John Hall & Associates - Phoenix Real Estate Brokerage

Look for Mr. Jim Sexton in the Arizona Republic this weekend.   He will be highlighted in the real estate sections’ Broker’s Corner.  Just in case you’re not a newspaper kind of person, here’s the article. 

The Big Game 

When you say “Big Game” in Arizona you can’t help but think of the football game in Glendale, even if you’re not a football fan.  Arizona also hosts other big games like the FBR Open and the Barrett/Jackson car auction; there is literally something for everyone.  Even those who aren’t sports fans can’t help but appreciate the fabulous weather, stunning scenery and warm hospitality.  But, the REAL “Big Game” in Arizona is real estate.  I hope that the “white noise” of a negative national press in the financial sector doesn’t obscure the positive aspects of what is happening in Arizona.  Local real estate gurus in their 2008 forecasts give us high marks in comparison with the rest of the country predicting a population growth of +2.7%, employment at +2%, personal income +5.5% and retail sales at +1.5%.   This is when the knowledgeable players get in the game, to take advantage of interest rates at historic lows and the abundance of housing choices.  Even the rise in foreclosures gives real estate a boost whether you are a buyer occupant or an investor.  When you consider the fact that according to the National Association of REALTORS®, the value of homes nearly doubles every ten years, this would be the perfect time to get off the bench and start playing.

With all the bad news from the economic sector of our economy, you may have missed some of this; Forbes magazine ranks us 3rd in its “Best US Cities for Jobs” list, Business 2.0 magazine rates us a top destination city for relocations and one of America’s hottest job markets.   And, CNN ranked the Phoenix/Tucson area as one of the top 10 “megapolitans” in the U.S.  

You have to ask yourself, how bad is the economy when a 30 second commercial during the Super Bowl costs approximately $2.3 million?  Don’t wait to buy real estate, buy real estate and wait.  Whether you are a Patriots or Giants fan, its time to get off the sidelines and get into the REAL game in Arizona - real estate.

As you may have heard ARMLS’s current contract with MarketLinx is expiring and FlexMLSis going to be the new provider.  What does this mean for ARMLS members?  The good - it’s a user-friendly MLS sytem that can be customized to meet your requirements.  The bad - a new system to learn.  The ugly - well, I’ve seen it and it ain’t ugly - quite attractive really.  Check out this video to see what I’m talking about (Be patient it takes a little while to load a 30 minute video.)

FlexMLS is getting a warm welcome in Phoenix.  There has even been a unique blog site started by Greg Swan that is dedicated to providing feedback to the designers of the system.  Two of our own, Dru Bloomfield and Russell Shaw, are contributing authors. 

Look for the new system to be up and running by July 1st ‘08.  It won’t be long before ARMLS starts scheduling training classes for all 35,000 of us.  Stay tuned.   

If you are interested in moving your business out of your house or garage, or maybe you are ready to get away from the “got a second” folks at your branch office - we might have a solution for you.

Adjacent to our PV location near Tatum and Shea we are opening a brand new executive suites only location.  The suites include: Privacy, Golf Course Views, Underground Parking, High-Speed Internet, Network Printer, Kitchen w/ Refrigerator, 2 desks, 2 chairs, and 2 phones.  Whew!  We also have work stations for those that don’t need an entire office.  

If you would like more information or want to schedule a guided tour, send us an email. 

At the time of this post we have 2 offices and 4 work stations left.  Prices start at $25/month.

If you would prefer a private office at the John Hall & Associates’ Tempe, Arrowhead, or Scottsdale location give us a shout.

We received an awesome email this morning from the past president of the Arizona Mortgage Lenders Association,  Amy Swaney.  She does an excellent job of explaining the relationship between the Fed’s rate cut and mortgage rates.

Many consumers have misconceptions about the FED, and its affect on the long term interest rates.  I thought I would give you a crash-course on the truth behind the Fed’s meeting and the affect it has on long-term rates.  This may be a refresher course for many, but always good information to review. 

 The Federal Open Market Committee (FOMC) is a twelve-member committee made up of the seven members of the Board of Governors and five Federal Reserve Bank presidents. It meets eight times per year to determine the near-term direction of monetary policy, such as setting guidelines for the purchase and sale of government securities and setting policy relating to System operations in the foreign exchange markets. The Fed determines interest rate policy at FOMC meetings.  The interest rate set by the Fed, the federal funds rate, is the lending rate banks charge each other for the use of overnight funds and it serves as a benchmark for all other rates. A change in the fed funds rate also changes the dynamics of competition for investor dollars: when bonds yield 10 percent, they will attract more money away from stocks then when they only yield 5 percent. Again, the level of interest rates affects the economy for a­ higher rate tend to slow activity; and lower rates stimulate activity, a ripple effect that expands into all sectors of the economy.

These changes in monetary policy are now announced immediately after FOMC meetings so many assume that a drop in the discount rate or the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank’s lending facility–the discount window or the Fed Funds Rate, will automatically translate into a corollary drop in the long term rate. This is inaccurate. 

Is a Fed rate cut really good news for long term mortgage rates? The facts may be surprising. The Fed can only control the Discount Rate and the Fed Funds Rate. This is very different from mortgage rates. A mortgage rate can be in effect for 30-years, a rate that is set by the Fed can change from one day to another.

How does a change in the monetary policy directly affect consumers?  Consumers will see fairly immediate changes in short-term or consumer type loans such as credit cards and Home Equity Line of Credits (HELOCs) as the rate has ties to the Prime Rate.  But then how are long-term mortgage rates based?

As it turns out the answer is mortgage-backed bonds known as Mortgage Backed Securities (MBS). Bonds issued by Fannie Mae and Freddie Mac (MBS) and the trading performance of those bonds will determine the direction of mortgage rates. Finding the catalyst that causes mortgage bonds to move will give you the keys to finding out what makes mortgage rates rise or fall.

That catalyst could be any type of economic, political or global data.  Something to consider is that as bond prices rise, interest rates fall. As bond prices fall, interest rates rise including large movements in the Stock Market.  This concept is simple if you think in terms of where money comes from.  Investors have basically 2 places to put their money; in the stock market or the bond market.  Since money is a finite resource, if people are buying stocks, they typically have to pull that money out of the bond market and vice versa, thus they typically move opposite of each other.  

As the Nasdaq (Bond Based) moves higher, bond prices move lower causing interest rates to rise. As the Nasdaq declines, mortgage bonds benefit, causing mortgage rates to fall. Additionally, and unlike common opinion, Fed rate cuts have had virtually no direct effect on mortgage rates. In actuality, it appears that since Fed rate cuts act to stimulate the Nasdaq, they have a negative effect on mortgage rates.

The reality is that market participants weeks before the meeting announcement speculate about the possibility of an interest rate change at these meetings, and if the outcome is different from expectations, that is truly the only time the rate hike or cut will have a direct impact on the markets, but it usually tends to be short-term and volatility based. 

Amy Swaney 

Mr. Jim Sexton did some analysis of the 2007 resale market in Maricopa and Pinal Counties according to the ARMLS numbers - pretty interesting.  Here is a slide that shows the average sales price for the entire year.  Before you look, what’s your guess – Did prices go up or down in 2007?  

He also looked at Scottsdale specifically.  Here are the number of closings per year.  If you compare these to the entire countyyou will notice Scottsdale has consistently tracked the county’s sales - about 10%.

Notice the number of active listings – over a 12 month supply.  AND the average list price of these active listings is 40% higher than the average sales price last year!

Sellers, not just in Scottsdale, need to become more realistic about properly pricing their property.  Not many people who list their property today want to wait until until Jan. 2009 to sell.  One of the most difficult things to do is not dwell on the “could of had” prices of yesterday and focus on the market of today.  A properly priced property should sell within 30-45 days.  Adam Smith said it best in 1776.  It’s not the sellers who set the prices, it’s the market. 

The market is always talking.  Can you hear it?  Or better yet, do you understand what it is saying?

The Phoenix Business Journal recently contacted Marc Gastineau for this article.

They contacted him because of his niche of working with foreclosed properties.  Here is how they describe him:

Marc Gastineau, an agent with John Hall & Associates in Scottsdale, is focusing much of his time on finding qualified buyers to take advantage of bank-owned properties, mostly through an aggressive Internet strategy.

“We’re finding them in droves,” Gastineau said.  Though many are investors, he said, “We’ve got a handful of first-time buyers. Interest rates are still reasonable.”

Instead of releasing new forms throughout the course of the year AAR releases new form updates once a year in February.  Not too much action in the AAR forms world right now, but you should be looking for the following forms to be released at AAR’s next release date on February 1, 2008:

·        Revised Residential Rental Agreement (major overhaul of the Rental Agreement with a new name)

·        Revised Residential Seller’s Property Disclosure Statement

·        Vacant Land Seller’s Property Disclosure Statement

·        Commercial Seller’s Property Disclosure Statement.

The changes made to the SPDS forms are minimal, and, as follows:

NOTICE TO BUYER:  THE ARIZONA DEPARTMENT OF REAL ESTATE PROVIDES EARTH FISSURE MAPS TO ANY MEMBER OF THE PUBLIC IN PRINTED OR ELECTRONIC FORMAT UPON REQUEST AND ON ITS WEB SITE AT www.azre.gov.

On the Residential SPDS the update is at line 73, on the Vacant Land/Lot SPDS it’s at line 129, and on the Commercial SPDS it’s at line 86.  Please note that only the Rental Agreement and Residential SPDS forms will be printed. The others will be available on ZipForm only. 

If you are using ZipForm Online the new forms will be automatically updated.  For those users with ZipForm Desktop will need to download the updates.  

Remember this is the last year AAR will be printing any forms - Jan. ‘09 they are switching to digital forms only. 

Our golf commitee is hard at work planning for the John Hall & Associates Golf Classic for MDA.  This year we are playing at the exclusive FireRock Country Club in Fountain Hills.  We have room for 124 golfers.  Just in case you are interested in participating on May 12th here is an entry form. 

Of course in our attempt to raise lots of money for MDA we are asking for interested sponsors to step forward.  There are lots of different levels to choose from or you can also donate a gift to be given away as a prize.

We are proud to say that over the life of the tournament John Hall & Associates has been able to donate over $700,000!  Our goal this year is to add $45,000 to that.  See you there! 

 

In the past, if your home was sold for less than you owed on a mortgage and the lender forgave some of the debt you owed - most sellers got taxed on the amount forgiven similar to normal income. 

As of December 20th, a new bill was passed that relieves many home sellers of this tax.  The home has to have been sold between January 1, 2007 and December 31, 2009.  If you have any questions about a specific transaction - CONSULT A TAX ADVISOR!  

Read the summarized details of the bill.