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How We Pick The Home We Buy

August 31, 2009

Interesting post from the Zillow blog that puts a little science behind what I’ve always told my sellers – home buyers make decisions based on emotion, usually within the very first few moments they’re in the house.  In my experience, those first few moments make about 80% of the decision for a large portion of the population.

The post references a Katherine Salant column.  Excerpts:

In the first two or three minutes you are in a model home, your sensory organs are feeding data into the emotional centers of your brain. As you glance at the living room, these emotional centers rapidly register the details.

Then, on the spot, the emotional networks vote up or down. The deal starts or ends with the firing of a few billion neurons.

If our nearly instantaneous visceral response is positive, our dopamine receptors go into overdrive, Lehrer said. They make us want that house, and they make us want it immediately.

Once your emotions have voiced their opinions, a different set of neurons in the frontal cortex, which control your brain’s "executive function," start to kick in. They generate seemingly logical reasons why a particular house is the one, Lehrer said. As you continue to think about this purchase, your list of good reasons gets longer: It has all the formal living and dining space that we need for resale! We’ll have a place to put great aunt Julia’s living room set, which we just inherited! We can have romantic dinners for two by the fireplace in the family room!

This is why I’ve always argued that the point of good home marketing is to get a potential home buyer inside the house.  When I represent home sellers here in Tucson, I want to show people enough information, pictures, and details that they’re curious to see more, that they’re drawn to see the house in person.  I want that visceral emotional reaction from those home buyers.

I don’t want someone looking online and rejecting a house because they looked at 50 pictures and decided they don’t like the oak cabinets or the guest bedrooms seem to small in the virtual tour – I don’t want potential home buyers dismissing a house out of hand because of some perceived flaw or omission, most of which could be changed or otherwise addressed.  I want people in the house, seeing it in person, getting that emotional reaction.  That’s successful home marketing.

All of which – if you’re looking to buy a home -  is why you should work with an agent who knows your wants and needs, who understands that you can get caught up in that visceral reaction, and can remind you to evaluate the house from a more objective view point.

$8000 Tax Credit for First Time Home Buyers – Expires Soon

August 26, 2009

I’ve talked about it a little in my Tucson real estate market reports, but for those that don’t know – there’s an $8000 tax credit for first time buyers that expires December 1, 2009. 

The home buyer tax credit is only for first time buyers, according to the IRS.  And those are people who have not owned a home in the last 3 years.  Excluded from the credit are first time home buyers who file taxes separately and whose income exceeds $95,000, those who file jointly and whose income exceeds $170,000.

There are a few other guidelines – mortgage guru Dan covers them well in this article.

BUT – you have to close on your home on or before December 1, 2009.

Given a typical escrow is 30-45 days in Tucson – let’s use 45 days just to play safe – if we count backwards, that means you need to have a home under contract by October 16th.  Throw in a couple of days for negotiating, and you need to be making offers probably by October 10th, at the absolute latest.

Which is in 46 days. 

If you think you may qualify for this program and want to take advantage of it, it’s time to get moving.  Get thee to a lender to get pre-approved, and get thee home shopping.

If you’ve got questions, send me an email.  Happy to help where I can.

Tucson Market Statistics and Report – July 2009

August 23, 2009

The Quick Numbers:

• Single Family Home Average Sales Price: $227,109
• Single Family Home Median Sales Price: $180,000
• Single Family Home Units Sold: 933
• Single Family Home Months of Inventory: 5.8 months

• Townhouse Average Sales Price: $152,601
• Townhouse Median Sales Price: $132,500
• Townhouse Units Sold: 77
• Townhouse Months of Inventory: 7.1 months

• Condo Average Sales Price: $124,110
• Condo Median Sales Price: $114,400
• Condo Units Sold: 43
• Condo Months of Inventory: 11.2 months

• Citywide Average Sales Price: $217,455
• Citywide Median Sales Price: $170,000
• Citywide Units Sold: 1053
• Citywide Months of Inventory: 6.1 months

Another atypical month in July.  Normally, July signals the end of our summer peak – the number of homes sold goes down, the months of inventory levels start to rise, the average sales price starts to drop off as demand slows.  Not so, this past July.

Sales were were up a bit over last month, coming in at 1053 units – a volume we haven’t seen in 2 years.  If you look at what price points had the most sales, you see that the lower end of the market is what has been moving lately, especially the under $200k range.  Lots of first time buyers out there taking advantage of the $8000 tax credit.

The average sale price in Tucson was $217,455, with a median of $170,000.  We’ve been dancing in this same price range all year – in fact, January started with a $217,491 average sales price.

The number of homes for sale did drop though, roughly 200 homes fewer for sale than last month.  Back in a normal market (anyone remember those years?) inventory used to hover in the 5000-6000 range.  July recorded the lowest levels of homes on the market since I started tracking active listings at the start of 2006. 

The Southeast part of Tucson had an interesting July, recording the lowest months of inventory at 4.8 months.  The average sales price there ticked up a bit too, to $207,117.  The Southeast has been hovering in the $190k range for a good 11 months or so.  That area is known for the school district though – makes me think the last minute rush to buy a home before the kids start school may have contributed to the uptick there.

Sorry for the delay in the report this month – rearranging some of the back end of the site took a whole lot longer than anticipated!

As always, there are extensive charts and statistics and whatnot, broken down by area and type of housing, over at my Tucson market statistics site. The market in this city varies widely from one end to the other, so you can check out what’s going on in your area over at that section of my site.

Data gathered from the Tucson MLS and is deemed reliable but not guaranteed. Figures quoted here include only single family homes, townhomes, and condos in the 9 areas that make up the Greater Tucson Area: NW, N, NE, W, C, E, SW, S, and SE.

Hi There!

August 12, 2009

Been a little quiet around here lately. I’ve been making some changes to the site configuration and it took a little longer than expected. I think I’ve got all the kinks worked out, and we’ll be back to a regular posting schedule shortly. Favor though? If you find something not working on the site, let me know. I went through it pretty thoroughly, but if you find something I missed, I’d appreciate the heads-up!

Even More New Rules – SB1271 Anti Deficiency Law Change

August 5, 2009

It’s the week to update rules, apparently. Hang in there with me.

SB 1271 is an amendment to ARS 33-814, for those of you who want to do some of your own Google research. For the rest of us…

Arizona Revised Statute 33-814 says that within 90 days of a foreclosure sale, legal action can be brought against that borrower to recover any deficiency – the lender can sue you for any money that they’re owed after the property is auctioned off. BUT – a lender can’t pursue a deficiency judgement if the property foreclosed on is 2.5 acres or less and used as a single family home.

So if you’re a homeowner in Arizona, live in your own home on less than 2.5 acres, and the bank takes your home back via foreclosure, they probably can’t come after you for any money. If you don’t live on the property or if it is on 2.5 acres or more, then the bank can come after you for the difference between what is owed and what is made at the trustee sale, at the auction. (That’s a simplification, but generally correct.)

SB 1271 is a bill amending that rule, going into effect September 30, 2009. This bill says that the owner had to have “utilized” the property for 6 consecutive months in order for that owner to be exempt from a deficiency judgement. I’m told the language is a little vague – at this point, the best interpretation is that you have to have lived in the house for at least 6 consecutive months.

The Arizona Association of REALTORs has a bit of a problem with this bill, and is appealing to the governor to not enact the bill. You can see AAR’s request to stop SB 1271 here. Go ahead and read their letter to get a better idea of their objections. Some points they bring up are that it takes away an incentive for lenders to work with homeowners in distress, since they can foreclose quickly and then sue the owner for the difference. Another objection is due to the 6 consecutive months requirement – Arizona has a lot of vacation home owners, second home owners who only live here 4-5 months out of the year. Even if they own the home for many years, they may not have “utilized” it for 6 consecutive months.

I’ll let you know as updates come along.

HERA, HVCC, and Other Fun Acronyms- Ready for New Lending Rules?

August 3, 2009

Starting July 30th, 2009, there’s some new disclosure rules for mortgages – an update to the Truth in Lending regulation (also called Reg Z, if you want to use the fancy lingo). They call this one HERA – the Housing and Economic Recovery Act. The highlights:

• The new requirements apply to all mortgages where the owner lives in the property as either a primary or secondary residence, and includes refinances.
• Good faith estimates are to be provided within 3 business days after you apply for a loan, and the lender can’t collect any fees before that disclosure is provided – except to collect a reasonable credit report fee.
• Closing can’t happen until 7 days after you get that early disclosure, as a waiting period.
• If your APR increases by more than 0.125%, the lender has to give you an updated disclosure, and wait another 3 days before the loan can close. Remember that an APR includes not only the interest rate, but factors in other closing costs and fees.

So basically, you’re supposed to get disclosures earlier, not pay any big fees until you have time to review them, and if your costs and/or interest rate make a big swing, you’re supposed to get an updated disclosure.

Also – and this rule started May 2009 – for conforming loans, those that conform to Fannie Mae/Freddie Mac guidelines, there’s another rule. This one is HVCC – the Home Valuation Code of Conduct.

HVCC is an attempt to make the appraiser more independent – less likely to be influenced by a lender or an agent or a buyer or a seller – and to make sure a borrower gets to see their appraisal. HVCC states that borrowers receive a copy of their appraisal report no less than 3 days prior to closing their loan – unless the borrower waives this requirement.

There was quite a bit of hubbub when HVCC came out – that agents weren’t allowed to communicate with the appraiser, that they’d delay closing because of long appraisal timeline allocations, that appraisers were working in areas outside their expertise. FHFA issued a document to try and clarify some of those conerns. Fannie Mae has a FAQ about HVCC as well. And of course, links to all kinds of HVCC information over at Realtor.org.

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