I wrote this little tutorial to help Canadians see how easy it is to buy Arizona real estate. I hope these pages help you visualize the process of buying a winter home in Arizona, and make it real for you.
The key to a smooth and easy purchase of a home in Arizona is finding an experienced, knowledgeable Realtor you trust. And if you are going to borrow money to buy your Arizona home, an experienced, knowledgeable lender you trust.
I hope I become your Realtor or that I am able to refer you to a Realtor who specializes in your area of interest.
Please help me improve this web site! Email me with your questions and suggestions. Thanks!
Francie and I can help our Canadian clients and friends with a lot of other tips for buying homes in Scottsdale, North Phoenix, Cave Creek, Carefree, Fountain Hills and other areas.
If you’re looking to buy a home in other parts of metro Phoenix, please let me know, I have other colleagues I trust like Francie who I think you’ll love working with.
Even most Arizona Realtors believe the urban myth that banks have held back tons of Phoenix homes from the market and eventually when the banks release those homes, home prices will fall again.
It is true that some markets (for example, NY, NJ, CT, MD, IL and FL) have a huge “shadow inventory” of homes most of which will eventually end up as bank-owned MLS listings (also known as foreclosures or REOs).
Does metro Phoenix have a huge shadow inventory?
The answer is, “No.”
How to Forecast Bank-Owned MLS Listings
To predict the number of future bank-owned listings in Phoenix we can look at the number of homes in the earlier stages in the process.
Four Stages of a Bank-owned MLS Listings
Behind on Mortgage Payments — House is delinquent
In Foreclosure — House is officially in the foreclosure process
Bank-Owned but Not Listed — The house was repossessed by the bank at the foreclosure auction, the bank owns it now, but it’s not listed yet
Bank-Owned MLS Listing — Bank puts house up for sale in MLS, this is the stage that puts downward pressure on home prices
Let’s look at recent trends in each of these four stages.
Phoenix Bank-Owned MLS Listings
Phoenix bank-owned listings have fallen dramatically, down TWO-THIRDS from 12 months ago.
Phoenix Bank-Owned Homes Not Listed (yet)
Myth: “Yes, REO listings have fallen but that’s because the banks have been holding back from the market a huge number of homes they own and I hear the banks will soon put those homes up for sale in the MLS.”
Fact: There is no increase at all in the last 12 months in the number of Phoenix homes the banks own but haven’t yet listed.
Phoenix Homes In Foreclosure
Myth: “The banks aren’t completing foreclosures because they don’t want to own more Arizona homes so there’s this huge backlog of Arizona homes in the foreclosure process.”
Fact: The number of Phoenix area homes in the foreclosure process has fallen dramatically, down almost HALF in the last 12 months.
Phoenix Homes Behind on Mortgage Payments
Myth: “The banks are avoiding starting the foreclosure process even on homes that haven’t made a payment in many months so there’s this huge backlog of Arizona homes that are delinquent but which eventually will have to be foreclosed on.”
Fact: The number of people who are behind on their mortgage payments in Arizona has fallen dramatically, down more than ONE-THIRD which is actually two-thirds of the way back to “normal.”
Summary — Metro Phoenix REO Listings Pipeline
Behind on payments — Down more than one-third (since early 2010)
In foreclosure process — Down almost half (last 12 months)
Bank-owned but not listed yet — No increase (last 12 months)
Bank-owned listings — Down two-thirds (last 12 months)
Conclusions
Phoenix bank-owned listings will continue to fall because the number of homes in the earlier stages is falling.
I think, therefore, that as the supply of bank-owned/REO/foreclosures continues to fall that we’ll reach a tipping point early next year and the median home price in most zip codes in metro Phoenix will start rising and be significantly higher by this time next year.
P.S.
I posted one of these charts on my Google+ account before I posted it here and got a comment from a reader who thought we could see a “flood of new foreclosures” because Arizona has a very high rate of foreclosure starts. My response was that the rate of foreclosure starts in Arizona is indeed high but the rate is down ONE-THIRD from August 2010 to September 2011. So it’s hard for me to imagine that we could see a “flood of new foreclosures” when foreclosure starts have fallen by one-third in such a short time. You can see the post and comments here.
Source: The top 3 graphs are from The Cromford Report. I created the “Phoenix Homes Behind on Mortgage Payments” graph from data gleaned from this website.
This post was originally published on November 15, 2011 in ArizonaRealEstateNotebook.com.
Here it is!!
Loans to Canadians for 2nd Homes
Down Payment 30%
Max Ratios 45%
Income must be fully documented
Reserves 6 Months PITI
Call for details
AZDFI BK 0917054
Lonny Gibson
Loan Officer
NMLS#206242/LO License #0912579
Allied Home Mortgage Corporation
7320 East Deer Valley Road # 110
Scottsdale, AZ 85255
Cell: 602-321-2282
Fax: 480-452-0629
Most Canadians pay all cash. of course, but not all Canadians want to buy all cash. A lot of Canadians would like to finance a part of their Arizona home and converse their cash. Unfortunately, it’s been difficult for awhile now for Canadians to find such loans.
I hope this is the beginning of a trend! Arizona home prices are so low right now, it’s not like there is much downside risk for lenders.
I went to a recent presentation from Bryant Andrus of Keats, Connelly and Associates, LLC discussing issues involved with Canadians buying homes in Arizona. Keats, Connelly specializes in advising Canadians regarding their U.S. activities.
Arizona-Canada Factoids
100,000 Canadians live the Phoenix area
80 per week from Canada to Phoenix (including 2 new weekly flights from Montreal)
The quick reference guide below is from Joe Bartley, Branch Manager/Escrow Officer at Magnus Title Agency. It’s a great little summary!
The following is a quick reference of the timelines and procedures of a Real Estate Closing in Arizona.
Prior to submitting a contract to purchase a property you will want to have your financing secured and documented.
If you are obtaining new financing an LSR and/or bank approval letter should accompany the purchase contract. If you are securing financing otherwise and purchasing the property cash then a Proof of Funds letter should accompany the contract.
Unless the terms of the contract specify differently –
Once the contract is accepted Earnest Money, ranging from $1000 – $5,000 depending on the sales price, is deposited to the Escrow Company. This can be done by wire* or check.
The 1st 10 days after contract acceptance is the inspection period. Before the end of your inspection period you will submit a request for repairs (if any) to the Seller or notify the Seller of items you disapprove of, cancel the contract and retain your earnest money. The document used during the inspection period is called the BINSR (Buyers Inspection Notice and Sellers Response). Once you submit the BINSR to the Seller with the list of repairs you are requesting, the Seller then has 5 days to respond to your request. You will then have 5 days to approve or disapprove their response. In the event you disapprove their response you may cancel the contract and retain your earnest money. Please note there is only one submission of the BINSR so you will want to make sure all of your inspections are done prior to sending your request to the Seller.
Upon opening escrow, the Title Company will send a copy of the preliminary title report for your review (usually sent within the 1st week of escrow). You have 5 days to review and cancel if there are items disapproved.
If the property is in a subdivision with a Homeowners Association, the Escrow Company will request the Association’s Management Company to send their disclosure package to you for your review. This may be in the form of a booklet or CD/DVD. Per the contract you have 5 days after receipt of this information to cancel if there is an item that you reasonable disapprove of.
Once in a position to do so, the Escrow Company will send docs to you to have signed, this is usually within a week of Close of Escrow but varies depending on circumstances. There may be documents to have notarized. This will include the closing statement with the breakdown of the closing costs and the amount the Escrow Company will need from you to close and record.
Funds for closing should be deposited with the escrow company in enough time to allow escrow to close. If Funds are being wired* it is usually suggested to have the wire send a day or two before close of escrow to cover any delay due to processing.
* When sending a wire from a Canadian Account it is usually suggested to add an additional $50-$100 to cover any conversion fees that may apply. Any overages deposited in the transaction will be refunded to you at close of escrow.
I’ve found that Canadian buyers of Arizona winter homes tend to fall into one of two camps.
Single Family Homes on the Outskirts
The first camp, and by far the largest camp, are those folks that just want a place in the sun. They don’t want to spend a lot of money. They prefer newer homes to reduce potential maintenence costs. They don’t care if the home is located on the edge of metropolitan Phoenix because they are coming for the sun… and maybe to play a lot of golf.
The ideal home for those in this first camp would be a home in one of the newer towns like Queen Creek or Maricopa.
Condos in Scottsdale
The second camp want a place in the sun but they would also like to get out and be active when they are on vacation in Arizona. Oftentimes, they would also like to rent out the home for part of the winter to make some money when they’re not using it.
The ideal home for those in this second camp would be a condo in Scottsdale. Scottsdale is the center of winter events in Phoenix. For example, the Barrett-Jackson Classical Car Auction, the Arabian Horse Show, the Phoenix Open Golf Tournament, and a zillion other activities are located in Scottsdale in the winter.
And because Scottsdale is the center of winter activities, it can be easier to rent out Scottsdale condos to winter vacationers.
I brought this all up because recently a few 2-bedroom condos in the Scottsdale area sold for just over $100,000. Some amazing prices right now! And the ones I’ve seen were located in resort like communities. A few even had a garage which is quite unusual indeed for condos in Arizona.
There are complications because the condos I saw at those prices were usually foreclosures or short sales. Foreclosures and short sales and not like normal sales. Here are Scottsdale foreclosure condos and Scottsdale short sale condos currently listed for sale. Call me for more information about these or other Arizona homes for sale.
The tutorials (see sidebar) are great but, unfortunately, they don’t cover Arizona foreclosures. Now with this blog, I’ll be able to talk about how you can buy Arizona foreclosures and Arizona short sales.
This is an amazing time for Canadians to buy a home in Arizona. Both home prices and the exchange rate are excellent!
I hope this website is able to help you understand the Phoenix area real estate market and our Arizona home buying process. I hope you are able to buy your sunny and warm winter vacation home in Arizona.
I created this website over 2 years ago and it’s been helpful to a ton of Canadians which I’m very happy about.
One problem. I’m always running across information that would be useful to Canadians considering buying a home in Arizona but without a blog on this website, I really didn’t have a good way to get the information out.
Viola! I finally added this blog during the Christmas slowdown and just in time for the high season that began yesterday, January 1.
In addition, I’m going to do a makeover of this website to, I hope, make it even more useful.
