weekend announced their plans – which would have to pass Congress – to save the mortgage giants. When questioned at a Senate hearing, Treasury Secretary Paulson finally acknowledged who would end up footing the bill: the taxpayers.

From the New York Times account of the exchange between Paulson and Senator Bunning, R-KY:

“You want an unlimited amount and some of us at this table don’t like an unlimited amount of federal dollars,” Mr. Bunning said in a particularly testy exchange. “Do you really think we can believe exactly what you are saying, Secretary Paulson?”

“I believe everything I say,” Mr. Paulson replied. “I’ve been around markets for a long time.”

“So have I,” Mr. Bunning angrily responded. “Where will the money come from if, in fact, we have to use the backstop?”

After Mr. Paulson replied that he did not think any money would be needed, Mr. Bunning said, “That doesn’t answer my question. Where is the money going to come from?”

“From the government,” Mr. Paulson said.

“And who is the government?” Mr. Bunning asked.

“The taxpayer,” Mr. Paulson said.

What do you think?

Phoenix Real Estate Blog: You Keep the House, I’ll Take the Mortgage

Bob Stahl (MyPhoenixMLS) — Wed, 16 Jul 2008 19:12:31 -0500

I feel a bit sheepish. I pride myself on knowing a lot about real estate – from the economics of the current market to how to stage a home. It is, after all, my job. But I always admit when I learn something new. And today, I did.

Reading an article on Bloomberg.com, called “Discounted Mortgage Notes Can Stop Foreclosures” I learned that there is a market for mortgage notes – not buying homes in pre-foreclosure or foreclosure – but buying the actual mortgage when a homeowner can no longer make the payments.

It sounds kind of strange, actually. As in, why would anyone want to do that (if they’re not taking possession of the home to live in, hold as an investment, rent out, or resell)?

The company that the journalist profiles is Foreclosure Trackers, Inc. According to the article: “Buying defaulted mortgages at a discount, Lee [the company’s co-founder] encourages and enables owners to stay in their properties and avoid foreclosure. His company buys the loans, not the homes, then employs a ‘work- out, not kick-out'’ approach in working with homeowners.”

The cynic in me says, “What’s the catch? Surely they’re not doing this just to help people in trouble with their mortgages?”

It turns out that no, they’re not. But in the process of making money (which, hey, isn’t necessarily a bad thing) it seems like they’re also helping out a lot of homeowners in trouble. Of the mortgages that the company buys (which are in default at the time), less than 15% fall into foreclosure, Lee said (compared to about 68% of homes in default that typically go into foreclosure).

Here’s how it works, according to the article:

Lee buys first mortgages on which borrowers have missed payments. He uses capital from private funds to buy the loans directly from the bank, lender, or loan servicer – at a deep, deep discount. In an example cited in the article, Lee paid $255,000 for a $750,000 mortgage on a house worth $510,000 in the current market.

He then contacts the homeowner and offers to reduce the mortgage principal to $408,000 – 80% of the home’s current market value – if the homeowner can refinance with another lender within 60 days. If the homeowner can refinance, the new lender pays Lee $408,000 for the mortgage, netting Lee a profit of $153,000 (he paid $255,000 for it).

If the homebuyer can’t refinance – because of poor credit, high debt, or insufficient income, for example, Lee might offer the homeowner a loan modification option, perhaps reducing the homeowner’s principal and interest payments in exchange for a longer term.

Sounds like everyone wins. I wonder why you don’t hear of people purchasing distressed mortgages more often?

Phoenix Real Estate Blog: 10 Fun Things to do this Weekend in the Phoenix Area

Bob Stahl (MyPhoenixMLS) — Fri, 11 Jul 2008 18:23:11 -0500

It may be hot, hot, hot outside, but there are some cool things to do this weekend in the Valley! Check them out:

(And let me know if I’ve missed any of your favs!)

An Icy Evening at the Museum

What: Cool off from the heat by visiting our Ice Age animals, cool your heels in our territorial jail and hear the cool roars of our dinosaurs. Special admission is $3 for under 18 years and $5 for everyone else, except members are free. After your Night at the Museum, visit Downtown Mesa for Friday Night Out--food, fun and festivities.

Where: Arizona Museum of Natural History, 53 N. Macdonald, Mesa

When: Friday, July 11, 5:30 PM - 8:00 PM

Mesa Downtown Splashdown

What: Water-themed activities for the whole family, including a waterslide and water-balloon toss. Also dunk a council member and meet the mayor. Features a group of children who swam from Alcatraz Island to San Francisco last year.

Where: Center and Main streets, Downtown Mesa

When: Friday, July 11, 6:00 PM - 10:00 PM

Theater Works Summer Theater in Rep

What: Intent on upping the artistic ante, Theater Works, the veteran west-side community troupe, fills in the dog days of summer with a pair of shows in repertory - the same cast and scenery doing double duty (kind of like a reversible suit). The musical What About Luv? is a dark comedy set on the Brooklyn Bridge and involving attempts at both suicide and murder; Park Your Car in Harvard Yard is a laugh-and-cry fest about a dying high school teacher and his former student, now housekeeper (a precursor to Tuesdays With Morrie, perhaps).

Where: Peoria Center for the Performing Arts, 8355 W. Peoria Avenue, Peoria.

When: Every Thurs-Sunday through July 27 at 7:30PM

Novaballet Concert One

What: Concert One is a repertory ballet program with four individual segments, one of which will be a world-premiere presentation by award-winning choreographer and Novaballet dance artist Robert Dekkers. Each segment of Concert One was selected by the founding dance artists of the company, the end result being a challenging program which is expansive in scope and a celebration of classical and contemporary movement. Energetic and global, it promises to infuse the senses with dynamic layers of color and sound.

Where: Tempe Center for the Arts Theater, 700 W. Rio Salado Parkway

When: Friday and Saturday at 8PM; Sunday at 2PM

Winter in July

What: Enriching the lives of the animals here at the Zoo is not only fun, but very important for their well-being! Come play the animal way, during Winter in July! With tons of snow (literally), fun puzzle feeders, foraging activities, and other activities, see for yourself how the animals get to play everyday. The kids will get to play in tons of snow too, just like our animals here at the Zoo. They will also get to try out some of behavioral enrichment toys just like the animals play with! After “coolin’ off” please attend our very special Winter in July BBQ in our air conditioned Stone House Pavilion, catered by El Paso BBQ.

Where: Phoenix Zoo

When: Saturday morning, 7-11AM

West Valley Art Museum, An Evening of Fine Art and Wine

What: Art auction and wine tasting to benefit the museum. Participants can bid on more than 50 works of museum-quality art from more than two dozen artists, with all the proceeds going to the museum. In addition, eleven local and regional artists are scheduled to attend and talk about their works, including local favorites Michael Cunningham and Red Rohall. Also, Jim Covarrubius will create a painting live during the event, to be auctioned off at the end.

Where: West Valley Art Museum, 17420 N. Avenue of the Arts, Surprise

When: Saturday night, 7-10PM

Phoenix Real Estate Blog Breaking News: Governor Napolitano Signs Loan Originators Licensing Bill

Bob Stahl (MyPhoenixMLS) — Thu, 10 Jul 2008 13:12:54 -0500

Arizona’s Governor Napolitano signed a proposal requiring that loan originators – mortgage loan officers – be licensed, just like real estate agents, appraisers, escrow agents. . . the list goes on.

I’ve written a couple of posts reporting on the progress of the bill:

Proposed bill would require Arizona loan officers to be licensed on May 7; and
Arizona Senate Bill 1028 to License Mortgage Loan Officers on May 26.

According to Catherine Reagor’s Arizona Republic blog, one of the only reports I could find on the bill’s passage (the other was in The Capitol Times), there are 10,000 loan originators in Arizona who will be required to have licenses by the time the law goes into effect in January 2010. The bill requires loan officers to pass a test, pay a fee, and notify the Arizona Department of Financial Institutions where they’re working.

Many in the state legislature, the Governor, and many from the state’s mortgage and real estate industries supported the bill; they hope it will stem bad lending and slow foreclosures. According the Reagor, the Department of Financial Institutions received a record number of complaints about bad loans last year. And while the Department has recourse against mortgage brokers, it doesn’t have any way to punish badly behaving loan officers – until now.

Phoenix Real Estate Blog: MyPhoenixMLS makes top blogs list in Carnival of Real Estate

Bob Stahl (MyPhoenixMLS) — Thu, 10 Jul 2008 13:11:51 -0500

This week’s Carnival of Real Estate was creatively hosted by TransparantRE.com and we made the top blogs list! Check out TransparentRE’s slide show of the top blogs here.

Thanks to Transparent Real Estate for hosting a great Carnival!

Phoenix Real Estate Blog: House Swap Update

Bob Stahl (MyPhoenixMLS) — Thu, 10 Jul 2008 13:10:53 -0500

I’ve written a couple of blog posts in the past year about an interesting, if quirky, trend: house swapping.

(You give me yours and I’ll give you mine — trading houses and House swap (it’s not a new reality show)).

It works less like “Wife Swap” (you don’t give the house base) and more like “you give me your house and I’ll give you mine.”

The trend recently caught the attention of Inman News, which reports on real estate. Read their article, “Sell me yours, I’ll sell you mine,” here.

Phoenix Real Estate Blog: The Ripples Continue

Bob Stahl (MyPhoenixMLS) — Thu, 03 Jul 2008 11:25:47 -0500

I like to mention it when Arizona gets some “Best of. . .” award. And there have been lots (see my blog post, From Best Cities for Jobs to North American City of the Future — Greater Phoenix Is It). Yet the other day we were ranked #1 on a not-so-great list: Business Week’s list of the ten states with the biggest tax shortfalls.

And that prize goes to. . .

1. Arizona: 13.6% drop in tax revenue; 5.5% drop in home values

2. Florida: 10.3% drop in tax revenue; 8.15% drop in home values

3. Rhode Island: 6.2% drop in tax revenue; 3.04% drop in home values

4. Nevada: 4.9% drop in tax revenue; 10.3% drop in home values

5. Georgia: 3.8% drop in tax revenue; 2.23% increase in home values

6. New Jersey: 0.3% drop in tax revenue; 1.15% drop in home values

7. California: 0.1% increase in tax revenue; 10.58% drop in home values

8. Washington: 0.2% increase in tax revenue; 2.92% increase in home values

9. Delaware: 0.3% increase in tax revenue; 1.02% increase in home values

10. Tennessee: 0.6% increase in tax revenue; 3.9% increase in home values

Not coincidentally, many of the states on the list have been hit the hardest by the real estate downturn. As property values drop, so do property tax revenues.

“State tax revenue pays for everything from health care to education, but falling home sales, job losses, and weak corporate earnings have drained coffers. A new study reveals the states that will see the biggest shortfall in tax revenue and what that could mean for the residents of the hardest hit.”

Arizona topped the list with the largest tax shortfall. According to the Business Week data, which comes from the Nelson A. Rockefeller Institute of Government, Arizona’s tax revenue has declined 13.6% in the last year, as property values have fallen 5.5% across the state.

“On Thursday the Arizona legislature approved a budget plan for the coming year that eliminated a $2 billion shortfall by cutting spending for college construction projects and expanding revenue by beefing up photo enforcement and the state lottery.”

The article hinted at what a tax shortfall means for Arizona: cutting spending for the state’s universities, for example.

“Arizona was hit hard by the subprime crisis, and its economy has slowed significantly since mid-2006. Lawmakers are trying to make up a $1.9 billion budget shortfall for fiscal 2009 and are considering borrowing $501 million for school construction, pulling money from the ‘rainy day’ fund, and making cuts to the state universities, the Economic Security Dept., and the Arizona Health Care Cost Containment System of the Dept. of Health Services.”

To note, not all of the states on the list actually had tax revenue declines in the last year. Yet they still have a spot in the top 10 for existing or impending budget shortfalls. While tax revenues didn’t fall in California, for example, the state is facing a $17 billion budget deficit.

Phoenix Real Estate Blog: Market Numbers Reality Check

Bob Stahl (MyPhoenixMLS) — Tue, 01 Jul 2008 16:53:30 -0500

I never advocate sugar-coating bad news. The fact is that the real estate market in the Greater Phoenix area has fallen dramatically from highs two years ago. I’ve written about that plenty (see my most recent Market Update blog post, for example).

But I also think that fear-mongering is equally destructive. A recent ABC News piece was titled “Valley homes face record double-digit price drop.” It certainly sounds scary.

According to the piece: “The Arizona State University-Repeat Sales Index reports that average prices dropped 13-percent from March 2007 to March 2008.

Karl Guntermann, the Fred E. Taylor Professor of Real Estate at the W. P. Carey School of Business, compared the current situation to the last major housing downturn of the 1990s and found the current price drop to be even more severe.

The worst drop in the 1990s was in February 1990, which recorded a decline of five-percent from February 1989.”

But let’s put that “record” price drop in context. To do that, I went to the source: ASU’s Repeat Sales Index, which has tracked sales since 1989. I used their data to create a chart that paints a very good picture of what has happened in the Phoenix real estate market in the last few years. Here it is:

So, yes, the recent market downturn does represent a “record” drop when compared to the early 1990s. But look at how rapidly and steeply prices went up prior to the downturn. And look at where the market stands – prices are still a lot higher than before the boom.

The fact is that the Phoenix housing market was highly overinflated. A glut of investors hungry for low-priced homes, most on the outskirts of the Phoenix metro area, led builders into a building frenzy. Eager to jump on the bandwagon, and aided by low interest rates and “look-the-other-way” lending practices, more homeowners than ever bought into the market.

The result: a market where demand and supply were artificially inflated. The problem is that demand deflates very quickly – like popping a balloon. Investors walk away, prospective homebuyers stick to renting. Supply, on the other hand, can’t simply fade away. So now we’re dealing with that oversupply of homes.

Once current demand – which is there; people are still buying homes in the Phoenix area – eats up that oversupply of homes, the market will be back on track.

And signs suggest that is beginning to happen. In many markets, the number of homes resold in May, 2008 increased compared to May, 2007. The chart below demonstrates:

So let’s not sugarcoat the situation and pretend that we aren’t in a market correction. But let’s not perpetuate dishonest doom-and-gloom scenarios, either.

10 ways to save at the pump

Bob Stahl (MyPhoenixMLS) — Tue, 01 Jul 2008 16:51:25 -0500

Gas prices have risen $1.07 since last summer – representing an increase of more than 30%. Economists argue about what’s really behind skyrocketing gas prices, but most agree that factors include oil speculation, rising worldwide demand for oil, and the weak value of the U.S. dollar.

None of those are factors we as individuals can do anything about. But there are things you can do to save at the pump – in spite of high gas prices.

1. Keep your car in tip-top shape

A poorly maintained car gets fewer miles per gallon of gas than the same car in tip-top shape. So don’t skip oil changes. And keep your tires inflated to the manufacturer’s specifications (that’s a safety issue, too).

2. Avoid extra loads

Hauling around a bunch of junk in the trunk of your car will add to your bill at the pump. For every 250 pounds, your car gets about 1 mile less per gallon. So take out what you don’t need. And when the football team wants a ride – charge ‘em.

3. Buy the lowest octane gas your car can take

My dad thinks that the car must have 91-octane gas (the highest grade), which typically runs about $0.20 more than 87-octane gas (the lowest grade). Here’s good news, mom: experts say that if you use the gas that your car’s manufacturer recommends (probably 87- or 89-octane) you’ll be taking good care of your car’s engine, and saving money at the pump, too.

4. Stop peeling out

Rapid acceleration wastes gas. You may look cool for the girls at the drive in, but you’ll pay more at the gas pump.

5. Think about your route and whether you really need to run out to the store for ice cream

My wife used to ask me to run out to the store for every little thing we need – chocolate sauce for the sundaes, popcorn for the movie. But even short trips to the store and back home can add up at the gas station. So plan out your trips to maximize efficiency (think killing two birds with one stone) and say “no” to errands when you’ve already been to the store once that day.

6. Gas = go; brake = stop; don’t combine them

Growing up, my best friend’s mom drove around with her foot pressing lightly on the brake, even when she was pressing the gas pedal to accelerate. Even if we were only driving the four blocks to my house, I’d be green in the face by the time we got there. Turns out, driving with your foot on the brake, however lightly, is bad for fuel economy too.

7. Use the A/C sparingly

Air conditioning can lower your car’s fuel economy 10 to 20 percent. That doesn’t mean you should drive on the freeway with the windows down – that won’t help, much. But in stop-and-go traffic, if you can bear to shut off the A/C and roll down a window instead, you’ll save a bundle. Of course, that’s not practical when it’s hot enough outside to fry an egg on the sidewalk.

8. Trade in the SUV

If you can afford to sell your gas-guzzler in exchange for a more fuel-efficient car, you’ll save big in the long run.

9. Comparison shop, but don’t forget tip #5

There are a number of websites you can visit to see gas prices in your area, including GasBuddy.com and

GasPriceWatch.com. But as you comparison shop for gas, don’t forget tip#5. In other words, don’t drive 5 extra miles to save a few cents at the pump.

10. Slow down

During the gas crises of the 1970s, speed limits on highways were lowered so that cars wouldn’t use so much gas. Even if the sign says 65, driving in the right lane doing 55 will save you at the pump – those 10 mph could save you 2 miles per gallon in added fuel efficiency.

Phoenix Real Estate Blog: The Pain at the Pump is Spreading

Bob Stahl (MyPhoenixMLS) — Tue, 01 Jul 2008 16:50:15 -0500

I subscribe to Google news. Call me crazy, but I like to stay informed. I have Google e-mail me all of the stories about real estate each day.

In the last several days, I’ve seen three that echo a theme I think we’re going to start hearing a lot more about: how pain at the gas pump is reverberating throughout the economy. Check them out:

CNN: Gas drives real estate buys

ABC News: A New Kind of Housing Cycle

LA Times: Gas prices latest worry for real estate market

LA can serve as an important lesson for Phoenix, if we let it. Southern California has long been known for far-flung suburbs and horrendous commutes. With suburbs stretching 70 miles or more from downtown Phoenix, the Valley is headed in the same direction.

But according to the LA Times article, things in SoCal might be changing. “Outlying areas have long appealed to people who were willing to accept a burdensome commute for the chance to own a better house. But buyers are increasingly factoring gasoline costs into their purchase decisions,” the article reads.

In Greater Phoenix, people traded short commutes for bigger, less expensive houses in the suburbs. The cost was the extra time spent in the car, but a lot of families found it a worthwhile tradeoff. Not so much as gas rise about $4 per gallon.

The CNN article told of a man who bought a house near an Amtrak station because commuting by car to his job in the San Francisco area would be too expensive.

“That represents a fundamental shift in the way more Americans are approaching home buying in this era of ballooning gas prices,” the article reads. “Home buyers are placing more importance on cutting their gas bills and commute times than they have since the oil shocks of the 1970s.”

In Europe, sky-high gas taxes make the bill at the pump much more expensive than in the US. In the UK, for example, the gas tax alone is $5.50. Yet people in the UK aren’t made ridiculously poor by those high gas prices.

The fundamental difference is that public transportation in the UK is very good. And people live much closer together – think New York rather than LA. In the US, in contrast, cities were built for an era of cheap gas prices (with far-flung suburbs, dispersed economic centers, and poor public transit systems). And Americans became very cozy with gas-guzzling SUVs, much different than Europeans’ Smart cars and scooters.

But high gas prices in the US are pushing Americans to want to live more like Europeans. From the CNN article: “Homes in cities and neighborhoods that require long commutes and don't provide enough public transportation alternatives are falling in value more quickly than more central locations, according to a May study by CEOs for Cities, a network of U.S. urban leaders.”

ABC News reports a startling trend in Colorado: people are actually riding their bikes instead of driving. In that article, the reporter tells of a real estate agent in Boulder who conducts home tours by bicycle.

On many fronts, then, if $4-per-gallon prices are here to stay, look for a dramatic shift in Americans’ ways of life.

Greater Phoenix Real Estate June Market Update I: East Valley Home Sales Up for the Fourth Straight Month

Bob Stahl (MyPhoenixMLS) — Wed, 25 Jun 2008 14:10:55 -0500

Welcome to the fourth monthly edition of the MyPhoenixMLS area-specific market conditions update. Today, I’ll post market conditions reports for the East Valley, including Chandler, Gilbert, Tempe, and Mesa; in my next post I’ll describe market conditions in the Scottsdale and Phoenix markets.

Chandler

In Chandler the number of homes resold increased in May for the fourth straight month – up this time by 7.35%. Prices were up, too – 5.58% over April to $250,000.

In contrast, sales of townhomes and condos in Chandler were down. The number of townhouses/condos sold decreased 25% and the median price decreased 8% to $142,650. Still, that’s only slightly below March’s median sales price of $145,000.

Gilbert

Sales volume on single-family homes (resales) in May was up for the fourth straight month in Gilbert – up this time 4.17% to 375 homes. Prices stayed steady at $240,000.

Prices in Gilbert’s townhouse and condo market increased just over 8% in May even though sales were flat over April.

Tempe

The number of homes resold in Tempe increased dramatically, by 45% to 145 in May. Prices were up, too – though not as dramatically – rising just under 4% to $258,000.

The number of townhouses and condos resold was up significantly, too – rising 25% in May over April. Prices, however, were down 6.78% to $160,775.

Mesa

In Mesa, the median sales price of single-family homes rose just slightly – less than 1% -- in May, to $197,000.The number of homes sold in the East Valley’s largest city dropped by 2.54%.

The median price of townhouses and condos fell slightly, under 1%, to $139,000. The number of townhouses and condos resold stayed steady at 100.

If you’re in the market for a home or townhouse/condo in the East Valley, now is the time to buy! All signs point to the fact that we’re hitting the bottom of the market downturn. Lock in a great deal on your dream home before prices start climbing again. For the best deal with the least hassle, sign up for your FREE Time Saving Home Finder Program at www.MyPhoenixMLS.com.

If you’re looking to sell your East Valley area home, an experienced realtor with a strong track record selling in slower markets can help you get the best possible deal. It is possible to sell your house now. I’ve been selling homes in Phoenix through up markets and down markets, and I sold more homes in the first quarter of this year than ever before. It can be done. Call me today at 602-318-1114 or visit www.MyPhoenixMLS.com.

Greater Phoenix Real Estate June Market Update II: Mixed Reports in the Housing Markets

Bob Stahl (MyPhoenixMLS) — Wed, 25 Jun 2008 14:03:04 -0500

Let’s see what’s gone on in the Scottsdale and Phoenix area real estate markets this past month:

Scottsdale

The number of homes resold in Scottsdale in May increased dramatically – up 25.76% to 415 homes. The increase in sales volume in Greater Phoenix on whole was just under 3%. The median sales price, though, fell 7.21% in Scottsdale for the second month in a row, down to $470,000 from April’s $506,500.

Price declines, though, are not necessarily bad news. The fact is that prices were overinflated in many areas of Scottsdale during the housing bubble. It’s normal – and healthy – for prices to fall during this correction. Once they reach sustainable market levels, we’ll see home values start to rise again. Strong resale numbers paired with price drops is a good sign that the market is nearing that turning point.

In South Scottsdale, prices decreased slightly after three months of median price increases. In May, prices fell 2.44% over April, to $266,500. In North Scottsdale – including DC Ranch and McDowell Mountain Ranch – the median sales price went up 2.13% to $575,000.

Paradise Valley

The median sales price for single-family homes in Paradise Valley was $2,000,000 in May – up from April’s median price $1,375,000 (though sales prices may only reflect the sale of one or two homes in this pricey area).

When the market rebounds, expect to see prices increase quickly in this upscale enclave. If you’re looking to buy, now is the time. For the best deal with the least hassle, sign up for your FREE Time Saving Home Finder Program at www.MyPhoenixMLS.com.

If you’re looking to sell your Scottsdale/Paradise Valley area home, an experienced realtor with a strong track record can help you get the best possible deal. It is possible to sell your house now. I’ve been selling homes in Phoenix through up markets and down markets, and I sold more homes in the first quarter of this year than ever before. It can be done. Call me today at 602-318-1114 or visit www.MyPhoenixMLS.com.

Phoenix

Phoenix is such a large city that home prices vary dramatically – from $147,900 ($146,455 in April) in the Maryvale area to $280,000 (flat from April) in the Desert Ridge area. Overall, the median home price for single-family homes in the City of Phoenix was $180,000 in May – up just over 1% from April. Sales volumes, though, were down slightly – just over 1% after April’s 33.5% increase.

The median price of townhouses and condos in Phoenix increased 5.33% to $158,000. Sales volume of townhouses and condos was down slightly, to 240 sales from 250. If you’re in the market for a home or townhouse/condo in Phoenix, now is the time to buy! All signs point to the fact that we’re hitting the bottom of the market downturn. Lock in a great deal on your dream home before prices start climbing again. For the best deal with the least hassle, sign up for your FREE Time Saving Home Finder Program at www.MyPhoenixMLS.com.

If you’re looking to sell your Phoenix home, an experienced realtor with a strong track record selling in slower markets can help you get the best possible deal. It is possible to sell your house now. I’ve been selling homes in Phoenix through up markets and down markets, and I sold more homes in the first quarter of this year than ever before. It can be done. Call me today at 602-318-1114 or visit www.MyPhoenixMLS.com.

Greater Phoenix Area June Real Estate Market Update

Bob Stahl (MyPhoenixMLS) — Mon, 23 Jun 2008 14:11:08 -0500

It’s here again: time to produce my monthly Phoenix area real estate news video for Realty Times. Read on for a snapshot of what went on in the Phoenix area in May.

Did you miss my last Realty Times news video? You can check it out here: http://realtytimes.com/REUv/BobStahl

Enjoy!

RT: What specifically happened last month/quarter in this market?

MyPhoenixMLS.com: After dropping 4.5 percent in April compared to March, the median price of single family resales in Greater Phoenix increased nearly 6.5 percent in May to $223,500. The number of homes sold also increased, for the fourth straight month, up almost 3 percent.

An increasingly large percentage of those homes sold are have been foreclosed by lenders. The number of foreclosures sold in May was 1,475 – representing more than a quarter of the 5,740 homes sold.

RT: In your opinion, or the opinion of experts you know, will the market conditions continue or will they change?

MyPhoenixMLS.com: An increasingly weaker economy – fueled by losses in the stock market, job layoffs, and record-high gas and food prices – will increase the stress on the housing market.As homeowners battle rising costs in other areas, their ability to save their homes from foreclosure – especially if their mortgages reset to higher rates – will be constrained.

RT: What are the bright spots in the market?

MyPhoenixMLS.com: Median prices of single-family homes increased in a number of Valley cities, including Chandler where prices were up over 5.5 percent; North Scottsdale, where they rose more than 2 percent; and Phoenix, where prices rose 1.12 percent.

The number of homes sold increased significantly throughout the Valley as well; in Tempe, 45 percent more homes were sold in May than April; in Scottsdale the number was up 26 percent; in Chandler the number increased 7.35 percent; and in Gilbert it rose more than 4 percent.

RT: Is there anything the world needs to know about your area pertaining to Real Estate Market Conditions?

MyPhoenixMLS.com: Foreclosed homes represent attractive purchase options for many first-time homebuyers and investors, and that fact has tempered the negative effects of the foreclosure crisis to some degree.

Phoenix Real Estate Blog: The Foreclosure Bus Tour Idea is Catching On

Bob Stahl (MyPhoenixMLS) — Wed, 18 Jun 2008 15:26:19 -0500

We’ve been doing it here for a while. Since Phoenix is one of the nation’s foreclosure hotspots (primarily due to the speculator-driven over-inflation of home prices and subsequent overbuilding – for more, check out last year’s blog “What’s behind the foreclosure crisis”), we’ve been helping first time and seasoned homebuyers, as well as investors, purchase homes that banks have foreclosed on for a while.

Lately, the demand for these homes (also called real-estate owned, or REO) has been so high, that we just couldn’t handle all of the requests from prospective buyers who wanted to see the opportunities we had for them to buy a great home at a great price. So the “Bank Repo Bus Tour” was born.

Turns out, our idea isn’t so unique after all (either that or it’s simply catching on, in Arizona and other parts of the country). Last weekend, an article in the San Francisco Chronicle told about a Northern California “Foreclosure Bus Tour.”

According to that article, “the Stockton agent who pioneered the foreclosure tour concept reportedly was inspired by Hollywood tours of movie stars' homes. Needless to say, many foreclosure tours are more down-market, with the spirit of a field trip to factory outlet stores.”

One real estate agent in Maryland calls her foreclosure bus tour a “seminar on wheels,” according to an article last week on Gazette.net.

That article pointed out one important goals of a foreclosure bus tour: to educate potential buyers. “The tours, a national trend in areas where foreclosure rates are high, aim to debunk the belief among many potential homebuyers that all foreclosed homes are risky investments that would require a large amount of renovation to make them livable.”

Yet some people call buying a bank-owned home or one that’s in the process of being foreclosed is “vulture-like.” One potential buyer quoted in the San Francisco Chronicle article indeed wondered if he was a vulture.

But selling bank-owned homes and those in the foreclosure process (short sales) as rapidly as possible is actually good for the market. One Bay-area real estate agent quoted in the San Francisco Chronicle article said “we're trying to help get rid of some of this inventory, to get us out of this mess. We’ve got a ton of (foreclosed) homes on the market and are getting more and more in the hopper.” The same is true in Arizona.

If you’re interested in buying a bank-owned home, first read last year’s blog post on how to wisely invest in short sales and foreclosures. If it sounds like it might be for you, hop aboard and take a ride!

Fun Things to Do in Phoenix: Summer is here! The Valley of the Sun is ready to keep you busy.

Bob Stahl (MyPhoenixMLS) — Fri, 13 Jun 2008 14:08:44 -0500

This summer get out there and be entertained with all the activities that the Valley of the Sun has to offer, including festivals, concerts, sporting events, cultural attractions, museums, and much more. Below you’ll find a list of great activities in the Phoenix area, taken in part from About.com.

Fun for the whole family

Birds in the Garden
Join expert birders for a morning bird walk along the Garden trails. Everyone, including first-time birders, is welcome. Wear a hat, sunscreen and comfortable walking shoes. Bring binoculars if available. Desert Botanical Garden, Phoenix at 7 a.m. This activity is included in the regular admission fee. When: Every Monday in June .

Downtown Chandler Art Walk
Visit more than 40 artisans set up along the streets in front of the unique shops and cafes of Historic Downtown Chandler. Free. When: First Wednesday of the month.

Firebird International Raceway Summer Spectacular
Robosaurus makes his only Arizona Appearance. Jet Cars, Funny Cars, fireworks. When: June 21.

Flashlight Tours
Nights in the desert are anything but dull. Nighthawks fly, night-blooming flowers open, toads sing and owls watch as you roam the trails of the Desert Botanical Garden in Phoenix, never knowing what will be around each corner. Wear walking shoes, and bring a flashlight. 7 p.m. Flashlight tours are free with admission, but require reservations. Call 480-941-3510. When: Every Thursday and Saturday in June.

Free Fishing Day
On the second Saturday in June the Arizona Game and Fish Department encourages everyone to get out and fish. It's fun, it's relaxing, and it's a great opportunity for a family outing. When: June 14.

Grand Canyon State Games
Olympic-style competition in judo, weight training, baton twirling, table tennis and more. When: June 19-22.

Movies at the Museum
Phoenix Art Museum. Independent and classic cinema and documentaries relating to art, artists, and works on view in the Museum, usually followed by discussion. Free with paid museum admission. First come, first seated. When: Various dates in June.

Scottsdale ArtWalk
Every Thursday evening the Scottsdale Art District invites you to spend a casual evening walking downtown and enjoying fine art. Free. When: Every Thursday evening.

Starry Safari Friday Nights at the Phoenix Zoo
Select zoo trails will be open as will gift shop and snack bar. Animal encounters, water play activities, carousel rides and more. Bikes and boats available to rent. When: Every Friday night in June.

Summer Band Concert
All concerts are free and start at 8 p.m. Glendale Amphitheater in downtown Glendale. Refreshments will be available for purchase. Bring a lawn chair or blanket. No pets. When: Every Thursday in June.

Summer Concert Series
Every Saturday night from 7 p.m. to 9 pm.at the Arrowhead Towne Center Amphitheater in Glendale. When: Every Saturday in June.

Ladies’ night out

Scottsdale ArtWalk
Every Thursday evening the Scottsdale Art District invites you to spend a casual evening walking downtown and enjoying fine art. Free. When: Every Thursday evening.

Miss Arizona Pageant
During the last week of June you can see some of the brightest and most talented young ladies in the state compete for the Miss Arizona crown. The winner will get to represent Arizona at the Miss America Pageant. When: June 19 – 21.

Summer Concert Series
Every Saturday night from 7 p.m. to 9 pm.at the Arrowhead Towne Center Amphitheater in Glendale. When: Every Saturday in June.

Guy time

Big Boys & Their Toys
Classic cars, collector cars, RV and off-road, boats and sports cars, and lots of other toys. Phoenix Convention Center. When: June 14, 15, 16.

Phoenix Con Games
A four-day gaming convention. Mesa. When: June 12 – 15.

Phoenix Mercury WNBA Basketball
The women of the Phoenix Mercury play professional basketball at the US Airways Center. When: Various dates in June.

Scottsdale ArtWalk
Every Thursday evening the Scottsdale Art District invites you to spend a casual evening walking downtown and enjoying fine art. Free. When: Every Thursday evening.

Firebird International Raceway Summer Spectacular
Robosaurus makes his only Arizona Appearance. Jet Cars, Funny Cars, fireworks. When: June 21.

Summer Concert Series
Every Saturday night from 7 p.m. to 9 pm.at the Arrowhead Towne Center Amphitheater in Glendale. When: Every Saturday in June .

What’s Left in the Bank Account After You Pay Your Mortgage?

Bob Stahl (MyPhoenixMLS) — Thu, 12 Jun 2008 14:21:52 -0500

There was a very interesting blog on Zillow yesterday that talked about how much money the average family has left over every month after paying the mortgage, in different cities around the country. Check out Zillow’s chart: Source: Zillow.com

Source: Zillow.comThe relatively large amount of money left over at the end of the month in cities like Detroit, Atlanta and Dallas is due in large part to relatively low housing prices, which typically translate into relatively low mortgage payments. Chicago ranks surprisingly high – real estate there is relatively expensive – but incomes there are higher than in many other cities, too.

Not surprisingly, New York City and Los Angeles are way down at the bottom of the list. People who live and work in LA have less than $1500 left over at the end of the month after paying the mortgage. And that has to stretch to buy food, childcare, utilities, and gas, which – as we all know – is getting more and more expensive by the day.

New Yorkers are a bit better off than those in LA and even San Diego, but not by much – they have to eke by on less than $2,000 after paying the mortgage.

By now, some of you readers are probably thinking: so rent! The problem is that in cities where mortgage costs are relatively high, rent costs are, too. When my brother was first starting out in LA he rented a very modest one bedroom in a so-so neighborhood that cost him a whopping $1500 a month. In Phoenix you’d pay $500 for comparable digs.

But to get to the juicy part: Phoenicians sit about in the middle of the pack, with a little over $2,500 left over after paying for the mortgage. It’s a good thing, because even though prices of things like food, utilities, and childcare are less expensive in Phoenix than in, say, LA or New York, us Phoenicians have relatively long commutes in our cars and those rising gas prices to contend with.

Still, the ratio of housing prices to incomes is pretty good in Phoenix. And as the housing market evens out, we’ve seen homes become much more affordable for many more families.

Phoenix Real Estate Blog: Buyer Beware -- Don’t Sign In If You’re Not with Your Agent

Bob Stahl (MyPhoenixMLS) — Tue, 10 Jun 2008 14:34:40 -0500

About a quarter of all homebuyers choose to buy a new home rather than a resale.

Many think that the sales people at the builder’s model home office will work for them just like a real estate agent would.

Wrong.

“Everyone working on the site is working for the builder. . .There's not one single person there who's working for the buyer.” That’s advice from a recent article in the San Francisco Chronicle.

The fact is that only a buyer’s agent or real estate attorney who is working exclusively for you will guarantee to look out for your interests and your interests alone. Many buyers think that they don’t need a real estate agent or attorney when buying a new home. Certainly, it’s not required. But it’s wise.

Hiring a buyer’s real estate agent to help you buy a new home from a builder won’t cost you a penny – the builders have to pay for the agent’s commission out of the sale of the home. You will have to pay an attorney, but the protection you’ll get may be well worth the expense.

It might sound self-serving, but Brincefield, like many other real estate lawyers, insists, "When you sign a builder's contract, you're taking a much bigger risk than you realize, unless you've had a knowledgeable real estate attorney review the contract with you."

He said, "I've been in the practice of real estate law for over 40 years, and I never had anyone come to my office and say, 'I'm so glad I didn't have an attorney when I bought a house.' "

But buyer beware: if you walk into a builder’s model home and sign in without a real estate agent, the builder can then refuse to pay your agent’s commission if you later decide to use an agent to buy a home from that builder. If you want to shop around by yourself before you bring your agent along, don’t sign in. Or, better yet, get your agent involved from the beginning. That is our job, after all.

To read more important tips on how to protect yourself – and your money – when you buy a new home, visit http://myphoenixmls.com/new-home-deals.asp for the free article, 9 Steps to Getting the Best Deal on a New Home.

Phoenix Real Estate Blog: Renovating to Get an Edge -- Tips to Keep in Mind

Bob Stahl (MyPhoenixMLS) — Thu, 05 Jun 2008 16:01:35 -0500

Sellers are going to great lengths these days to get an edge in the market. They’re now competing with homeowners doing short sales and banks selling foreclosed properties. So what’s a seller to do?

For a complete list of tips on how to sell in a slower market, check out this informative article: 7 Keys to Selling in a Slower Market. In this post, I’ll talk about one idea for getting an edge in the real estate market: renovations.

An article the other day in Canada’s Times Colonist newspaper talked about bathroom renovations gone awry: “Thomas Tripodi says he'll never forget the Versace designer bathroom in the house he was marketing for $4 million-plus. ‘It was waaay over the top,’ says Tripodi, associate broker with Prudential Douglas Elliman Real Estate in Long Beach and owner of The Tripodi Group, which sells luxury homes. So while that bathroom obviously appealed to the owners, prospective buyers were turned off, Tripodi says.”

Zillow.com has a really cool feature -- Dueling Digs -- that allows readers to browse through pictures of renovations and even vote on their favorites. It’s interesting that the most highly ranked bathrooms are fancy, to be sure, but they’re not over-designed, so they fit a wider range of people’s tastes. As you get into the 13^th, 14^th, and 15^th-ranked bathrooms, the designs become much more personalized. Not over-the-top Versace, but maybe not the best idea for a person looking to sell their home.

From the Times Colonist article: “Like kitchens, bathrooms -- those essential, private spaces -- are rooms buyers scrutinize most closely when shopping for a house, real estate agents say. And in today's buyer's market, sellers need to tread carefully. It's important not to do too much -- making something too quirky or personal, like that Versace bathroom, or spending so much they risk pushing their price too high.”

So that’s the key, then: make sure your bathroom is clean, tasteful, nicely decorated, but not too personalized. You want all of your prospective buyers to be able to imagine themselves soaking in your garden tub.

In getting your bathroom to that point, remember not to spend too much. With any kind of renovation, you’ll never recoup 100% of the cost when you sell your home. Still, even if you only recoup 60% or 70% of the cost of your bathroom renovation, if it makes the difference between not selling your home and selling it, that’s priceless, right?

Phoenix Real Estate Blog: “Dear John” concept adapted for real estate

Bob Stahl (MyPhoenixMLS) — Thu, 05 Jun 2008 15:58:56 -0500

An article today in the “Your Money” section of the New York Times, “Letters from the Home front: A Real Estate Deal Seen from 2 Sides,” by Ron Lieber, offered something I’d honestly never heard of before: a letter from a prospective buyer to the home’s seller explaining why the seller should accept the buyer’s low-low offer. The article’s author then offered a seller’s reply. The letters are really entertaining, read them here.

At first I thought the whole idea sounded really bizarre, and who knows – maybe if a prospective buyer actually sent the home seller a letter like this the seller would think it was really bizarre, too. But on the other hand, I send out letters to my prospective clients – people who have something I want (the business of selling their house) explaining why they should choose me as their Realtor. So is it really that odd, then, that a prospective buyer would send a letter to the home seller, who has something he wants (the home) explaining why the seller should accept his offer? Maybe not?

I get a lot of business by sending out these “sales” letters – maybe they could work for buyers and sellers, too. On that premise, I’d like to offer some general tips that work for me and could work for you in your letter(s), too. (I should also mention that Lieber also offers his letter from buyer and response from seller as templates that you could use.)

3 tips for successfully getting what you want with a letter:

Tip #1. Always speak directly to the letter’s recipient. Don’t just talk about your offer, talk about how it will benefit the seller (buyer).

Tip #2. Include relevant information to make your point. Lieber uses housing market statistics to make his case on both sides – the buyer’s and the seller’s. There are always two sides to a market number – use it to your advantage.

Tip #3. If you really want the letter to work, get emotional. Playing to emotions – like fear – may not be very nice, but it sure works. Sellers these days are really afraid of not ever being able to sell their home. For those in a pinch to move, the situation can be even more frightening. If you play to that fear, and can still sleep at night, you will dramatically increase your chances of success.

Lieber makes the point that you’ll probably rely on your real estate agent to deliver the letter; he suggests asking the agent if he honestly intends to do so. A better bet would be to talk the strategy over with your agent first – it’s always your decision, ultimately, but your agent may have some good advice based on your specific market.

If you’ve sent – or received – this kind of letter before, let me know! I’m interested if this really exists or it’s just one New York Times’ columnist’s hare-brained idea.

Phoenix Real Estate Trends: You give me yours and I’ll give you mine – trading houses

Bob Stahl (MyPhoenixMLS) — Thu, 05 Jun 2008 15:54:00 -0500

An article Sunday at MyrtleBeachOnline.com talked about a new trend in real estate: house swapping. Well, maybe not too new, but growing, according to the article.

On one popular house-trading site, DomuSwap.com, there are currently 389 listings in Arizona. Not surprisingly, the states most affected by the real estate slowdown have the highest number of listings – Florida has Arizona beat with 1,323 listings; California comes in third with 332.

The most popular house-trading sites, in addition to DomuSwap.com, are Pad4Pad.com, OnlineHouseTrading.com, and Craigslist. (I haven’t vetted those sites or the services they offer, so please don’t take my mention of them as a recommendation.)

Back in October, I wrote a blog about house swapping. There I gave three pieces of advice to those looking to swap houses: 1) be wary; 2) be wary; and 3) be wary. In other words, be wary. Like they always say, if it sounds too good to be true, it probably is. In any real estate transaction, especially one that’s not particularly common – like house swapping – it’s important to understand everything that’s involved. In this case, getting some help – from an experienced real estate agent and/or attorney – is wise.

Aside from owner-to-owner swaps, where one homeowner looking to sell in one area and buy in another finds another homeowner looking to buy in his area and sell in the other, some builders – eager to offload their excess inventory of homes – are offering deals to prospective buyers that include a purchase guarantee of the buyer’s current property. Remember, though, that the agreement – in fine print, of course – is for the builder to purchase your home at market value, probably less real estate agent’s fees. Market value is the price that the builder can turn around and resell your home for – not what you paid for the home, or even what you think it is worth.

I’m not knocking builders, or even the purchase guarantee deals that are cropping up. I’m simply reiterating the point I made (times three) in October: be wary.

Phoenix Real Estate Blog: How the Foreclosure Crisis Has Spread through the Housing Market

Bob Stahl (MyPhoenixMLS) — Wed, 04 Jun 2008 15:43:39 -0500

I was struck by a string of articles around the country that summed up pretty well how the foreclosure crisis has spread throughout the housing market:

The Wall Street Journal: Number of Foreclosed Homes Keeps Rising

The Chicago Tribune: Break for sellers: Banks settle for less

The Arizona Daily Star: Foreclosures push down your home's selling price

First, the number of foreclosed homes continues to rise. Foreclosures are expensive for banks, which lose money because they have to pay court costs and associated fees to foreclose on a home, and lose money because they typically sell the home (if they can) for less than the mortgage amount.

Second, banks realize that foreclosing on homes is bad for them, too, so they start to make deals with homeowners in trouble. Those deals might include reworking a loan, like reducing the principal or changing the interest rate, or they might involve a short sale, where the lender agrees to take whatever the homeowner can sell the home for, even if it’s less than the mortgage amount.

Third, foreclosures, which result in the banks selling homes for less than what they’re worth, or short sales, which do the same, push down the “market value” of homes in a given area. Market value is typically determined by the price of recently sold comparable homes within a 1-mile radius.

According to the Arizona Daily Star article, “The rising number of foreclosures is reducing property values in a possibly unprecedented way. Not only are foreclosed properties flooding the market, but they are also becoming the only standard of comparison for other homes sold in some areas.”

Lower home values make it even harder for families in trouble to sell their homes, and put even more downward pressure on prices – which reduces the price banks can charge for foreclosed homes or homeowners can charge for short sales.

According to the Wall Street Journal article, “With home prices falling, "holding the assets means further losses," said Mark Fleming, chief economist for First American CoreLogic. Some lenders now are cutting prices as often as every 20 days on homes that aren't selling, said David McCarthy, chief executive officer of Integrated Asset Services LLC, a Denver-based company that helps banks value and sell REO homes.”

Yet the process may be a necessary evil – an unavoidable path out of the housing market downturn. As prices drop, more buyers enter the market, which reduces the inventory of unsold homes. As the inventory of unsold homes shrinks, supply becomes more closely aligned with demand. Once supply and demand are aligned again, prices will rise to a “normal” level and the market will have rebounded.

So while foreclosures and short sales may increase the pain of the downturn in the short term, they will also decrease the length of the downturn, which is better for us all in the long run.

Phoenix Real Estate Blog: Are we there yet?

Bob Stahl (MyPhoenixMLS) — Wed, 14 May 2008 23:45:20 -0500

It’s the scourge of the family car vacation: the nasally voice coming from the back seat, waaaaaaaayyyy too often, asking “Are we there yet?” And you’ve only rounded the corner out of your neighborhood. It’s going to be a long drive. . .

I feel like that now, only it’s all of us in the back seat chiming in with the collective “Are we there yet?” Has the real estate market hit bottom? I’ve posted on this topic so many times I have to debate whether to post on it yet again. But whether I like it or not, it’s the question everyone’s asking.

Last week, the Wall Street Journal’s online site, WSJ.com, posted a story posing just that question: The Housing Crisis Is Over?

The post included the figure, above, as well as statements from a number of real estate experts (professors and analysts, not agents – for all you cynics) saying that we are, indeed, at the bottom and that now is the time to buy.

One of the interviewees pointed to a private portfolio manager in London, who said the homebuilding stocks on Wall Street were at last a “buy.”

The driver of the upturn, according to the experts, is the relative affordability of homes now and low interest rates, making home ownership possible once again for first time homebuyers.

Interestingly, among the many comments, most were decidedly pessimistic that we’ve reached the bottom of the housing market turnaround. Some pointed to the idea that the current market is not the same as markets before, and therefore we can’t look to those market bottoms and turnarounds as predictors of this one. Others said that housing is still not affordable for many people. Still others commented on the oversupply of homes in bubble areas – including Florida, Nevada, California, and parts of Arizona.

What about you? Are we there yet?

Phoenix Real Estate Blog: 3 tips for finding your dream home on the Internet

Bob Stahl (MyPhoenixMLS) — Wed, 14 May 2008 23:42:01 -0500

An article last week at U.S. News and World.com offered six secrets for Internet home buying. Well, not home buying exactly, more like home searching. From the story:

“As the real estate industry grows increasingly Web-savvy, house hunters can now scour through neighborhoods, inspect front porches, and even peek inside bedrooms from the comfort of their desktops. But while this surge of new information can help you find that perfect home, it can also—at times—make the whole process overwhelming.”

I like to say that knowledge is power. But it’s true that too much information can be overwhelming. So how do you wade through the tons and tons of information available online to access just the right info. that will help you build knowledge? Here are 3 tips:

1. Know what you’re looking for

Whatever you’re doing online – whether it’s searching for recipes, research for work, or looking for homes for sale – the key to making your search efficient and effective is knowing in advance what you’re looking for, and staying on the right track.

One of the coolest things about the Internet – and perhaps its biggest danger – is that there’s great information everywhere you turn. So if you don’t know what you’re looking for, and stick to it, it’s really easy to get lost in something entirely different. You’ll take five minutes to read a fascinating story about megayachts, which leads you to an interesting piece on budget travel in St. Bart’s, which takes you to a history of the Caribbean, and when you look up you realize that three hours have gone by and you haven’t even looked at homes for sale.

Decide what you’re looking for and resist the temptation to stray.

2. Learn to spot reliable – and unreliable – information

It used to be that you would go to a tried-and-true, trusty source to find reliable information. Newspapers. Consumer Reports. That kind of place. Now, on the Internet there are hundreds, thousands, tens of thousands of resources on a given subject. But how do you know which ones to trust?

Blogs are a good example – there are a number of really excellent real estate blogs out there that offer reliable, accurate information. But there are others that are basically shams.

Fortunately, the good sites are pretty easy to differentiate from the shams. Good ones will have links and references to and from other reliable sites, for example. They’ll talk about information that you find confirmed in other reputable sources.

3. Spend some time with the sites that offer customizable searches

It used to be that you would have to spend a whole Sunday scouring the classified real estate listings to find a few homes you wanted to visit. Now that those listings are online, you can easily search for listings that match just what you’re looking for – number of bedrooms and bathrooms, school district, pool or no, etc.

Still, finding homes for sale that meet your criteria (all of those features that you’ve decided you need, plus maybe some of the features you want) can be a tedious, time-consuming process. Minding the three tips listed above will help you make your home search more efficient and effective.

Hiring a real estate agent with a house hunting service can help you even more. The MyPhoenixMLS.com Time Saving Home Finder Program, for example, provides buyers with:

A customized report of all the home listings matching your criteria
A complete report that includes pictures of the homes, maps of their locations, and more
Access to your own password-protected site
. . . And more, all for FREE, with NO OBLIGATION

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