The market is showing even more improvement in the average price per square foot – a large increase of nearly 40% from July 2011 to July 2012 in closed sales! That’s an increase of $17 per square foot on average and July 2012 marks the highest average price per square foot in over 2 years. You may not see a direct increase in your value right away since appraisals and the news tend to be 3 to 6 months behind the current trends, but we have the data and statistics to back up the trends. If you’d like more information about your specific home, just let me know – even if you’re looking to refinance or are just curious about your home’s value – I can help.
On the flip side, we are seeing a slowing in activity when it comes to purchases, however this was somewhat expected with the coming of summer – July and August have historically been slower months for housing in Casa Grande. This is largely due to the heat and the fleeing winter residents.
Something else to be aware of is that the USDA Rural Housing loan is coming to its end here in Casa Grande. For years Casa Grande and its surrounding communities have been eligible for this type of loan, however with our growing population – things aren’t looking good for another exception. You may be asking yourself why this matters to you… well if you know of someone with moderate income that would like to purchase a home with no down payment, the time is coming to an abrupt end.
Another housing related item coming to an end… the Mortgage Debt Relief Act of 2007. This bill went into effect in 2007 to help struggling homeowners who lost their primary residence either to foreclosure or short sale. If homeowners met the qualifications of the provision, they were not obligated to pay income tax on the forgiven debt. For example, if Sally sold her home in a short sale for $100,000 but still owed $250,000 to her mortgage company, the residual $150,000 would have to be claimed as income on her tax return, thus catapulting Sally into a much larger tax bracket. Under the Mortgage Debt Relief Tax Act, as long as Sally met the qualifications, the IRS would not be required to pay income tax on the $150,000 deficiency. This bill is due to expire on December 31, 2012 if another extension is not passed.
If you have any questions that are real estate or mortgage related – please don’t hesitate to ask. I am always here to help. We have a team of specialists designed to make your next real estate transaction as easy as possible. Until next month! =)
There have been many changes in the local real estate market trends including appreciation! In fact, since last June of 2011, the average price per square foot of active listing prices has increased 28.1%. This figure may be very different from what you’re hearing on the news which can be anywhere from 3 to 6 months behind and is typically based on national or metropolitan city statistics. When analyzing market trends, statistics can change dramatically when comparing areas.
Casa Grande tends to be a seasonal market due to our strong influx of winter visitors and seasonal population. Prices and activity tend to rise in the fall and winter months with a strong following in the spring and a ‘cooling off’ in the summer months. However, this year, that trend has changed. We are actually seeing a month over month increase in pricing even through June.
The number of active listings has also been on a declining trend with a 26% decrease since June 2011. Pending and closed sales have also softened a bit for the summer, but are expected to pick up pace in the fall. When listing inventory declines and buyer demand is still relatively strong, we typically see price appreciation.
Good things are happening in real estate around Casa Grande and we hope to see the trends continue!
If you have any real estate related questions please don’t hesitate to ask – I am here to help!
You probably hear lots of speculation from friends, family, and everyone else you talk to that hears that you may be in the market to buy or sell a home… but how do you really know which type of market you’re in? Is it a seller’s market, a buyer’s market? Or is it a transitional market?
Let’s start with the most recent widely understood type of market, the Buyer’s Market… this is when inventory is high and buyer demand is low. There are tons of homes to choose from and not much competition – buyers are able to negotiate with the most advantage since they are in the driver’s seat. Sellers are fighting to attract buyers by lowering their listing prices and offering crazy incentives such as no closing costs, new appliances, carpet allowances and even throwing in cars and personal property. This is the type of market we’re just beginning to come out of after the most recent real estate market crash.
Then comes the Transition to the Seller’s Market which is marked by an increasing buyer demand with declining inventory with sales prices stabilizing and eventually increasing. The decline in inventory and increase in demand drives prices up which pushes us into a Seller’s Market.
A Seller’s Market is when buyer demand is high, inventory is low and sales prices are high. Prices will continue to go up until buyer demand cools off. Once buyer demand begins to slow and inventory starts to increase with sales prices stabilizing and eventually declining again – we’ve entered the Transition to a Buyer’s Market. The Transition to the Buyer’s Market shows declining buyer demand with increasing inventory. When seller’s capitulate and start dropping prices again, we’ll be back into the Buyer’s Market.
There’s a much more involved way that utilizes a calculation to determine which type of market we’re in however this is an easier and more instinctual way to figure it out and utilizes all that stuff your friends and family are telling you!
For more information about the current market and to find out how to stay ahead of the cycle, please feel free to contact me via email or phone by clicking on ‘About Me’ at the top of this page.
FHA financing is probably the most widely used financing program available. It has many dimensions and allows for purchase, refinance and cash out refinance. It’s typically a 30 year fixed, but could be an adjustable rate mortgage as well. FHA financing is for primary residence, owner occupied properties, however it is available for mixed use and multi-family dwellings as well.
FHA requires a 3.5% down payment which can be gifted with property documentation. Due to the low down payment and higher loan to value, mortgage insurance is required with FHA financing and currently is 1.15%. The program also allows up to a 6% seller contribution which means all closing costs could be covered by the seller of the property.
There is a minimum credit score requirement of 620 and there are loan limits predetermined based on location. Flips are allowed, but probably will require a second appraisal. The seller should always keep copies of receipts, invoices, and a list or repairs to help support the change in value.
Also, something that’s not widely known about FHA is that under certain circumstances, short sale sellers who remain current on payments may be able to purchase a home right after the closing of their short sale. There are certain guidelines that must be met, but this can be a great opportunity for people who are relocating or who have a change in circumstances.
Another key area of FHA financing is the 203k loan program which is available in two forms: a streamline and a standard 203k program. There are different repairs allowed for each type of loan and there are guidelines for each that must be met. This type of loan is incredibly involved and requires a lot of work for the borrower but can be an amazing opportunity to purchase a home and build equity.
For a while there was a scare about lack of funding and additional reasons as to why this loan product would soon be unavailable – but it’s still here! And for how long… nobody knows. Technically, Casa Grande doesn’t qualify due to our growing population but we were kept in under an exception and will continue to utilize it as long as possible.
This loan program allows first time homebuyer, and in some cases, second home purchasers relocating, to purchase homes without a down payment. The loan provides up to 102% of appraised value in financing which means some of the closing costs and guarantee fees can be financed, depending on the appraised value. The loan also doesn’t require cash reserves and gift funds are acceptable for closing costs.
Another great feature is that sellers can contribute up to 6% towards the buyer’s closing costs – this means that a buyer could potentially purchase a property with no money down – and the mortgage payment will probably be less than rent!
Rates are comparable to FHA financing and flipped properties are allowed. The property must be owner occupied and there are some household income limits, but most first time homebuyers will fit into the program guidelines.
The selection of inventory for buyers has declined. Those of you who are actively searching for a property are experiencing this – where you used to receive multiple emails a week with properties that fit for you, that activity may have slowed to maybe one email per week or less! This is because the number of new listings has been declining over the past year and has leveled out to a lower number of active listings per month. There were only 383 active listings for single family detached homes at the end of December 2011 – down from 587 listings in December 2010!
These numbers change even more drastically in certain price brackets, for example if we look at a price range of $75,000 to $125,000 there were only 161 active listings for sale at the end of December 2011 which is down from 258 in December of 2010. There isn’t a shortage of qualified buyers either indicated by the blue and green bars on the same graph, which makes the competition for properties even stronger!
Bankrate.com has a mortgage payoff calculator where you can enter your loan terms and they’ll create a graph showing your balance and interest difference with a prepayment per month.
The full report also includes an amortization schedule and more information about what you’re saving in interest when you prepay.
For example, the chart below indicates what we would save if we paid an additional $100 towards our mortgage with each payment. We’d shorten our loan term by 5 years and 1 month and save over $35,000 in interest payments over the life of the loan.
Perhaps you don’t have an extra $100 per month to pay towards your mortgage payment, but maybe your payment is $895… why not add the extra $5 in and make it an even $900? Every little bit counts when it comes to paying down your principal balance – this means less interest paid in the end!
Typically, I suggest buyers should shop around, but don’t just shop at your local banking institution. Sure, getting your home loan through the institution where you keep all of your money makes perfect sense… until you get lost in the tangled web of a big machine. True, they may be able to offer you a free credit report, but in the long run, is a free credit report worth a two week to a month long delay in closing? Probably not.
Unfortunately too many buyers get caught up in the freebies that larger lending institutions offer, but nothing can substitute supreme customer service, competitive rates, comparable and sometimes superior products, and who can beat a friendly smile at the end of the day? Oftentimes you’ll never even meet the loan officer when you use a large, national banking or lending institution, but if you choose to work with someone who has intimate knowledge of the area you’re interested in purchasing in, it will save you hours of frustration in the long run.
While I can’t mention any of the lenders to stay away from, I can always help you find one that will take care of you. Just take a quick browse through the Hoping to Buy section and give any of the three fabulous local lenders listed a call for the best service available.
*Data from a poll by Harris Interactive and LendingTree comprised of 1317 respondents.
This section states that if there are any changes to the Seller Property Disclosure Statement or if there are any items that are warranted in section 5a, that the Seller must immediately notify the Buyer and that such notice will be an update of the SPDS. The Seller is also obligated to correct or repair the changed item and the Buyer has five days after delivery to provide notice of disapproval to Seller. For example, if the AC unit stops working, the Seller is bound to disclose, then correct or repair. Pretty simple, right?
The contract language states: Seller shall immediately notify Buyer of any changes in the Premises or disclosures made herein, in the SPDS, or otherwise. Such notice shall be considered an update of the SPDS. Unless Seller is already obligated by Section 5a, or otherwise by this Contract or any amendments hereto, to correct or repair the changed item disclosed, Buyer shall be allowed five (5) days after delivery of such notice of disapproval to Seller.