Why North Scottsdale doesn't get quite as many Canadian buyers ....

In recent months, we’ve been regaled with stories about how Canadians have finally surpassed Californians as the primary out-of-state buyers of valley real estate and it’s easy to understand why that might be the case.

After all, our receding housing prices, their strong dollar and the winter temperature differential make for an awfully compelling rationale for buying here. In fact, although it might be a little unsettling for us to realize, they probably look at buying here the same way we used to look at opportunities in Rocky Point (Puerto Penasco).

The fact is that the members of Helene’s Team saw this trend developing more than two years ago and we began an extensive outreach program to create referral relationships with Realtors in such Canadian cities as Winnipeg, Vancouver, Calgary and Edmonton. However, while the results have been positive and while we certainly get our share of attention from our northern neighbors, there is no question that other parts of the valley have had much greater success than North Scottsdale in terms of finalizing sales.  

The reasons are really quite straightforward. At the top of the list is the cost of housing in our area and that’s followed closely by the limited availability of financing and the costs associated with it. 

The price issue is largely the result of the fact that most Canadian buyers are either looking for second homes that will only be used a few months out of the year or for rental property that will be easy to keep occupied consistently.

Either way, the East Valley cities generally offer many more interesting opportunities. Not only were their prices lower than ours to start with, but they have actually dropped more significantly. Moreover, those towns are also home to a huge pool of potential renters who were, until very recently, homeowners themselves.

Then there’s the fact that it’s very hard and very expensive for Canadian buyers to obtain financing and that often limits their selection to what they can afford to buy for cash - a fact that generally precludes consideration of the higher priced North Scottsdale market.

This problem is the result of many lenders concluding they needed to limit their lending practices to absolutely risk-free bullet-proof situations (i.e. the kind that don't actually exist) and electing not to offer financing to Canadians because they have not established "U.S. credit" or by requiring that they pay much higher origination fees, settlement costs and even asking that they set aside six months of "reserves" (monthly payments) in a separate US based account.

Unfortunately, this appears to be another one of those counter-productive policy decisions we’ve seen lenders make in the last year or so. By adopting these restrictive policies, they are effectively saying "no thanks" to one of the better resources we have for extracting ourselves from this morass.

Of course, they’re not alone in fostering this situation. Canadian Lenders will not lend on US property either. However, in their case, it’s because they are worried about their unstable neighbor to the south. That I understand.  

Fortunately, the North Scottsdale market is not as dependent on this type of buyer traffic as other areas might be.  However, we do get our share and, in fact, have often been able to put together transactions by having Canadian buyers  borrow against their own homes so that they can purchase here for cash. 

Appraisal reforms are being reformed!

In May of 2009, the Federal Housing Finance Agency (FHFA), and the State Attorney General of New York, promulgated the Dodd-Frank Act which was designed to protect the independence of appraisers and offer additional protection for consumers.

The act required that Mortgage lenders use third party Appraisal Management Companies to do their appraisal and prohibited lenders from having any conversations with the appraiser during the process.

As well intended as it was, the regulations caused delays in the process because of the addition of the AMC middleman, forced independent appraisers to align with an AMC, and drove up appraisal costs. It also drove most experienced appraisers from the market as the AMC’s found they could hire inexperienced help at a lower cost and boost their bottom line by doing so.

In a rare instance where common sense seems to have prevailed, the Dodd –Frank Act will be fading from the scene  effective around October 21^st and …..

 Fannie Mae or Freddie Mac will now be able to accept any appraisal report completed by a selected appraiser or paid by a mortgage lender

Lenders will be required to pay agents at market rates

Loan originators will be subject to state and/or Federal laws that prohibit them from making payments, threats or promises to influence the report

                                                                                                 --- Helene 9-20-2010

Economic panel says recession ended in June 2009

According to the Associated Press, the longest recession the country has endured since the Great Depression ended in June 2009, atleast that's what the National Bureau of Economic Reseach declared this this morning. 
This panel of academic economists based in Cambridge, Mass., said the recession had lasted 18 months. It started in December 2007 and ended in June 2009. Previously the longest post World War II downturns were those in 1973-1975 and in 1981-1982. Both of those lasted 16 months.
This is nice news, I presume, but there is an obvious distiction between the technicalities of academia and the practical realities of life. I will happily concede that we've crossed some technical barrier if they will now explain what that means for the economy in general. Teh recession my be over but when will the recovery actually begin - not the technical recovery - the one where people aren't afraid to spend again and aren't paralyzed by every negative suggestion from a pompous media paid prognosticator.