2008 Real Estate Outlook

How will real estate look in 2008? Short of rubbing a crystal ball, which is not very practical, the next best thing is to attend an Elliott Pollack seminar. Elliott is the real estate and economic guru for ASU, as well as several institutions. When Elliott spoke on Friday, December 1, to a packed house in Tempe, all the real estate agents appeared to be holding their breath. His news was dismal: more of the same - only worse. The number of foreclosures and short sales will be increasing, thereby depressing the sales prices of resale homes. There will be fewer people moving to Arizona, because they are unable to sell their homes. Elliott projects 35,000 transferees, rather than the 100,000 people we have come to expect. The new home market is also dismal and land prices have fallen substantially.

Buyers appear to be waiting for the market to hit bottom, and it's not there yet!! That strategy tends to backfire, however, because when it's perceived that we've hit the bottom, prices will bounce back; almost a trampoline effect. There will be a lot of real estate belt tightening and moaning in 2008, but the pent-up demand for housing will continue, and there will be few sales. According to Elliott, we currently have a 14 month supply (inventory) of MLS listings in Maricopa County.

How will it affect the Coronado Historic area? It's too soon to tell, but currently there are 71 listings in Coronado; 2 of which are designated 'short sales' and 4 of which are foreclosures. I'll be watching these listings.

When is A Short Sale Not a Short Sale

First, let's talk about a short sale. Everyone knows what a foreclosure is - right? That's when the lender (the bank) has taken the house back from the delinquent homeowner and is now marketing the house for sale, usually through a realtor. Short sales are not new - they've been around for a long time, but they are getting a lot of press now. A short sale (or a pre-foreclosure) happens when the homeowner cannot make the payments to their lender and , also, when the property has lost value. This is happening often in this unstable real estate market. As prices have decreased and some adjustable rate loans are resetting to higher interest rates, homeowners are feeling really pinched. Add to this a job loss, divorce, long-term illness, job transfer and you have a recipe for disaster.

Short sales to the rescue!! The lenders are recognizing that it's not in their best interests to foreclose. Therefore, many of them are allowing the homeowner to market the home as a short sale, which will net the lender less than what is owed on the property; thus a 'short' sale. There are many hoops which the homeowner needs to jump through to satisfy the lender, such as appraisal, tax returns, hardship letter, etc, so that the lender can determine whether the contract price meets the lender's guidelines. In many cases, the lender will adopt 'some money is better than no money attitude', because foreclosures are expensive and do not solve the lender's cash flow problems, and further depress the real estate market.

So, I looked in MLS for a short sale, and came upon the house above. It's a darling one bedroom home on 10th Street, with a porch, a beautiful kitchen, fireplace in the living room, an extra room which could be a bedroom by extending the back of the house and adding a closet. It's got a lot of potential and is listed for less than $200,000, which piqued my interest. But in talking with the seller, it's not a short sale, since her payments are current and she owes less than the sales price, but her realtor did not describe her situation correctly.

So, that's when a short sale is not a short sale, but could be a great opportunity for a savvy buyer who sees the potential in this little gem.

Diane Brennan, D.B., D. Brennan & Associates.

Historic Coronado (Phoenix) Arizona trends

Since this is my first blog, I'm excited and nervous about communicating in this format. I have lived in the Coronado (Phoenix) area for almost 9 years, and it's been the most adventurous and financially successful move I've made. I moved from Fountain Hills, Arizona in Feb. 1999 into a 950 sq. feet cottage in Coronado, about 1/2 block from the Coronado Park. My little house has a wonderful historic charm and character, which is what attracted me. It had concrete floors, which I've acid stained, and built-in china cabinets in the dining room. The kitchen cabinets reach from the ceilings to 15" above the tiled counters, and there are built-in shoe racks in each of the closets. The windows are the original: single paned, single hung. I have added ponds both to my backyard and my front, which give a parklike feel to the landscape. I'm experimenting with various trees and plants, to give an English garden appearance.

Enough about me! This blog about Coronado will touch on issues - both real estate and community - which affect us. The area I'm writing about is from 7th Street to 16th Street, from Thomas to the 202 freeway. This is not the Greater Coronado area, but a more condensed area. In this condensed area, there are 63 active listings, in the price range from $195,000 to $469,000. The average home has 2 bedrooms and 1.65 baths, call it 1 3/4 baths, averaging 1416 square feet. The average price is $310,842, and days on market (avg) are 115. This days on market figure is close to the ARMLS average for the entire Maricopa County area. Of these 63 homes, there are 4 short sales and 1 foreclosure, which is 7.9% of the total active listings.

What is a short sale? I will explain that in my next blog. Thanks for reading this and please feel free to comment on anything (content, grammar, etc). I look forward to more blogs about my community.

Diane Brennan, D. B. D. Brennan & Associates