One of the things I love about working with RE/MAX is the people. I have the pleasure of being around the best in the business every single day, and that means a lot. Not only are my co-workers ethical, intelligent and responsible people, they are a generous bunch. They say that the leader always sets the tone, and my hat goes off to Dave and Gail Liniger, the Co-Founders of RE/MAX International.

He Linigers have been big news on all of the major stations since making the winning bid on a Hummer, called “Warrior One” donated by CNN yesterday. It was used in Iraq by a news team and then refurbished last fall on TLC’s “Overhaulin’” program.

CNN donated the vehicle to the Barrett Jackson auction going on now in Scottsdale as a fundraiser for Fisher House Foundation, which provides a home away from home for families of wounded service members rehabilitating in military hospitals.

The Liniger’s winning bid of $1,000,000 was then topped by another $250,000 by a fellow bidder, raising a whopping $1.25 million for Fisher House Foundation.

Thank you, Dave and Gail, for being the outstanding leaders and just plain good folk that you are. I am proud to be a part of this organization!

Keeping Your Credit Clean
by Phoebe Chongchua


Many homebuyers frequently wonder, "If I am shopping for a home loan will my credit be affected each time a credit report inquiry is made?"

It's a logical and intelligent question to ask; the answer is: not significantly, if the credit checks are done in a short period of time.

When a credit check is made by a potential lender it is called a hard inquiry. When a hard inquiry occurs it does have an impact on your credit score. However, when you're shopping for a mortgage or a car loan, credit bureaus typically cluster the hard inquiries together because the credit reporting bureaus understand that the consumer is shopping for the best loan.

"So for example, if you're shopping for a new mortgage and three potential lenders pull your credit score within three weeks, that is looked at as one inquiry for that purpose," says Steven Katz a spokesperson for TransUnion's TrueCredit.com.

Keeping your credit clean is critical. Katz offers the following advice to help ensure healthy credit.

One card you should not carry: Leave your Social Security card at home. "There is basically no reason that you need to [carry] that with you," says Katz.

Most people have their Social Security card number memorized. If you're not one of those people, then only carry your card with you when you know you need the information on it. Your Social Security card number contains personal information that if it gets into the wrong hands, can cause major credit dilemmas.

Lock it up: Apartment complexes and condominiums typically have locking mailboxes, but these types of secure mailboxes aren't as common in residential, single-family neighborhoods.

"If at all possible, people should have a locking mailbox," says Katz.

Katz says mailboxes with locking devices are becoming more popular at hardware stores because identity theft is spreading. Taking precaution to protect your personal information can save you months of agony.

Shred your documents: Katz says if you don't shred your personal documents and criminals access the information, the result can be devastating to your credit. Criminals will often attempt to open new accounts using your name and information. If they're successful, they will use the new account and divert the account information to the criminals' address or post office box.

"So, you'll never even know that the account was established. They'll be receiving the bills and then just throwing them out. It's ruining your credit." explains Katz.

Keep an eye on your credit card: Katz says while it is difficult, people should not let their credit card out of their sight or else they run the risk of becoming a victim of skimming.

Skimming has become prevalent at some restaurants and gas stations where a clerk might have a small device that scans the consumer's credit card.

"It's a very small scanner that captures all the information that is on the magnetic strip, and then the card's information can be cloned," explains Katz.

Of course, keeping your credit card visible at all times is nearly impossible. Katz says, "If you're going to go to a restaurant in an area that you're a little uncertain of -- that's in a fringe area or you're in a foreign country and you're not too certain about where you're dining -- attempt to use cash."

Also, when using credit cards be sure that the receipt you leave with the merchant does not have your credit card number exposed. Most merchants have credit card systems that only print out the last four digits of a consumer's credit card; however, some still show the entire account number on the print out. If your full credit card account number appears on the receipt, scratch it out with a pen. Additionally, in rare cases where carbon copies are used, ask for the carbon.

Check your credit history

Consumers can check their credit history for free once a year at annualcreditreport.com. Katz says that the free reports will not contain an actual credit score, but you can get the scores for a fee.

Another good credit-checking resource is found at truecredit.com. The website offers access to tools to manage a consumer's credit health by receiving credit reports, credit scores, credit monitoring, and informational materials.

Published: October 23, 2006

Resale home prices up more than 10% in most of SE Valley

David van den Berg
The Arizona Republic
Oct. 12, 2006 04:34 PM


Home prices are climbing, while sales are falling around the southeast Valley.

Mesa, Tempe, Chandler, Gilbert and Queen Creek all saw their median home prices rise more than 10 percent the first eight months of 2006, according to a Republic analysis of data from the Information Market.

And in all three Ahwatukee Foothills ZIP codes, median prices rose more than 10 percent.

The data show new homes were more expensive than resales in all parts of the southeast Valley except the Higley section of Gilbert. New-home prices were not available in Tempe or Ahwatukee Foothills.

New homes coming to Higley are mostly in Trend Homes and KB Homes communities. They tend to be on smaller and less conventional lots than traditional single family home lots, and therefore less expensive than new homes in other communities, said Charles O'Dell, a Realtor with Re/Max 2000 in east Mesa.

"They're doing a great job of offering affordable housing," O'Dell said.

The Maricopa County section of Queen Creek saw the largest overall price increase in the southeast Valley, at nearly 39 percent. But the number of homes there fell by more than half through the end of August this year.

Median home prices rose 16 percent in Chandler from 2005 to the end of August, the data show. Sales dropped from 9,730 to 4,117.

Data for Gilbert and the Higley section of town were separated. Prices in Gilbert jumped more than 15 percent from 2005 through the first eight months of 2006. More than 8,000 homes were sold in 2005, while more than 3,500 have been sold through August in Gilbert.

Median home prices in the Higley section of Gilbert rose 11 percent while sales dropped from 779 to 487.

The 85045 ZIP code in Ahwatukee Foothills saw a price increase of about 34 percent, while sales dropped from 380 to 163. Prices rose 11 and 14 percent in Ahwatukee's other ZIP codes, while sales also declined.

In Tempe, median home prices climbed more than 14 percent, while sales dropped from 1,977 to 1,068.

Median home prices in Mesa climbed more than 11 percent, while sales dropped by about half. One ZIP code in Mesa, 85207, saw a drop of 28 percent in its new-home median prices. That ZIP code was the only one in the southeast Valley where any drop in prices occurred through the first eight months of the year.

Home Prices Correcting, Buyers Returning to the Market


Home sales appear to be bottoming out with lower home prices, attracting buyers in many areas of the country, according to the National Association of Realtors.

David Lereah, NAR’s chief economist, said the housing market is showing signs of life and that sales may be leveling out. “Many potential home buyers who have been taking a wait-and-see attitude or taking their time and being methodical in the search process are being enticed by lower home prices,” he said. “Given a positive economic backdrop of lower interest rates and job creation, we expect sales activity to pick up early next year.”

Existing-home sales are forecast to be fairly stable in the fourth quarter and sales for all of 2006 are expected to drop 8.9 percent to 6.45 million – still the third strongest year after consecutive records in 2004 and 2005. New-home sales are forecast to fall 17.3 percent this year to 1.06 million, the fourth highest year on record. Housing starts should be down 10.9 percent to 1.84 million in 2006.

With a recent correction in the market, the national median existing-home price is likely to rise 1.6 percent to $223,000 for all of 2006; it’s anticipated prices will remain slightly below year-ago levels before gaining positive traction in the first quarter of 2007. The median new-home price is projected to decline 0.2 percent to $240,500 – largely the result of builder price cuts to move unsold inventory.

NAR President Thomas M. Stevens from Vienna, Va., said this presents a unique opportunity for buyers. “The supply of homes on the market is the highest we’ve seen in over 13 years, and mortgage interest rates are experiencing an unexpected decline,” said Stevens, senior vice president of NRT Inc. “The 30-year fixed rate is hovering around 6.3 percent, and sellers in most of the country are now showing a willingness to negotiate. While this changing market is a great time to buy, it’s become increasing important for parties on both sides of the real estate transaction process to have professional representation.”

The 30-year fixed-rate mortgage will probably average 6.5 percent in the fourth quarter but will trend up modestly in 2007.

The unemployment rate should average 4.8 percent in the fourth quarter. Inflation, as measured by the Consumer Price Index, is expected to be 3.4 percent for all of 2006, while growth in the U.S. gross domestic product is forecast at 3.3 percent. Inflation-adjusted disposable personal income is likely to grow 3.4 percent for 2006.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.


Existing-home sales for September will be released October 25; the Pending Home Sales Index is scheduled for November 1 and the next forecast will be November 10 at NAR’s Conference & Expo in New Orleans.

Hopeful Glimmers in the Housing Slump

Sure, prices fell. But look at the big picture: The market is adjusting to reality and some of the news is better than expected.

By Peter Coy, BusinessWeek Economics Editor

If you're a homeowner, the recent movement of home prices is as sickening to watch as a mountaineer falling off a cliff. As recently as a year ago, prices of existing homes were rising an amazing 15 percent a year. But the rate of increase has been going down, down, down. In August, the year-over-year change went below zero for the first time since 1995. The National Association of Realtors announced Sept. 25 that the median price nationally in August 2006, was $225,000, 1.7 percent lower than in August 2005.

Time to punch that pulsing-red panic button? Not yet. Because several other pieces of news in the Realtors report were better than expected, indicating that the housing downturn may not be quite as bad as some fear. For example:

• The decline in the number of existing homes sold was less than economists expected. It fell 0.5 percent to 6.3 million. There was no change at all in the number of single-family homes sold in August. The decrease was entirely in the category of condominiums and cooperative apartments.

• The inventory of unsold homes, albeit the highest in terms of months' supply since April, 1993, increased from July to August by a modest 1.5 percent, the smallest amount so far in 2006. If inventories start to top out, it will be a good sign for housing.

• According to an analysis by JPMorgan Chase (JPM), the inflow of "new offers" -- that is, existing homes coming onto the market -- held steady in August and was down 5 percent from a year earlier. (Those numbers are not seasonally adjusted.) This shows the market is adjusting to reality.

FED RELIEF? Investors certainly saw a silver lining in the Sept. 25 news. The stocks of D. R. Horton (DHI), KB Home (KBH), Lennar (LEN), Pulte Homes (PHM), and other homebuilders all rallied for the day. Pulte led the way as its share price rose more than 4 percent, to $32.66.

Stocks overall were lifted by hopes that the Federal Reserve will hold off on further interest rate hikes, at least for a while. Richard Fisher, the president of the Dallas Federal Reserve, said after a speech in Mexico that the slowing U.S. economy is likely to tamp down inflation. Lower inflation would give the Fed more latitude to hold the line on interest rates.

Make no mistake, housing is slumping, and things are probably going to get worse before they get better. Global Insight, the forecasting firm, wrote, "The housing slowdown is about a year old. It probably has another year to run." The firm expects that existing-homes sales will drop nearly 10 percent in 2006 and nearly 15 percent in 2007, and begin to turn around in the second half of '07.

PRICING REALISM. The point is, things could be worse. For one thing, mortgage rates have been falling lately. Freddie Mac (FRE), the big mortgage buyer, says that the national average commitment rate for 30-year fixed-rate loans fell about a quarter-point in August, to 6.52 percent, from 6.76 percent in July. And they've fallen more since, to 6.40 percent last week. That increases consumers' buying power.

You can even put a positive spin on the price decline, as the National Association of Realtors did in its announcement. NAR president Thomas M. Stevens said, "sellers are starting to become more realistic" and cut prices in order to move the merchandise.

The Realtors' own numbers lend credence to the "realism" theory -- by region, it appears that sellers in the Northeast were the most realistic and ones in the Western region, which is dominated by California, were the least realistic. Prices fell the most in the Northeast, but at least volumes were up. California had a slight increase in prices, but volumes fell the most.

Here are the numbers by region:

Northeast
Sales volume up 1.5%. Median price down 3.9%.
Midwest
Sales volume up 0.6%. Median price down 1.1%
South
Sales volume down 0.9%. Median price down 2.6%.
West
Sales volume down 2.4%. Median price up 0.3%.

Economists Beginning to Challenge Media's Negative Drumbeat on Housing
by Kenneth R. Harney


Is it a housing bust or a media-driven panic? Mike Moran, chief economist for Wall Street's Daiwa Securities America, Inc., says he's surprised that virtually nobody has challenged the constant drumbeat of negative headlines and TV news warnings of imminent crashes and home price meltdowns.

"It's really been way out of line with reality," says Moran, whose firm specializes in the bond market. When a 1.7 percent decline in the median home price nationwide sparks headlines about the "housing bust," that is "just pure sensationalism about what is going on here," he said in an interview.

The housing market "is going through a correction that's badly needed" after five years of record sales and price appreciation. "The key issue is whether it is orderly or disorderly" -- and it's clearly the former. Yet the financial press and TV news programs are "portraying it as a catastrophe."

Moran got indirect support for that view from other economists, including the Mortgage Bankers Association of America's chief economist, Doug Duncan, who said "the rhetoric is just way overwrought" -- the sky is not falling in the real estate and mortgage sectors.

To the contrary, even the Federal Reserve's vice chairman believes the current correction will not be dramatic or even that long-lived, and that the housing slowdown will not have dire side effects on other parts of the economy.

In a speech that went virtually unreported by major media, vice chairman Donald L. Kohn told New York analysts that the "rebalancing" of prices to better fit current demand that is underway in many metropolitan markets is a normal, cyclical event -- not an incipient disaster. In fact, it may even be a healthy and necessary part of the cycle: "The reported declines in new home prices in a number of areas should help facilitate the rebalancing of supply and demand" -- ie, lower prices should help gradually expand the number of serious buyers looking for houses.

Thanks to strong underlying demographic factors -- new household formations and population growth -- the current down phase may be relatively short-lived, Kohn suggested. New housing "starts may be closer to their (low point) than to their peak." If one takes mid-summer 2005 as the peak of the multi-year housing boom, Kohn appeared to suggest that the low point of the cycle -- and the beginning of the eventual turnaround -- could be just over the horizon.

The latest pending home sale index from the National Association of Realtors, which showed a surprising 4.3 percent jump in the number of sales in the contract stage, but not yet closed, supports that conclusion.

Kohn also noted that other economic conditions today do not point to a deep housing price recession or bust. For example, long-term mortgage interest rates are about a point above their historic lows, the Fed itself has stopped raising short-term rates, gas prices are falling, and the unemployment rate just dropped to 4.6 percent.

The current "situation stands in sharp contrast to some past downturns in the housing market" -- in the early 1980s especially -- "that followed actions b the Federal Reserve to tighten credit conditions significantly."

"Continuing growth in real incomes should underpin the demand for housing," said Kohn, "and as home prices stop rising, help to erode affordability constraints."

Top 5 Mortgages to Avoid

By Stacey L. Bradford
Reporter, SmartMoney.com


SHOPPING AROUND FOR a mortgage is nothing short of confusing. Thanks to plenty of innovative products on the market, a consumer has more than 50 loans to choose from. "While there is a mortgage out there for everyone, not every mortgage is right for every consumer," says Mark Lefanowicz, president of E-Loan, an online lending site. And now that the real estate market is softening, there's no guarantee that home prices will continue to appreciate -- at least not over the next few years. So buyers need to be particularly wary and not take on additional risk.

Here are five popular, yet risky, loans that the average consumer should avoid.

1. The Multiple-Choice Mortgage

Product: The Pay-Option Adjustable Rate Mortgage (ARM)
Why You Should Avoid It: Could end up owing more than you borrowed.

This is considered the riskiest mortgage around. The pay-option ARM offers borrowers a low initial interest rate and then allows them to choose one of four monthly payments. On the more conservative side, homeowners can opt to write a check for both the interest and principal on a fully amortized loan. On the other end of the spectrum, borrowers can make a payment that's so small it doesn't even cover all of the interest due on the mortgage.

While some advocates argue these mortgages are good for people with modest salaries but large bonuses -- think Wall Street -- many average home buyers are taking advantage of them, too. And that spells trouble. It's simply too tempting to make that minimum payment when families have others bills to pay off. The risk? In just a few months a homeowner could find he's "upside down" in his loan, warns E-Loans Lefanowicz. That means he owes more to the bank than he initially borrowed.

2. Cash-Out Financing

Product: 103s, 107s, and 125s
Why You Should Avoid Them: Can't count on home appreciation to build equity.

Think of it as easy money. Lenders now allow homeowners to take out a mortgage for more money than a home is actually worth. Consumers can borrow an extra 3%, 7% and even 25% of a property's value to help fund closing costs and renovations or even pay off credit-card debt.

Here's the rub: If a home doesn't appreciate in value enough to cover the total amount of the loan, a homeowner could end coughing up the extra cash to pay off the mortgage upon moving. This wasn't considered too risky a few years ago when the real estate market was hot and home prices were moving higher by the day. Now, however, all data point to a softer market with fear of a correction ahead, says Celia Chen, director of housing economics at Economy.com. As for interest rates, borrowers should expect to pay through the nose. Lenders will often charge 50% more for one of these highly leveraged products, says Lefanowicz.


3. Adjustable-Rate Mortgages (ARMs)

Product: One-Year and Three-Year Fixed-Rate ARMs
Why You Should Avoid Them: Tough on budgets, since the monthly payments are variable in just one to three years.

Call this the high-risk, little-reward mortgage, at least in today's rising interest rate environment. Here's how they work: Borrowers lock in a slightly lower interest rate for the first one to three years. The product then readjusts every year in tandem with highly volatile short-term interest rates. Since 2004, the one-year ARM has increased two percentage points to 6% from around 4%. That means a homeowner with a $300,000 mortgage is now paying $4,400 more a year than when he first took out his loan.

A few years ago, these loans appealed to consumers who needed a little extra help making their monthly payments during the first few years of homeownership. But now, there is only a half a percentage point difference between the interest rate on the 30-year fixed and the one- and three-year ARM. While that discount might still appeal to some homeowners, the risk of that mortgage readjusting upward is too great to justify the minimal savings, says Keith Gumbinger, vice president of HSH Associates Financial Publishers. Better to lock in the interest rate on a 30-year fixed-rate product and never think again about what the Federal Reserve will say at its next meeting. (Click here to compare payments on a fixed rate mortgage vs. an ARM.)

4. Interest-Only Payments

Product: Three-Year, Five-Year, Seven-Year and 10-Year Interest-Only Option on an ARM (commonly referred to as the Interest Only Mortgage)
Why You Should Avoid Them: Monthly payments can quickly balloon.

Can't afford a home in today's pricy environment? A mortgage that gives you the option to pay just the interest on a mortgage offers consumers yet another way to slash their monthly payments. As the name implies, borrowers don't pay down any principal for the first three, five, seven or 10 years of their loan.

Now it's time to read the fine print. After the initial "interest only" portion expires, the monthly payments balloon to cover the remaining interest and all of the principal payments on that mortgage. Borrowers are also charged a slight premium on their interest rate, compared with fixed-rate ARMs, since people who take on these loans are more likely to go into default. Add it up and the new payment is likely to break the average family's budget, especially if they could only afford the interest portion to begin with, warns HSH's Gumbinger. At this point many borrowers will either have to spend a few thousand dollars to refinance or sell the house.

5. Fixed-Rate Loans

Product: 40-Year and 50-Year Fixed-Rate Mortgages
Why You Should Avoid Them: Builds equity too slowly.

As the name implies, these long-term vehicles are mortgages that amortize over a period of 40 or 50 years. The selling point is that a homeowner could lower his monthly payments by stretching out the terms of the loans. But when you do the math the savings just aren't that significant. On a $300,000 mortgage, a borrower would reduce his monthly mortgage payment by roughly $80 with a 40-year vs. a traditional 30-year fixed rate mortgage.

What does a homeowner have to sacrifice for that minimal monthly savings? It will take significantly longer to build up any equity in a home compared with a 30-year mortgage, says Lefanowicz. Consumers will also pay a lot more in interest over the life of the loan since the interest rate is typically a quarter of a point higher than the more traditional alternative.