According to a Phoenix Metro Housing study, the number of vacant units declined from 106,125 in 2009, to 83,475 in 2011. This number will only get lower, as Phoenix and the surrounding communities feel the effects of increasing population. According to ASU and the Dept. of Commerce, the population in greater Phoenix is expected to increase 1.2% in 2012. Okay, it’s not as great as the 3.8% increase in 2005, but it’s also not as bad as the 0.3% increase in 2009. The current unemployment rate is about 8%. This is down from 10% in 2009. Arizona ranked 22nd in job growth in 2011, compared to 49th in 2010 and 2009. Greater Phoenix ranked 9th in 2011, compared to 31 other metro area with over 1 million jobs.

In terms of real estate sales, the Southeast Valley has seen 13 straight months of diminishing “Active” property listings. Inventory is starting to dry up in many areas of Chandler and Gilbert, with multiple offers on resale properties commonplace. Part of the reason for this decrease in inventory is the influx of investors. 40% of all sales in the greater Phoenix area in 2011 were non owner occupied sales. Even more interesting is that almost 40% of all sales in 2011 were cash!

If you don’t believe these numbers, just go talk to some of the new home builders in the Southeast Valley. They are experiencing record sales levels. Shea Homes in Old Stone Ranch saw record sales in December, and can hardly keep up with demand thus far in January. 11 contracts for new homes written in the past month. This trend is being repeated elsewhere with Pulte and Meritage homes as well. Spec homes don’t last very long, and available lots are selling fast in  most communities. This trend will not stop either, as the builders are all experiencing an increasing shortage of available labor to build these new homes. Most prices in the SE Valley have begun to stabilize, but prices will not go up any time soon, as appraisers are still being very conservative with their valuations.

So while we don’t have a full housing recovery yet, as Phoenix is still in the top 10 major cities with homes that have negative equity (52%), there is reason to feel optimistic that the worst has passed.

Like many Realtors here in the Southeast Valley, the sales of some of my listings have been under jeopardy due to the value placed on it by the appraiser hired by the buyer’s lender through an “independent” appraisal management firm. Even with properties that have multiple offers which send the price above the original list price, there is no guarantee that the appraiser will find the home worth as much as the buyer and seller thought at the time of the contract.

An appraisal is supposed to be a “snapshot in time” value that a willing and able buyer will agree to pay for a property. It should be a reflection of the quality of the home, as well as the forces of supply and demand. However, due to the Dodd-Frank Act, which requires maximum distance between the lender and the appraiser, the appraiser is now chosen at random. So, if you live in a custom community in Chandler, you may get an appraiser with six months of experience that lives and works primarily in Glendale. This appraiser may have no working knowledge of the area, the builders, or the local market. So the appaiser’s local bias, rather than market conditions, may skew the value.

My job as a Realtor, is to screen the appraiser as best I can through a series of questions, to ensure local knowledge BEFORE the appraiser shows up at the door. Another appraiser can be requested if the questions show a lack of local knowledge, but only before they show up to do the appraisal.  Make sure before you list your home, that you have a Realtor who looks after your interest before a problem arises.  HARLAN STORK

How Appraisals Are Derailing Home Sales

New requirements are resulting in more cancelled or delayed contracts. By ANNAMARIA ANDRIOTIS

Three months ago, real estate agent Gary Rogers says he was conducting a fairly routine home sale. Then he received the home appraisal’s report, which valued the three-bedroom colonial in Waltham, Mass., at $430,000, rather than the $448,000 selling price the buyer and seller had agreed to. Unless the buyer agreed to put up more money, or the seller to lower the price, the deal was off. Fortunately, after nearly two weeks, Rogers says the two sides agreed to meet in the middle.

In the past, appraisals rarely disrupted a home sale. But realtors and housing experts say new requirements and a difficult housing market are doing just that. Year-to-date through September, one third of realtors have said appraisals resulted in buyers and sellers delaying or canceling contracts or renegotiating to a lower sales price, according to the National Association of Realtors. That’s up from 29% in all of 2010 and up from less than 10% prior to 2009.

Indeed, lenders say they’re requiring more thorough home appraisals. Appraisers determine the value of a home largely by reviewing the prices at which similar homes nearby sold for in recent months. During the housing boom, appraisers could cite as few as three recently sold homes; today, lenders are often requiring two to three times that, says David Stevens, president and CEO of the Mortgage Bankers Association. To meet that quota, appraisers say they sometimes have to use homes that aren’t similar and may be foreclosures or short sales, though they are taking into account what this property would have sold for if it wasn’t a distressed sale, says a spokesman for the Appraisal Institute, an association of real estate appraisers. “Appraisers have become much more cautious,” says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla.

To be sure, a more thorough appraisal process does have its benefits. It lets a buyer know whether they’re offering too much to buy a particular home. “For buyers, the appraisal is a check and balance — it’s there to ensure the buyer isn’t overpaying and the lender isn’t over-lending,” says McCabe.

It may also make houses cheaper for buyers — though not without more hassle. If the appraisal value comes in below the agreed buying price, the lender will typically offer a smaller mortgage. For example, on the house that Rogers sold, the buyer would have gotten a mortgage for $358,400, or 80% of $448,000. But when the appraisal value came in at $430,000, the lender adjusted the mortgage amount to 80% of the appraisal figure, or $344,000. The contract the buyer and the seller had signed, however, stated the higher buying price of $448,000, and the buyer (and potentially the seller) had the option to decide if they wanted to make up the $18,000 difference.

Typical solutions include having the buyer paying that difference out of pocket or the seller lowering his price — or both. And sellers often do lower their prices: For example, during the three months ending September, 13% of realtors reported contracts were renegotiated to a lower sales price, compared to 10% who said contracts were canceled and the 8% who said contracts were delayed.

Here are ways to make the process easier, say experts, and how to deal with complications.

How sellers can prepare:Before putting their home on the market, sellers should research what similar homes near them are selling for by looking at online listings, visiting open houses and speaking with realtors, says Rogers. “It’s always good to get more than one opinion,” he says. They can also ask for their own home appraisal, which could give them a sense of how close (or far off) the figures are. The cost of an appraisal varies but typically ranges from $250 to $600.

How buyers can protect themselves:When buyers make an offer, they should include statements in the contract guaranteeing they’ll receive their initial down payment (typically 3% to 5% of the agreed buying price of the home) back if full mortgage financing doesn’t come through for the agreed price or the appraisal value is below the offer that’s in the contract, says McCabe. Separately, the buyer (who’s required to pay for the home appraisal) should ask for the appraisal report and look at what properties the appraiser used as comparisons, says Rogers. It should, he says, include homes that are in the same neighborhood and the same style. In other words, a colonial home shouldn’t be compared to a ranch.

What to do if appraisal value comes in below the purchase price:In this situation, experts say buyers have several options. If they’re no longer interested in the home, they can walk away. (However, without a contingency clause — see previous section — they risk losing their initial down payment.) But if they still intend to buy the house and they can prove the report excluded similar, nearby properties or had some other issue, they can appeal or ask their lender for a second appraisal.

If those strategies don’t work, the buyer and the seller can consider working out an agreement on their own. Lastly, to report a problem with an appraiser, consumers can contact their state’s appraisal board.

While many buyers feel that buying a short sale is a long drawn out experience that is not worth the time or trouble, new data suggests otherwise. Whether you are a first time home buyer, a second home buyer, or an investor, being patient on a short sale may give you the best value for your dollar.

In a market like ours here in the Southeast Valley of Phoenix, which is dominated by short sale listings, avoiding short sales may also put a severe limit on the number of homes available for you to buy. Don’t let poor information limit your options. The article below lets you know how short sale equals value in many cases.  Harlan Stork

Short Sales Offer Significant Discounts in Several Major Cities By: Krista Franks 10/31/2011

Short sales are growing throughout the nation as distressed homeowners and servicers continue to seek alternatives to foreclosure and home buyers increasingly opt for the significant discounts that come with short sales.

With 9,145 completed short sales, the Los Angeles area had more short sale transactions than any other metropolitan statistical area (MSA) in the second quarter of this year, according to a recent blog post from RealtyTrac. These short sales came with an average discount of 32 percent and at an average price of $350,237. Phoenix ranked second in number of short sales for the second quarter with 8,434 short sales, which came with an average discount of 27 percent and an average price of $133,793.

According to the RealtyTrac blog post, the metros with the highest numbers of short sales in the second quarter were:

1. Los Angeles
2. Phoenix
3. Cape Coral – Fort Myers, Florida
4. Oxnard – Thousand Oaks – Ventura, California
5. Reno – Sparks, Nevada
6. San Francisco
7. San Jose
8. Portland
9. Atlanta
10. Milwaukee

Short sale savings averaged more than 30 percent in Cape Coral – Fort Myers, Florida; San Francisco; San Jose; and Milwaukee. Reno – Sparks, Nevada, experienced a 50 percent rise in short sales from the first quarter to the second quarter of the year, while San Francisco saw a 47 percent rise in short sales. Atlanta and Milwaukee also saw significant increases in short sales over the quarter – 21 percent and 20 percent respectively.

©2011 DS News. All Rights Reserved.

The most important step in selecting a home is knowing how much you can spend. If you already use an electronic budgeting system, you’re ahead of the game. If not, track your expenses for the past several months to a year. Try to quantify the “gray areas” of cash withdrawals that disappear on small purchases. Now add up your current rent and other related expenses. If you’ve been saving money toward your down payment, note that, as well. Finally, ask yourself where you can tighten your belt with your existing discretionary purchases. This is the maximum amount you could pay per month. Now ask yourself if this is reasonable, given your current savings and possible expenses. Only you know the answer to that. When you’ve arrived at a comfortable number, write it down, and save your calculations. You’ll take this to the bank when you apply for loan preapproval. For now, you have an estimated payment you can use while shopping online.

Set your Criteria

A home is the biggest purchase you’ll probably ever make. Stay focused and don’t let emotion guide you. If you have one child and no plans for more, four bedrooms are probably a waste. Write down a list of must-haves, nice-to-haves, and can’t haves before you start visiting homes. You’ll save time, help your agent work more productively, and keep yourself from getting carried away—into the wrong house.

Important criteria include:

• Age of house
• Number of bedrooms and bathrooms
• Size of lot / yard
• School district requirements
• Type of street (Are busy streets OK, or do you want a cul de sac? Do you need to be near a bus or light rail line?)
• Type of home (Single-story? Mutli-level? Are there any dominant architectural styles in your area that you refuse to buy?)
• Central heating and cooling
• Expensive additions, such as in-ground pools

Make a list of Homes

After you’ve made this list, search online and find several representative homes. If you have time and you’re fairly local, drive by a few of them to get a feel for the neighborhoods. Write down your impressions. This will help you understand home much of a home’s description is fact versus fluff, and give your real estate agent a good idea of your likes and dislikes.

Find a Realtor®

Most home buyers select a licensed Realtor® to represent them, and they are almost always happy they did. Realtors® are real estate agents who subscribe to a strict code of ethics and are acknowledged experts in the field. A Realtor® knows your local market, and can help you through every step of the home buying process, from finding your dream home to negotiating the best possible terms, explaining everything along the way.

Bring a Camera

Your Realtor® will take you on a number of open houses, and your opinions can be lost in the blur. To keep things straight, bring a digital camera on your trips. Take a picture of the street nu,ber of each property, then photograph each room during your walk-through. Photograph a house even if you decide it’s wrong for you—there may be furnishings, construction tips, or other features you notice later that could come in handy when you find the right home.

by Cormac Foster