Mid Month Pricing Update and Forecast for August

Article Courtesy of Michael Orr
The Cromford Report

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending August 16, we are currently recording a sales $/SF of $79.63 averaged for all areas and types. This is 1.1% lower than the $80.53 we now measure for July 16. Our forecast range was $77.83 to $81.01 with a mid-point of $79.42. The actual figure is almost at the center of the predicted range, so we congratulate ourselves that last month's projection was much more accurate than usual. For this we can thank the fact that the blend of sales between June 16 and July 16 was fairly similar to that between July 16 and August 16.

Sales activity is still very concentrated at the bottom end of the market with the top end much weaker than during the spring. Buyers of luxury and vacation homes tend to stay away from Phoenix during July and August, having better places to be when temperatures soar above uncomfortable. This is one reasons why Phoenix's average pricing almost always shows signs of weakness between June and September each year.


On August 16 REO sales across Greater Phoenix (all types) averaged $59.26 per sq. ft. (down 0.9% from July 16). Pre-foreclosures and short sales averaged $73.78 (up 3.1%) while normal sales averaged $105.32 (down 3.6%). Normal sales gained a little market share, moving from 32.0% to 32.6% of sales, while REOs also gained market share, moving from 43.9% to 44.2%. Short sales and pre-foreclosures were the losers this month, moving from 24.1% to 23.2% after a strong spike at the end of June.

On August 16 the pending listings for all areas & types showed an average list $/SF of $78.09, 1.1% below the reading for July 16. Among pending listings we have only 26.2% normal, 39.0% REO and a growing 34.8% in short sales and pre-foreclosures. The average pricing for pending listings on July 16 in each category were: $109.13 normal, $70.26 short sales & pre-foreclosures and $60.47 for REOs.


Our new mid-point forecast for the average monthly sales $/SF on September 15 is currently $78.74, which is 1.12% below the August 16 reading, and we have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $77.17 to $80.21. A substantial change in the mix can have a significant effect on the average price per sq. ft. and we are still seeing considerable variation from day to day.


In the last two months the overall monthly average sales price per sq. ft. has moved below its former range of $81 to $85 establishing a new extreme low of $79.31 on July 29. In conjunction, and on the same date. the monthly average sales price broke through its previous record low of $153,210 which had been set on February 24, and established a slightly lower low point of $153,073. However the record low monthly median sales price is still standing at $107,000 and this was set six months ago on February 24. Our current monthly median sales price is back down to $108,000, having flirted for a moment with $113,000 as recently as July 8.


Although we at the Cromford Report tend to enjoy looking at these details, all this price movement is of no great significance in the big picture. Median prices have been in the range $107,000 to $113,000 since December 23, 2010. When we look back a year or two from now we will conclude that they were essentially flat and it will be hard to make out where the bottom was. Given the strong demand and weak supply, prices are likely to stay flat for a while longer apart from movements caused by the blend. Counterbalancing the supply/demand forces are continuing pessimistic (let's call them very conservative) valuations from the majority of appraisers and gloomy sentiment from the non-investing public, who continue to be misinformed daily by much of the media about a supposed "glut of foreclosed homes" about to hit the market.


The main trends we currently see are:

• banks have increased their asking prices for REOs as they become scarcer
• short sales are getting cheaper and easier to close, though far fewer remain active without an offer
• normal sales include a higher proportion of "flips" rather than owner occupier sales and therefore average prices are falling
• luxury homes are selling in lower numbers
• HUD homes are selling like hot cakes (which also brings pricing averages down)

So we shouldn't expect to see good news from pricing numbers for a while yet. For those who would like some good news here is a selection:

• pending listing counts dipped after the Spring peak but remain strong for the time of year
• expiry and cancellation rates are very low
• active listing counts are moving sideways whereas they would normally be increasing at this time of year
• the supply versus the annual sales rate is lower than at any time in the recent past with the exception of the bubble years 2004 and 2005 - take a look at the long term inventory chart

The improvement we have been seeing in Maricopa County foreclosure numbers is taking a breather in August. Following a pattern we also saw in the last two years, we are experiencing higher notices of trustee sales than in the previous three months, but still far below the levels of 2009 and 2010. Trustee sales are seeing fewer properties go to beneficiaries and more to third parties so the REO inventory is still declining. However the steep fall in pending foreclosures has stopped due to the renewed flow of notices. The end of month August foreclosure totals are likely to be higher than of late, but these do not signify a change of trend. There is no "new flood of foreclosures" and the higher numbers will be partially caused by the calendar - there are an unusually high 23 working days for trustees in August. So for once let's spare a thought for those hard working and under-appreciated professionals - the trustees.

Today's Topics - 8/17/11

Today's Topics include an interesting take on the current state of our economy shared by the crew at Keeping Current Matters and some great information from the IRS. 

While we are all aware that our economy has taken a dive in recent weeks and we are all stunned by rising food and gas prices, dropping home prices, and crashing markets, the article by Keeping Current Matters suggests that things may not be quite as bad as they seem. 

The tax tips provided by the IRS come as a list of 10 tips for anyone who is planning to sell a home or who has recently sold a home. It also includes information for anyone who received the
First-time Homebuyer Credit and within 36 months of the date of purchase, the property is no longer used as your principal residence.  The IRS article which discusses the Mortgage Forgiveness Debt Relief Act and Debt Cancellation was written in 2009, however, the information is still pertinent today.  As always, be sure to seek professional advice from your tax advisor regarding your specific tax situation.  

The articles mentioned can be found by scrolling down.

The Economy: Why All the Panic?

Courtesy of Keeping Current Matters/ the KCM Blog
Posted: 17 Aug 2011

For the last couple of weeks, all we have heard is how bad the current economic situation is. The markets are going to crash and interest rates are going to skyrocket. Panic has definitely engulfed the entire country.
Consumer confidence, as measured by the University of Michigan’s Consumer Sentiment Survey, has fallen to a number not seen in thirty years. This panic has actually had a negative impact on the economy.
It was said best by Mark Zandi, chief economist at Moody’s Economy:

“Confidence normally reflects economic conditions; it doesn’t shape them…
Yet at times, particularly during economic turning points, cause and effect can shift. Sentiment can be so harmed that businesses, consumers and investors freeze up, turning a gloomy outlook into a self-fulfilling prophecy. This is one of those times.”

What does the data actually show?

We decided to look at certain economic indicators and compare them to the numbers from a year ago. Here is what we found:

We are not making the argument that the current numbers are worth celebrating. We are only suggesting that the sky is not falling.

 

Bottom Line

Conditions aren’t as dire as some are professing. Make good sound financial decisions based on your own economic conditions. There is no need to panic.

IRS Provides Ten Tax Tips for Individuals Selling Their Homes

Source:  The Internal Revenue Service

IRS Summertime Tax Tip 2011-15 ,  August 8, 2011
The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are ten tips from the IRS to keep in mind when selling your home.

1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
   
   
2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
   
   
3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
   
   
4. If you can exclude all of the gain, you do not need to report the sale on your tax return.
   
   
5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
   
   
6. You cannot deduct a loss from the sale of your main home.
   
   
7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
   
   
8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
   
   
9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.
   
   
10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

For more information about selling your home, see IRS Publication 523, Selling Your Home. This publication is available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Links:

• Publication 523, Selling Your Home ( PDF)
  
• Form 5405, First-Time Homebuyer Credit and Repayment of the Credit ( PDF)
  
• Form 8822, Change of Address ( PDF)

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

Source:  The Internal Revenue Service

If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.

The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17.

The following are the most commonly asked questions and answers about The Mortgage Forgiveness Debt Relief Act and debt cancellation:

What is Cancellation of Debt?
If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.

Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:

• Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.
• Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
• Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets.
• Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.
• Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.

These exceptions are discussed in detail in Publication 4681.

What is the Mortgage Forgiveness Debt Relief Act of 2007?
The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007 (see News Release IR-2008-17). Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.

What does exclusion of income mean?
Normally, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. But the Mortgage Forgiveness Debt Relief Act allows you to exclude certain cancelled debt on your principal residence from income. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

Does the Mortgage Forgiveness Debt Relief Act apply to all forgiven or cancelled debts?
No. The Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes. In addition, the debt must be secured by the home. This is known as qualified principal residence indebtedness. The maximum amount you can treat as qualified principal residence indebtedness is $2 million or $1 million if married filing
separately.

Does the Mortgage Forgiveness Debt Relief Act apply to debt incurred to refinance a home?
Debt used to refinance your home qualifies for this exclusion, but only to the extent that the principal balance of the old mortgage, immediately before the refinancing, would have qualified. For more information, including an example, see Publication 4681.

How long is this special relief in effect?
It applies to qualified principal residence indebtedness forgiven in calendar years 2007 through 2012.

Is there a limit on the amount of forgiven qualified principal residence indebtedness that can be excluded from income?
The maximum amount you can treat as qualified principal residence indebtedness is $2 million ($1 million if married filing separately for the tax year), at the time the loan was forgiven. If the balance was greater, see the instructions to Form 982 and the detailed example in Publication 4681.

If the forgiven debt is excluded from income, do I have to report it on my tax return?
Yes. The amount of debt forgiven must be reported on Form 982 and this form must be attached to your tax return.

Do I have to complete the entire Form 982?
No. Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Adjustment), is used for other purposes in addition to reporting the exclusion of forgiveness of qualified principal residence indebtedness. If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as the result of foreclosure on your principal residence, you only need to complete lines 1e and 2. If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2, and 10b. Attach the Form 982 to your tax return.

Where can I get this form?
If you use a computer to fill out your return, check your tax-preparation software. You can also download the form at IRS.gov, or call 1-800-829-3676. If you call to order, please allow 7-10 days for delivery.

How do I know or find out how much debt was forgiven?
Your lender should send a Form 1099-C, Cancellation of Debt, by February 2, 2009. The amount of debt forgiven or cancelled will be shown in box 2. If this debt is all qualified principal residence indebtedness, the amount shown in box 2 will generally be the amount that you enter on lines 2 and 10b, if applicable, on Form 982. 

Can I exclude debt forgiven on my second home, credit card or car loans?
Not under this provision. Only cancelled debt used to buy, build or improve your principal residence or refinance debt incurred for those purposes qualifies for this exclusion. See Publication 4681 for further details.

If part of the forgiven debt doesn't qualify for exclusion from income under this provision, is it possible that it may qualify for exclusion under a different provision?
Yes. The forgiven debt may qualify under the insolvency exclusion. Normally, you are not required to include forgiven debts in income to the extent that you are insolvent.  You are insolvent when your total liabilities exceed your total assets. The forgiven debt may also qualify for exclusion if the debt was discharged in a Title 11 bankruptcy proceeding or if the debt is qualified farm indebtedness or qualified real property business indebtedness. If you believe you qualify for any of these exceptions, see the instructions for Form 982. Publication 4681 discusses each of these exceptions and includes examples.

I lost money on the foreclosure of my home. Can I claim a loss on my tax return?
No.  Losses from the sale or foreclosure of personal property are not deductible. 

If I sold my home at a loss and the remaining loan is forgiven, does this constitute a cancellation of debt?
Yes. To the extent that a loan from a lender is not fully satisfied and a lender cancels the unsatisfied debt, you have cancellation of indebtedness income. If the amount forgiven or canceled is $600 or more, the lender must generally issue Form 1099-C, Cancellation of Debt, showing the amount of debt canceled. However, you may be able to exclude part or all of this income if the debt was qualified principal residence indebtedness, you were insolvent immediately before the discharge, or if the debt was canceled in a title 11 bankruptcy case.  An exclusion is also available for the cancellation of certain nonbusiness debts of a qualified individual as a result of a disaster in a Midwestern disaster area.  See Form 982 for details.

If the remaining balance owed on my mortgage loan that I was personally liable for was canceled after my foreclosure, may I still exclude the canceled debt from income under the qualified principal residence exclusion, even though I no longer own my residence?
Yes, as long as the canceled debt was qualified principal residence indebtedness. See Example 2 on page 13 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments.

Will I receive notification of cancellation of debt from my lender?
Yes. Lenders are required to send Form 1099-C, Cancellation of Debt, when they cancel any debt of $600 or more. The amount cancelled will be in box 2 of the form.

What if I disagree with the amount in box 2?
Contact your lender to work out any discrepancies and have the lender issue a corrected Form 1099-C.

How do I report the forgiveness of debt that is excluded from gross income?
(1) Check the appropriate box under line 1 on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to indicate the type of discharge of indebtedness and enter the amount of the discharged debt excluded from gross income on line 2.  Any remaining canceled debt must be included as income on your tax return.

(2) File Form 982 with your tax return.

My student loan was cancelled; will this result in taxable income?
In some cases, yes. Your student loan cancellation will not result in taxable income if you agreed to a loan provision requiring you to work in a certain profession for a specified period of time, and you fulfilled this obligation.

Are there other conditions I should know about to exclude the cancellation of student debt?
Yes, your student loan must have been made by:

(a) the federal government, or a state or local government or subdivision;

(b) a tax-exempt public benefit corporation which has control of a state, county or municipal hospital where the employees are considered public employees; or

(c) a school which has a program to encourage students to work in underserved occupations or areas, and has an agreement with one of the above to fund the program, under the direction of a governmental unit or a charitable or educational organization.

Can I exclude cancellation of credit card debt?
In some cases, yes. Nonbusiness credit card debt cancellation can be excluded from income if the cancellation occurred in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See the examples in Publication 4681.

How do I know if I was insolvent?
You are insolvent when your total debts exceed the total fair market value of all of your assets.  Assets include everything you own, e.g., your car, house, condominium, furniture, life insurance policies, stocks, other investments, or your pension and other retirement accounts.

How should I report the information and items needed to prove insolvency?
Use Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to exclude canceled debt from income to the extent you were insolvent immediately before the cancellation.  You were insolvent to the extent that your liabilities exceeded the fair market value of your assets immediately before the cancellation.

To claim this exclusion, you must attach Form 982 to your federal income tax return.  Check box 1b on Form 982, and, on line 2, include the smaller of the amount of the debt canceled or the amount by which you were insolvent immediately prior to the cancellation.  You must also reduce your tax attributes in Part II of Form 982.

My car was repossessed and I received a 1099-C; can I exclude this amount on my tax return?
Only if the cancellation happened in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See Publication 4681 for examples.

Are there any publications I can read for more information?
Yes.
(1) Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) is new and addresses in a single document the tax consequences of cancellation of debt issues.

(2) See the IRS news release IR-2008-17 with additional questions and answers on IRS.gov.

Page Last Reviewed or Updated: May 19, 2009

"For Sale By Owner" Website Founder Uses REALTOR® to Sell Home

Courtesy of REALTOR.org Magazine

Interesting article!  If you're thinking about selling your home without a REALTOR®, you might want to read this... 
 CLICK HERE.

New Stats at My Website

I'm pleased to announce that this week I added some new CROMFORD REPORT charts to my website.  Now, in addition to the stats specific to Paradise Valley and Scottsdale, I have added an Annual Appreciation by List Price graph and a group of Snapshots by Price Range charts.  While the PV and Scottsdale stats are updated weekly, the data by price range is updated monthly.  Michael Orr, author of the Cromford Report, also provides commentary on current market conditions twice a month.  The most current update can be found posted below.  During these crazy economic times, I think you will find the stats provided to be very informative and, if you are considering buying or selling, you may find them extremely helpful when used in conjunction with a comparative market analysis.

Market Summary for the Beginning of August

Article Courtesy of Michael Orr
The Cromford Report

Although we didn't see the record breaking sales numbers of June, July had plenty of positive news for market watchers. An important exception was pricing, and no doubt much will be made of that by the housing doom folks, but then Cromford Report readers all know that pricing is a trailing indicator, don't we?

According to the current ARMLS data, 8,522 homes closed during July across all areas and types. This is 19.4% below the 10,568 we are measuring today for June. This dip between June and July is a normal seasonal effect. The key comparison to make is with July 2010. Here we are up 23.3% compared with 6,911 a clear sign that the market is healthier today than it was last year when we were reporting significant deterioration.

Due to the exceptionally large number of short sales in the ARMLS numbers, we experience a lot of "turbulence" in these sales numbers and they continue to change for many weeks after the end of the month. On July 2 last month we could see 3,057 short sales and pre-foreclosures across Greater Phoenix but this number is now measured at 2,481. The flexmls system automatically closes pending transactions when their Close of Escrow date is reached. Quite often a snag occurs in real life and a sale fails to close when expected and has to be manually reversed later. This is far more likely to happen with short sales than other types because of the large number of approvals and documents needed to successfully close escrow. As usual our sales counts will be constantly monitored and corrected as newer statistics emerge on a daily basis. The 19% drop-out rate for June is the highest we have seen and is unlikely to be repeated in July's numbers, but please treat all reports with caution due to this effect. 

 Here are some key figures for all areas & types:
Pending Listings: 11,491 on August 1, down 6% from 12,224 on July 1, but up 17% compared with August 1, 2010.
Active Listings: 27,787 on August 1, down 3.6% from 28,837 on July 1, and down 34.6% compared with August 1, 2010.
Listing Success Rate: 74.4% on August 1 which compares favorably with 73.5% on July 1 and very favorably with 58.5% on August 1, 2010.

In a normal year supply starts to increase from the beginning of July, so that 3.6% decline in active listings is a positive sign. Because of the lower monthly sales rate in July, months of supply has edged up from 2.9 to 3.0 months, but this is well below normal. The average months of supply for 2001 onwards is 5.8 months. A less volatile way to measure inventory is to divide active listings by the annual sales rate as this largely eliminates seasonal effects. Here we are seeing 105 days of inventory, improving from the 110 we measured last month and the lowest number of days of inventory since February 2006. The average days inventory since January 2001 is 174, so we have a significant under-supply of homes for sale through ARMLS.

Supply continues to drop while demand remains relatively strong. However that demand is not evenly distributed across the price ranges. In the last month we have seen the market strengthen at the low end while losing a lot of momentum at the middle and high end. Compared with July 2010, this month saw dramatic sales growth for single family homes below $100,000 but above that figure the picture is mixed. A few ranges performed fairly well, notably $100K->$125K, $175K->$200K, $400K->$500K and $1.5M->$2M, but there was a huge hole at the very top end of the market. Last year we had eleven closed sales over $3,000,000 during July and this July we have just one. Sales volumes are also down between $225K and $400K and between $600K and $1.5M. As you can imagine, an increase in the volumes under $100,000 pulls the average sales price and the average sales price per sq. ft. down substantially. The sales weakness in the higher range exacerbates this. However all that buying at the low end has caused the median sales price to stay fairly strong and it has barely changed over the last seven months.

As is normal when a market is attempting to recover from a long and disastrous plunge, there are plenty of conflicting signals:

Signs That Prices Are Going to Go Down

• The average list price per sq ft for pending listings continues to drift downwards, down 1.5% in the last month.
• The average asking price per sq. ft. for normal listings has fallen by 1.6% in the last month.
• Monthly average sales prices are making fresh lows.

Signs That Prices Are Going to Go Up

• The average asking price per sq. ft. for lender owned homes has risen by 7.4% in the last month.
• Sold price as a percentage of list continues to go up.
• Remarkably few listings are being canceled or expired.
• Investors are now purchasing nearly 40% of the properties auctioned at trustee sales in Maricopa County.
• Average days on market for closed sales is coming down.

Signs That Price Are Going to Stay Flat

• The average asking price per sq. ft. for short sales and pre-foreclosure has barely moved in the last month.
• Median sales prices are essentially flat.

So you can take your pick. It seems to me that although the supply/demand imbalance is becoming extreme, demand from investors alone is unlikely to sustain a significant upward price movement. We may have to wait until the general public realizes the degree to which the reality and perception of the supply picture have diverged, so that fear of missing out on a bargain overcomes the fear of prices dropping yet further. 

There are still many sources claiming that a "new tidal wave of foreclosures" is going to hit the Phoenix area. This is pure imagination and reminds me of the Y2K phenomenon in 1999. Despite a busy final week in July, the trustees of Maricopa County only issued 4,194 new notices of which 4,015 were residential. This compares with 8,140 in total and 7,802 residential for July last year. Foreclosure notices are down 48% to the lowest level since December 2007. As for actual trustee sales, we had 3,330 in July of which 3,176 were residential. This is 31% down from July last year and 36% below March this year. The trend is obvious and strongly downward and it seems we are about 75% of the way through the foreclosure tsunami of 2007-2012. This observation is only made about Maricopa County and is probably not true elsewhere, especially in states that use a judicial foreclosure process.

Mortgage Rates Reach Record Lows

Source:  National Association of Realtors®
Daily Real Estate News | Friday, August 05, 2011

Mortgage rates dropped sharply this week, possibly improving the purchasing power of many home buyers. The 30-year fixed-rate mortgage, the most popular choice among buyers, averaged 4.39 percent this week, its lowest average for 2011, Freddie Mac reported in its weekly mortgage market survey. The 15-year fixed-rate mortgage and the 5-year adjustable rate-mortgage also both reached new historical record lows. 

Rates mostly dropped across the board amid signs of a weakening economy, Freddie Mac says. 

"Treasury bond yields fell markedly after signs the economy was weaker than what markets had previously thought allowing fixed mortgage rates to follow this week with the 15-year fixed and 5-year ARM setting new historical lows,” says Frank Nothaft, chief economist at Freddie Mac.

Nothaft also noted some improvement in the housing market, however. "There were indications that the housing market is firming,” he says. (see Pending Home Sales Rise in June)

Here’s a closer look at rates for the week ending Aug. 4:

30-year fixed-rate mortgages: averaged 4.39 percent, downfrom last week’s 4.55 percent average. A year ago at this time, 30-year rates averaged 4.49 percent.  

15-year fixed-rate mortgages: averaged 3.54 percent, dropping from last week’s 3.66 percent average.Last year at this time, 15-year rates averaged 3.95 percent.  

5-year adjustable-rate mortgages: averaged 3.18 percent this week, falling from last week’s 3.25 percent average. Last year at this time, 5-year ARMs averaged 3.63 percent.

1-year adjustable-rate mortgages: were the only ones on the rise last week, averaging 3.02 percent this week, which is up from last week’s 2.95 percent average. Last year at the time, 1-year ARMs averaged 3.55 percent. 

Source: “Mortgage Rates Hit Record Lows Amid Signs of Weakening Economy,” Freddie Mac (Aug. 4, 2011)

Do-It-Yourself Home Security Check: Doors are First Line of Defense

Courtesy of the National Association of Realtors
Article Written By: Joseph D'Agnese

Protect against break-ins with a security check that shows where the entrances to your house—your doors—are vulnerable.

Think like a burglar 

 

First, stand back: is your front door visible from the street, or is it obscured by bushes? A door that’s covered by shrubbery offers thieves the perfect chance to break in without being seen. 

Trim back or remove shrubbery that offers cover for potential intruders.

 

Upgrade strike plates and deadbolts

 

Open all doors and check the strike plates, the metal fittings that catch bolts and latches. Chances are, they’re fastened to the soft wood of the door jamb with two screws only. Not good. Upgrade security with four-screw strike plates ($3) and 3-inch screws that bite all the way into the stud behind the jamb.

When conducting your home security check, make sure exterior doors have deadbolts that throw at least a 1-inch bolt. Ask your locksmith to upgrade to Grade 1 or Grade 2 locksets and deadbolts ($25 to $80), the most secure options.

Check garage doors

Back doors and garage doors are more likely to be attacked than the front door. If you have an attached garage, disable the automatic opener and lock the garage door before you go away on a long trip. The door leading from the garage into the house should be outfitted with the same hardware as exterior doors and kept locked at all times. 

Patio doors are vulnerable

Sliding doors leading to a patio can be a home’s weak spot. To beef up security:

• Closely inspect the doors and their hardware.

• Replace any missing or broken locks.

• Consider installing locking pins to prevent the doors from sliding.

• Get into the habit of locking the doors, not just the screen, when patio doors are unattended. 

Replace your entry door

Check the construction of your entry doors.  Those made of steel, solid wood, and impact-resistant fiberglass are all good choices for security. If you must have glass, make sure it is tempered or reinforced for added strength. Expect to pay $1,400 to $2,300 for an exterior replacement door, including installation.

Strengthen the lock on your outdoor storage shed

 

Don’t ignore the doors on your outdoor storage shed, especially if you store tools there; they could be useful to a burglar. As with house doors, the best option is a secure deadbolt. If your shed doors are unable to accommodate a deadbolt, a heavy-duty slide bolt ($15 to $25) secured by a padlock is a good substitute.


Joseph D’Agnese is a journalist and book author who has written numerous articles on home improvement. He lives in North Carolina.