Local Realtors are hopeful the worst is behind us, with prices going up and inventories running short, largely due to investor activity. By one analyst’s estimate, investors have snapped up about 20 percent of Tucson’s home inventory.

That’s a good thing for the local economy, said Marshall Vest, an economist and director of the Economic and Business Research Center at the University of Arizona’s Eller College of Management.

“It helps put a floor under prices,” he said. “Most investors have bought these properties with the idea that they’re going to have to hold on to them for five years.”

As a result, Vest said, the market is unlikely to be flooded at any one point with flipped properties, and demand is likely strong enough to counter any downward pressure on prices.

“A strong case can be made that we have passed the low point for housing pricing,” he said.

Vest said he wouldn’t be surprised if prices rose as much as 20 percent over the next year.

Other analysts agree home prices will likely increase, but they’re less certain the data are showing a clear upward trend.

“Sustained demand is the part that worries me,” said David Stiff, chief economist for the Fiserv Case-Shiller Indexes, which recently predicted a 4.1 percent decrease in Tucson home prices from the fourth quarter of 2011 through the end of this year.

The indexes analyze single-family properties with two or more recorded sales to control for a changing mix in home stock, and focus on the average change in home prices. The algorithm tries to capture local demand using unemployment rates, population growth and median family income, among other factors, to make predictions.

The company’s most recent report forecast that Tucson area home prices would climb 4.1 percent between the fourth quarter of 2012 and the fourth quarter of 2013.

Stiff, who oversaw the report, said the model may not adequately represent the demand from outside investors, who have been especially active recently in Arizona markets.

“Investor demand can ebb and flow depending on market trends,” he said. That means investors are likely to sell as prices rise and homeowners who have been waiting for the right time to sell will begin to put their homes on the market.

Local real estate data consultant John Strobeck puts it this way: “Right now, in my terminology, we’re bouncing on the bottom in pricing. I would like to see it turn up, but I haven’t seen that yet.”

However, Strobeck, like Stiff, adds a caveat: “I do see that we will see prices begin to increase.” He thinks a rise of 4.1 percent in 2013 is “not out of the realm of possibilities” but predicts that prices will shift up and down for the next couple of years.

The reason? “Investors will start dumping properties,” Strobeck said, estimating that investors own about 20 percent of Tucson’s home inventory. “More houses will enter the market, and prices will fall.”

The president of the Tucson Association of Realtors Multiple Listing Service is optimistic.

“I think we’ve already trended up,” Sue Cartun said. “It’s a good time for buyers in that they still have a good interest rate.”

Both analysts agreed there are several bright spots in the market.

“Nearly all non-price metrics – existing home sales, rising home order volumes, increased spending on home improvement, a jump in multifamily construction – indicate that the housing sector hit bottom last year and has started along a path of slow recovery,” Stiff said in a news release announcing the recent report.

Strobeck noted that there have been increases in local new home permits this spring, up about 12 percent compared with the same period last year. Prices for lumber and drywall are also inching upward, another reflection of growing demand, he said.

In the resale market, “the proportion of distressed sales appears to be dropping,” Stiff said. That means that Arizona, unlike states with a judicial foreclosure process such as Florida, may have worked through most of the foreclosures linked to the recession.

“The way properties make their way through the process will determine what happens with prices,” he said. “That could be good news for Arizona.”

Still, Strobeck estimated that distressed sales – foreclosures, short sales and other sales in which the homebuyer is under financial pressure to unload the home – constitute about 70 percent of the Tucson resale market.

Real estate activity in both Phoenix and Tucson has been strong this spring, Stiff said, noting that that data did not factor into his report, which used fourth-quarter statistics.

The median home sale price has generally trended upward since hitting a low of $117,500 in September, according to Tucson Association of Realtors Multiple Listing Service data. In April this year, that figure was $134,000.

“Buyers of all kinds have gotten serious,” Cartun said, pointing to an influx in homebuyers looking to take advantage of low interest rates, including buyers from New York, New Jersey and Canada shopping for second homes.

“If there’s not much on the market, that’s going to drive prices up,” said Kevin Kaplan, a spokesman for Long Realty. He estimated home inventories at about four months’ worth, less than the six months that represents a balanced market.

Home sales volume for April was up 12 percent compared with the year before, according to MLS data.

“Demand is up, and our inventory is down,” Kaplan said. “That’s a sellers’ market.”

One hint that investors may be involved in much of the purchasing is in the financing breakdown. About 38 percent of the homes bought in April were paid for in cash, MLS data show. In contrast, 31 percent were bought using conventional financing.

The Fiserv Case-Shiller Indexes show that home affordability for those relying on a conventional mortgage is improving. The median Tucson mortgage payment was equal to 11 percent of the local median family income in the fourth quarter of 2011, according to the report.

The nationwide figure was 12 percent, the lowest figure since 1971.

The report shows that Tucson home prices in the fourth quarter of 2011 had dropped 45.8 percent from their peak.

The post Worst might be over for local home prices appeared first on Tom Campbell.

Looking to be a landlord? Buying property in college towns typically translates into stable rental returns, no matter how the economy is faring.

Not only do colleges provide a steady source of jobs for the local economy, but enrollments have swelled as the unemployed go back to school seeking new job skills.

Along with increased demand, rents have risen, too, by about 5% over the past 12 months, according to real estate website Trulia. And you can expect them to keep climbing. Steve Berkowitz, CEO of Realtor.com projects rents will rise by another 5% in the upcoming year.

Even developers who have cut back on other housing projects, are building in college towns. Erik Nelson, who handles construction loans for the Portland-based Bank of the West, said he arranged financing for residential housing projects in five college towns last year.

“The closer to the campus, the better,” he said.

For buyers, there are plenty of bargains out there. According to Coldwell Banker’s College Home Listing Report for 2011, the average three-bedroom, two-bath home sold for less than $200,000 in nearly two-thirds of the college markets it surveyed and less than $150,000 in nearly a quarter of the towns.

Here are some investors who have profited from being college-area landlords and are looking to buy more — while the deals last.

• Raleigh, NC
• Athens, OH
• College Station, TX
• Memphis, TN

Article Source: http://money.cnn.com/galleries/2012/real_estate/1203/gallery.college-towns/

The post Real estate investors’ best kept secret: College towns appeared first on Tom Campbell.

The GSEs issued new guidelines Tuesday that fall under the Servicing Alignment Initiative rolled out last fall and aim to bring greater transparency to the short sale process and expedite decisions related to these pre-foreclosure sales.

Not only is a short sale an effective foreclosure alternative when home retention is no longer an option, but it keeps homes occupied and helps to maintain stable communities, according to the Federal Housing Finance Agency (FHFA).

Addressing real estate practitioners’ No. 1 complaint about short sales, FHFA directed Fannie Mae and Freddie Mac to establish a new uniform set of minimum response times that servicers must follow in order to facilitate more efficient short sale transactions.

The GSEs’ new short sale timelines require servicers to make a decision within 30 days of receiving either an offer on a property under the companies’ traditional short sale programs or a completed Borrower Response Package (BRP) requesting short sale consideration, whether it’s through the federal government’s Home Affordable Foreclosure Alternative (HAFA) program or a GSE program.

If more than 30 days are needed, servicers must provide the borrower with weekly status updates and come to a decision no later than 60 days from the date the BRP or offer was received.

According to the GSEs, this 30-day add-on will provide some leeway for servicers who may need more time to obtain a broker price opinion (BPO) or a private mortgage insurer’s approval for a short sale. All decisions must be made within 60 days.

In the event a servicer makes a counteroffer, the borrower is expected to respond within five business days. The servicer must then respond within 10 business days of receiving the borrower’s response.

The GSEs plan to use the new short sale timelines to evaluate servicer compliance with the Servicing Alignment Initiative.

Edward DeMarco, acting director of the FHFA, says the GSEs new borrower communication and timeline requirements for short sales “set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”

GSE servicers must comply with the new minimum communication time frames for all short sale evaluations conducted on or after June 15, 2012, although servicers are encouraged to begin implementing the new requirements sooner.

“I applaud Fannie and Freddie for finally coming out with real guidance with real world timelines for their servicers,” commented Anthony Lamacchia, broker/owner of McGeough Lamacchia Realty Inc., which specializes in short sales. “There is no question that this will help short sales and the market as a whole.”

Last year Freddie Mac completed 45,623 short sales, a 140 percent increase since 2009. Fannie Mae’s short sale completions shot up by 101 percent over the same period, totaling around 79,800 in 2011.

Article Source: http://www.dsnews.com/articles/fannie-and-freddie-set-timeline-requirements-for-short-sales-2012-04-17

The post Fannie and Freddie Set Timeline Requirements for Short Sales appeared first on Tom Campbell.

In my analysis, the significant difference is that most zip codes have seen a reduction in months of inventory and show that the overall market has moved from a decidedly “buyers’ market” (blue shades), to a more “normal” market (yellow shades). Some segments in the south and southwest have actually achieved a “sellers’ market” (red) rating.

With interest sales still historically low and home price trends starting to stabilize there couldn’t be a better time to buy a home if it is in your short or long term objective.

The post Tucson Market Heat Map Comparison appeared first on Tom Campbell.

Home prices in the Tucson area will have dropped 0.2 percent by the third quarter of 2012 compared with the same period last year, a housing report released Monday predicts. Then – from the third quarter of 2012 to the third quarter of 2013 – home prices are projected to rise 16.6 percent, according to the Fiserv Case-Shiller Indexes.

In previous reports, Fiserv predicted Tucson housing prices would have hit bottom by last June. It then pushed the bottom to September before saying housing prices would continue falling through 2011.

The indexes, which are generated by Fiserv Inc. with supplemental data coming from the Federal Housing Finance Agency, track home prices in more than 375 U.S. markets. By September of last year, home prices in Tucson had fallen 12.3 percent from that month in 2010, Fiserv’s latest report says. That represents a 45 percent drop from when prices reached their peak in the first quarter of 2006.

Despite the prices reaching new lows, Fiserv still predicts “stabilization and recovery” in the coming year.

Copyright 2012 The Arizona Daily Star
Record Number: MERLIN_12991479

The post Housing prices may hit low by 3rd quarter appeared first on Tom Campbell.