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Home Prices…Up 20 Percent??????

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Looking for your morning hit of amazement? Check this out.

If that’s true, then the downtown house over which M’hijito and I have agonized for lo! these many months is now worth $216,000: six grand more than we owe on it.

And…last night we had a guest speaker at the real estate class: a mortgage broker. He reported that you can get FHA financing for as little as 3.5 percent. Our mortgage mod, which we obtained when I lost my job, is at 4.3 percent. So if that’s true, we should look into refinancing right now.

It’s not completely outside the realm of possibility that these little jaw-droppers could be true. Right now housing inventory in Arizona is at an all-time low, because Chinese and Canadian “investors” (read “absentee landlords who don’t care what happens to your neighborhood as their rental properties deteriorate”) have flooded into the state. Nay, they have tsunamied into the state.  A buyer looking for a place for her family to live can’t find a house for love nor money. Yesterday at the weekly network-fest, our Realtor member reported that one house he’d looked at with a client got thirty-eight bids!

We’re also told, however, that banks are about to unleash their shadow inventory of foreclosed properties. They’ll be selling empty houses to speculators in lots of 500. Investors buy these properties in cash. You can imagine what the result of dumping this stuff on neighborhoods will be, especially as most of the homes are converted into rentals with little landlord oversight.

And so, the rich get richer and the middle class gets poorer.

I guess if we’re going to try to refinance to get out from under the balloon that’ll come due in a few years, we’d better do it now.

Here Comes Another Big Expense

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Uhm...not your father's Buick

LOL! Sumer is y-cumin’ in…and with it, the usual array of stupefyingly pricey unplanned expenses. You’ll recall what happened last summer: the minute the power bills started their climb toward the stratosphere, every damnfool thing that could go wrong did go wrong and had to be fixed, from teeth to car.

This time it’s the toilet. The one in the roomier bathroom (this house has two alleged bathrooms, one of which is smaller than the master bedroom closet), the one I prefer to use, has finally given up the ghost. It’s never worked well, though it’s been better than most water-efficient toilets.

How something that has to be flushed three times every time you use it can be dubbed “water-efficient” beats me. But at least this model doesn’t have to be plunged every other time you use it.

Anyway. Satan and Proserpine installed a couple of mid-priced American Standards in this house. They have been OK, but I’ve missed the $300 Toto I put in the old house after I made the stupid mistake of replacing the 1970s toilets that actually worked with pretty but nonfunctional new models. That was shortly after the rules came in saying all toilets had to be “water-efficient.” One detail I’d missed out on was just what that implied: i.e., toilets simply stopped working. Finally, I found a plumber who would admit that he knew of a toilet that did not have to be plunged once or twice a day, but it was expensive. Three hundred bucks was as nothing compared to the annoyance factor of the things I’d installed.

If I’d had any sense, when I put the house on the market I would have removed that terlet, replaced it with another Home Depot special, and brought the thing with me to the new palace. Oh well. Hindsight is…heh!

Moving on. The newer toilets work pretty well. We put a pair of Kohlers in the downtown house, and they’ve been fine. So when the favorite throne in this house finally stopped working, I decided that instead of having Wonder-Plumber fix it (which he surely could do in short order), I would ask him to replace it, preferably with one of the elongated models instead of the dwarf-sized affair that’s in there.

Geez. Satan and Proserpine were both tall, big-boned people. Not fat, but tall and solidly built. These tiny little thrones must have really been really uncomfortable for them. One wonders, doesn’t one, why on earth people make the choices they do?

Anyway. I want a low-end Toto, which isn’t all that much more expensive than a functional version of other models. He thinks it’s ridiculous to spend that much on a toilet, and, he being a plumber, I expect he knows whereof he speaks. So he’s bringing a new, larger American Standard. Oooohhhkay. This had better be good, Mr. WonderPlumber! And I’d better not have take the damn thing apart and fix it every time I flush it, as I’ve had to do with th’deceased!

WhatEVER. By the time I finish paying him to acquire, deliver, and install that thing and haul the old piece of junk away, the bill no doubt will hover around $250 or $300. It’ll be worth it to have a non-annoying piece of hardware in there, one that actually functions. But…was there a reason this couldn’t have come to pass in February, when I had an extra $250 laying around?

Can’t wait to see what goes on the fritz next month.

🙂

Image: Delftware-style toilet. Evert Maijis. Creative Commons Attribution-Share Alike 3.0 Netherlands license.

Burnout: When Something’s Gotta Go…

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Over at Surviving and Thriving, proprietor Donna Freedman describes the exhaustion she feels after cramming too much work into too many hours for too many years:

But I’ve been on a dead run for years. I started out tired and the more things I take on, the more tired I become. Too often I meet deadlines at the expense of a personal life. Too often, writing is my life.

Don’t know how that woman does it, but somehow she manages to express exactly what’s crossing my mind, and she does it better than I can. Like Donna, I also am spending altogether too much of my life working (generally for very low pay) and altogether too little of it enjoying life. Last week’s mail meltdown, which led to 42  hours in front of the computer punctuated by a three-hour nap in the middle of the night, really was the watershed moment.

This stuff has gotta stop. I can’t keep on doing it. The overwork and the constant fatigue are starting to make me sick.

Yesterday at choir, just as we started to process up the center aisle at the start of the service, I suddenly had another dizzy spell. It was the third one to visit in a week or ten days, and by far the worst. I could barely walk, to say nothing of walking straight. People must have thought I was drunk! For a minute or so, I thought I was going to have to sit down, berobed, in one of the pews. That would have made a nice spectacle.

But no. Managed to stagger down the side aisle and out the side door with the assembled company, and I even managed to climb back up the steep staircase to the choir loft.  Don’t know whether the cause is stress, migraine (a headache usually ensues and lasts all day), an inner-ear problem, MS, impending stroke, or a brain tumor…though I’m inclined to suspect the first.

Ugh. Whatever’s behind that, the fact is that despite many resolves to quit it, I still spend way, way, way too many hours in front of a computer.

A fair quantity of that time is spent reading the seemingly endless supply of news sources. I do need to be up-to-date with current events, not only to write this blog but to perform the teaching and editorial work I do, and so I consider that activity, though unpaid, to be part of my various jobs. And occasionally, when my brain starts to fry, I’ll take a break at my favorite Mah Jongg site or fill in the USA Today crossword. That time, too, is spent staring into a computer screen—which is to say, rest breaks do not take me away from the computer. Consequently, I can easily spend ten or twelve hours without getting up from my desk. Some days (and nights) I spend a lot more hours than that parked in front of Macintosh hardware.

So it occurred to me that if I rationed the number of hours spent online, I’d be forced to focus on work and not sit on my fanny nonstop. And if the computer were actually turned off, I would get up and do something else. Maybe I’d even leave the house and reacquaint myself with the out of doors.

The most likely day for that is Saturday. There really is no reason for me to have to work on the weekends (except that the magazine writing students have papers due on Fridays…next semester, we’ll be changing that). Another possibility is Wednesday afternoon. I have choir on Wednesday evening. Why can’t I take off the entire afternoon, rather than working through the dinner hour and then chasing out the door like a scared rabbit and arriving at rehearsal barely on time or late? Usually I end up fixing dinner after I get home—around 9:30 at night—which means I don’t get to bed before 11. If I sit back down to the computer after dinner, it’ll be after midnight before I crawl into bed.

Work expands to fill the time available.

But it may shrink to fit time available, if the time available is reduced.

This revelation came to me when I decided to take the dog for a walk at 5:00 a.m. (after dawn in these parts) instead of plopping down in front of the computer, as I habitually do. Walking the dog and then taking even more time to make the bed, shower, and brush my teeth did not cause any less work to happen during the day than I would have accomplished had I started stumbled to the computer the minute I rolled out of the sack. I actually got the same amount of work done—maybe even more. And in the meantime, I got a little bit of exercise and started the day refreshed.

Would the workload compress if a day or a day and a half were taken away from time spent at the computer?

Stay tuned—we shall see! Meanwhile, tell me…what do you do to control malignant work overload?

What a Lender Is Thinking…

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Learning a lot from the real estate course. Right now we’re discussing lenders and their financing instruments. Ever wonder what a lending organization has in its collective mind when you apply for a loan? Here’s what an underwriter thinks about when he or she considers your application:

• Credit: have you used credit responsibly in the past? Do you have a decent credit history?

• Capacity: Do you have enough financial resources (income, wealth) to repay not just the proposed mortgage but also your existing debts?

• Character: This subjective assessment has traditionally been defined as your “desire” or “willingness” to repay the debt.

• Collateral: Is the value of the property to be mortgaged adequate to secure the loan?

Underwriters try to quantify their institution’s risk by calculating a “loan-to-value” ratio (LTV). To figure it, take the amount of the mortgage you’re asking for and divide it by the sales price or by the appraised value, whichever is lower. The result is the LTV, expressed as a percentage. The higher the LTV, the less the borrower has at stake in equity. Obviously, the less equity you have in a loan, the more likely you are to default, eh?

For example, at the time M’hijito and I bought the downtown house, it appraised at around $235,000. We borrowed $209,000 to buy it. Hmmmm….

209,000/235,000 = 88.9%

Today the place is worth about $180,000. Wanna see a figure guaranteed to give our lender heart failure?

209,000/180,000 = 116.1%

😯

{gasp} We’ll just keep that between you & me & the lamp-post, hm?

Moving on, what does the LTV mean when you’re trying to get a loan? Well, for one thing, according to FHA guidelines, the amount of any insured mortgage may not exceed 97.65% of the property’s appraised value (make that 98.75% if the value is 50 grand or less).

So, again using the downtown house, the maximum FHA mortgage we were eligible for, back in the day when we thought the market had hit bottom, was

235,000 x 97.65% = $229,477

In other words, we borrowed about $20,000 less than we could have, in theory. To take the place off our hands today, the most a buyer could borrow based on its alleged current value would be $175,770.

Another factor that depends on the LTV is the maximum amount you, as a borrower, are allowed to contribute to various closing and ancillary costs. These include such nicks and dings as the origination fee, discount points, the cost of a credit report, appraisal fees, escrow, title insurance, recording fees, prepaid interest, taxes, homeowner’s insurance, and the like. The seller may pay all or part of your contributions, but the total can’t exceed the allowable maximum. How does this shake out?

• If the LTV is greater than 90% on your principal residence, the maximum percentage of your contribution that may be paid by the seller is 2% of the selling price or appraised value, whichever is less.

• If the LTV is 90% or less on a principal residence, the seller may contribute no more than 6% of the selling price or appraised value.

• For a second home, if the LTV is 80% or less, the seller may contribute no more than 6%.

Any costs that are normally the buyer’s responsibility are considered to be “contributions” if the seller pays them.

 Who’d’ve thunk it?

 

2012 Baptized!

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w00t! It’s only the first 100-degree day here, and already the pool is warm enough to plunge!

Yay!

This morning while returning Harvey to the drink after an extended rest, watering plants, and generally puttering around, I happened to stick my feet in the pool.

Hm. Not too bad. Stepped in deep enough to get the hems of my cutoffs wet. Legs did not turn into blocks of ice. Amazing.

Threw off the clothes and jumped into the drink!

woooHOOOOO!

Deliciously, perfectly crisp against the hot sun on the skin! It is almost ideal.

😀

Of course, I forgot that the neighbors across the street can now see into my backyard from their front windows, in the absence of the devil-pod tree. So had to slink into the house.

Undeterred, I tried on one of the El Cheapo Costco T-shirts over the bottom part of an old Land’s End tankini. And…yes! It works! Tucked in, it works just like a swimsuit in the water. Pulled out, it looks like a tank top or coverup over a bathing suit. And with the AC set at 80 degrees in the house, a damp orange T-shirt keeps you feeling mighty cool while parked in front of a computer. And it’s SO much more comfortable than the hateful girdle of a woman’s swimsuit.

The pool is so gorgeous. It liked being emptied and refilled last November—the water is sparkling clean and clear. And boyoboy, did it ever like the assassination of the devil-pod tree.

Despite concerns that the Satanic tree’s last blast had killed Harvey the Hayward Pool Cleaner, he survived and now trundles around the bottom and up & down the walls for days without much attention. Overall the water can always use a little more acid, but it doesn’t seem to matter much. No algae is growing, no bushelsful of gunk collect on the bottom. Harvey needs a new tail…that is, new hoses. But otherwise the whole system is working magnificently.

Hopseed closeup
Detail of a hopseed bush

The hopseed bushes have taken hold and are beginning to put on new growth. My guess is that by next spring they’ll be tall enough to block the eye-rays of nosy passers-by. Meanwhile, because I started pouring more water in that part of the yard, the cat’s claw along the west wall has sprung to life. If that continues, in a couple of years it will do what the vines on the north wall have accomplished: piled up so much vegetative matter that they add a good three or four feet to the height of the wall. So. Soon there should be plenty of relatively benign vegetable screening between me and the neighbors and prowling burglars.

 

Real Estate Rebounding?

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If you believe what people in the business say, it appears that real estate is recovering in Arizona. In fact, having been hit hardest, Arizona is recovering the fastest of the many states whose economies crashed on the collapse of the real estate bubble. One guru, Michael Orr, reports a 3 percent increase in sale prices. Could be: speculators are flooding into the area and buying up everything between $100,000 and $200,000, planning to turn them into rentals. Realtor friends say they can’t find moderately priced homes for normal buyers, because every such house has a dozen bids on it within a few days of hitting the market. In February, Phoenix-area single-family home sales rose 10 percent compared to February 2011. Inventory is down 42 percent. The inventory of single-family homes under $250,000 is now below a 25-day supply.

It is, in short, a buyer’s market.

It may be a pretty artificial market, since the phenomenon is being driven by speculation. However, after the savings and loan fiasco, which caused a similar real estate crash here (that was what allowed me to buy a house in the pricey North Central area: my buyer’s agent got the place for $30,000 under the asking price, which was itself under market), the recovery was similarly driven by “investors”—another word for speculators.

If in fact prices are rising by 3 percent a year, which historically has been a pretty normal rate here, the value of the downtown house will return to what M’hijito and I owe on the place in six years. The balloon payment that will happen on the 40/15 mortgage comes due in about 10 years.

We’re not going to come out of it smelling like the proverbial roses, but we should at least be OK. We’ll be forced to either sell or refinance at that time. Of course, mortgage rates will be much higher by then, and so even though we’ll refinance a lower principal, monthly PITI will probably go up. We’ll be lucky if it stays the same…and since we didn’t win the lottery, I kinda doubt that we’re gifted with some Karmic package of luck. However, we at least won’t be on the verge of bankruptcy, as we have been for so long.

Speaking of real estate, down at the college we’re told by our licensing course instructor that now is the time to get into the business. Well. I’ll believe that when I see it. But I am enjoying the course. It’s very interesting, and I’m learning a lot of stuff I wish I’d known when we (my son, my ex- and I) were buying the various shacks we’ve lived in over the past 30 years or so. I’d highly recommend that anyone who is interested in personal finance, and certainly anyone who thinks they’d like to invest in real estate rentals or fix-and-flips, take one of these inexpensive community-college courses in real estate. An enormous amount of useful information has come forth.

Whether I’ll pass the final remains to be seen. It will be over the entire book, and since I joined the group in the second term, of course I haven’t read the whole book. Though I’ve been trying to catch up, I very much doubt that over the next 18 or 20 days I can read and absorb another 11 chapters while trying to keep pace with the present assignments and prepare for a final exam. The work load here has been phenomenal, with a client who thinks we’re going to produce an entire book in an unreasonable period—we should have told this guy at the outset that we could not do it in 10 weeks, but at the time, I thought he had in mind our editing copy, not ghost-writing most of it. The amount of extra work imposed by the real-estate course has made it impossible for me to keep up the schedule he thinks we’re going to meet, and so I expect we’ll lose that client.

Not so great for Tina, but from my point of view…something’s gotta go. One little crisis like this week’s e-mail melt-down puts me completely underwater in terms of workload. Truly: a 42-hour work day is beyond the pale. I’m still exhausted from that fiasco. This business of working like an animal for little or no pay has simply got to stop.

Right now I feel torn in several directions: Don’t know whether it’s better to drop everything and focus on the real-estate licensing project, or to drop everything and focus on producing a couple of e-books that could be marketed for fun and profit, or to drop everything and focus on building the editorial business in a new direction, or to just drop everything, period.

This summer I’ll be teaching one course. It’ll only take a couple of days to clean out the website and and get new course packets printed. But next fall I’ll have a 101 course, and I haven’t rewritten that around some solid subject matter, along the lines of the 102 course (whose success remains to be seen, anyway). It’ll take about two weeks to build that, but even then, it should leave a fair amount of free time over the next three months. Now—probably right now—I need to decide how best to use that time. And the truth is, I have no clue.