Dear Friends, Family, and Business Associates,
The following entry includes Regional News compiled from different business sources. Please pay particular attention to the trends. Sellers need to be keenly aware that the market continues to see declining prices. However, sales activity has picked up and may signal a shift. For more information about the local real estate numbers for last week, please see Market Review Blog.
Business News (from the Arizona Business Journal and other sources)
Fannie, Freddie follow banks with foreclosure moratorium: Fannie Mae and Freddie Mac said they will suspend foreclosure sales involving occupied single-family and two- to four-unit residential properties through March 6. The announcement from McLean, Va.-based Freddie (NYSE:FRE) and Washington D.C.-based Fannie (NYSE:FNM), which own or guarantee almost half of the nation's mortgages, comes after some of the largest U.S. banks with Arizona operations last week agreed to a similar measures while the government works out a plan to stabilize the banking industry. Moratoriums from JPMorgan Chase, Wells Fargo, Bank of America Corp. and Citigroup Inc. also will remain in effect until March 6. Fannie Mae and Freddie Mac said the temporary suspension should give loan servicers more time to help troubled borrowers find an alternative to foreclosure. The latest suspension does not apply to vacant properties in foreclosure. In addition, the moratorium gives lenders servicing Freddie Mac mortgages broad authority to provide forbearance to borrowers who are not yet delinquent, the lender said. Lenders also can provide permanent rate reductions, mortgage term extensions, forbearance of principal or other modifications to borrowers who are delinquent.
Foreclosure-traditional sales price gap narrows: Larger Foreclosures have pushed median home prices below $90,000 in El Mirage and $400,000 in Scottsdale, which represent the two extremes in Maricopa County. Overall median prices for the sale of existing single-family homes dropped 40 percent to $135,335 from $225,000 in Maricopa County, according to Arizona State University's Realty Studies report comparing January 2009 and January 2008. In January 2009 the median price for the sale of existing homes was separated by less than $1,000 between foreclosed property sales and traditional sales - $135,005 and $136,000.Here is how individual cities fared for overall median price between January 2009 and 2008: Phoenix, $90,675 from $193,870; Scottsdale, $380,000 from $550,000; Chandler, $204,000 from $255,550; Gilbert, $197,250 from $283,325; Mesa, $138,000 from $207,830; Tempe, $205,000 from $243,000; Avondale, $115,000 from $204,615; El Mirage, $85,000 from $164,255; Glendale, $130,000 from $206,000; Goodyear, $150,000 from $237,000; Peoria, $171,310 from $255,000; Sun City, $140,340 from $161,000; Surprise, $144,000 from $210,500.
Consumer Price Index shows slight uptick in January: Consumer prices were up in January for the first time in seven months, but inflation was flat in 2008 for the first time in more than 50 years. The U.S. Labor Department's Consumer Price Index, the key measure of prices at the retail level, was up 0.3 percent in January after falling 0.8 percent in December. However, the CPI was unchanged from January 2008, marking the first time that reading has not shown a year-over-year increase since August 1955, when prices were falling on an annual basis. On an annual basis, the core CPI -- which strips out volatile food and energy prices -- was up 1.7 percent for the year. Core CPI rose 0.2 percent in January. The January increase in overall consumer inflation was largely attributable to a 1.7 percent rise in overall energy prices, including a 6 percent boost in the cost of gasoline. On a year-over-year basis, energy prices were down 20 percent, driven by a 40 percent drop in gas prices.
Phoenix Zoo ranked No. 4: The Phoenix Zoo ranked No. 4 on a new list of the top 10 zoos in the U.S. The list was put out by USA Travel Guide, a Dallas-based tourism Web site published by Worldwide Revenue Solutions, a hospitality Internet-marketing company. The Columbus Zoo in Ohio ranked first on the list followed by the San Diego Zoo and Lion Country Safari in West Palm Beach, Fla. The travel guide cited the Phoenix Zoo's comprehensive collection of animals and park-like layouts in it ranking. The World Wildlife Zoo & Aquarium in Glendale did not make the top 10 list.
Now arriving in Boston: Southwest: Low-cost carrier Southwest Airlines has announced plans to begin service out of Logan International Airport. Whether any of those flight link to its hub at Phoenix Sky Harbor International Airport, however, remains up in the air. The Dallas-based company (NYSE: LUV) said it will begin with "a conservative number of flights" at two gates in Logan, which is the sixth-busiest airport in the nation. It will release specific destinations later in the year. Logan will be its 65th destination. Southwest has operated in New England for over a decade, providing 27 daily non-stop flights from Manchester Boston Regional Airport in Manchester, N.H., and 31 daily non-stop flights from T.F. Green International Airport in Providence, R.I.
Foreclosures jump back up in Maricopa, Pima counties: Foreclosure activity in both Maricopa and Pima counties jumped back up at the beginning of 2009. According to Default Research, which tracks home foreclosures in the Phoenix and Tucson areas, 5,102 homes were involved in foreclosure proceedings in Maricopa County in January. That's up 40 percent from 3,629 in December. Default says the number of homes involved in foreclosure proceedings over the past 12 months represents 4.11 percent of the county's home inventory. In Pima County, 412 notice of trustee sales were issued in January, up from 312 in December - a gain of 32 percent. Pima's percentage of foreclosures was pegged at 1.24. "It is never good to see foreclosures increase in any situation," said Default Research Founder Serdar Bankaci in a company statement. However, January's 5,102 foreclosures are much lower the 8,685 reported in August, 6,900 in September and 7,284 in October Bankaci said. Some of the increase from December to January can be attributed to post-holiday season activity, as many lenders had put a temporary hold on foreclosures.
Home construction down 16.8 percent in January: As President Barack Obama delivered his plan to rescue struggling home owners in Mesa, the U.S. Commerce Department reported a 16.8 percent drop in construction of new homes and apartments. January's drop lead to a seasonally adjusted annual rate of 466,000 units, the slowest pace in more than a half century. In addition, applications for building permits -- a barometer of future activity -- dropped to a record low, falling 4.8 percent to a rate of 521,000 units. According to the Commerce Department report, construction activity fell 6.4 percent in the West to an annual rate of 131,000 units, the slowest pace since October 1966. Construction dropped 43 percent in the Northeast to a record low of 36,000 units annually. Building fell 29 percent in the Midwest to a record low of 53,000 units, while it dropped 12.8 percent in the South to a record low of 246,000 units. For all of last year, the number of housing units builders broke ground on totaled 906,200, also a record low. That was down from 1.36 million units started in 2007. The previous low was set in 1991. Obama on Wednesday unveiled the administration's new foreclosure relief plan, which will spend $75 billion in an effort to prevent 7 million to 9 million Americans from losing their homes.
Mortgage plan opens bankruptcy option: President Barack Obama's $275 billion housing and mortgage plan would allow homeowners to rework their mortgages via bankruptcy proceedings. Current federal laws restrict bankruptcy courts from reworking mortgages, while debts such as credit cards and consumer loans can be revised during proceedings. Obama unveiled a large scale mortgage modification and home lending plan Wednesday in Mesa aimed at curbing foreclosures and helping the languishing housing market. It includes $75 billion for mortgage modifications and $200 billion in federal equity stakes in mortgage giants Fannie Mae and Freddie Mac. The National Association of Consumer Bankruptcy Attorneys and some congressional lawmakers have been pushing for the bankruptcy law change, but did not have support from the Bush administration. "It is painfully clear that the continuing, and indeed worsening, foreclosure crisis is perhaps the single largest impediment to this country's economic recovery. We call on the banking industry to impose a moratorium on foreclosures until the Obama housing plan, including and in particular bankruptcy reform, has been fully implemented," said NACBA president Carey Ebert in a statement. There are some cautionary views about the proposal, however. Dean Wegner, a mortgage banker with American Financial Lending in Phoenix, said allowing bankruptcy courts to rework mortgage likely would increase the number consumer bankruptcy filings and could increase the cost of lending because such mortgage modifications would be considered a possibility when loans are initially approved. Wegner likes other aspects of the Obama plan, however, including possible breaks for borrowers who are current on their loans but have seen values decline. Wegner said he hopes that will bolster confidence in the housing market. "We need this confidence boost. People are really giving up," Wegner said.
Refinancings cause surge in mortgage applications: Mortgage applications surged last week as a growing number of homeowners took advantage of lower interest rates to refinance their home loans. The Mortgage Bankers Association said its seasonally adjusted application index jumped 46 percent for the week ended Feb. 13. It is the highest reading since Jan. 16, and coincided with a 0.2 percentage point drop in average 30-year mortgage rates over the past week to 4.99 percent, according to the MBA. The increase was due mostly to refinancing of mortgages, with the index of those loans climbing 64 percent for the week. The gauge of loan requests for home purchases rose 9 percent, the MBA said.
Wells Fargo expects community banks to suffer more with commercial mortgages: Wells Fargo Chairman Dick Kovacevich and CEO John Stumpf told an analyst that they expect their community bank rivals to suffer more than the bigger banks from problems with commercial real estate loans. The San Francisco company's top brass told RBC analyst Joe Morford that they expect Wells will benefit from its customer relationships and underwriting standards as the financial health of borrowers for commercial mortgages deteriorates, according to a research report that Morford shared with clients Friday. Commercial mortgages are being closely watched as another source of pain for the nation's bankers. At the height of the credit bubble, one industry observer said commercial real estate loans had become the crack cocaine of community banking, reflecting the pace of growth some were achieving with such loans. On the consumer front, Morford said Wells Fargo anticipates that it can cover any rise in consumer credit losses from net interest income. Many expect banks will experience rising losses in credit cards, auto and other consumer loans as the recession deepens and unemployment rises. Morford also addressed a frequent topic when it comes to Wells Fargo: prospects for a cut in the dividend, now yielding about 8 percent. "Wells seems unlikely to cut the dividend near-term, preserving it as a key component for long-term shareholder returns," Morford said. But the analyst cut his 12-month price target on Wells to $21 from $25 per share, reflecting the general sell-off in financial stocks. The bank's shares traded at the $16 level Friday. Morford remains optimistic on the bank's long-term outlook, especially with the growth potential in the recently acquired Wachovia territory. "At this point, the 10 percent cost-savings projection looks conservative, and many potential revenue synergies seem realistic including opportunities to reprice deposits or improve cross-sell ratios and add sales capacity at Wachovia," Morford said. "Furthermore, not only has customer retention been better, but also Wells is gaining market share." Wells Fargo (NYSE:WFC) has one of Arizona's largest banking operation.
Have a fantastic week!
Bob Pearson
Keller Williams Realty Professional Partners
www.bobpearsonrealty.com
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