The Catalina Foothills

overpriced by any measure

It has become painfully clear that the real estate market is going through one of the worst times in it's history. And the jury's still out on where it will end.
Sales have been slow, dreadfully slow in some places - and home sales are slowing even more with the added burden of the mortgage crisis. Inventories of homes are at an all time high - foreclosures are higher than ever and growing, and choking off many of the lenders that made those loans - sadly, people are losing their homes because their mortgage payments are rising and their homes value is decreasing - new home builders are on the rocks - and the stock market and the economy are faltering as a result of the state of the real estate and mortgage markets.
For the most part, only the most desirable, well priced and well presented homes are selling. While just about everything else is starting to smell like day old fish.
Yet in the face of this overwhelming evidence, some homeowners persist in trying to sell their homes at outlandish fairy-tale prices. Still, now, today. It's mind boggling.
And I'm not talking about the homes that are just run-of-the-mill over priced, I'm talking about the homes that are blatantly overpriced, at 20%, 30% and more over current market value. Homes that are priced so out of whack with reality, that they really don't stand a chance of selling. While these grossly overpriced listings are the exception in the Tucson Foothills these days - because most people have gotten it by now - about four or five of them turn up and catch my eye in the MLS each week. You can't help noticing them with all those $$$$ signs. They pop up as shiny and hopeful new listings, that are destined to fail, or more often as withdrawn or expired old listings, which have grown older, more tired and irrelevant as time goes on.
Of course homeowners can list their home for whatever price they like, however outlandish, but if they would really like to sell, or need to sell, they're in for a big disappointment and maybe a big financial setback. The market is in turmoil, it ain't over.
And though it's not surprising, it is discouraging that these homeowners have been able to find a Realtor® (or maybe the Realtor® found them) who will smile and go along with this fantasy.
Of course it's possible that the Realtor® took the listing, assuming that down the road the homeowner would see the light and reduce the price to where it should be. But it's also possible that it's the Realtor®, and not the homeowner, who suggests and encourages this outlandish pricing - because they want to get the listing (why I don't know), or because they haven't the faintest idea of what the market value is, and they make an honest mistake in pricing the home - In which case they shouldn't be doing what they're doing. Not when you're off the target by that much.
Admittedly, pricing a home in the Tucson Foothills is not as simple as 1-2-3. With few exceptions, this is not a community of cookie-cutter homes, so you can't just look at what might appear to be comps in order to arrive at a fair market price. Usually there are a lot of variables within those comps, and you have to know the market to properly evaluate them. And then you have to take your head out of the sand and give serious consideration to what's happening in the world out there these days, if you truly want to have a shot at selling that home.

Truth in lending

Here's the pitch;
"I want to be sure you are getting the best loan possible"
And the reality;
Countrywide’s entire operation, from its computer system to its incentive pay structure and financing arrangements, is intended to wring maximum profits out of the mortgage lending boom no matter what it costs borrowers, according to interviews with former employees and brokers who worked in different units of the company and internal documents they provided.
Today's New York Times features an in-depth expose' of how Countrywide Financial steered consumers away from lower cost loans to those that were more expensive to homeowners and more profitable to Countrywide. Inside the Countrywide Lending Spree

a ray of light

In an interview with Kelsey Hubbard of the WSJ, David Wyss, chief economist of Standard & Poors, speaking of the latest housing numbers says, "there are signs that things are bottoming out."
He adds some disclaimers and caveats, but he does say it,
"there are signs that things are bottoming out."

cash is king

Cash buyers have always had an edge in real estate transactions. They're just more attractive to home sellers and their agents because a cash offer just seems more solid and serious and real. It's cash, with no strings attached. A cash offer eliminates the unknowns and snafus of the loan contingency variable, and the time it takes to process that loan, and get it approved - or not approved - through underwriting and then funded.
That's about 25 -30 days of waiting and wondering. Cash buyers can close fast, I've seen it done in 7 days. That's very tempting to a home seller.
And now with the global credit crunch making loans harder to get, more expensive and less available - added to an already slower home market - cash buyers are sitting in a very pretty place.
In the Tucson Foothills, with the average sale price of a single family home at about $700K, the availability and affordability of jumbo loans, which have been battered lately, are of particular concern.
The upside, is that this is a real window of opportunity for cash buyers in the Tucson Foothills.

there are buyers out there, even now

Two weeks ago, in more on pick of the litter, I wrote about a home that I had just listed for sale and how we got two very good offers on it, after just two days on the market. And this was no cheapie home either, it was listed at $845,000. (The point of that piece was that the good homes, the pick of the litter homes, are still selling very well in the Tucson Foothills. A point that I've made, OK, harped on, again and again for some time now) Anyway, after a few days in escrow, and as the buyers were doing their inspections, the mortgage mess suddenly billowed out from it's corner in the subprime arena, to engulf the entire mortgage industry and credit markets worldwide.  Spooked, I suspect, those buyers walked at the 11th hour, after 12 days in escrow.
At the time that we went into escrow there were other buyers interested in that home, but they'd hesitated a couple a beats too long. So I put the house back on the market the next day, Saturday, August 18th hoping that at least one of them would come around.
But with suddenly tighter, more expensive lending, particularly for jumbo loans, and fewer options as lenders were closing their doors,
I was feeling less optimistic about getting another good offer anytime soon. I figured this mortgage thing was going to have to shake itself out a bit before buyers started showing their faces again.
Wrong. Right out of the box we had one showing after another.
And yesterday, again after just two days on the market, we got another very good offer and went into escrow, again, while another agent was trying to schedule a third showing, for her apparently very interested clients.
So at the risk of beating a dead horse- there are buyers out there who want to buy a home in the Tucson Foothills, but these days, they all want the pick of the litter. 

kick' em while they're down

There's an ugly little story in today's New York Times, front page stuff, about a little known side effect of foreclosure. May cause dizziness, nausea, vomiting... 
Here's the scenario; You lose your home to foreclosure and suffer the upheaval, indignity and financial repercussions that go along with it. Bruised, beaten and licking your wounds, you take some small comfort in the fact that at least it's over and done with, it's all behind you.
Not so fast. One day you go to the mailbox of your rented flat, and amidst the bills and junk is a letter from the IRS stating that you owe them $34,000 in back taxes. The letter explains that the debt that was canceled by such-and-such bank on your homes foreclosure, is subject to income taxes, as well as penalties and late fees.
Unbelievable! Read it here>  After Foreclosure, a Big Tax Bill From the I.R.S.

making loans, moving forward

I have it on very good authority that Long mortgage has been seamlessly processing mortgages, accepting applications for new mortgages and delivering loan docs to title for ontime closings.
This, despite the fact that a number of other mortgage companies have been frozen in their tracks and unable to move forward.
In some cases Long mortgage has had to pick up the pieces from these other mortgage companies, and put them back together, quickly, so that buyers and sellers could close as originally planned.
As an added bonus, and a pretty extraordinary one at that, considering what's happening elsewhere in the mortgage marketplace, Long mortgage continues to offer the 1% off Real Deal. Simply put, a buyer using Long Realty and Long Mortgage gets 1% off their interest rate for the first year of the mortgage. On a $400,000 mortgage, that's a savings of $3084.00 over that first year.
That kind of reassurance and standout performance should be a comfort to buyers and sellers who are active in the Tucson home market right now.

fallout in the Tucson Foothills

About two weeks ago I wrote about a home that I'd just listed for sale here in the Tucson Foothills, and how it snapped up two very good offers in just 2 1/2 days on the market - more on, pick of the litter
And all was going along very nicely, until yesterday, when at the 11th hour the buyers backed out of the deal. And while I can't go into the gory details of why it fell through, I can say that it was not due to problems with the house. I chalk it up to the stress of the times - the mounting mortgage mess generously heaped on continuing bleak news in the national real estate markets, alongside mucho turbulence in the financial markets = fear.
We're not alone in this. With fear in the marketplace, plus mortgages that are suddenly more difficult and expensive to obtain, deals are falling through, for reasons that are both real and imagined.
Fortunately, this is a best in it's class, pick of the litter house, and some other lucky buyer will now have their chance.
Click HERE to see the pictures and get the details of this house.

Tucson - Long Mortgage steps in as others falter

Within hours of the news that Tucson-based First Magnus Financial Corp had halted all loan activity, Rosey Koberlein, CEO of Long Companies provided some much needed reassurance to the local market by announcing, "Long Mortgage Company has responded to the situation at First Magnus by working closely with its parent company, HomeServices of America, an affiliate of Berkshire Hathaway, to promptly arrange alternative funding sources to fund loans currently in the pipeline and to continue accepting loan applications for any Long Realty business."
Here's the full text of the announcement:

RE: LONG MORTGAGE CONTINUES TO FUND LOANS

Our thoughts and good wishes go out to our colleagues at First Magnus Financial, which announced today that it would stop writing and funding real estate loans, effective immediately. We know the shut down will affect not only First Magnus employees but their many families, as well. We will be hoping for the best for them!

Long Mortgage Company has responded to the situation at First Magnus by working closely with its parent company, HomeServices of America, an affiliate of Berkshire Hathaway, to promptly arrange alternative funding sources to fund loans currently in the pipeline and to continue accepting loan applications for any Long Realty business.

Here are the steps we have taken today:

1. Loans that are set to close within the next 48 hours will be our highest priority. Such loans will be funded through our alternative funding sources.
2. Our alternative funding sources will also honor all current loan commitments and terms for our client's loans now in the pipeline.
3. We are reaching out to other brokers with buyers of Long Realty listings, offering to process their clients' loans with the same care and concern as for our own buyers, if their buyers' loans are in jeopardy.
4. We are contacting other real estate companies to assure them that our own real estate transactions on their listed properties will close in a timely manner.
5. Finally, we have secured a commitment from our funding sources to continue with Long Mortgage's Real Deal 1% Off Program.

We believe taking these important steps will add much needed calm and stability to the local market.

Long Mortgage and Long Realty are very fortunate to have the strong backing and support of HomeSevices of America during this difficult period. As you may know, HomeServices is the second largest, full service independently owned residential real estate company in the nation. Rest assured, Long Mortgage will continue to provide loan services to southern Arizonans seeking to fulfill the dream of homeownership. 

I will also continue to monitor the situation locally and keep you informed in the days ahead. Thank you all for your patience and outstanding professionalism.

Sincerely,

Rosey Koberlein, CRB

CEO Long Companies

Tucson - mortgage meltdown hits home

From an online article in today's Arizona Daily Star.
Tucson based First Magnus Financial Corp announced that it has stopped writing loans, stopped accepting applications for loans and halted funding for loans previously originated but not yet funded.
First Magnus announces layoffs, halts new loan activity

Joesler, popular as ever in Tucson Foothills

I'm a big fan of Josias Joesler and the houses and other buildings that he designed and built in the Tucson Foothills. And judging by the number of web searches that I get for Joesler, or Josias Joesler, or Joesler homes, a lot of other people are interested in this little known (except here in Tucson) Swiss born architect.
Given that interest, I thought it worth-while to compile a list of sources of information on Josias Joesler and his work - albeit a short one, since there doesn't seem to be much available.
But I've also included links to the Joesler homes that are currently for sale in the Tucson Foothills and those that have sold in the last few years. Enjoy!

-Josias Joesler: An Architectural Eclectic
written by, R. Brooks Jeffery, Coordinator of Preservation Studies at  the College of Architecture and Landscape Architecture (CALA) at the University of Arizona. A great source of information on Joesler.
-Northern Pima County - Catalina Foothills
This is from the Northern Pima County Chamber of Commerce and       provides a history of the Tucson Foothills, and how Joesler and his patron John Murphy were a key players in the development of the Tucson Foothills.
-Josias Joesler gave Foothills character
An article from the Arizona Daily Star that discusses the continued popularity of Joesler's homes in the Tucson Foothills.
-St. Philips In The Hills Episcopal Church
The most prominent of Joesler's public buildings it's located at the entrance to the original Catalina Foothills Estates on the northeast corner of River Rd and Campbell Ave.
-Joesler's For Sale
A link to the Tucson MLS showing the 4 Joesler homes that are currently for sale in the Tucson Foothills.
-Joesler's SOLD
A link to the Tucson MLS showing the 18 Joesler homes that have sold in the Tucson Foothills in the last 4 years or so.
**A few of these Joesler homes pop up more than once, having come up for sale a couple of times over the last few years.
**Unless I remember to renew them, the links to the Tucson MLS will expire on 9/10/07.
If they do, contact me for info on Joesler homes currently for sale.
If you know of other good sources of information on Josias Joesler please post it here or email me. I'd appreciate it.

more messy mortgages

Two days ago I wrote that jumbo loans were in the news, and reported to be the next victim of the credit squeeze. Today CNN.com has more on the jump in jumbo loan costs- 
Big-ticket mortgage rates rise -and what it means for big ticket buyers.
Rising rates for jumbo loans (Wells Fargo is reported to be charging 8%, yes 8%) are likely to take a bite out of home sales in the Tucson Foothills, and other high priced markets, which until now have not seen too much effect from the sub prime mess.
The average sale price of a single family home in the Tucson Foothills is around $700,000- so this is a big market for jumbo loans.

the rising tide in the Tucson Foothills

Since moving to the Tucson Foothills in 2000 I've watched the Foothills morph into an area of more and more expensive homes. 
As in many cities, high rates of home appreciation have contributed to this, but also, in the Foothills virtually all the new construction in the past seven + years has been at the upper-end of the market - big expensive homes. No one is building $400,000 homes in the Foothills. By mid 2003, when the country and the stock market began to recover from the effects of 9/11, luxury home building in the Foothills really started to take off.
 
And while a big chunk of that luxury home building took place in Pima Canyon and a few other luxury subdivisions in the Foothills, soon every nook and cranny of the Foothills was fair game.
Large multi-acre estates from the 40's and 50's were being split into 1 acre lots to make room for new luxury homes. And older homes on lots scattered throughout the Foothills were razed, and in their place $1,000,000+ McMansions were built. And more recently, builders started putting up big expensive spec homes on less desirable lots. Lots that are next to roads, or homes squeezed onto small hillside lots, where the house overwhelms the setting.
Because of this rush of luxury development I started wondering how that has effected the rates of appreciation in both luxury and more moderately priced communities in the Tucson Foothills.
Overall, single family homes in the Tucson Foothills have appreciated +82% between 2000 and 2007 - based on average sale price-$371,937 in 2000 - $677,050 in 2007 = +82%.
(and that's down 3.7% from 2006)
Looking at the average sale price and % of appreciation in five  upscale communities and five mid-priced communities, here's what I found.
             
      Average Sale Price by Subdivision 2000 to 2007

                                             2000             2007            %

• Pima Canyon                 $717,375       $1,629,536     +127%
• Ventana Canyon Est       $869,500       $1,232,500     + 42%
• Skyline CC Est               $692,324       $1,118,586     + 61%
• La Paloma Est                $941,428       $1,600,000     +70%
• Catalina Foothills 10        $637,750       $1,398,100     + 119%
  
• Fairfield Sunrise             $290,147       $595,115       +105%
• Shadow Hills                  $332,124       $618,068       + 86%
• Villages of Ventana         $247,285       $503,320       +103%
• Cimarron Fthls Est          $353,140       $635,681       + 80%
• Catalina Fthls 7              $352,162       $758,333      +115%

In the luxury communities listed above, the cumulative appreciation has been 419%, or an average of 84%. While in the mid-priced communities it's been a whopping 489%, or an average of 97% during the same period. 
between the lines,
And there's a key difference at play when comparing the two types of communities that the numbers alone don't explain.
In these mid-priced communities, there have been very few, almost none, new homes built in the last seven years, so the appreciation that we're seeing, is just that, appreciation on existing homes.
So maybe the stable inventory, and the rising tide of higher priced luxury homes in the Tucson Foothills has benefited the mid-priced market.

While in the luxury communities, and in Pima Canyon in particular, there's been lots of new construction, and increasingly that new construction is for ever larger, more exotic, and more expensive homes. So while the figures are accurate, they reflect more than just appreciation on existing homes. They also reflect the higher cost of more exotic homes being added to the mix.
Pima Canyon opened in 2000, and added 290 luxury homesites to the Foothills in one swoop.
   
But this goldrush mentality to build more and bigger luxury homes, and to do it anywhere and everywhere you can, has gotten way ahead of the market.
At $1.5 to $2.0mil, there is now 51 months of inventory.
At $2.0mil and up, there is 63 months of inventory, in the Foothills.
While up to about $700,000 there is just 8 to 9 months of inventory.

And despite the increasing popularity of the Foothills as a destination for luxury home buyers, it is difficult to imagine that the luxury market is not going to suffer reduced appreciation, for at least the next year or two, as a result of rampant building.

cash buyers and the mortgage mess

Whenever I've worked with a buyer who is interested in making a really low-ball offer on a house in the Tucson Foothills, particularly a vacant house that's been languishing on the market for four, five months or more, my first question is always, "are you taking a mortgage or paying cash"?
If it's at all possible for them, I counsel them to consider making a cash offer combined with a super-fast close of escrow, two weeks or so. When a seller sees that combination of a cash offer and a closing date so close that they can almost smell the money, their objections tend to melt away and the low-ball offer begins to look a lot more attractive. We've been able to make some incredibly good deals using that strategy.
Now with the sub-prime mess spilling over into all mortgage categories, including prime borrower jumbo loans - as reported in today's Wall Street Journal -  Mortgage Fears Drive Up Rates On Jumbo Loans, the (low-ball) cash offer-fast close strategy, may by necessity, become even more attractive to sellers as the ranks of mortgage eligible buyers dwindles. And for home buyers able to make a cash offer, there should be many more opportunities to make a great deal.
Here in the Tucson Foothills, with the average sale price of a single family home hovering around $700,000, many of the mortgages taken are prime jumbo. Until now, this wealthier, higher-end of the market has seen fewer adverse effects from the mortgage mess, but it looks like that's about to change.

Monsoons slam Tucson, again

  Sun          Today            Tues

                     
88° | 72    89° | 72         90° | 71°
July and August is Monsoon season in Tucson, and up until about a week ago it was a pretty piddling monsoon. At least that's been the case here in the Tucson Foothills, all bark, no bite. 
But monsoon storms are very localized, and we might have a howling rainstorm where I live, and at my office two miles away, not a drop.  
But lately we've all been getting slammed.
Here's what it looks like this morning out my window,
 


This wash, which borders the west side of my house is where I walk my dogs everyday, and it's usually bone-dry.
 
That's building up to about three feet of very swift moving water. 
The weatherman says more on the way.

more on, pick of the litter

I've written about this 'pick of the litter' thing a couple of times in the last few months. The gist of my message was that although home sales are slower in the Tucson Foothills (down about 13%) and inventory is up, that it's not anywhere near the disaster that you hear about on the national news, and that the more desirable homes are still selling.
And they're selling very quickly in many cases, and catching buyers who think a slow market equals no sales, by surprise. 
See, buyers market, Holy Cow!, pick of the litter and
multiple offers in the Tucson Foothills
This past Monday I listed what I thought was a
'pick of the litter' house in the Tucson Foothills, for $845,000.
(See it at New listing, not yet in MLS) It went into the Tucson MLS mid afternoon on Monday, and we got a lot of traffic right away.
We had a combination of 4 showings or previews that afternoon, and about 6 more showings/previews on Tuesday and on Wednesday.
By Thursday morning we had an offer, a good one.
And later on Thursday we got another offer, an even better one. When I arrived at the house on Friday morning to discuss the offers with the owners, there was a woman standing in front of the house who had seen the listing on the internet and came by to see the outside. Since I was there, she asked if I could show her the house. About 15 minutes after she left her agent called to let me know that she too was interested. I told him we had two good offers in hand and if they wanted in they'd have to move very quickly.
They weren't able to move that quickly but he said they'd be interested in making an offer if the other offers fell apart.
Well they didn't fall apart, and by early Friday afternoon it was all over, and one of those buyers got the pick of the litter.
Apparently these buyers were savvy and well informed about the local market in the Tucson Foothills. They didn't dilly-dally and they weren't afraid to make an offer on a brand new listing. They knew what they wanted, recognized a good thing when they saw it and realized that this house was going to sell quickly, despite the the fact that we're in a slower market, and that it's mid summer, the slowest time of year for home sales in the Tucson Foothills.

Tucson Foothills Homes Sales, January thru August

It's time to check the scorecard and see how home sales in the Tucson Foothills are doing.
Here's a comparison of single family homes SOLD in the Tucson Foothills for the period of January - August 2006 vs.
January - August 2007. This is for homes SOLD through the Tucson Association of Realtors MLS. Keep in mind that this is a niche market, and that during this period in 2007, there was an average of just 320 homes for sale priced from $500,000 & UP in the Tucson Foothills.

Price Range	Jan-Aug 06 # Homes Sold	Jan-Aug 07 # Homes Sold	+/- %
$500 - $750K	161	152	-5%
$750 - 1mil	74	60	-19
$1mil - $1.5mil	63	42	-33
$1.5 - $2.0mil	14	16	+14
$2.0mil & UP	15	9	-40
Total Homes SOLD	327	279	-14
*Avg List Price	$732,907	$712,188	-2.8
Avg SOLD Price	$705,547	$681,479	-3.4
Median List Price	$579,250	$567,000	-2.1
Median SOLD Price	$570,000	$545,000	-4.3
$$ Value of Homes SOLD	$378,172,949	$314,161,730	-16

*The Avg. & Median List and Sold prices, and the Total $$ Value figures, include ALL homes SOLD in ALL price ranges in the Tucson Foothills - not just those from $500K & UP.
Overall sales have slipped a bit from last months tally,
-14% vs -13% and the $500,000 to $750,000 price range which had been holding it's own against last years numbers, is now showing a measurable slowdown. And while the $1.5 to $2.0mil price range is still ahead of last years sales, that lead has also slipped from last month.
And hand in hand with the drop in the number of homes sold in the Tucson Foothills is a noticeable dip in average and median sale prices, which have nudged down again since last month.
Fewer sales = more pressure on prices.
And none of this takes into account the latest meltdown in the credit markets - where jumbo loans got clobbered -which is likely to have a negative effect on home sales here unless some confidence returns to those markets soon.
Nothing to cheer about, unless you look at the big picture and consider that in the last five years the average sale price of a home in the Tucson Foothills is up 72%, and that includes the latest dip in the numbers. And while 72% is not as dramatic a jump as in some other markets, there's no panic in the streets here either, as there is in some of the higher flying markets.