Banks are selling Tucson foreclosures like never before and the stats are mind-boggling!  In the core Tucson real estate areas there are currently only 586 Active foreclosures listed for sale with 612 that are currently under contract.  This is an astounding 51.1% pending – Strong Seller’s market and the numbers are showing it.  There have been 2,361 foreclosures listed that have successfully sold and closed in the last 6 months with a median sale price of under $100,000!  Many great foreclosures are selling for less than $60,000!  This gives an inventory of only 1.5 months!  With roughly 180 days in the last 6 months this means that there are just over 13 foreclosures closing every day. 

Who is buying them?  Some are being bought by buyers that plan for them to be their primary residence but a large portion are being grabbed up by savvy investors looking to buy distressed properties and fix them up, then either rent them for a few years or sell them as clean homes.  The rental market in Tucson is thriving.  A good friend of mine has bought 4 foreclosures and has fixed them up – All of them are rented for between $795-$850 a month and his highest mortgage payment is $625.00.  He has been able to leverage these properties to make them have a positive cash flow that not only covers his mortgages and expenses but also makes him some money while he waits for the markets to come back around to make his profits.

Could this be you?  If you or someone you know have thought about investing in something more stable than the stock market, foreclosures are a great investment.  Of course nothing is guaranteed and being a landlord is not hassle-free but it is a great way to make some money in a very difficult time.

Where do you find these foreclosures?  There are many websites that give access to foreclosure listings.  However, they do not differentiate between listings that are Active & Available vs. listings that are Active Contingent (under contract that has a pending contingency such as inspection periods or appraisals but are very likely to close) or listed as Active CAPA (under contract but Can Accept Purchase Agreements – mostly short sales).  This gets frustrating since you will find a home that looks perfect, go out to drive by it and then call me only to find out it is already under contract. 

We have designed a search website that ONLY searches for Active & Available Foreclosures and you can search by area, community or subdivision.  It is www.ForeclosureListingsInTucson.com.   

Check out this website and please share it with all of your friends, family and co-workers that have been talking to you about buying foreclosures.  We will get you into the homes as soon as possible to give you the best chance to submit your offer before others can beat you to it.  Call us today with any questions or to get together to discuss the amazing opportunities there are waiting for you!

Jack Murray                                                    Barbara Murray

520-404-5533                                                  520-400-0505

Info@ABMurray.com                 www.GoTucsonRealEstate.com

PS, As I was writing this another foreclosure closed to bring the total up to 2,362 sold foreclosures.

 Jeff Wallach published a great article in Money, September 2011, talking about the great opportunity to Cash in on Rental Property and I wanted to bring this home to Tucson. 

The housing market for Tucson homes is soft still, with good signs of recovery in sight, but there is an opportunity in the chaos: The Rental Market!  With many homes going into foreclosure, credit scores falling and many potential buyers not ready to make a purchase, the demand for rental properties is as high as it has been in years.  If you have a rental property inTucson, you are in a position to get stronger rents and not have to see vacancies.  Jeff Wallach quoted Hotpad.com in his article stating that rents nationwide jumped 11.6% in 2010 to $1320.00 a month.

For those investors with a mind for money, we now have an amazing opportunity with low, low prices and fantastic interest rates that are at a 40 year low, make your purchase of a rental home in Tucson cash flow from day one.  The median sale price currently for homes inTucsonis $138,000.  The mortgage for a rental home with 20% down would be roughly $680.00 for your principle and interest.  The average monthly rent inTucsonis $1,050.00.  Factor in $200.00 for taxes and insurance and there is a true potential for IMMEDIATE cash flow. 

It is wise to plan to use that rental income to tide you over until home values come back up.  If you plan to hold onto the home for 8-10 years there should be solid gains on your investment, especially if you leverage your purchase by financing it. 

It is important that you must be able to afford to hold onto the property for a length of time without needing the equity of the home for other purchases or investments.  Also, banks will require 20-25% as a down payment for investment purchases and will usually require you to prove you have the cash and to cover 6 months of expenses, mortgage, taxes and insurance.

Buy Where You Live!  It is best to buy a rental home within 10 miles from where you live.  It means you are generally familiar with the area and know what you are buying.  It also helps to know what your competition in the rental market is and it is easier to learn your current area.

Once you identify candidates (to search for them go to www.GoTucsonRealEstate.com), make sure you crunch the numbers.  As Jeff Wallach reported, it is best to make sure your rental income will at least cover your mortgage payments, taxes and insurance plus leave a 20% cushion for vacancies, repairs and possibly property management fees.  Also, check sites like Craigslist and Rentometer to see what similar homes are renting for. 

It is also good to brush up on your people skills.  You may find yourself answering tenants’ calls, possibly in the middle of the night for headaches and repairs.

If you have and questions about rental homes inTucson, please feel free to Contact Us.  We are always here for you!

A Great Place to Stars is with Tucson Foreclosures!  For ALL of the Tucson Foreclosures in the FLEX Multiple Listing Service Click Here!

Here is a review of the current activity in the Tucson real estate market of the Catalina Foothills. The Catalina Foothills of Tucson, Arizona are one of the higher priced areas in the Tucson real estate market as they offer larger lots, a great school district and the potential for Amazing Tucson Views!

We are seeing some great signs that the Tucson real estate market is turning and we want to put the numbers in front of you to see where things are and how we have progressed in the last 12 months.  We look at the existing inventory and the number of homes sold in Tucson over the last 6 months to show the supply and demand.  We also look at the months of inventory to show the absorption rate as well as the percent pending to show what percent of active home for sale in Tucson are under contract. 

Catalina Foothills, Tucson AZ – Active listings of homes for sale in the Catalina Foothills are down 15.1% from 444 in 2010 to 377 active listings currently. There have also been 360 homes successfully sold in the Catalina Foothills which is up 15% from 313 sold homes last year. The inventory reflects this change: there is only a 6.3 month supply of homes, down 26.2% from 2010. The only slowdown shown is in the percent pending which is only 12.7%. This is down 23% from 2010’s 16.5% pending ratio. This reflects some consumer slowdown which is likely reflected from Wall Street’s chaos over the last few weeks. Many Tucson home buyers in the Catalina Foothills are either cash sales or mostly cash. Many people feel that they are in limbo about what to do and this has slowed the activity in the higher price ranges. One good sign is that the median sale price in the Catalina Foothills has stayed the same from last year at $415,000.

As specialists in the Catalina Foothills real estate market, we focus on the trends of this market to help out our clients in the best position to make their move. Whether buying or selling we want you to be the most knowledgeable to make your real estate transaction a success! Please feel free to contact us with any question we can answer for you. Also, to search for homes for sale in Tucson and homes for sale in the Catalina Foothills, just click these links.

Jack Murray, 520-404-5533 Info@GoTucsonRealEstate.com.

There has been much confusion as to where housing prices are headed. We have actually blogged on the issue recently. Today, we want to give our opinion on this subject for the short term. We believe sellers have a window of opportunity for the next 90-120 days in which to sell their homes for maximum price. We believe there will be increased downward pressure on home prices later this year and the first half of 2012.

Why renewed downward pressure?

Any item’s price is determined by ‘supply and demand’. In many parts of the country existing housing inventory is already high and actually increasing. In addition, an inventory of distressed properties (foreclosures and short sales) will be coming to market later this year. This inventory has been delayed for the last several months because of faulty paperwork by the banks when they originally attempted foreclosure proceedings on these homes.

Celia Chen, of Moody’s Analytics explains:

“Foreclosures are weighing on the outlook for U.S. house prices, and the slow resolution of issues surrounding the so-called robo-signing scandal is keeping distressed homes off the market”.

The New York Times also recently reported on this issue. They looked at the delays in certain states. As an example, this is what they found in New York:

“Last September, before the documentation crisis, nearly 1,500 New Yorkers lost their houses as a result of foreclosure, according to LPS. The average over the last six months: 286. That is far lower than at any point since the recession began.”

–In the Tucson real estate market, there are more foreclosures selling than in the majority of the country.  As this is helping our market stabilize it is also presenting an opportunity for the banks to put more Tucson Foreclosures into the Tucson MLS (multiple listing service) for sale.  This will put additional downward pressure on homes in the near future.  There is a window  before the banks set loose the next wave of foreclosure listings where savvy sellers can get there homes on the market to take advantage of the current buying atmosphere.  Good homes that are priced well are selling if they are properly marketed!

Banks are now correcting these errors.

There is evidence that the banks are getting their documentation in order and about to again increase their foreclosure repossessions. Housing Wire reported:

“Since major lenders delayed foreclosures to fix a broken process late last year, the amount of filings declined, but in May signs emerged the effect might be wearing off.”

They went on to quote RealtyTrac CEO James Saccacio:

“…lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory… Foreclosure processing delays continue to mask the true face of the foreclosure situation, although there were some clues in the May numbers of what lies behind that mask.”

What will this mean to Tucson home prices?

As this inventory comes to the Tucson real estate market, it will impact Tucson home prices in two ways:

1. It will provide discounted competition for buyers
2. It will impact the appraisal values of all Tucson homes in the area

Again, we quote Celia Chen:

“It is quite possible that house prices will pick up slightly in the second or third quarter of this year, as foreclosure sales remain depressed while nondistress sales pick up…By the fourth quarter of this year, however, the distress share will rise, sending the house price index back down…

House prices will founder until early next year and start rising in earnest at the end of 2012.”

 

Bottom Line

There is a window of opportunity currently which sellers should take advantage of. Waiting until later this year or until next year will not guarantee a higher sales price. If anything, it probably guarantees the exact opposite.

We have written several blogs recently quoting numerous sources saying now is the time to buy a home. We agree that now is definitely the time to buy. This is NOT because we are calling the bottom for real estate PRICES. What we have said is that the COST of purchasing a home is probably near a bottom or has hit the bottom.

The difference is that COST is determined by two components: the price of the home and the expenses associated with mortgaging that home. As we have put forth in several posts, we believe that the expense of obtaining a mortgage will increase as the year goes on.

We also believe strongly that, in most parts of the country, prices will continue to soften; however, in the Tucson Real Estate Market prices are closer to a bottom. Here are the reasons why:

Existing Months’ Supply of Inventory Is Still Too High Nationally

A balanced market (where prices are stable) can handle 5-6 months worth of active inventory. Anything less than 5 months constitutes a seller’s market as there are not enough houses to meet buyer demand. This usually results in price appreciation. Anything more than 6 months constitutes a buyer’s market as there are not enough buyers for the number of houses on the market. This usually results in price depreciation.

Currently, as per the National Association of Realtors (NAR), there is a 9.2 month supply of inventory Nationally. This alone would put downward pressure on prices.

In the Tucson Real Estate Market (for single family homes for sale in Tucson) we have 3,676 Active listings and 4,577 Tucson Homes have Sold in the last 6 months.  This puts the Tucson Inventory of Homes at 4.8 months supply.  MUCH healthier than the national average!  We also look at the “Percent Pending” when analysing the Tucson Real Estate Market.  This is the percentage of homes that are activeley listed that are under contract.  This shows us what the curve will look like in the near future as well as show us the active trend of Tucson Home Buyers.  Our Percent Pending for Tucson Homes is 35.7%.  In a “normal market” were it is even between sellers and buyers, this would be at 25%.  It has been as low as 8% in recent years showing a strong buyer’s market and in the Boom, it was as high as 47% swinging the market to the seller’s advantage.    At the current 35.7% we are seeing great activity from Tucson home buyers who are realizing that the “Cost” of buying a home is potentially at the Bottom even if prices may continue to slide slightly.  The Tucson Real Estate market is Alive and Active while the “National” market continues to slide.

Distressed Property Inventory Is About to Enter Market

There are over over 4 million homes that have the potential to become a distressed property sale (foreclosure or short sale) over the next few years. A percentage of these properties are set to enter the market before year’s end. No one knows exactly how many will come to market in each region but the common belief is that the number will be substantial.

These properties will sell at a discount thereby attracting a portion of buyers in the market. After they close, they can also be used in an appraisal to help establish values of other homes which sell in the area. A short sale sells for approximately 90% of its non-distressed value. A foreclosure sells for approximately 65% of full value.

In the Tucson Real Estate Market we are handling the sale of Tucson Foreclosures and Short Sales better than the National market.  Whereas the East Coast has an issue with Shadow Inventory (New Jersey is close to a 51 month supply of Shadow Inventory) Arizona has only a 9 month supply of Shadow Inventory.  This puts us in the dentists chair, with our tooth being pulled.  Soon we will be home and recovering while the majority of the country is just starting to feel a toothache.

Bottom Line

The inventory of homes currently for sale added to the inventory of distressed properties about to come to market will far exceed demand Nationally for the next twelve months. When there is less demand for any item then there is supply of that item, prices fall. Check with a local real estate professional to see how this may impact the value of your home over the next year.

However, In the Tucson Real Estate Market, the demand for Tucson Homes is still surpassing the incoming inventory and the best homes, that are priced appropriately, are selling and selling quickly.  This IS the time to buy a Tucson Home!

Fist of all, as real estate agents we are not licensed to give tax advise so to see how this may affect you, you NEED to consult your tax professional.  This is GENERAL information about what sales may have taxes applicable.  CONSULT YOUR TAX PROFESSIONAL

Answer: Basically “No” but a few home sellers may be subject to the tax.

The 3.8% tax targets high incom earners (Single Income exceeding $200,000; Married exceeding $250,000) with large “net gains” from investment sales.  The tax falls on the net gain attributed to the property.

Net gain exclusion on $250,000 for single filers and $500,000 for married filers.  In other words, the first $250,000 or $500,000 of profit from the sale may not be taxed.

• Does not apply to vacation homes or rental properties.  Exclusionfor Primary Residences only.
• Primary Residence exclusion applies only if owner lived in the “Main Home” two out of te last five years.

Examples from Factcheck.org:

• A single executive making $210,000 a year who sells his $300,000 ski condo for a $50,000 profit.  His tax on the sale of that vacation home would amount to $1,900, in addition to the capitol gains tax he would have to pay anyway.
• An “empty nester” couple with a combined income of over $250,000 who sell their $1,000,000 primary residence to move to smaller quarters.  If they cleared $600,000 on the sale, they would be taxed on $100,000 of the profit (the amount over the $500,000 exclusion).  Their health care tax on the sale would amount to $3,800 over and above the usual capital gains tax.

Keep in mind, this new tax in on all taxable investment income including interest, dividends, annuities, royalties and rents if the income limits are exceeded.

ONCE AGAIN, we are passing along this information to you as a courtesy.  If you have any questions on the tax implications on your taxes and filings you need to consult a licensed tax consultant.

We get asked this question quite often. In a rapidly changing market, it is difficult to give absolute answers. Much depends on your family’s personal situation. However, if you realize that you can no longer make the payments, you may have to decide between doing a short sale or letting the home go to foreclosure. Here are three things you may wish to consider:

1.) Impact on Your Future Ability to Get a Mortgage

There are many different lending institutions, each with their own requirements when it comes to your ability to obtain a mortgage in the future. However, a common trend is to be much more lenient with someone working through a short sale rather than letting the house go to foreclosure. As an example, the Fannie Mae site, Know Your Optionsexplains you:

May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years)

You can get further information here. However, in a rapidly changing environment, make sure you get the latest information available from the actual lending institutions mentioned.

2.) Impact on Your Credit Score

There has been much dialogue on this issue. The question is whether or not a foreclosure will have a more severe impact on your credit score than a short sale. A recentFICO study sheds needed light on this question. Here is a chart from that report.

The first chart shows the impact on the score for each stage of delinquency, and the second shows how long it takes the score to fully “recover” after the fact.

We can see that there is very little difference in impact on your credit score whether you choose a short sale or a foreclosure.

3.) Impact on Your Family during the Move

Usually a family asking this question is already experiencing major financial difficulties. This may be putting immense pressure on both parents and the children. If you allow your home to go to foreclosure, you move and leave it vacant or you stay waiting for an official to knock on your door demanding you move. That added burden can cause even more stress for a family.

In the short sale process, you work with the bank and pre-determine the day you will move. The new purchasers usually move in the same day. Your family moves with a plan and you don’t leave the neighborhood with a vacant house to deal with. There is a level of dignity in this type of move that does not always take place in a foreclosure situation.

Bottom Line

For several reasons, a short sale may be the better option for your family. It is best to get professional advice if faced with this decision.