You may have heard that things are about to change in the loan limit world! It’s true. Both Conventional (aka “GSE”) and FHA limits will be reduced (if Congress does not step in to change). VA loan limits will not change until at least January 1, 2012.

CONVENTIONAL LOAN LIMITS: What is changing?

In Maricopa County, we will not see a change in Conventional Loan Limits. Our limit is not above the current base limit of $417,000(our limit is $417,000). The base limit is not what is changing for Conventional Loans therefore our Conventional Loan Limit will remain $417,000. What is changing (without an act of Congress) is the way the “high cost” Conventional Loan Limits are calculated in “high cost” areas. See below for the change in the calculation.

FHA LOAN LIMITS: What is changing?

If Congress does not act, we will feel the impact of the pending FHA Loan Limit Changes here in Maricopa County. After October 1, 2011 FHA Loan Limits are set to decrease from the current $346,250 to $271,050 in our County. The reason for the change here is based on the lowest allowed FHA loan limit or the “floor.” By law, the lowest FHA limit allowed in any County is $271,050. Based on our median price, Maricopa County’s FHA limit will revert to the floor of $271,050. “High cost” areas FHA loan limits will be calculated exactly the same way and are currently calculated the same way as the Conventional high cost limits outlined above. Here is how:

HIGH COST AREA (not Maricopa County) LOAN LIMITS
How are they calculated and what is changing?

Pre Oct 1 FHA and Conventional Loan Limit in High Cost Area = Median Home Price x 125%
Post Oct 1 FHA and Conventional Loan Limit in High Cost Area = Median Home Price x 115%

*national “ceiling” loan limit would drop from $729,750 to $625,500 for FHA and Conventional

EnviroMissionis almost ready to begin construction of a massive solar tower in Arizona. The solar tower will be located about 130 miles west of Phoenix near the Arizona/California border. This solar tower will be about twice as high as the Empire State Building and almost as large as the Burj Khalifa building in Dubai, which is currently the world's tallest building.

The massive solar tower will be as wide as a football field at the base and will have a greenhouse base more than 2 miles in diameter. The solar tower will generate enough power for 150,000 homes with over 1 million megawatt hours of solar energy.

The solar tower will create electricity by using turbines to force air heated by the sun up a 2,600 foot chimney. WOW!

EnviroMission chose to build the large solar tower in Arizona because of the hot climate and availability of flat land. The location is also near the Arizona/California border and near transmission lines in both states. There is enough room in the Arizona desert to build several large solar towers and EnviroMission may just do so. They also plan to build in other states in the southwest desert.

The solar facility is expected to cost upwards of $700 million dollars and will employ 1,500 people to help with construction.

Active Listings (TOTAL) peaked on November 20th at 45,960…supply has declined over 25% to 34,364

Active Listings (excluding AWC status) peaked on November 21st at 39,813 and has declined over 28% to 26,734

Pending listings reached a low of 8,695 on January 2nd and has since risen 55% to 13,467

Sales per month reached a low of 6,195 on January 31st and has risen 49% to 9,237

Sold % List Price reached a low point of 94.23% on December 31st has since risen to 95.57%



INVENTORY DECLINING!

Days Inventory peaked at 188 on November 21st has since fallen 28% to 135

Month’s supply rose to 6.8 on October 6th has since fallen 48% to 3.5 months



BANK OWNED HOMES ARE SELLING!

REO sales in April accounted for 44.6% of total sales compared with 46.8% for March

Normal sales increased to 35.7% of total sales in April compared to 34% in March

Short Sales increased from 19.2% to 19.8%

April delivered only 4,418 new notices of trustee sales - LOWEST monthly total since DECEMBER 2007


Market data courtesy of Mike Orr, Cromford Report

Today's Arizona Real Estate market, more than any other time in history, requires that every buyer and seller seek the expertise of a knowledgeable Real Estate Agent and Mortgage professional.





One of the primary reasons is that short sales and foreclosures still dominate the desert. As a homeowner, many Arizonan's are faced with a very important decision when it comes to the sale of their home. If they find themselves underwater, they must choose between a foreclosure or a short sale. Out of haste and a lack of an understanding of the short sale process, many make the decision of a foreclosure oftentimes delaying their next home purchase longer than what they may see with a short sale.



The time that someone must wait after a short sale before they are eligible for another mortgage depends on a number of factors including mortgage payment performance during the short sale, the reason for the short sale and the type of loan they want to use to buy their next home. The bottom line is that every homeowner owes it to themselves to consult with a Realtor that specializes in short sales and a mortgage professional that can help them understand what the best approach is as far as qualifying for another mortgage down the road.

As a mortgage professional, many of my clients are better off opting to short sale rather than just walking away from their home. I have created a "How to Buy after a Short Sale" guide that helps my clients prep for their next home purchase and avoid hurdles that may extend their wait time.



To the surprise of many, there are scenarios where a homeowner that did a short sale on their home can obtain a new home loan immediately. However, even if they cannot buy right away, the time that a short seller must wait to purchase after a foreclosure is usually longer than after a short sale.

It is important to seek the advice of both a Real Estate agent and either a CPA or an attorney to access the tax implications of a short sale. Either way, Arizona homeowners will benefit from researching the differences between a foreclosure and a short sale.



Jeremy House

The HOUSE Team @ PrimeLending

602.435.2149

JHOUSE@PrimeLending.com

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