Johns Newsletter October 2009
Search for Sedona Real Estate in the Sedona MLS
An Awesome Combination
More on Short Sales
Sedona Real Estate Market Report -The Sedona Market is Hot!
Third Quarter 2009
The defining measure of this market is not that prices are down. We know that they've been coming down for the past few years, but that the landslide has stopped and homes are selling. Hurray! Sales of residential homes in 2009 grew for the third quarter in a row, already surpassing the total number of homes sold in all of 2008: 299 compared to 309. The amazing combination of low interest rates and low priced homes cannot be beat.
Foreclosures and Short Sales
Of the 126 Homes Sold, 21% were foreclosures and 10.4% were short sales. While some Buyers looking to stretch their dollars found their dream home in a foreclosure or short sale, many others didn't. Instead they found many of these foreclosures to be in serious disrepair and not worth even the supposedly low price the banks were asking. Short Sales on the other hand presented a different problem, one of timing. Buyers are refusing to put their lives on hold for months waiting on the banks to give them an answer on their offer. With a little luck, patience and knowledge of the market, however, bargains can be found, just don't limit your search to just distressed properties, consider traditional sales as well.
| Sedona Market Statistics 2nd Quarter 2009 compared with 3rd Quarter of 2009 |
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2nd Quarter 2009 |
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3rd Quarter 2009 |
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% Change+/- |
| # of Homes Sold |
|
121 |
|
126 |
|
UP 4.1 |
|
| Average Sold Price |
|
$452,196 |
|
$442,401 |
|
down 9.7 |
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| Average Sold Price Per SqFt |
|
$195 |
|
$194 |
|
even |
|
| Median Price |
|
$389,000 |
|
$359,000 |
|
down 9.2% |
|
| Days on Market |
|
175 |
|
203 |
|
|
| |
Homes Sold
The number of homes sold continues to increase as Sellers price their homes competitively: 126 homes sold in the 3rd quarter of 2009, up 4.1% from the 2nd; and up 50% from the 1st quarter 2009. Homes priced below $399,000 sold the most, followed by those priced $400,000 to $600,000, while those priced $800,000 to $999,000 saw no change. Two markets decreased: homes priced $600,000 to $799,000 decreased 31% and the Sedona Luxury Market, homes above $1,000,000, decreased by 8%.
Average Price Per Square Foot Shows Stability
The average price per square foot went from $195 2nd Quarter 2009 to $194 the 3rd quarter 2009, a decline of 1%. You should know that the low- end market, homes that sold below $250,000, have been selling the most and consequently driving prices down. This will change as inventory of homes in this price range has shrunk considerably. Price per sqft in all other price ranges rose modestly in the 3rd quarter.
Inventory Continues to Shrink
The inventory of homes for sale in Sedona has been a key factor in the local market for the past several years. Inventory levels are generally a good indication of where home prices are going. As of September of 2009 that level dropped to a 12 month supply, down from a 37 month supply in January of 2009. Are we going to see prices soar any time soon due to the drop in month supply? We doubted, but we'll probably see interest rates go up. This may be one reason why you would want to buy now. Low prices with low interest rates, present a great opportunity for vacation home buyers and retirees looking to settle in Sedona.
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One of the many questions buyers ask is "Has this market bottomed out?" In order to answer this question, prices per square foot must either remain the same or go up for at least 6 months straight. Based on the average price per square foot of homes that sold in the last 6 months, it sure looks like the Sedona market has hit bottom.
AN AWESOME COMBINATION
9/22/2009
Rates for home loans remain low - but it won't last forever.
The Fed continues on their purchasing plan of Mortgage Backed Securities, and the added demand has kept Bond prices high and home loan rates low. Last week, they purchased another $32.4B, bringing the total to $849B out of the $1.25T they committed to. While these Fed purchases have helped home loan rates stay near present low levels, remember that their buying program is set to be over near the end of the year. There is talk that the program will be extended - but there has also been talk that it will end early - so nothing is a guarantee, except for the fact that when the Fed purchasing program is over, home loan rates will assuredly rise.
In addition, given the current expiration date of November 30, 2009 for the $8,000 First Time Homebuyer credit, it's important for homebuyers to get prepared, and take action.
In fact, many homebuyers are doing just that already. The Mortgage Bankers Association reported that home loan applications surged in the latest week to their highest level since late May, as more buyers are seeing the great opportunity that exists right now.
Let me know if I can answer any questions for you, or perhaps a friend, family member, neighbor or coworker that might be thinking about a home purchase.
The combination of reduced home prices, motivated sellers, low home loan rates, and the potential of a juicy tax credit is too great an opportunity to miss.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
Because of this volatility, it's important to work with a knowledgeable advisor who monitors the markets' moves. Don't hesitate to call me with any questions. I'm here to make sure your client has the best program at the best rate AND to insure the loan closes quickly and effortlessly. . . Have a great week!
Source: M&I Bank, Sedona, AZ
Donna Wiseman
"Short Sales" — Long Wait!
September 2009
A short sale is when a property is sold for less money than what is owed on it. For example, Mr. And Mrs. Smith sell their home to John and Jane Doe for $350,000, even though they owe the bank $425,000 on the home. In this instance, the bank is "shorted" $75,000 plus the costs of the sale such as commissions.
This begs the question: "Why would the bank agree to the sale?" The conditions that the bank imposes in a sale of this kind are that the seller must have suffered a hardship, such as a job loss or divorce, and must have no cash reserves to make their mortgage payments. In these circumstances the sellers are probably just a few steps away from foreclosure and it is cheaper for the bank to do a short sale than foreclose on the home; national statistics show that it costs a bank an average of $45,000 to do a short sale versus $65,000 for a foreclosure.
For the seller, a short sale also has advantages. The primary advantage is that a short sale only stays on one's credit report for 2 to 3 years, versus 5 to 7 years for a foreclosure, and it carries less of a reduction in credit rating. The other benefit is that it is not a matter of public record, so not everyone knows your business.
However, there are pitfalls for the seller to be aware of. For one, the bank(s) may not release the seller from future liability for the "forgiven" debt; this is more common when there is a second, non-purchase money loan on the home (e.g. a loan used to buy a boat). Furthermore, the "forgiven" debt may be a taxable event; for example, only loans on primary residences qualify for tax forgiveness, and then with dollar limits. So, always seek professional advice before undertaking a short sale.
The buyer, in these circumstances, can often purchase a property at a discount of 5% to 15% below market, but it is not an easy process. Most short sales take months and months to close as banks are swamped with them at a time when they are short of staff to manage the volume. Many buyers therefore end up losing interest after the long delay and the cancellation rate for this type of sale is far higher than normal. It is much easier to close a non-distressed sale and many sellers are now pricing their property to compete with short sales.
In conclusion, talk to your tax and legal advisors before undertaking a short sale and seek out a real estate agency that has experience of this type of transaction — a lot is riding on it.
Andrew Brearley
Owner
Coldwell Banker First Affiliate
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