With 2012 dawning on us, here are a few predictions about how the arizona real estate market may look like in year 2012:

In 2011, a lack of consumer confidence in the overall economy dramatically impacted the housing market. Buyers were afraid to make a purchasing decision on any big ticket item. By the end of 2011, consumer confidence began to return and sales increased. Economic conditions will continue to improve throughout 2012 and consumer sentiment will solidify. Once that happens, home buyers will realize that now is the time to buy.

The ‘shadow inventory’ of foreclosures which has been growing since late 2010 will finally be introduced to the market. Distressed properties sell at discounted prices. They will impact the housing values of the non-distressed homes in the area.

As more and more foreclosures come to market, there will be greater downward pressure on the values of houses in the region. Foreclosures impact values of non-distressed properties in two ways:

They will eat up some of the buyer demand in the market.

They will impact the appraisal on ALL transactions in the area.

An increase in foreclosures will have a negative impact on values. This will cause more homes to be underwater.

As mentioned above, we strongly believe that home prices will soften through at least the first half of 2012. Falling prices will force more homeowners into a position of negative equity. Negative equity is one of the triggers that cause people to strategically default on their mortgage obligations. If this happens, there could be an increase in the number of foreclosures. However, we predict that banks will take preventative measures which will help many of these homes avoid foreclosure by easing the requirements in the short sale process for both homeowners and real estate professionals.

Real Estate professionals who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year.

Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as industry leaders. These experts will dominate their markets.

The Arizona FHA 203k streamline loan program has become popular with the downturn in the housing market. When a property is owned by the bank, chances are that the property may be in need of a little work and the FHA 203k streamline program is a great option.

The Arizona FHA Streamline 203K is a rehabilitation loan that works much like a construction loan.  The buyer of the home is able to purchase a home that is in need of repairs and is able to finance the repair work in the mortgage to fix items in the house.  The Arizona FHA 203k loan consists of the purchase price of the home plus the construction costs for the work to be performed after close.

$100,000  purchase price of home

$20,000 Repairs Needed (see a list of the most common FHA 203k repairs)

$120,000 Total Loan Amount

The offer is the purchase price of the home only.  Do not include the cost of repairs anywhere in the sales contract or offer.  In the above example, the purchase price on the sales contract or offer would be $100,000.

The minimum that FHA will allow you to spend is $5,000 and the maximum allowed under the Arizona FHA 203k streamline program is $35,000.

Not until after the work is completed.  The FHA 203k streamline loan is designed to help properties that are not currently qualified, actually become qualified with the needed repairs.

No.  The requirements to qualify are the same as a traditional FHA loan.  What does it take to qualify for an FHA loan? Generally speaking, a credit score above 620, a good job and a down payment of 3.5%. Of course there are more details to qualifying, but those are the general highlights.

It is recommended that you work with a general contractor that can perform all construction tasks.  We can easily help recommend one – we know a few great ones. It is also important that the contractor be experienced in FHA guidelines so that they can include any FHA required items in their contract.