Housing News Blog

Home sales in Arizona seen a dramatic turn around in the month of February according to MLS statistics and NAR. We seen double digits in some places of Maricopa county.

Does this mean we have hit the bottom in the housing market price decline. One has to wonder as we are seeing more 1st time home buyers take advantage of the lower prices and the great discount rates on mortgages. On the slip side with the credit market tightening up with the lenders it is having a double whammy on the market.

Buyers who sat on the side lines and saved there money and improved there credit scores are now coming out  and entering into the housing market and picking up some great foreclosures or short sales at the price of another loss. Hopefully we will see stagnation in the market evaporate in the coming months and build momentum as get into the prime selling season for Arizona.

Some analysts are saying we will not recover fully until 2009 at the earliest and that the crunch of foreclosures still looms ahead, but with lenders working with buyers at trying to stabilize there rate increases in the arm loans maybe we will see a turnaround sooner than what we think.

It is a great time to get out and start looking if you are in the market and the rates are low. 

Last Sunday night, the news broke that the Fed had not only decided to make a move to lower the Discount Rate by .25%, just two days ahead of when their normally scheduled announcement would arrive, but also that they had helped facilitate the bailout of investment giant Bear Stearns. The 85-year-old company had its stock purchased by JPM Chase at $2 per share, for $236 Million...yep, that's Million with an M. Bear Stearns was trading near $90 at the end of February, with a 52-week high near $160. Bear Stearns was the number one buyer of sub-prime home loans, with a huge appetite for this type of paper - and they bought sub-prime transactions with both fists, a strategy that certainly came back to haunt them.

Adding to the manic-depressive mix was a huge news day on Tuesday, starting with earnings and outlook from two other major financial players - Goldman Sachs and Lehman Brothers - who reported much more positive results than had been anticipated. Particularly on the heels of the Bear Stearns situation, this was very welcome news to a jittery Stock market. New construction numbers came out mixed, along with a hotter than expected read on wholesale inflation via the Producer Price Index...and as if it all weren't enough already, the Fed released their official decision to cut the Fed Funds Rate by .75%. Many people expected a deeper cut, but they likely kept the cut to only .75% because of continuing fears of inflation.

But wait...there's still more. On Wednesday, investment banker Morgan Stanley also came out with a great earnings report, which again was seen as good news by the Stock market, but pulled money out of Bonds. But then...along came big news from the Office of Federal Housing Enterprise Oversight (OFHEO), who announced that they lifted special capital restrictions that had been put in place for both Fannie Mae and Freddie Mac. This will allow these firms to pump $200 Billion into the mortgage market by way of buying Mortgage Bonds. The anticipated increase in demand was very good news for Bonds and home loan rates, which immediately improved on the news.

WHEW! ALL THE CRAZY MARKET ACTION HAS YOU WORN OUT? TAKE A BREATHER AND THINK ABOUT SOMETHING NOT SO STRESSFUL...BUYING A VEHICLE. OK, SO MOST WOULDN'T CONSIDER THAT A STRESS-FREE EVENT, BUT GET SOME GREAT TIPS ON BUYING VS LEASING IN THIS WEEK'S MORTGAGE MARKET VIEW!

Wow what a roller coaster ride on wall street with the Bear Stearns buyout by JP Chase all announced over the weekend after round the clock last minute negotiations. A once power house commercial bank with shares trading in the 120s last year gets taken over at 2 bucks a share with help of the Federal Reserve.

What does this mean to the housing industry in a whole. According to the powers to be basically not to much. Interest rates are still at a low and if the fed cuts rates again and it looks as if they are, that money is short term money and not really money for home mortgages. Short term money such as home equity lines and adjustable rate credit cards and the such that are tied more directly to the fed funds rate will change. In time if the bond market takes a swing you will see mortgages shave a hair or two off, but all in all we are in for the long run and investors who have waited are now coming out and buying up foreclosures and short sales.

Why one would ask, well there at bargain prices , especially in the out laying areas of Phoenix such as Buckeye,Tolleson and Maricopa. We all know people need places to live and those whom have lost there home due to either predatory lending or just foolishness on there part are in need of rentals, so bring on the investors to buy up the losses and rent them back. 

The time is good for investing in long term hold properties and we are seeing that taking place now. Invest with some good sense now and you will most likely see a great return in the years to come.

Home values have declined across the country, giving homebuyers the best buys they've had since 2004.

It may be the best time to buy a house in more than four years.

Home prices have dropped so quickly and so far that valuations - the difference between what a home should cost and its actual price - are the lowest they've been since 2004, according to a report.

The Cleveland-based bank National City Corp. (NCC, Fortune 500), together with financial analysis firm Global Insight, revealed Tuesday that more than 88% of the 330 housing markets surveyed showed price declines and improved affordability during the last three months of 2007.

"Housing valuations are almost back to long-term norms," said National City's chief economist, Richard DeKaser. He called current affordability "the best in the past four years."

But DeKaser cautioned that home prices could fall even further.

"This isn't to say home price declines are over," he said. "We could move below historic norms. By the end of 2008, housing markets could be broadly under valued."

There are still 21 housing markets, or 6% of those surveyed, that are severely over valued, including Atlantic City and Madera, Calif. That's down from 56 overvalued markets at the peak of the housing bubble in 2006.

The report compares actual median home prices with what the authors determine are proper home values based on population density, relative income levels and interest rates, as well as historically observed market premiums or discounts, to determine whether markets are over or under valued.

The report also factors in market intangibles that make some areas more desirable places to live, and more expensive.

"Declines are no longer confined to once-frothy markets," said DeKaser.

The survey covered home valuations during the last three months of 2007, but DeKaser pointed out there's reason to believe that valuations are even more favorable for buyers today.

Price declines have continued into 2008 and interest rates, although they have inched up lately, have been steady or lower compared to late last year. There have even been wage gains; personal income rose 0.5% in December. Soaring foreclosure rates have added inventory to many housing markets, depressing home prices further.

The biggest gains in affordability occurred in California, Michigan and Florida, which are areas that have also been some of the hardest hit by foreclosures. Those states registered 43 of the 50 biggest price declines.

Bend, Ore. currently tops the overvaluation list. Home prices there were judged to be about 59% higher than their fair-market value. Miami, despite a median home price decline of 5.7% last year, is the most overvalued big city, by 44%