From a high of 1,785 recorded sales in second quarter 2005, the Pinal County resale market in Arizona has steadily declined to 840 transactions in the first quarter of 2007, compared to 1,110 sales for first quarter 2006 and 1,435 in 2005.
Kyle Campos certainly does not look like a pioneer, and “go East, young man,” doesn’t have quite the same ring as the 19th century version.
But the high cost of a California mortgage made him one.
They offer struggling homeowners kind words and, most of all, help. The calls come quick, sometimes an hour after foreclosure proceedings are filed. Fliers and letters promising assistance fill mailboxes.
The number of Sun Valley residents who lost their homes to foreclosure has spiked more than tenfold in the past year as more and more homeowners fell behind on their Arizona mortgages.
In the Arizona housing market, and nationally, March generally tends to be the first month that shows an improvement in a given calendar year, and the beginning of the resale season.
This year has seen a steady decline in the resale market and median home prices in Gilbert, Ariz., despite home mortgage rates staying low, say studies released by Arizona State University.
But real estate experts say this is no reason for homeowners to panic.
“In a sense it’s a correction in the market after being hyper for the last couple years,” said Jay Butler, director of Realty Studies at ASU’s Polytechnic campus in Mesa.
Data released for February shows the resale market in Gilbert, located outside Phoenix, at 230 homes, down from 290 last February. The median price also decreased from $341,000 to $307,500.
Butler said that despite low Arizona mortgage costs, the selling market probably will not improve for a while because it is currently working at its historical norm.
“Basically it’s doing what would be expected,” he said.
He added the study only includes homes that have sold, and not the value of all homes in the Valley, where Phoenix home loan values have skyrockted in the past five years.
“If you’re sitting in your home and you don’t want to sell it, it probably has decreased a bit,” he said. “But if you’re making your monthly payments and you bought your home a couple years ago, you’re probably at where you bought it for and eventually it will go up.”
Fewer home sales do not necessarily indicate a poor Arizona housing market.
“If people are happy where they are, they’re not going to put their homes on the market,” he said.
Wayne Hatch of The Manors at Val Vista and Elliot roads falls in this category; happy with his home, his neighborhood and unconcerned by the changing market.
“The Gilbert, East and Southeast Valley markets were a little out of control over the past few years and we had many outsiders coming in and investing in the housing market, which inflated the real value of our market,” he said. ”Now that things have calmed down I think we are returning to the real market values, which are still very good.”
He has lived in Gilbert for 16 years and has no immediate plans to sell his home, saying in spite of the recent growth of Gilbert, the small-town feel remains and makes for a welcoming environment to live in.
“In my opinion this is still a great place to raise a family,” he said.
Councilwoman Joan Krueger, a real estate agent, is also not worried by the changing market. Growth in Gilbert continues, but now it is from a more commercial standpoint than residential.
“The council has known for some time that our focus must turn, now, from residential, which we believe is taking care of itself, to retail, commercial and employment uses,” she said.
She added the growth Gilbert has seen in the last decade has been well-managed, but as the market changes, the council needs to be careful when making future planning decisions.
“It is incumbent upon the council and staff to ensure that the decisions that are made provide the balance the community needs,” she said. “The future of Gilbert depends on hard work and courage to do what’s right in the long run.”
SOURCE: Newszap.com
With home sales still languishing, Valley developers are holding off on building thousands of houses — focusing instead on purging excess inventory and reevaluating the Arizona housing market.
Plans for an estimated 3,000 to 5,000 homes have either been postponed or scrapped — and that’s a conservative estimate, said John Fioramonti with research firm Hanley Wood Market Intelligence.
“Most of these people have already written off 2007,” and are waiting to see what will happen with Arizona mortgage demand in 2008, he said.
Scottsdale-based Montalbano Homes decided to delay an 1,800-home development in the Queen Creek area until mid-2008. The Copperton Trail project was originally scheduled to open later this year.
“It’s really a function of supply and demand at the end of the day,” said Jon Baer, Montalbano’s vice president of sales and marketing. “We’re no different than any business out there.”
The supply of homes spiked, while demand remained fairly constant, Baer said. Builders have been turning to local real estate agents for help as a result.
Montalbano already has a Queen Creek project called Estates at Skyline Ranch. That development still has 14 completed but unsold, or speculative, homes to offload.
Starting another project in the same area would have the company competing with itself, risking price erosion, he said.
Builders postponing projects is part of the real estate cycle, Hanley Wood’s Fioramonti said. Some builders are sitting on land they’ve already bought and putting off construction until the inventory of speculative homes is sold off. Others are walking away from options to buy properties.
It’s happening mainly in outlying areas, such as Maricopa, Coolidge and the far West Valley, Fioramonti said. Walking away from escrows or options on property can be a big financial hit for builders.
For national, publicly traded companies, holding onto properties that aren’t producing income can negatively impact financial statements for stockholders, he said. That’s been made worse by recent sales figures that have fallen far below projections.
“They’d rather lose the $150,000 or $200,000 they had in options rather than carry a larger inventory,” Fioramonti said. “That’s been happening across the country.”
Builders are no longer rushing to install utilities and other infrastructure, market analyst RL Brown said. They need to see what happens with mortgage activity in the region first.
“(They’re) waiting for the market to show some additional signs of recovery,” he said.
Some industry observers say the market could pick up later this year or early 2008, while others say 2009 is more realistic in light of the subprime lending market’s downturn.
Builders have been taking out an increasing number of new home permits in the past four months, but sales are still down, Brown said. A major factor in the new home market’s recovery will be sales of existing homes, he said. That’s because many new buyers can’t close deals until they sell their old homes.
Meanwhile, some builders are moving forward with projects.
Canada-based Mattamy Homes is about to break ground on two subdivisions — totalling nearly 250 homes — in the Queen Creek area as part of its expansion into Arizona.
“There’s still demand for new homes at the right price and the right program,” said Mark McHone, president of the company’s Phoenix division.
SOURCE: The East Valley Tribune
Permits for new-home construction are on the rise in Maricopa and Pinal counties, jumping 26 percent in February compared with the previous month and building on two straight months of gains.
Builders pulled 3,630 permits for new construction last month, according to analyst RL Brown, publisher of the Phoenix Housing Market Letter.
The total is still below what it was the same time last year, when the Valley was beginning to wind down from a housing boom in which record demand distorted yearly comparisons. And Brown cautioned that 18 percent of the February permit total was for condos.
That means the crucial single-family-home market still has some work to do in its recovery.
Yet the increases could indicate that builders are finally making a dent in excess inventory and are looking to start new construction, Brown said. Excess inventory, both new and resale, has been one of the drags on the local housing market, and analysts have said clearing it is key to any correction.
“Inventory is not stagnant,” Brown said. “Permits have been down for so long. Obviously we are selling inventory.”
The skyrocketing prices of the housing boom scared away Arizona mortgage applicants and many walked away from contracts, leaving some builders with cancellation rates of 30 to 40 percent. Builders were faced with getting rid of those speculative, or “spec,” homes. Brown said the spec inventory is falling as more builders buckle down.
It’s unclear exactly how many spec homes are on the market. Some analysts say the number could be more than 10,000.
Doug Fulton of Fulton Homes said his company will pull more than 50 permits to get started on a new community in Gilbert. Otherwise, he said, Fulton will be mainly selling down a spec inventory of about 280 houses to prospective home purchase loan borrowers.
Fulton hopes the surge in permits isn’t just big public home builders cranking up local production so they can book 2007 sales. Builders would need to pull the permits now to have the houses built in time to sell before this financial year ends.
“I would like to see permits go down,” he said. “What are you doing? You are just generating more inventory. . . . I don’t like to see permit increases any more than I like to see additional homes listed on the MLS (multiple listing service). It’s a supply-and-demand issue.”
Brown’s report also noted that the number of closed sales was the lowest since May 2003. He said most new houses being sold in the Phoenix area these days are spec homes. Falling sales could mean either reduced Arizona home loan demand or that a lot of the spec inventory has been sold.
SOURCE: The Arizona Republic
While there may be a national housing slump, local experts believe that Southern Arizona housing and land sales have gone from crazy to normal.
According to the San Pedro Valley Sun-News, most see steady growth here, despite what is happening in the rest of the country.
While the national property-sale market may be decreasing, local real estate agent Mary Ann Scott said Benson, Ariz., is not on the path to a slowdown, but back to normal.
“Land sales have taken sort of a nose dive right now because landowners have priced themselves right out of the market,” she said. “The market right now is being called a corrective market.”
Until prices adjust, Scott said Arizona mortgage activity and sales will remain slow throughout the San Pedro Valley. It is unlikely home prices will rebound to last year’s levels any time soon.
“It was almost like a panic-buying mode in 2005,” she said.
“People were coming in from everywhere and buying whatever they could get their hands on. Compared to [California housing prices], even the overpriced land here looked fabulous to them.”
In 2005 and 2006, because Benson’s land became popular for housing developers and real estate investors, undeveloped land was being sold for up to $12,000 an acre. Will White of Arizona Land Advisors in Tucson said prior to the boom, land cost about $4,000 an acre.
“The general overview of the market is it’s taking a well-deserved breather right now,” White said. “The land developers and investors are taking a break.”
Developers already in Benson plan to proceed. Ernie Graves of the Whetstone Ranch development on State Route 90 said while reports say the national housing market seems to be going downhill, they remain optimistic.
Graves said national home builder D.L. Workman recently pulled out of projects in Whetstone Ranch, forcing Graves to contract with local builders from Tucson and Sierra Vista.
“It’s obvious the national builders are cutting back,” Graves said. “We’ve lost some of them but already signed up with some others.”
Graves said he’s not really focusing on the number of homes being built, but whether or not they are moving forward. The Cottonwood Bluffs portion of the development sold about 30 homes last month.
When it comes to new and existing homes, Scott said it’s going to be a long time before the market slows down in Benson.
“There is a major need for new homes,” she said. “I think the national builders may have underestimated our market, but the buyers are still here.”
City officials had expected more growth in 2006, especially as Arizona mortgage costs remained low, but are nevertheless pleased with the slow pace of development.
City Manager Martin Roush said it’s not as slow as some may think, since permits for 106 new homes were pulled in 2006, compared to two in 2005.
“I don’t have any concerns about the market,” Roush said. “Growth is going to come; it’s just a matter of when and how much. If it slows down, it’s not necessarily a bad thing. That allows us to get caught up.”
John Davis, a mortgage broker, said he’s been working with Workman on Homes in the Whetstone Ranch development since September. In that development alone he said more than 50 homes were sold, historic for Benson.
“The year before, there were only two homes total. That doesn’t point to a slow-down in the market,” he said. “They went from two or three to dozens and dozens of homes.”
Davis said that many of the new home buyers are winter visitors who don’t want property in Tucson, but want to be near the big city, making Benson the prime location.
Continue reading in the San Pedro Valley News-Sun …
The number of Arizona mortgage holders behind on payments and in danger of losing their homes is at a two-year high … and it’s expected to keep climbing.
Many owners staved off foreclosure a few years ago by home mortgage refinancing to more risky adjustable-rate mortgages with lower monthly payments. But now, those borrowers, and the many investors who used the same mortgages to buy multiple houses, are struggling to hold on as their payments begin to increase.
Across the Arizona housing market, 3.51 percent of homeowners are at least one month behind on their home loan payments, according to the Mortgage Bankers Association’s quarterly snapshot of the housing market. The figures are for the last three months of 2006.
The picture isn’t as bleak here as in other parts of the country. Nationally, the percentage of late mortgage payments hit 4.95 percent, a 3 1/2 -year high. Foreclosures hit an all-time high of 0.54 percent.
Mississippi, Louisiana and the Michigan housing market led the nation in delinquencies. Arizona was 40th.
The Valley’s housing boom in 2004 and 2005 bailed out a lot of struggling homeowners. A 50 percent spike in home values and an overheated market helped people who had fallen behind on their mortgages to sell quickly before their home loan lenders foreclosed.
Other homeowners were able to tap the rising equity in their houses to refinance and catch up on payments. But some who refinanced used more risky adjustable-rate mortgages. Most of those loans were subprime, meaning the borrower had bad credit and the interest rates and fees were higher. Now, adjustable-rate payments are rising, but owners’ home equity and salaries aren’t keeping pace.
“We’ve just started to see the head of the monster,” said Margie O’Campo de Castillo of Arizona Dream Realty. “There were a lot of three-year, adjustable-rate mortgages done to buy Valley homes or refinance in 2004 and 2005. Payments on those loans are about to start rising. More foreclosures will follow.”
Foreclosures have been steadily rising in both the Phoenix housing market and Arizona since last summer but aren’t near the highs of the late 1980s, when the real estate market crashed. The Mortgage Bankers Association tracked 0.42 percent of Arizona home loans in foreclosure at the end of 2006.
Doug Duncan, chief economist for the association, said the rise in delinquencies and foreclosures across the country was expected because of the housing market slowdown. How quickly the market rebounds depends on how deep the problems in the subprime mortgage market turn out to be, economists say.
The delinquency rates on subprime mortgage payments are much higher than the overall rate.
In Arizona, about 9.2 percent of borrowers with subprime loans are behind on their mortgage payment. The U.S. delinquency rate for subprime mortgages is 13.3 percent. Subprime loans are a big concern on Wall Street now as more of these lenders announce losses from writing off bad loans.
“There will be some pain,” said Terry Turk, president of Mesa-based Sun American Mortgage. “A lot of people are shaking their heads at the subprime loans out there. But Phoenix’s continued growth should help it fare better than other parts of the country.
SOURCE: The Arizona Republic