Help on the Road Home

By Stuart and Destyn Young, Young Team, Homesmart

Oil prices are high; food prices are on the rise; the cost of energy, including water use, is skyrocketing; and unemployment is increasing. And of course, there is the mortgage meltdown. How does Phoenix stand in this arena?

Actually, there is good news. Home sales are up and home prices are more affordable. According to the Arizona Regional Multiple Listing Service Second Quarter report for 2008, home sales during this period have surpassed total homes sold since June of 2007.

What factor is fueling home sales? The answer is simply this: affordable prices and attractive financing options.

The Federal Housing Administration (FHA) has taken action by offering seller down payment assistance programs and by increasing the loan limits. Currently, the FHA loan limit for Maricopa County is at $346,250. This increase has expanded options for home buyers and brought relief to home sellers whose list prices were just out of reach before the loan limit increase. FHA loan programs also offer down-payment and closing-cost assistance for first-time home buyers. These popular programs, known as Nehemiah and Ameridream, allow sellers to assist buyers with up to 6 percent of purchase price toward down-payment assistance and closing costs. These programs are also available in bank-owned and short-sale transactions. Furthermore, fixed interest rates are still reasonable.

What caused the insurgence of home sales during the Phoenix housing boom were price and climate. The climate’s a given, and now price is making a return. Affordable prices help reduce inventory. The majority of affordable homes is largely due to bank-owned properties and short sales. In order for the market to return to normal, the supply needs to be decreased, which requires price reductions. Short sales and bank-owned properties will not be driving the market forever, but they will need to run their course in order for the market to stabilize.

Many home sellers are faced with the challenge of selling a home whose value is less than what is owed on the mortgage. This is called a short sale. Short sales are making up at least 33 percent of homes sold. If you are considering a short sale, it is suggested that you ask a realtor who is seasoned in the short-sale market, as these transactions can be arduous. Home buyers with patience are good candidates for short-sale transactions, because the reward is worth the wait. For home buyers looking for a quicker turnaround, bank-owned properties close on an average of thirty days. You may need to get your hands dirty with an REO (Real Estate Owned), a property that has gone through foreclosure and owned by lender, but the price point is worth the sweat equity. There are also really great deals on standard listings that are priced right and in turnkey condition, and can close quickly.

So what will the future bring? Only time will tell, but the present brings good news: Inventory is being reduced, and prices are more affordable.