Sedona AZ Real Estate Blog

Sedona Real Estate Market Rally Continues

May 8th, 2009

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Cheaper Credit Will Stimulate Local Real Estate Market

February 21st, 2008

THE CREDIT CORNER

As I am writing this column, the Economic Stimulus Package has passed Congress and is due to be signed by President Bush this week The housing credit component will raise both FHA and FNMA/FHLMC lending limits based on 125% of our median house prices, with rates currently around 5.5%. According my friend, Dr. Roy Grimm, owner and broker of Buyer Brokers Realty of Sedona, at year end 2007 as many as 455 listed single family residences, having a median listing price of $855,000, will be the beneficiaries of new capacity of potential buyers who can qualify for loans up to $725,000 (subject to HUD’s published prices for our area) at rates that are a full 1% lower than a week ago. Incomes needed to qualify will be reduced 10% across the board. And new buyers of Sedona area homes will save up to $3,890,000 in annual simple interest costs. These incentives may be additionally enhanced by further declines in interest rates as the economy slows. The expansion of these lending limits however is only temporary; granted through the end of the year.

Though the term “sub prime” has been scandalized by the media this last year, borrowers with less than prime, B grade credit can in many cases qualify for home loans under one of FNMA’s expanded approval tiers at rates and payments substantially less than any sub prime jumbo alternatives. These programs also offer fixed rates; not the much publicized ARMs with crippling rate resets. These dynamics will certainly increase demand in our real estate market and firm up values.

As a side note, any market bottom shares similar signals: the issue is ever present in the media; psychology is extraordinarily negative; and the Fed lowers short term rates and expands our money supply. Many veteran realtors I’ve spoken with recently are already busy with new offers by new clients. So as we get back on track, ladies and gentlemen, start your engines.

Next week, I’ll discuss who is actually responsible for the international sub prime mortgage debacle.

Chris Seymour is broker and owner of Country Mortgage Corp of Sedona since 1992. For more information, he can be reached at 928-204-1777 or Chriscountrymtg@aol.com

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A Lovely Day in the Neighborhood - Sun and Great Music

February 10th, 2008

Some people wonder what there is to do in a small town like Sedona - especially in the middle of February; not our peak tourist season. Personally, I spent today trying to recover from my sterling (or was it leaden) performance yesterday in the 5K section of the Third Annual Sedona Marathon. I was in the “Over-weight Old Guys Who-Used-To-Be-Serious-Runners Division.” Hey, I survived the thing, at least. I’m working my way back to shape one of these days. It’s a great event that attracted over 1,200 participants. Has to be one of the most scenic running events in the country. Give it a shot if you’re a runner or even a jogger or just like to take long walks.

Anyway, I worked out some of the kinks today by taking a nice hike in the National Forest near my home. Had to break out the shorts. It was 63 degrees this afternoon.

That was followed by a marvelous Chamber Music of Sedona concert. I’m always astounded by the amazingly high level of talent that CMS seems to be able to attract. We’re talking Lincoln Center quality here. I think there is sort of Aspen Music Festival syndrom at play here. The big names in chamber music just seem to love to stop off in Sedona to play amongst the red rocks. Today it was the multiple Grammy Award winning Emerson String Quartet, called by Time Magazine, “America’s greatest quartet.” Suffice to say that they lived up to their billing. Great stuff, especially if you’re a fan of Brahms and Czech composer, Leos Janacek.

Should you be in town when thee is a CMS performance, don’t miss it.

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What About Forest Fires?

February 9th, 2008

People, especially Californians, often ask about what sorts of natural disasters Sedona is subject to. Well, write off earthquakes and hurricanes. Oak Creek has been known to flood. I think we’ve had two or three “500 year” floods in the 17 years I’ve lived in Sedona, but we’ve learned how to not build in the flood way and damage lately has been minimal. Used to be able to say that about forest fires. We just weren’t prone to them like the Flagstaff area. Well, we’ve lost our sense of complancy about that.

If you’ve been reading my newsletters over the past few years, you probably recall my almost daily posts on the Brins Mesa Fire June of 2006. Pretty scarey stuff for us as it came down the mountain and threatened Oak Creek Canyon. Fortunately the US Forest Service made that fire their #1 priority and eventually rushed in hundreds of firefighters and squadrons of aircraft and were able to put it out before it damage any home or anyone was injured. About 4,200 acres of US Forest Service land was burned. The Brins Mesa trail was closed for quite a while, but it’s open now. That followed on the heels of a 800 acre fire near Pine Valley east of the Village of Oak Creek. Both were started by human stupidity.

The positive aspect of the fires was to disrupt our complacency about fires. Up to that point, forest fires only seemed to happen in the pine forests up on the Mogollon Rim. We’d get smoke drifting down to us from those and controlled burns, but had never had a major fire of our own. I won’t say that we’ll never have another big fire, but the Forest Service, the fire departments, and individual citizens are now much more atuned and take vastly more precautionary measures to keep fires from starting and to limit them if the do start.

One of those is, on rare occasions, to close down the National Forest

if the potential for fire is exceptionally high. I can only remember that happening less than a handful of times and they seemed to be around the times of major holiday weekends when the numbers of people and the stupidity factor would likely to also be high. So, we didn’t mind. Plus, with our neighborhood trails, we’d slip in for short hikes - ostensibly to help the USFS police the ban.

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How does the Fed’s most recent Interest Rate Cut Effect You?

February 9th, 2008

Hi Everyone:

And what a hump day it is for the real estate community . . . another half point cut by the Fed both in the fed funds rate to 3% and the discount rate to 3.5% ! Our HELOCs and commercial loan rates all go down an immediate .50% as prime rate resets to 6%.(prime still has a ways to go). Mortgage rates are unchanged since last week since the market was anticipating this move. Though the Fed doesn’t meet again until March, look for a decline in Friday’s jobs report to help push rates lower. The Economic Stimulus Package passed the House yesterday and is in discussion in both the Senate Budget and Finance Committees today. It is expected to pass the Senate vote by Friday. The housing component which increases both the Fannie and Freddie loan limits to up to $725K will give our market a good shot in the arm by qualifying more buyers at higher loan amounts. Activity is going to pick up.

The jumbo ARMs are really attractive. Check out the 2-1 buydown below 4% (borrowers qualify there with 20% down).

Best

Chris Seymour

Broker

Country Mortgage Corp

9928-300-5115 cell

Visit www.SedonarealEstate.com/mortgages.html for more information and advice on mortgages and lenders - plus multiple mortgage calculators.

Posted in Chris Seymour, Sedona AZ Real Estate | 4 Comments »

Wither the Drought?

February 6th, 2008

Knowing that the Southwest has been in a drought, off and on, for the past decade or so, many people ask about our water situation and how it might affect Sedona real estate and the quality of life here.

Happily, I can report that Sedona has always had one of the best water supplies in Arizona. Located just below the Colorado Plateau (aka the Mogollon Rim), we are sitting on a terrific aquifer that has been described by Arizona Water Institute and Northern Arizona University hydrologist, Dr. Abe Springer, as vastly more than adequate for future Sedona needs indefinitely. This past year I attended a local water seminar at which Dr. Springer affirmed that position and went on to say that we have “one of the best water supplies in the west.” He further said that we are using a tiny fraction of the available water and our limited population growth projections won’t make much of a dent in it in the future. Some people (not locals) believe that it’s gotten dryer here every year, historically. Certainly we have been in something of drought in the last 10 or 12 years. But, within that time we have had some very wet years that have recharged the reservoirs serving Phoenix and given some relief to our local ecology. In the past few months we’ve had a half a dozen good-sized storms that caused a few of the reservoirs downstream to overflow. Even in full-on drought years the droughts aren’t all that obvious in arid or semi-arid (as Sedona is) areas. Fire danger goes up, that’s for sure and several years ago it seemed to hit the Manzanita bushes fairly hard in spots and my favorite waterfall runs only when it rains. And, the pine bark beetle appears to show up when the pine trees are stressed from dry conditions - fortunately, we (knock on wood) haven’t seen that here in a few years. Some of my favorite mountain areas of Colorado, New Mexico, and south of us here in Arizona, however, have been ravaged by those little s.o.b.s.Where I grew up in Upstate NY, when you had a drought, you knew it. Here it’s not in your face like a dying lawn. In Sedona, even during our severest drought times, we’ve never had water rationing and there are no restrictions on building pools or any other heavy water uses.The only shadow on that optimistic note is that we’re seeing more water pumping and usage up on the Colorado Plateau as Flagstaff expands and there is some concern in Sedona that this could affect our aquifer. So Sedona is gearing up for that battle.

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Are We at the Bottom of the Sedona Real Estate Market?

February 4th, 2008

“I don’t want to buy a home today, only to discover that it’s worth less six months from now.” Given the dire prognostications from Wall Street regarding the national real estate market and the credit crunch that have appeared regularly in the media lately, that’s a reasonable concern. Why should a buyer rush to make a purchase now? Timing any market is a tricky business. No one really knows whether or not the bottom has arrived or whether it is weeks or months or even years away. The local statistics indicate that we are now in the midst of the worst market for sellers (read, best opportunity for buyers) that we have seen in Sedona since the numbers have been recorded by the Sedona Verde Valley Association of Realtors. (If you’d like obtain a copy of a lengthy comparative historical statistical analysis, email me at Roy@SedonaRealEstate.com - you also visit the “Market Conditions” page of our website: www.SedonaRealEstate.com ). That doesn’t guarantee that it can’t decline further, but there are signs that we could very well see a strong upturn by spring. The roaring Seller’s Market of 2005 turned on a dime to plunge downward. We might well see a similar abrupt reversal to the upside if positive market forces come together quickly. Overly cautious buyers risk missing the market at its most venerable point. So what are those positive market forces that will give us more buyers? First, at the national level, we are now seeing mortgage rates at historic lows. Granted, lenders are being, justifiably, far more selective, but financing is available and being offered at discount rates. Second, as the Feds rush in to rescue the floundering housing and credit industries we will see a rise in consumer confidence. Third, for Sedona, one of the most significant federal government’s new economic stimulus package is a proposal to raise the Fannie/Freddie mortgage limits from the current $417,000 to as much as $730,000. And, according to my mortgage guru, Chris Seymour, rates for jumbo loans (those above the limit) are expected to drop a full point. Fourth, it is true that the national market is made up of collection of local markets with very different fundamentals. As for Sedona, a reservoir of latent demand has been building for the past two years. Given our marvelous quality of life and our title (thanks, USA Today) of, “The Most Beautiful Place in America,” people still want to move to Sedona. Many have been shaken by the national media and have put their plans on hold temporarily, but they still certainly intend to make the move. A large percentage of those people are Boomers who simply would rather retire here sooner than later. They’ve been showing up in the past several months in significant numbers to check things out. Even at this traditionally slowest time of the year, we have been as busy showing property lately as we were back in the height of 2005 and a number of our colleagues have reported the same. So far, many of those folks have hesitated pulling the trigger yet, but they will. It’s simply a matter of confidence that now is the right time. Fifth, we are now seeing the sudden appearance of foreign buyers in the local market, particularly Canadians who are finally enjoying the strength of the loonie against the US dollar. Add our discounted prices to the purchasing power of a very favorable exchange rate and Sedona real estate is a relative steal. Sixth, volatile stock markets often cause investors to seek refuge in hard assets like real estate. It’s not easy to live in stocks and bonds. I believe, firmly, that now is, indeed, the right time to buy here. I’m acting on that and advising friends and family to do the same. What if I’m wrong and we do see further declines in prices for the remainder of 2008? If your intent is to invest in real estate here in order to flip it quickly, that would be a losing proposition. If you are buying for the long term, you can take heart. You can safely buy the home or lot that really fits your needs at a bargain price and enjoy it right now. Land prices and construction costs, by the way, are never likely to be this low again. Buy now and you could see short term losses on paper, but you can be confident that your property will be appreciate dramatically in the not-too-distant future. Why? Our unique market fundamentals. Surrounded as we are by National Forest, private property here is a finite resource. When the land available to build on is gone, it’s gone. As supply inexorably diminishes, prices will reach levels that are hard to conceive of today. That, of course, assumes that demand will continue to rise. Demand will be driven, first by the incoming tide of retiring well-heeled Baby Boomers. The median age of that generation will be 54 this year. That’s a couple of decades or so worth of future retirees and second home purchasers. And, that doesn’t even account for the following generations and the influx of immigrants and foreign buyers. The bottom line is that there’s no time like the present to begin enjoying the benefits of living in Sedona.

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What you REALLY Need to Know BEFORE Buying Real Estate in Sedona & The Verde Valley

January 31st, 2008

by Roy E. Grimm, PhD

“I remember the old days we all worked for the seller and everyone knew we worked for the seller, except for the buyer.” - A Real Estate Instructor on Agency

The normal practice in those not-so “good old days” was that agents working with buyers generally operated in the capacity of Sub-agents of the seller since their commissions were paid by the seller. These days, Sub-agency is seldom seen in Arizona. About a decade or so ago most states changed their laws and now allow an agent (actually the brokerage) to be employed by the buyer, but be paid, in essence, by the seller.

What’s really at work here is the practice of Co-brokerage. When the seller’s agent takes a listing, the seller usually wants the property placed with the Multiple Listing Service. It would be complete idiocy not to. The property is then made known, online, to all 700+ members of the Sedona-Verde Valley Association of Realtors and Co-brokerage is offered should one of those agents from another firm bring an acceptable contract. That means that, at close of escrow, the listing brokerage will pay a portion of their commission to the brokerage representing the buyer.

Should the buyer be “represented” by another agent employed by the listing broker, the brokerage keeps the entire commission. This is a Dual Agency situation in which the agents are supposed to represent both sides in the transaction. As rife with the potential for conflicts of interest as this dilemma may be for the agents, Dual Agency is clearly in the brokerage’s financial interest.

In the case a sale within the MLS, the buyer’s agent’s commission is paid, via the broker (agents cannot be paid directly by anyone other than the his/her broker), from the seller’s proceeds at close of escrow as a matter of course. In the case of ”For Sale By Owners,” a buyer’s agent would typically negotiate a commission from the seller. Regardless, however, of who pays the commission directly, it can also be said that the buyer ultimately pays it indirectly as part of the cost of the property and therefore deserves full representation.

About the Author

Roy E. Grimm, PhD is the associate broker the Buyer Brokers Group of Russ Lyon Sotheby’s International Realty. He is an Accredited Buyer’s Representative, a Certified Luxury Homes Specialist and a member of Who’s Who in Luxury Real Estate. His office is in The Old Market Place in Sedona. Telephone (928) 282-2757/800-282-2959. For Sedona MLS access, visit: www.SedonaRealEstate.com.

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Sedona AZ Real Estate Blog

Sedona Real Estate Market Rally Continues

Cheaper Credit Will Stimulate Local Real Estate Market

A Lovely Day in the Neighborhood - Sun and Great Music

What About Forest Fires?

How does the Fed’s most recent Interest Rate Cut Effect You?

Wither the Drought?

Are We at the Bottom of the Sedona Real Estate Market?

What you REALLY Need to Know BEFORE Buying Real Estate in Sedona & The Verde Valley

About the Author

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