Hegreness Residential Real Estate Group’s News and Events

The Internal Revenue Service (“IRS”) has recently provided information to taxpayers about the possible tax consequences resulting from a home foreclosure. The general rule is that when a lender forgives a portion of a loan, the amount of debt cancelled constitutes taxable income for the taxpayer. The IRS website highlights the exceptions to this rule, so taxpayers can consider their options before their property is foreclosed by the lender. The IRS also recommends that the taxpayer may want to consult with a tax professional, as devising a structure to limit the taxes resulting from a foreclosure is a complicated process. Some of the exceptions are:

debt is discharged in bankruptcy
an insolvent taxpayer (defined as a tax-payer whose debts exceed his/her assets) may not have to recognize all of the discharged debt on his/her tax return
cancellation of qualifying farm debts
cancellation of a nonrecourse loan
If the taxpayer’s property is foreclosed, the taxpayer will receive a Form 1099-C from the lender. The IRS urges taxpayers to review the Form 1099-C to make sure it is accurate. If the taxpayer is unable to pay the taxes arising from a foreclosure, the IRS describes the process for making an “Offer-in-Compromise” to the IRS, which may relieve the taxpayer of a portion of the debt and/or create a payment plan for the taxes.

To read the Q & A on the IRS website, go to www.irs.gov/newsroom/article/0,,id=174034,00.html.

Housing Q/A

Homeowner Affordability and Stability Plan Fact Sheet

3 Problems You May be Facing and Your NEW Options

Introduction

Arizona and a small minority of other states have adopted anti-deficiency statutes to prohibit a homeowner’s personal liability after losing a home to foreclosure. In the past two years in Arizona there has been both a rapid increase in homeowners who are delinquent on their home loans and a rapid decline in home values. Therefore, the scope of the protection of the anti-deficiency statutes is now of heightened interest to both homeowners and lenders.

Frequent questions are: Can the lender waive the right to foreclose on a home and bring a collection action on the promissory note? Do investors and developers have the protection of the anti-deficiency statutes after foreclosure on a home? Do the anti-deficiency statutes apply to the refinancing by the homeowner of the original purchase money loan, even if a portion of the loan refinancing exceeds the original purchase money loan? This article will attempt to answer those questions.

Background

The Mortgage

A mortgage is a two-party instrument which is basically a pledge of real property given by a borrower (mortgagor) to a lender (mortgagee) to secure a loan. A mortgage is not a debt, rather it is a security for the performance of another act, generally the repayment of a promissory note. Arizona follows the “lien theory” rule, which provides that a mortgage is not a conveyance, rather the mortgage merely creates a lien in favor of the mortgagee. Therefore, neither legal nor equitable title passes to the lender upon the creation of a mortgage.

The Deed of Trust

Since the adoption of the Arizona deed of trust statutes (A.R.S. §33-801 et seq.) in 1971, the deed of trust has replaced the mortgage as the principal real property security interest used in Arizona. There are two reasons that the deed of trust has become more popular: (1) foreclosure without the courts and (2) no redemption period after sale. A deed of trust is a three-party instrument by which the borrower conveys to the trustee legal title to the property. The trustee holds legal title to the property on behalf of the lender, who becomes the beneficiary of the deed of trust. The beneficiary’s remedies under the deed of trust include those available to the mortgagee, but also give the trustee a non-judicial private power of sale not available in mortgages.

Enforcement of the Security after Default

Because the mortgage or deed of trust itself is not a debt, the lender may release the security interest under the loan without losing the lender’s right to bring an action on the original indebtedness which is secured by the loan.

If a mortgagee chooses to enforce the security, the mortgage must be foreclosed by judicial sale, in which case the security is sold by court order.

The beneficiary under a deed of trust may enforce the security by either
foreclosing upon the property as a mortgage (by judicial sale); or
having the trustee exercise its private power of trustee’s sale.
The power of sale is often preferred by lenders because it provides a quicker and less expensive remedy than judicial foreclosure, and may be completed as soon as ninety days after formal notice of the sale is recorded and sent to the proper parties. A trustee’s sale cannot be held after an action to foreclose the deed of trust has been filed unless the foreclosure action has been dismissed.

The Deficiency Judgement

If the proceeds of the foreclosure sale of the property secured by a mortgage or deed of trust are insufficient to pay the full loan balance (after deducting certain expenses and interest), the mortgagee or beneficiary may be entitled to a personal judgment against the debtor for the difference between the debt and the foreclosure sale price or fair market value of the property, whichever is greater. This in personam remedy following the foreclosure sale is called a deficiency judgment and is authorized under A.R.S. §33-725 (mortgages) and A.R.S. §33-814 (deeds of trust).

General Rule: Lender Must Elect Remedy

In Arizona, separate actions on the debt and to foreclose cannot be maintained simultaneously. This rule is embodied in A.R.S.§33-722 which allows the mortgagee to either sue directly on the debt, thereby waiving the mortgage, or foreclose the mortgage. Similarly, the beneficiary under a deed of trust can generally choose to forego judicial foreclosure or the trustee’s private power of sale, and bring an in personam action on the debt.

Arizona’s Anti-Deficiency Statutes

Although historically the mortgagee has had the right to obtain a deficiency judgment, the Arizona legislature enacted A.R.S. §33-729(A) in 1971 to limit the right of certain purchase money mortgagees to obtain a deficiency judgment if the security does not exceed two and one-half acres and is utilized as either a one-family or single two-family dwelling. For the purposes of A.R.S. §33-729(A), a “purchase money mortgage” is one given concurrently with a conveyance of real estate between the seller and the buyer, or given to secure a loan to pay all or part of the purchase price of the dwelling. When such a purchase money mortgage exists, A.R.S. §33-729(A) provides the following limitation:

…[T]he lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment…

This anti-deficiency statute expressly limits the purchase money mortgagee who initiates foreclosure to only those proceeds of the foreclosure sale. By its express terms, the statute applies only to actual foreclosure situations; it does not expressly bar the right of a purchase money mortgagee to elect under A.R.S. §33-722 to waive the security and sue on the debt. Even the no “general execution” language of the statute literally refers back to those actions taken by the mortgagee in foreclosure, although it is unclear if this language was intended to restrict the mortgagee from general executions arising out of an action on the note itself.

Presumably, the lender would prefer to waive the security and sue on the debt any time it appears that the indebtedness would exceed the foreclosure sale price, at least where the debtor has sufficient assets to enable the lender to collect upon the judgment. Thus, the conflict between two statutes arises: A.R.S §33-722 permits an action on the debt, whereas A.R.S. §33-729 (A) demonstrates the legislature’s intent that the residential purchase money mortgagor should be exposed to liability only to the extent of the home used as security for the debt.

A similar issue also arises with application of the anti-deficiency statute for residential deeds of trust (A.R.S. §33-814(G)). This statute is similar to A.R.S. §33-729(A) to the extent that by its express terms it prohibits a deficiency judgment after the property is sold. The statute is somewhat broader, however, because it is not limited to “purchase money” loans.

Supreme Court Decision In Baker V. Gardner

In Baker v. Gardner, 160 Ariz. 98, 770 P.2d 766 (1988), the Arizona Supreme Court resolved the statutory conflict regarding purchase money loans with respect to mortgages and deeds of trust described in A.R.S. §33-729(A) and 33-814(G). The Baker court held that any secured lender may not waive the purchase money security and bring a collection action on the loan. In support of its decision, the Court stated that the legislature’s objective in enacting A.R.S. §33-814(G) was to “abolish the personal liability of those who give trust deeds encumbering properties of two and one-half acres or less and used for single family or two-family dwellings.” Baker, 160 Ariz. at 105, 770 P.2d at 772.

The Supreme Court Decision in Mid Kansas Federal Savings

In Mid Kansas Federal Savings and Loan Association of Wichita v. Dynamic Development Corporation, 167 Ariz. 122, 804 P.2d 1310 (1991), the Arizona Supreme Court resolved another conflict arising out of Arizona’s anti-deficiency statutes. Specifically, the Court decided what persons and what properties are included within the anti-deficiency statutes.

The anti-deficiency statutes provide that the property securing the debt must be two and one-half acres or less and must be limited to and utilized as either a single one-family dwelling or single two-family dwelling. The Court held that if the subject properties fit within the statutory definition, the identity of the borrower as either a homeowner or developer is irrelevant. While the Court implied that the legislature intended to protect individual homeowners rather than commercial developers, it stated that the language of the anti-deficiency statutes did not exclude any other type of borrower. See also Northern Arizona Properties v. Pinetop Properties Group, 151 Ariz. 9, 725 P.2d 501 (App.1986) (investors entitled to protection of anti-deficiency statutes).

In determining whether a subject property fits within the statutory definition, the Court held that residential lots owned by a developer for construction and eventual resale as dwellings are not within the definitions of properties “limited to” and “utilized for” single-family dwellings; a property is not utilized as a dwelling when it is unfinished, has never been lived in, and is being held for sale to its first occupant by an owner who has no intent to ever occupy the property.

The Court of Appeals Beauvais Decision

In Bank One, Arizona, N.A. v. Beauvais, 188 Ariz. 245, 934 P.2d 809 (App. 1997) the Court of Appeals extended Baker, supra, to hold that the extension, renewal, or refinancing of a purchase money note retains its character as a purchase money note. In support of its holding, the Court of Appeals cited Baker’s examination of the legislative objectives behind Arizona’s anti-deficiency statutes and, in light of those objectives, the Court of Appeals determined that the legislature did not intend that the loan would lose its character as a purchase money obligation when the loan is extended, renewed, or refinanced. The Court of Appeals further stated that to hold otherwise would lead to the very result that the legislature intended to avoid through the anti-deficiency statutes, namely, putting homeowners unable to make mortgage payments “at the peril of facing personal liability as well as the loss of their homes.”

Even though in Beauvais a portion of the consolidated loan was non-purchase money, Bank One did not argue that the loan could be bifurcated. Therefore, the Court of Appeals considered the entire loan to be a purchase money obligation. As a result, the Court of Appeals declined to further address what exactly constitutes a “purchase money” loan or discuss the extent to which the anti-deficiency statutes protect refinanced purchase money loans.1

Thus, Beauvais does not resolve the issue of whether a homeowner who refinances a purchase money loan and borrows funds in addition to the remaining balance of the original loan amount will receive protection under the anti-deficiency statutes for the total amount of the new loan, or whether the amount can be bifurcated for the purpose of determining the purchase money and non-purchase money amount.

Conclusion

The Arizona legislature, in adopting our anti-deficiency statutes, undoubtedly intended that a homeowner, who is unable to make payments on a purchase money loan, should lose no more than their home. The Supreme Court of Arizona, in interpreting this intent, has held that a secured lender may not waive its security and sue directly on the note. Additionally, the Supreme Court has held that there is no distinction between a homeowner and an investor/developer seeking protection under the anti-deficiency statutes if the residential property fits within the statutory definition of “two and one-half acres or less” and is “utilized for either a single one-family or a single two-family dwelling.” Finally, the Court of Appeals has held that the anti-deficiency statutes protect a homeowner who has renewed, extended, or refinanced the original purchase money loan.

What remains unanswered is whether the Arizona appellate courts will determine that a homeowner, who defaults on a refinanced loan in excess of the original purchase money loan, will have the full protection of the anti-deficiency statutes. In light of the enormous amount of foreclosures now in Arizona, that answer should be forthcoming shortly.

Christopher Combs and Adam Martinez of Combs Law Group are on the AAR Legal Hotline Team. Visit their website or contact them at 602-957-9810.

1 In 1990 the Court of Appeals held that “[a] ‘purchase money mortgage’ for purposes of Arizona’s anti-deficiency statute is one that encumbers the property being sold.” Cely v. DeConcini, McDonald, Brammer, Yetwin & Lacy, P.C., 166 Ariz. 500, 505, 803 P.2d 911, 916 (1990).

Copied from the AARONLINE.COM website

By Christopher A. Combs and Adam D. Martinez

As reprinted from 09/29/2008
Financial meltdown: How it all happened
As Arizona state treasurer, my office manages a $12 billion portfolio and last year distributed profits of over $500 million to state and local governments. Last week, I watched in horror as the U.S. government’s schizophrenic actions created this financial meltdown. Now, they want nearly a trillion taxpayer dollars to fix it. Action is needed immediately, but taxpayers should not pay for others’ mistakes. The last thing we need is FEMA running our local bank. Our financial system is in a logjam, gripped by fear. The proposal to buy all the logs to remove the jam is expensive and rewards those who took large risks as much as those who did not. Instead, treat the disease directly, make the system more transparent and separate the good loans from the bad, saving taxpayers hard-earned cash. Main Street home buyers, Wall Street investors and the federal government are sitting on piles of debt. Easy money led to low lending standards, fueling housing speculation in Arizona and elsewhere. Because money was easy to get, lenders lowered standards to attract more borrowers. These debts were then bundled together and sold on Wall Street to institutional investors to raise capital to make more loans. The problem was a lack of transparency; bundling loans obscured the risks from investors. Prime loans were bundled together with jumbos, subprime loans and others while still receiving “A” ratings. Many investors just assumed the “A” rating meant all mortgages inside were safe. In August of last year, Wall Street realized that it owned subprime loans in portfolios that did not plan for that risk. At that point, the market froze. The housing bubble had burst and subprime loans were now seen as contaminated; anything they touched was considered toxic risk that no one wanted to buy. The lack of transparency in bundled mortgages made it difficult to know how many subprime loans were inside. Therefore, all mortgage securities were treated as toxic. Investors avoided all mortgages to prevent accidentally buying subprime. It’s like the adage: “One bad apple spoils the barrel.” So it was with subprime spoiling the entire mortgage market. New accounting rules designed for liquid markets now began to put the squeeze on banks even though more than 90 percent of Americans are still paying their mortgages. After the fraud at Enron, Congress changed the accounting rules to “mark to market.” Assets had to be priced according to what the market said they were worth if you liquidated them today. This was a very good rule for preventing unscrupulous individuals from overinflating their balance sheets. However, it works only when a functioning and liquid market exists to price the assets. When mortgage markets froze last August, demand evaporated for the now-toxic mortgage bundles. This crushed many banks’ balance sheets as they had to list mortgages at pennies on the dollar. Instead of having these assets on the books as collateral to make more loans, banks now needed to borrow money to stay afloat. Banks, however, stopped lending to other banks due to fear of getting indirect exposure to subprime loans. Banks depend on short-term cash to stay afloat. A total credit freeze puts our financial system in peril. Since the Great Depression, the Federal Reserve has been the lender of last resort to banks. During a crisis, if short-term cash ran dry, they could borrow from the Fed in order to prevent a run on the bank. When Bear Stearns faced a liquidity crisis, the Fed provided backstop lending to JPMorgan to assume Bear’s assets and liabilities. It promised the same assurances to other investment banks in this liquidity crisis. This contained the problem for a while. Confidence was shaken, but given the commitment to help banks get through any short-term liquidity crisis, the market was likely to avoid catastrophic failure. Then, the government caused the catastrophic failure it was trying to prevent. Despite nearly a year of promises, after the markets closed, the government reversed its position. It would not provide the same backstop as Bear Stearns to Lehman Brothers, an investment bank with positive net assets of $26 billion. It forced a company that was “A” rated on a Friday to file bankruptcy the following Sunday. Panic gripped the financial markets. The forced bankruptcy of Lehman destroyed insurance company AIG’s balance sheet. As fear ravaged investment portfolios, the government reversed itself again. It seized control of AIG, nationalizing it and pouring in $85 billion. By week’s end, the government had spent more money trying to contain the firestorm it unleashed by reneging on Lehman than it would have cost to support its sale. Worldwide, investors (and taxpayers) were losing confidence in U.S. government economic leaders. The government is supposed to be the referee, calling a fair game, not choosing winners and losers. The original strategy of providing only emergency lending during a liquidity crisis made sense. Nationalizing financial institutions does not. When your neighbor’s house is on fire, you lend him a hose; you don’t have him sign over the deed to the house before you help put out the fire. Congress needs to take action to fix this problem immediately; the longer it waits, the more damage is done. But it needs to treat the disease. Allow the mortgage bundles to be broken up, separate the toxic subprime loans that are causing the logjam from all other loans. Provide insurance for all other mortgages. This way, the 90 percent of Americans who are still paying their mortgages are rewarded for doing so, and the fear that has gripped the markets about the housing bubble will subside. Allow banks to value the now-insured loans based upon how many are still paying their mortgages, rather than liquidation value. This will unfreeze credit and get our economy moving again (and it’s a lot cheaper than just buying everything). I would rather bet on the majority of Americans who pay their mortgages, rather than bail out those who made risky investments. Dean Martin, a Republican, is Arizona’s Treasurer

In recent months, the nation’s two largest mortgage finance lenders have come under increasing scrutiny at the hands of Congress, the Justice Department and the Securities and Exchange Commission (SEC). The Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac, have operated since 1968 as government sponsored enterprises (GSEs). This means that, although the two companies are privately owned and operated by shareholders, they are protected financially by the support of the Federal Government. These government protections include access to a line of credit through the U.S. Treasury, exemption from state and local income taxes and exemption from SEC oversight. A recent accounting scandal at Freddie Mac that resulted in the replacement of three of the company’s top executives has led to mounting concerns over the privileged status these GSEs enjoy in the marketplace.

Fannie Mae was created in 1938 as part of Franklin Delano Roosevelt’s New Deal. The collapse of the national housing market in the wake of the Great Depression discouraged private lenders from investing in home loans. Fannie Mae was established in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing.

Initially, Fannie Mae operated like a national savings and loan, allowing local banks to charge low interest rates on mortgages for the benefit of the home buyer. This lead to the development of what is now known as the secondary mortgage market. Within the secondary mortgage market, companies such as Fannie Mae are able to borrow money from foreign investors at low interest rates because of the financial support that they receive from the U.S. Government. It is this ability to borrow at low rates that allows Fannie Mae to provide fixed interest rate mortgages with low down payments to home buyers. Fannie Mae makes a profit from the difference between the interest rates homeowners pay and foreign lenders charge.

For the first thirty years following its inception, Fannie Mae held a veritable monopoly over the secondary mortgage market. In 1968, due to fiscal pressures created by the Vietnam War, Lyndon B. Johnson privatized Fannie Mae in order to remove it from the national budget. At this point, Fannie Mae began operating as a GSE, generating profits for stock holders while enjoying the benefits of exemption from taxation and oversight as well as implied government backing. In order to prevent any further monopolization of the market, a second GSE known as Freddie Mac was created in 1970. Currently, Fannie Mae and Freddie Mac control about 90 percent of the nation’s secondary mortgage market.

GSEs such as Fannie Mae and Freddie Mae, with their combination of private enterprise and public backing have experienced a period of unprecedented financial growth over the past few decades. The current assets of these two companies combine for a total that is 45 percent greater than that of the nation’s largest bank.

On the other hand, their combined debt is equal to 46 percent of the current national debt. It is this combination of rapid growth and over leveraging that has lead to the current concerns of Congress, the Justice Department and the SEC with regards to the financial practices of these GSEs.

Fannie Mae and Freddie Mac are the only two Fortune 500 companies that are not required to inform the public about any financial difficulties that they may be having. In the event that there was some sort of financial collapse within either of these companies, U.S. taxpayers could be held responsible for hundreds of billions of dollars in outstanding debts. A recent investigation by the Justice Department and the SEC into the accounting practices at Freddie Mac revealed accounting errors in the amount of 4.5 to 4.7 billion dollars and resulted in the termination of three of the company’s top executives. Ongoing investigations by Congress, particular the House Finance Services subcommittee that oversees the activity of GSEs, will determine the future role of Fannie Mae and Freddie Mac and the secondary mortgage market that they dominate.

What Are the Origins of Freddie Mac and Fannie Mae?
By Rob Alford

Mr. Alford is a student at the University of Washington and an HNN intern.

This article has nothing at all to do with Arizona Real Estate at all.  I think it is one of the best emails I have received in years and wanted to share it.  I would love to know who wrote this letter, but it does not matter.  Too often we are caught up in our own lives to consider that which others are dealing with.  After reading this article I just wanted to say thank you to everyone who has served in our armed forces.  THANK YOU!!!!!!!!! 

 Below is the email originally sent by Alan Brumer, a past client. 

Luke AFB is west of Phoenix and is rapidly being surrounded by civilization that complains about the noise from the base and its planes, forgetting that it was there long before they were.

A certain lieutenant colonel at Luke AFB deserves a big pat on the back.

Apparently, an individual who lives somewhere near Luke AFB wrote the local paper complaining about a group of F-16s that disturbed his/her day at the mall. When that individual read the response from a Luke AFB officer, it must have stung quite a bit.

The complaint:

“Question of the day for Luke Air Force Base: Whom do we thank for the morning air show? Last Wednesday, at precisely 9:11 a.m., a tight formation of four F-16 jets made a low pass over Arrowhead Mall, continuing west over Bell Road at approximately 500 feet. Imagine our good fortune! Do the Tom Cruise-wannabes feel we need this wake-up call, or were they trying to impress the cashiers at Mervyns early bird special? Any response would be appreciated.”

The response:

Regarding “A wake-up call from Luke’s jets” (Letters, Thursday): On June 15, at precisely 9:12 a.m., a perfectly timed four-ship flyby of F-16s from the 63rd Fighter Squadron at Luke Air Force Base flew over the grave of Capt. Jeremy Fresques.  Capt. Fresques was an Air Force officer who was previously stationed at Luke Air Force Base and was killed in Iraq on May 30, Memorial Day.

At 9 a.m. on June 15, his family and friends gathered at Sunland Memorial Park in Sun City to mourn the loss of a husband, son and friend. Based on the letter writer’s recount of the flyby, and because of the jet noise, I’m sure you didn’t hear the 21-gun salute, the playing of taps, or my words to the widow and parents of Capt. Fresques as I gave them their son’s flag on behalf of the President of the United States and all those BR veterans and servicemen and women who understand the sacrifices they have endured.  A four-ship flyby is a display of respect the Air Force pays to those who give their lives in defense of freedom. We are professional aviators and take our jobs seriously, and on June 15 what the letter writer witnessed was four officers lining up to pay their ultimate respects.

The letter writer asks, “Whom do we thank for the morning air show?” The 56th Fighter Wing will make the call for you, and forward your thanks to the widow and parents of Capt. Fresques, and thank them for you, for it was in their honor that my pilots flew the most honorable formation of their lives.

Resourceful Investors Find a Way to Prosper

It wasn’t that long ago that many people around the
US were able to make exciting short term profits investing in real estate. The stories abound celebrating conquests of buying a home for $200,000 holding it for 30 days only to have a line down the street waiting to buy the property for $275,000. Well, those days are gone now. They have been replaced by the quivering voices of mortgage brokers hoping to find a program for a hard to finance would-be home owner.

Imagine having a realtor on your side that spends much of his time finding REO (foreclosed) properties and negotiating with banks. Wouldn’t that save you an untold amount of time? Finding the superstar REO agent will put you in the know and increase your deal flow immensely. That is the exciting part but what about your accountant? They are like opinions, everyone has them. But have you searched out to find one that works with primarily with real estate investors? Who spends his time researching every changing tax and legal landscape of real estate investing to make sure you are not only taking all of your deductions but also help you design your entity structures for long term profit?

The other key is the right Mortgage Broker.  Search for this person, or possibly more than one, to find the best “deal” on each transaction.  This is what we mean by filling the stables with the superstars. Of course it takes time and experience to develop this team.  Ant the time is well worth it!  Ant there is no better time than now.  Rates are still down, prices have fallen dramatically, and the deals are there. 

So do your homework to build your Superstar team, then continue that homework as you work with that team, then celebrate your own results! 

  - Jon Hegreness“I appreciate your referrals.”

We’ve had a lot of excitement on the mortgage industry over the last couple of weeks.  Interest rates have been thrown around like a yo-yo and we’re hearing a lot of chatter about possible loan limit increases as outlined in this “economic stimulus package” being passed by our government. I wanted to drop you a quick line and outline how this figures to affect our Scottsdale Arizona Market.  In short…not at all.
 
While many markets in California will see increased loan limits to about 729K we in the valley are projected to see no increase.  This is because the formula they will use to determine loan amounts is now 417K or 125% of the County Median sales price, whichever is greater.  Unfortunately for those of us who work in Scottsdale and high end areas of Phoenix our County Median sales price is too low to push us over 417K.  The best I can offer is Flagstaff is projected to increase to about 450K.  If any of you should have questions concerning these regulations please feel free contact me at any time.  I am well connected with some incredible mortgage lenders that can help with new mortgages and refinances.  

“I appreciate your referrals.”

The total number of homes on the market dipped down nearly 5% over the Holidays but have moved back up since. They are still sitting at a lower level, 45414 or down about 2%, from the end of the year. However the current rate of closings is very low due to the fact that it is reflecting activity from the end of the year. Closes in the previous month were 2362 which gives us a supply of 19 1/4 months.

I also keep track of but don’t usually report current Pending sales. The good news is these are at the highest level that I have seen since last August PM (Pre-Meltdown). We’ll see if this translates in to more closings in the next month.

Best market in the Valley continues to be the SE area at 15 3/4 months supply and next is
Scottsdale under $1M at 17 1/4 months.

Luxury Markets are at a staggering 3 1/2 YEAR supply level.

The comparison of current active listing change is based on the previous week’s inventory. Supply numbers are based on the number of closings in the previous month, divided in to the total number of active listings. This data is for Single Family Detached homes only and does not include patio homes, condos, or town homes.

Entire MLS (Maricopa and Northern Pinal county), listing inventories are unchanged from last week. Total of 45414 active listings. Based on current rate of closings, about a 19 1/4 month supply.

200’s area (
Central Phoenix). Listing inventories are unchanged from last week. Total of 6396 active listings. About a 21 month supply.

300’s area (

West
Valley). Listing inventories are unchanged from last week. Total of 15111 active listings. About a 20 month supply.

400’s area (NE Valley), Listing inventories are up 1% from last week. Total of 7589 active listings. About a 21 1/2 month supply.

500 #700’s area (SE Valley), Listing inventories are unchanged from last week. Total of 11341 active listings. About a 15 3/4 month supply.

Scottsdale over $1m. Listings inventories are up 2% from last week.
Total of 1601 active listings. About a 40 month supply.

Scottsdale under $1m. Listing inventories are unchanged from last week. Total of 2555 active listings. About a 17 1/4 month supply.

Paradise
Valley. Listing inventories are up 6% from last week. Total of 420 active listings. About a 42 month supply.

  - Jon Hegreness“I appreciate your referrals.”

• What goes up must come down
• What comes down will not stay there

  This is part 1 in a 10 part series.  Please check back each week.