Mortgage rates continue fall

East Bay Business Times - 2:29 PM PDT Thursday
by Jeff Clabaugh

Long-term mortgage rates have dropped in eight of the last nine weeks, but buyers are still on the sidelines.

Freddie Mac's weekly rate report puts the average 30-year fixed-rate mortgage at 6.31 percent, down from 6.4 percent last week. It is the lowest 30-year mortgages have been since early March. One year adjustable-rate mortgages averaged 5.47 percent this week, down from 5.54 percent last week.

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Governor courts PayPal, company plans hundreds of hires

The Business Journal of Phoenix - 12:34 PM MST Wednesday
by Mike Sunnucks
The Business Journal

Online payment king PayPal is planning to add a substantial number of jobs to the regional economy.

PayPal, an arm of Internet auction company eBay Inc., has opened a technical center in Scottsdale.

Gov. Janet Napolitano said Wednesday she recently met with eBay Chief Executive Meg Whitman about the company expanding in the state.

The San Jose, Calif.-based company plans to hire more than 100 technical workers for the Scottsdale center by the end of the year. It currently has a handful of workers.

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Meet Tempe’s developers

By Garin Groff, Tribune
September 25, 2006

The Centerpoint Condominiums project in Tempe casts a long shadow over other major projects. The three towers are expected to reach 343 feet, the tallest the city will allow.

Right now it’s the biggest project under construction in Tempe. But several other major developments are planned. Here’s a look at other major projects under way and some key developments already in place.

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Renovation to make bank into nightspot

Edythe Jensen
The Arizona Republic
Sept. 23, 2006 12:00 AM

His design faced some roadblocks, but Neils Kreipke finally got the green light to turn an old downtown bank building into a future city nightspot.

Kreipke, a partner in Desert Viking Holdings, has purchased and renovated several historic downtown buildings, including the old Arrow Pharmacy where work is under way. He is also building San Marcos Commons, 79 new townhouses with retail, restaurant and office space on 15 acres southwest of Chandler Boulevard and Arizona Avenue.

Now, he plans to turn the former Bank One building at 8 S. San Marcos Place in the core historic downtown area into a restaurant and late-night gathering place.

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Aloft is part of potential hotel row in Chandler

Luci Scott
The Arizona Republic
Sept. 23, 2006 12:00 AM

The new Aloft hotel that developers want to build near Price and Queen Creek roads is only the latest in a string of projects on the drawing board that, if they all come to fruition, would create a hotel row with a capacity of nearly 1,000 rooms in a four-mile stretch of Chandler.

There's no guarantee they all will be built, but if they are the intersection of the Santan Freeway and Loop 101 would be the center."

It's going to be a little urban node of activity there, with all the retail and offices and hotels," said Robert Mayfield of Lees Mayfield & Associates.

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High-rises to replace flour mill as Tempe's landmark

By Garin Groff, Tribune
September 24, 2006

Since Tempe’s founding, its iconic downtown landmark has been an industrial building that milled grain into flour. Its downtown scene for at least a generation relied largely on college students, bar food and beer. And the neighborhoods around Mill Avenue mostly vanished.

That’s all changing in a way that will transform Tempe’s place in Arizona and nationally. The new iconic image will be not a single building, but instead a cluster of 30-story luxury condos. The social scene is shifting to swanky eateries with celebrity chefs and boutique wines. And the neighborhoods are coming back — vertically. Nearly everything new downtown ranges from eight stories to 30 stories. The whole thing thrills civic leaders and merchants who insist Tempe is joining an elite group of urban cities known for their bustling downtowns.

Yet it horrifies others who see a quaint college town being gobbled up by developers eager to erect hulking monuments that will forever change Tempe’s face.

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Buyers Now Waiting for Favorable Mortgage Rates

Mortgage rates dropped this week to the lowest level in six months

RISMEDIA, September 25, 2006—(MCT)—Rates for 30-year mortgage rates dropped this week to the lowest level in six months, but the break for home buyers may not be enough to buoy sagging sales in San Bernardino and Riverside counties, according to some real estate agents, mortgage lenders and a university economist. "

It is good news,” said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University. “It is going to help. But it is not going to make a significant change in the housing outlook."

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SkySong's first office building is 80% leased

This is a great area for investment or first time home buyers. There are reasonably priced properties in the area that will appreciate as the Sky Song development completes.

Qwest plans to rent space, more companies expected

Jane Larson
The Arizona Republic
Sept. 21, 2006 12:00 AM

The first office building at SkySong, the ASU Scottsdale Innovation Center, is 80 percent leased, and developers think they are ahead of the pace for opening the high-tech development by next fall.

Developers are close to the point that they can kick off construction of the second office building, Plaza Cos. spokeswoman Michele Irwin said Tuesday."

We feel like we are ahead of where the industry standards are in filling space," Irwin said.

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Maricopa County called real estate 'bust'

Keep in mind that this company makes money from creating fear in home owners and then offering 'help.' ERA also offers a guaranteed sale, guaranteed price option. Ours is probably more generous than theirs because it is not a revenue stream for ERA. I thought I should post this article since its hitting all the news feeds.

The Business Journal of Phoenix - 11:10 AM MST Tuesday

A company specializing in fast-turn home sales Tuesday labeled Maricopa and 11 other U.S. counties real estate "busts."

House Buyer Network said real estate prices in the markets have been driven to unsustainable levels by years of speculation and increased reliance on low down-payment, short-term ARMs. That has created a glut of motivated home sellers needing to sell quickly.

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2 Tempe hotels get new owners; makeovers planned

By Donna Hogan, Tribune
September 16, 2006

Tempe tourism is getting a boost with two big hotel makeovers in the works. The Sheraton Phoenix Airport Hotel, a 210-room property at 1600 S. 52nd St., was purchased by JER Partners, a McLean, Va.-based real estate investment trust, for $25.5 million, said Molinaro Koger broker Bill Murney.

The company plans “a comprehensive renovation of the hotel’s guest rooms, corridors, (meeting) space and lobby,” said Devin Chen, JER vice president. The hotel also is slated to get a new exterior paint job and new management, he said.

The new general manager is to arrive next week to get the project in gear, but Chen said detailed designs are already in the works.

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Valley's falling home prices are 'necessary correction'

Catherine Reagor
Arizona Republic
Sept. 17, 2006 12:00 AM


Metropolitan Phoenix's housing market is "somewhat" vulnerable to a real estate bubble.

But that's not necessarily a bad thing, because if home prices dip a little, affordability will climb and the area's growth has a better chance of continuing.

People and companies move to Phoenix because the area has relatively affordable housing for the West, not because the Valley is "hip and cool" or because it has the best education system.

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Tempe to usher in new transit era

Jahna Berry
The Arizona Republic
Sept. 15, 2006 12:00 AM

A new era of transit is taking shape in Tempe, and on Saturday riders, residents and dignitaries will celebrate.

Tempe will mark the start of construction on a $24.5 million Tempe Transportation Center, which is expected to open in 2008. The project, which will share a plaza with the future College Avenue and Veterans Way light-rail station, will include a bus station, shops, a bike station and transit offices.

The project will bring together light-rail access to the Valley, Tempe bus routes, regional buses and bike traffic all to one spot for riders, said Sue Taaffe, community outreach coordinator for the Tempe Transit Office.

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Real estate, finance experts raise red flags at 'bubble' hearing

ARMs, affordability are risk factors as market cools

Wednesday, September 13, 2006

By Glenn Roberts Jr.Inman News

Economists and a representative for the National Association of Realtors, in congressional testimony today, raised red flags about "exotic" mortgages and rising interest rates, energy prices and house prices, though they said they do not expect a doomsday scenario for the nation's housing market.

"With rising mortgage rates, home buyers are becoming exhausted financially, which explains why sales have tumbled in high-priced regions of the country," said Tom Stevens, president of the National Association of Realtors and vice president of real estate brokerage giant NRT Inc., in written testimony.

He also cited a demand for more affordable property insurance in Florida and the inadequacy of Federal Housing Administration loan limits in high-priced real estate markets.

Stevens said a gradual slowdown for the housing market "is certainly possible and under the right circumstances likely, but that a soft landing is critically dependent upon policies that support a transition to a more normalized market and mitigate changes in local markets in the availability of mortgage financing and other essential elements to home ownership."

Economists for the Office of Federal Housing Enterprise Oversight, Federal Deposit Insurance Corp. and National Association of Home Builders also offered testimony during a hearing today, titled "The Housing Bubble and Its Implications for the Economy."

The hearing was held by the U.S. Senate Subcommittee on Housing and Transportation and the Subcommittee on Economic Policy.

A drop in residential construction spending is expected to slash about $21 billion this year from the U.S. gross domestic product and about $49 billion in 2007, Stevens said.
While one-third of the nation's population lives in markets that are still seeing rising home sales, two-thirds live in areas with declining home sales, he said, and "sales are down significantly in Florida, California, Arizona, Nevada, Virginia and Maryland. These regions experienced the greatest rise in home prices in recent years and affordability has become a major issue."
Housing inventory has tripled and quadrupled in some areas with declining sales, he said, and "these areas are vulnerable to outright price declines, particularly if interest rates were to rise further."
The ratio of home prices to income levels, and mortgage debt-servicing costs to income "have greatly increased in some markets to worrisome levels," he said, with Florida, California, Arizona, Nevada, Virginia and Maryland exhibiting "trends far above the local historical norm."

Markets in those states could experience price adjustments, he said, though "price declines are likely to be short-lived" because of job growth. Higher-than-expected rises in mortgage rates or inflation, or more monetary tightening by the Federal Reserve could cause prices to fall back further, he said.

But Stevens refuted the existence of a national housing bubble. "All real estate is local," he said, citing extreme differences in the California and Oklahoma real estate markets as an example.
Richard A. Brown, chief economist for the Federal Deposit Insurance Corp., stated in testimony that FDIC studies have found that booms in house-price appreciation are not necessarily followed by a bust in house prices.

"Instead, they found that housing busts were usually associated with episodes of local economic distress, such as the energy-sector problems that beset Houston in the mid-1980s," Brown stated.

But the latest housing boom is unique in some ways from past experiences, he said. "The number of boom markets is substantially higher currently than the historical experience." No markets in Florida met FDIC's criteria for a housing boom from 1977-2002, though the state was home to 21 boom markets, as defined by the agency, in 2005.
"In addition," Brown said, "the use of ARMs (adjustable-rate mortgages) and non-traditional mortgage products is unprecedented and could have an impact on future market performance."

ARMs accounted for about 30 percent of all conventional mortgage loans in 2004 and 2005, according to the Federal Housing Finance Board, and the share of ARMs was higher among sub-prime mortgages, Brown said in testimony.

"What is yet to be determined is the effect that recent changes in the mortgage lending business may have on the ability of homeowners to meet their monthly obligations under adverse housing market conditions," he stated.

"It remains uncertain how much the 'payment shock' associated with these structures may contribute to selling pressure in local housing markets on the part of distressed homeowners or lenders looking to sell foreclosed properties."

David F. Seiders, chief economist for the National Association of Home Builders trade group, also stated in his testimony that there are "considerable uncertainties about the true dimensions of the risk facing homeowners with 'exotic' ARMs," and "there are a lot of uncertainties about the quality of loan underwriting during the boom housing years."

A surge in energy prices could also hurt the housing market, Seiders said, and it's difficult to predict the future behavior of investors and speculators who bought during the boom.
"NAHB's surveys of builders show large numbers of cancellations of sales contracts before closing as well as less-frequent reports of resales of units closed on earlier. Our forecasts assume that any reflow of units back onto the markets is of manageable proportions and that wholesale dumping does not materialize."

The real estate downturn "still has some distance to go, if only to work off excess supply in markets for both new and existing homes (including the condo market)," Seiders said. "Builders are cutting back on new permit authorizations as well as on starts of new units, and they are trimming prices and offering sizeable non-price sales incentives to limit cancellations and bolster sales."

This is a time of "payback" in demand for home ownership, he said, as the boom served to "pulled demand forward." Demand for housing began to fall off in third-quarter 2005, Seiders said.

House prices increased about 56 percent from mid-2001 to mid-2006, said Patrick J. Lawler, chief economist for the Office of Federal Housing Enterprise Oversight, and inflation-adjusted house prices are 38 percent higher than they were five years ago.

Home prices are at "historically high levels and have already started to stretch past many traditional affordability boundaries," and Lawler stated in his testimony that "several factors may constrain appreciation rates in the near future."

While he said housing markets are expected to "perform well" in the long run, "an important caveat … is that healthy housing markets could soften seriously from an unexpected disruption in the ability of Fannie Mae and Freddie Mac to function effectively in secondary mortgage markets."

Lawler noted that OFHEO is "currently focused on correcting the significant accounting, internal control, management and corporate governance weaknesses" at Fannie Mae and Freddie Mac, and supports the enactment of legislation "that will create a new regulator with adequate funding, bank-like regulatory and enforcement authorities."

Greater Phoenix Resale Market Up Slightly in August

Monday, September 11, 2006

MESA, Ariz. - With 5,685 recorded sales in August 2006, the local resale home market continued to drift lower. Although this activity is slightly above the 5,545 sales of July 2006, it is well below last year's 10,700 recorded sales. After the reported activity for August 2005, the resale market began to dramatically change from a hyper market to a much slower market. Historically, August is the last of the strong months as the market recedes in activity until at least March of the ensuing year.

This is the weakest August since 4,940 sales were recorded in August 2002. So far in 2006, there have been a total of 47,515 sales, while it stood at 78,935 sales in 2005 year to date. While it was unlikely that the market could have sustained the level of 2005, the current level of activity is very comparable to that recorded in the years of 2003 year to date, with 47,255 sales.

Although the record median price was $267,000 in June 2006, the rapid rise in home prices appeared to end in September 2005 with a median price of $263,000. For August, the median home price of $262,500 was a retreat from the $264,900 in July, and was not appreciably above $258,700 last August.

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30-story Tempe building gets OK

By Garin Groff, Tribune

September 8, 2006

Federal aviation officials have decided that a proposed 30-story building in Tempe — which would become one of the East Valley’s tallest structures — isn’t a hazard to airliners and their passengers.

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Study: Phoenix top relocation destination

Phoenix has been ranked No. 1 in a new study of best relocation destinations.

The Retirement Solutions Foundation, a group run by personal-finance author Jane White, looked at several factors in devising the list such as local economic strength, employment, housing affordability and attractions that make a city enjoyable.

"Affordable real estate attracts workers, especially from obscenely overpriced California," the study says of Phoenix. " The region also has an unusually large number of organizations devoted to helping small business."

Also, the report noted high rankings for the Valley from Inc. and Entrepreneur magazines and the Milken Institute.

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Pending Home Sales Index Fell 7.0% in July, NAR Reports

By Benton Ives-Halperin
From Dow Jones Newswires

A gauge for future home demand fell sharply during July, the largest monthly drop since the index was created, indicating that the rate of home sales will be leveling out a lower pace in the months ahead.

The National Association of Realtors' index for pending sales of existing homes decreased at a seasonally adjusted annual rate of 7.0% to 105.6 from June's 113.5, the industry group said Friday.

July's index level is the lowest since February 2003, when it was 99.3.

And July's index reading was 16.0% below the level of July 2005.

David Lereah, NAR's chief economist, said the year-to-year numbers have been a good predictor of the actual pace of home sales.

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Refinancing From an ARM To a Fixed-Rate Home Loan

Question: I currently have an adjustable-rate mortgage for a home I purchased a year ago. Now the rates are increasing every other month. Someone suggested I refinance for a fixed-rate mortgage. How does this work? What happens to the previous mortgage and private mortgage insurance?
-- Sybil Eady, Philadelphia

Sybil: Hell is probably pretty crowded right now, but I hope there's a special circle reserved for lenders who make low-interest, adjustable-rate mortgages without adequately explaining how they work and what their drawbacks are.

And I don't mean just handing you a written form along with the mountains of other paperwork you receive when you apply for a loan. I mean talking to you about what could happen under worst-case scenarios -- until you understand your risks clearly.

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Buyers, sellers seek stability in erratic housing market

Catherine Reagor
Arizona Republic
Sept. 3, 2006 12:00 AM

Valley home buyers are sitting on the sidelines waiting to see when the market is going to level off.

Most open houses are drawing only a few lookers, and those who do show up aren't serious enough to bring real estate agents.

Neighborhood "vigilantes" are pulling down "for sale" signs because they are tired of having so many lookers cruise their streets and turn around in their driveways.

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August gain

The Business Journal of Phoenix - 2:46 PM MST Friday

After three months of sliding downhill, the Arizona Business Conditions Index did an abrupt about-face in August, gaining 6.1 points to reach a reading of 60.5.
The index, updated monthly by the Bank One Economic Outlook Center at Arizona State University's W.P. Carey School of Business, shows economic growth when the reading is above 50 points. A reading below 50 suggests a slowdown in the overall level of economic activity in the near term.

"Until August, the index had been approaching the critical 50-point mark, below which a recession would be indicated," said Dawn McLaren, an ASU economist.

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