Urban Life

MAKE A DIFFERENCE, HAVE AN IMPACT, BUY LOCALLY NOW

We often write articles about locally owned businesses and the importance of buying from these people. A recent study funded by Steelcase Foundation for the city of Grand Rapids Michigan gives some solid numbers to the effect we, as consumers, can have on our local economy by simply buying our goods and services from hometown vendors.  Below is a summary of the article we extracted from the LocalFirstArizona web site.

Small Move to Independents Creates Jobs, Wages and Impact

On September 23, Local First of Grand Rapids, Michigan, unveiled the results of the new economic study "Local Works: Examining the Impact of Local Business on the West Michigan Economy." The study revealed that a modest change in consumer behavior - a mere 10 percent shift in market share to independent businesses from chain stores - would result in 1,600 new jobs, $53 million in wages, and a $137 million economic impact to the area. "Local Works" was funded by the Steelcase Foundation and conducted by Civic Economics.

"We are looking forward to sharing the results with local policy makers and our local community," said Elissa Sangalli Hillary, Local First executive director. "So often, individuals feel overwhelmed and unable to make a difference. The study shows that by choosing to support locally owned businesses, individuals can help to create and retain jobs in [their] community."

For the study, Civic Economics analyzed the performance and economic impact of independent businesses in Kent County, Michigan, and identified opportunities for economic enhancement based on that analysis. Data was collected and analyzed for businesses in four lines
of goods: pharmacies , grocery stores, full-service restaurants, and banks.

Hillary noted that "Local Works" confirmed the results of similar studies across the country, including Civic Economics studies conducted in Chicago, San Francisco, and Austin, Texas. She added, however, that, while these earlier studies generated great momentum for independent businesses, some policymakers have dismissed them unfairly based on the theory that Austin, Chicago, and San Francisco are somehow atypical communities. No one will be able to dismiss "Local Works" on that premise, she said.
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If you are not currently buying from locally owned businesses, we once again urge you to do so. We often complain that we, as individuals, can not make a difference. However, this is an area each of us can have effect and help determine the viability of our cities and State.

Gene Urban
The Urban Team at Realty Executives... a locally owned brokerage.

Now a Good Time to Buy a Home?

JUNE FLETCHER of the Wall Street Journal wrote the following when asked if it is a good time to buy a home. We've made some comments to her message (seen in red) that reflect some of our take.  Hope you enjoy.

Q: Given what's happening in the financial markets, is now a good time to buy a home?

A: For some people, yes. If you…

• have access to credit
• have fat cash reserves (This is sage wisdom here. Tumultuous times caution us to be careful and cover our hind ends. Strong cash reserves can really help.)
• aren't already over-exposed to real estate  (Do not know if we agree with this. What does over exposed to real estate mean. I'd probably modify this to "over-mortgaged")
• have a secure job or income stream
• expect to hold the property for at least two years (We are telling people to expect a 4-5 year hold.)

…then now is an excellent time to buy.

Everyone else should take a breather.

The reason: It's still too early to tell whether the dire predictions many government officials and economists are making about the potential collapse of our economy without a bailout are crying wolf--or if the wolf is really at our door. (With the failure of the bailout plan today we've seen the stock market get smacked very hard. We'd say the wolf is not at the door but inside it and hungry.)

For those who are cash-rich, either because they are too wealthy to be badly hurt by any economic swing, or because they were presciently pessimistic and liquidated their portfolios before the meltdown, the coming months—and perhaps years-- of uncertainly will provide an unprecedented real estate buying opportunity, of both trophy estates and income-producing investment properties. "The smart people know that the world is not coming to an end," says Lanse Robb, an agent with LandVest, a brokerage on Boston's toney North Shore. "They're making their moves."  (John Foltz, the President and DB at Realty Executives commented to us that "now is the time millionaires are made in real estate." Our caution here is to have significant cash reserves and be prepared for long holds. The rental market is likely to be strong for the next decade... if you have the skill to be a good landlord it is a rare time.)

But the average buyer probably doesn't have the cash to gamble on real estate--and shouldn't, at least for now. Income growth has stalled for the vast majority of Americans for the past eight years, and home equity has been vanishing rapidly since the peak of the boom in 2005. (Last month, median existing home prices nationwide fell 6%, to $221,900.) The roiling stock market is hardly a comfort either, as everyone who has peeked at a 401k statement over the past week knows.

More critically, jobs are evaporating at an alarming pace. According to government statistics, the unemployment rate rose to a five-year high of 6.1% in August. There have been eight consecutive months of job losses, with a year-to-date total of 685,000. And layoffs aren't likely to end soon, since factory orders fell 4.5% last month—twice the rate that analysts expected.  (This is true for the Phoenix market as well as the Nation. In times past we were ranked in the top five cities for job growth. Today we sit at #46.)

Without healthy job growth, it's likely that the supply of unsold homes will grow. Currently it's at 11 months, more than double the median supply of two years ago. Until that inventory is burned off, home prices will continue to stagnate or fall in most markets. A government bailout that unfreezes credit markets and staunches the flood of foreclosures that are also depressing prices should help, but the fix will take a long time. (Overall this is true for the Greater Phoenix market. However, the impact of forecloses on homes prices is more evident in newer subdivisions and outline areas of the Valley. The sub prime loan market was virtually created in the 2003-2007 era, therefore, older neighborhoods that experienced fewer sales in 2003-2007 are not as highly affected. Just look at the price graphs for Anthem, a newer area verses 85013, an older part of N. Central Phoenix.)

That doesn't mean that the housing market is doomed; ultimately, it will get better. There's even an upside: certain markets, particularly on both coasts, were driven up by speculators and became wildly overpriced during the boom. Falling prices means that housing in those markets will eventually become more affordable for average families. Credit Suisse estimates that, nationally, the ratio of median home prices to household incomes will return to their historical average of 2.86 in another 18 months. (We are seeing more midwest buyers coming back to look at Phoenix now that our prices have come down.)

In the meantime, if you're feeling insecure about your job or low on cash, hang tight and save your money. And if you must move, rent. (Good advise here.)

We hope this article and our comments were of help to you and thanks again for being a loyal reader of our posts... it means a lot to us.

Gene Urban and Ron Urban
The Urban Team at Realty Executives

SHORT SALE... Our opinions on buying

We have been getting more and more calls asking us to help people buy homes through short sales.  I know we are not alone on this as I see this topic poping up on lots of blog sites and during conversations with other agents. Although we've discussed the difficulties in listing a home as a short sale, we have not touched on the issues buyers face purchasing a home under the short sale heading.

First, what is a short sale. Part of me wants to answer this as "the most frustrating real estate transaction I know" but that isn't the real definition.

A home being sold in a short sale situaltion is simply when the homeowner owes more that the home is worth; home owner has contacted his/her lender to gain approval to sell the home for an amount less than the mortgaged amount; homeowner is now looking for a qualified buyer. This is a pretty simplistic definiition, but covers the basics.

Let's take a look soem of the problems one faces when negociating a short sale propertry.

• It will seem like it takes forever to get a response to your offer. We have a client who has been waiting about 35 days for a response. We call the listing agent every week and they do not know when the bank will respond. An agent in our Realty Exeuctives office who specializes in representing short sale homes says it can take up to 3 months to get an answer from the bank.
• Some agents representing short sales have not educated their clients on the process and have listed homes as short sales that have not gone through the qualification process with the primary lender. Some of these homes can not qualify for this program and you have just wasted time and hope.
• Often times the bank accepts your short sale offer with several contingencies and very short closing timelines. An agent in our office got a response to his client's offer last week and the bank gave them 10 days to close escrow. 
• Short sale homes are often sold "AS IS". This does not necessary mean you can't ask for repairs but many owners do not have the personal funds to make requested repairs.  In addition, we see many short sale homes with deferred maintainance issues. People who are losing their homes or walking away without a gain are often upset, seldom care much about the place and really don't have the money to keep things in top shape.
• It is a very frustrating process due to lack of response by the banks and selling agents. This is simply a part of the process. The primary lender may have to negociate with subordinate lenders if there is more than one loan; the lender has to get approval from the seller and this can be a difficult process depending on the requirements the lender imposes on the seller.
  
• There may be hidden costs to the buyer depending on the acutal contract. Some contracts make the buyer responsible for back taxes and HOA fees due at the time of closing.

So, you may want to know the upside to purchasing a short sale home. We don't see many in this market. Short sales are a way to get a home for below market value. However, you can do this with bank owned (REO) properties with much less hassle and quicker response times.  Simply stated, we are not big fans of short sale transactions.

Gene Urban
The Urban Team at Realty Executives
602-234-5777
www.urbanteamaz.com

RADIATE PHX MEETING INFO FOR SEPTEMBER

The Urban Team is an original member of what is now called RadiatePHX (formerly Ignite Phoenix). If one of your goals is to make a difference in the policy and development of downtown Phoenix, we invite you to come to one of our gatherings. Below is information about September's event.

You are cordially invited to the special one year anniversary edition of RadiatePhx!

This month is a discussion of The Downtown Phoenix Urban Form Project as it enters the final stages of developing the Downtown Phoenix Form-Based Code.

We will welcome guests from the City of Phoenix Planning Department who have invested much time and energy into developing a plan that will affect development in the City for years to come.

Join us in the Arizona Club on the 37th Floor of the Chase Tower, and enjoy the panoramic view of our downtown and beyond. What better place to Radiate from our Core?

RSVP Here:
http://www.radiatephx.com

What is the Urban Form Project?
The Downtown Phoenix Urban Form Project is a collaborative process to shape future growth and to help realize the Downtown Strategic vision for a livelier, more integrated and sustainable downtown.  For more, visit: http://phoenix.gov/urbanformproject/

We’re part of the Affair!
This month’s RadiatePhx is being held in cooperation with the week long Urban Affair (http://www.urbanaffairaz.com).

Hope to see you there!

HOW TO CLEAR A CLOGGED DRAIN

The various vendors we use at the Urban Team often forward home maintenance tips.  Here is one for fixing that slow drain.  Hope it helps when the need arises.

Unstopping Clogged Sink Drains:
If the drain is sluggish but not completely clogged, turn on the hot water tap for 5 to 10 minutes. This sometimes opens the drain. If running hot water does not open the sluggish drain, try an environmentally safe chemical drain opener.

Cleaners are available in several forms, and they are made primarily from caustic soda with bauxite and other ingredients. Read the label on the drain cleaner and follow manufacturer's instructions. After using any chemical cleaner, flush it from the drain pipes by allowing hot water to run for at least 10 minutes.

This information is courtesy of  Valley Plumbing at 602-279-0797

Hope you have a great Monday,

Gene Urban
The Urban Team at Realty Executives

FREDDIE MAC, SHORT SALES & HELP

Just got out of another short sale class... this one offered by Freddie Mac.

As many know, short sales are a vehicle used to sell a property when the owner can not keep up with his/her payments and they owe more than the property is currently worth. A yucky combination of circumstance.

The advantage of a short sale is the homeowner may get out from under their mortgage burden without going into foreclosure. Many credit agencies consider a short sale as less harmful to long term credit scores since there is evidence the homeowner worked with their mortgage servicer to arrive at a solution.

The most shocking statistic during our class had to do with foreclosures and communication.  We were told that 50% of loans placed into the foreclosure process are done so without any personal contact made between the homeowner and their mortgage holder.  In other words, 1/2 the people who face foreclosure never take the time to contact their lender to work out a deal.  This is not to say they made no attempt, it simply means they did not doggedly pursue a conversation with their lender that could have resulted in finding options

If you or someone you know is facing foreclosure, contact your lender and try to work out a deal. This may take many calls... lenders are overwhelmed right now. The good news is many lenders are offering solutions such as:

• Full or partial reinstatement
• Short or long term forbearance
• Repayment plans
• Loan modifications
• Mortgage insurance claim advances and more.

Freddie Mac has a website dedicated to helping people understand their options:  click here

As always... thanks for taking a little time to read Urban Life.

Gene Urban
The Urban Team
Realty Executives
602-234-5777

Letter to Richard "Dick" Gaylord, President of The National Association of Realtors

Below is a copy of a letter we sent to the president of the National Association of Realtors, Richard Gaylord. Readers of our blog know that we often object to NAR's political and policy decisions. This letter is simply making the statement to the man at the helm.

Dear Mr. Gaylord:

I often find NARS opinions and positions so short-sighted as to be near blind.  Many of the problems that face our industry evolved out of the desire for quick fixes and unrealistic expectations… someone wants to buy a house, we make it easy for them, even if they don’t have a job or down payment. Heaven forbid we tell them they have to work hard to get everything they want.  People and businesses made ill-advised choices and are suffering the outcome of their greed and ignorance so NAR pushes for public policy to make things better… even when the policies NAR promotes mirror those that got us in trouble to begin with.

Therapists have a name for such actions… co-dependence.

I object to NAR supporting candidates and policy that propagates and promotes social weakness. As a realtor, I’d rather see us go through a few tough years and get back to basics rather than give support to band-aid fixes and the very same programs and policy that were causal to our current dilemma. I want a solid foundation under my future and NAR’s solutions are giving me quicksand.

A classic example is NAR’s local (Arizona) support of a State representative who voted against the licensing and certification of mortgage lenders. Her position is “the mortgage industry will do fine with self-policing.”  What rock has she been hiding under and why on earth would NAR support such an incompetent thinker?

Mr. Gaylord, what NAR and our country need right now is a leader who is willing to break with past policy that suggests NAR’s most important job is to grow its membership. You would do well to switch to a strategy that uses long-range thinking to decide what is best for the LONG-TERM future of our industry and country. Admittedly, this would not make you popular today, but it would leave you with a legacy of brilliance that would shine in the future.

Gene & Ron Urban
The Urban Team at Realty Executives

IS THE MORTGAGE MARKET THE LAST HOUSING OBSTACLE?

The US housing market may be entering a critic juncture according to a recent CitiGroup Global Markets analysis.

Steve Wieting, director of economic and market analysis at Citigroup, recently submitted an in-depth study of supply/demand  effects on the housing market as it pertains to mortgages.  He suggests the tightening of mortgage credit standards is probably the last major hurdle standing in the way of market stabilization.

Simply stated, banks are being more cautious in the dolling out of loans and this reduces the number of qualified buyers; Fewer buyers means a slower recover.

The article almost suggests the tightening of credit standards is a bad thing... perhaps because Citigroup is in the money lending business. I, on the other hand, am relieved standards have been strengthened. We have seen the effect of soft credit requirements has had on the housing market and more importantly the public. A lot of peoples lives have been shattered with the promise, and granting, of easy money.

I do agree with Mr, Wieting's opinion that a reduction in the supply of mortgage vehicles may have a significant effect on the housing market recovery. However, reasonable standards are necessary and in the long term will be the basis of a strengthen housing market.  I fear there will be additional pressure put forth by politicians and stockholders looking for another quick fix resulting in softer loan requirements once again creating a cycle of lust and loss.

Gene Urban
The Urban Team
Realty Executives
602-234-5777
http:www.urbanteamaz.com

BACK TO SCHOOL... Interesting Stats

With the holiday weekend over signally the official beginning of the school year (even though many kids started weeks ago) we thought we'd pass on some interesting school stats for your appraisal.

• 56 million students are expected to enroll in kindergarten through high school this year.
  
  
• 3.3 million students are expected to receive high school diplomas this year.
  
  
• 10.9 million school age children who speak a language other than English at home - 7.8 million of them speak Spanish at home.
  
  
• Over 30 million children participate in the national school lunch program (based on 2007 data).
  
  
• There are 7.1 million teachers in the United States, with 2.9 million of them teaching elementary and middle school.
  
  
• More than 18 million students are enrolled in colleges and universities this year, which is up from 13 million students 20 years ago.
  
  
• More than 3 million students are expected to earn their college degrees this year.

Enjoy your Monday and look for our updates and analysis on real estate in the Phoenix and Scottsdale, AZ coming to a blog near you soon... UrbanLifeBlog.com that is.

Gene Urban
Realty Executives
602-234-5777 x1