Arizona Republic reporter Catherine Reagor has the latest news on Arizona’s real estate market.
Ted Simons: Home prices have been flat recently, although they are up year-to-year. And investors continue to have a heavy presence in the local housing market. Here to talk about the latest in real estate is Catherine Reagor, a real estate reporter for "The Arizona Republic." Good to see you again, thanks for joining us.
Ted Simons: How active is the market right now?
Catherine Reagor: It has slowed, the home buyer credit that expired in June really gave us a boost. Maybe people who were going to buy there September, October, bought then and sales are down in the double digits. The summer doldrums and it's tough to get a loan right now. Really stellar credit and a lot of money down.
Ted Simons: Do we have hot areas, not so hot areas? What are you seeing out their?
Catherine Reagor: We are seeing some hot areas in parts of the east valley and Tempe and Gilbert where they was priced out five years ago and now you can buy a home for $200,000 in area where is they were selling for $600,000. There are little pockets. And it just depends really how many foreclosures and short sales are in the neighborhood.
Ted Simons: Lets talk about that, how much are foreclosures and short sales, how much are they driving the market?
Catherine Reagor: We saw the nice dips in may and felt good about the federal loan modification program and then started to climb again. Foreclosures, particularly. On short sales they continue to grow. Many people who can't get loan mod of courses, that's their option to avoid foreclosure and people who have lost a job. That's the way to go. And short sales are better for home prices than foreclosures, but they're still selling for less. And part of the market for a couple of years.
Ted Simons: You mentioned the federal loan modification program. How is that factoring in?
Catherine Reagor: There are some going well and unfortunately, a lot of people are getting knocked out of the trial period after they paid and it's either foreclosure or how do you make that payment? The federal government is pushing lenders to do more. They're trying to up the program. Here in Arizona, we get $125 million for the hardest hit markets and the Arizona housing department will begin taking applications later this month and force for those who couldn't get loan modifications, this should help and there's high hopes and the government sees -- a state-by-state issue. In Phoenix, where home values dropped 50%, you have to do something different.
Ted Simons: The rental market, how is that affecting the rental markets?
Catherine Reagor: There are a lot of happy landlords because -- and particularly for homes with two to three bedrooms in nice suburban neighborhoods because people who can't buy because of their credit, lost a home to foreclosure, they want to rent and a lot of times they want to stay in the neighborhoods where their children's schools are and the rental demand is strong for the three-bedroom, two-bath suburban neighborhoods
Ted Simons: The condo market, we have -- in general, the condo market, is worse when things are bad.
Catherine Reagor: We're seeing good signs, some projects open back up. That had been -- that have been in foreclosure. And there's definitely interest. It's just that they have to work it out and get completed and really, the condo project at center point.
Ted Simons: Yes, talk about that.
Catherine Reagor: You got the news. But you know, that's been on the market and costs more than $200 million, the loans, tied back to the mortgages unlimited but mark Winkleman, has been trying to sell that and we've had top bidders --
Ted Simons: Sounds like a company out of Cleveland, looking at $30 million. Obviously has to closed and the I's dotted and T's crossed. But $30 million, if that's the price, talk to me about that price for that project.
Catherine Reagor: It's a great deal for the developer, but it's also a good deal for the investors who have been waiting to get paid back. It will pay them something and it won't drag it out any longer. And needs work, so the developers have to put more money into it and that's an issue and see what they can do with it. If they can sell condos, or talk about high-end dorms or apartments. And for that price they could probably do it.
Ted Simons: Whatever they do will take a while because there's still a lot of work, its still a construction site.
Catherine Reagor: The first building, mark said 90% done but they have to do some things, retrofits, it would be nice to be completed and not empty and great for one of our biggest lenders, the investors to get money.
Ted Simons: Talk about the idea of double dip in terms of prices. How much was the upswing in the first place and how far could it go down again?
Catherine Reagor: I think we went up 58% during the boom and we hit what looked like for now, is the bottom in April of last year. We went down to about $118,000 for a medium price. If you bought when the medium was $265,000. And we were trekking up, $130,000, it's going in the right direction, but last month, foreclosures climbed but the jobless rate issues and sales dropped, after the first time tax credit expired and prices dropped two to three percent and if you look at pending sales which we have indexes, they're supposed to drop again in September and could drop to $119,000 in September - which would put us to our low.
Ted Simons: Back.
Catherine Reagor: And that would be a double -- if we climb back up, that's great. But that's not what it looks like. But we need more buyers and more people to be able to buy and want to buy.
Ted Simons: We nee more jobs, that gets more buyers.
Catherine Reagor: And fewer foreclosures.
Ted Simons: We'll get you back when it starts climbing back up again.
Catherine Reagor: It may be a while. But hoping sooner.