Bottom of the market?
I just received an email from a lender that indicates a policy change on lending. For the past two years, Arizona has been designated a declining market state by investors and mortgage insurance companies. This designation has reduced loan to value maximums on real estate mortgages negatively impacting the real estate purchase market. Investors require mortgage insurance on conventional loans that exceed 80% loan to value. Until recently, mortgage insurance companies have refused to insure loans with a loan to value above 90% and have required minimum credit scores of 720. Effective immediately mortgage insurance is available on primary residences to 95% loan to value and 90% loan to value on second homes! And, the minimum credit score has been reduced to 680!
This guideline change is a huge event. It provides home buyers with the opportunity to purchase a primary or second home with a lower down payment and less than perfect credit score and sends a clear message that the industry considers values in Arizona to have bottomed!
So, while there are still many unknowns and variables that will affect the market over the rest of the year, this is a good indicator that the market is improving.
Adam Tarr PC
Citywide Real Estate