Foreclosure homes are the ones we help our investors to buy for low prices and turn into rental houses to implement the projected cap rates or cash on cash rates.

In November, lenders foreclosed on 1,549 houses in Maricopa County. That’s the lowest level since December 2007, right before the foreclosure crisis hit metro Phoenix, according to the Information Market.  During 2011, a typical number of foreclosures was 4,000 to 5,000 a month.

Foreclosure starts, the early indicator of foreclosures, fell to 2,094 in November. By comparison, in March 2009, lenders started the process to foreclose on more than 10,000 metro Phoenix houses. These declines in foreclosure activity are key to tell what will happen to the housing market in coming months.

Another piece of foreclosure data that is even more important now, those loans with recent late payments or no payment, called foreclosures in the pipelines. The total number of foreclosures in lenders’ pipelines across metro Phoenix was 10,606 at the end of November. A year ago, there were double that many foreclosures under way in the region. Two years ago, there were more than 40,000.

Overall, foreclosures continue to fall in metro Phoenix. As a result, multiple bids became the norm and home prices picked up.

Trend Homes’ Parent company Najafi Cos. LLC has agreed to sell its operations and assets to the Ryland Group Inc., a publicly traded home builder based in Westlake Village, Calif., for an undisclosed amount.

All Trend Homes employees are being merged into Ryland, and Reed Porter, Trend’s president and CEO, will serve as Ryland’s Phoenix division president.

Ryland is taking over Trend’s seven existing communities in Phoenix, Scottsdale and Gilbert, as well as four developments that are under way, including 84 homes at DMB Associates Inc.’s Eastmark community at the former GM Proving Grounds in Mesa.

Phoenix Business Journal by Kristena Hansen, Reporter

I bet many of you heard about this 3.8% tax and not sure what it has to do with you and your money. Here below are 10 things Arizona Association of Realtors has prepared for you. We are not tax expert and we do not intend to give you tax advises, just some highlights to help you prepare for it.

1. If you add up all of your income from every possible source, and that total is less than $200,000 ($250,000 on a joint tax return), you will not be subject to this tax.

2. The 3.8 percent tax will never be collected as a transfer tax on real estate of any type, so you’ll never pay this tax at the time that you purchase a home or other investment property.

3. You’ll never pay this tax at settlement when you sell your home or investment property. Any capital gain you realize at settlement is just one component of that year’s gross income.

4. If you sell your principal residence, you will still receive the full benefit of the $250,000 (single tax return)/$500,000 (married filing joint tax return) exclusion on the sale of that home. If your capital gain is greater than these amounts, then you will include any gain above these amounts as income on your Form 1040 tax return. Even then, if your total income (including this taxable portion of gain on your residence) is less than the $200,000/$250,000 amounts, you will not pay this tax. If your total income is more than these amounts, a formula will protect some portion of your investment.

5. The tax applies to other types of investment income, not just real estate. If your income is more than the $200,000/$250,000 amount, then the tax formula will be applied to capital gains, interest income, dividend income and net rents.

6. The tax goes into effect in 2013. If you have investment income in 2013, you won’t pay the 3.8 percent tax until you file your 2013 Form 1040 tax return in 2014. The 3.8 percent tax for any later year will be paid in the following calendar year when the tax returns are filed.

7. In any particular year, if you have no income from capital gains, rents, interest or dividends, you’ll never pay this tax, even if you have millions of dollars of other types of income.

8. The formula that determines the amount of 3.8 percent tax due will always protect $200,000 ($250,000 on a joint return) of your income from any burden of the 3.8 percent tax. For example, if you are single and have a total of $201,000 income, the 3.8 percent tax would never be imposed on more than $1,000.

9. It’s true that investment income from rents on an investment property could be subject to the 3.8 percent tax. But, the only rental income that would be included in your gross income and therefore possibly subject to the tax is net rental income: gross rents minus expenses like depreciation, interest, property tax, maintenance and utilities.

10. The tax was enacted along with the health care legislation in 2010. It was added to the package just hours before the final vote and without review. NAR strongly opposed the tax at the time, and remains hopeful that it will not go into effect. The tax will no doubt be debated during the upcoming tax reform debates in 2013.

Another reliable indicator identifies housing market strengthness and trending – the IMI from National Association of Home Builders and First American Title Insurance, is showing positive sign that the US housing market is at steady speed on its recovery.

The number of housing markets considered “improving”  surged by 76 to a total of 201 metros in December. The index also shows that the number of states represented on the list by at least one metro increased from 38 in November to 44 (plus the District of Columbia) in December.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. A total of 84 new metros were added to the list and eight were dropped from it this month.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, housing price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three measures for at least six consecutive months following those measures’ respective troughs before being included on the improving markets list.

Credit Suisse November 2012 Industry Realtor Survey report just released today (12/7/2012). Below is extracted from its report for Phoenix, AZ housing market.

Phoenix, AZ has 7,389 single-family permits in 2011, 4th largest market in the country.

Traffic backing to meeting expectations as buyers are comfortable with rising prices. Traffic came in to meet expectations in November, as our traffic index improved to 48 from 43 in October, the only month in which traffic did not meet or exceed expectations since November 2011. Agents’ commentary in November shifted away from frustrated buyers fed up with competition from investors (though there was still some in November) to more opportunistic buyers, who were still excited about the improvement in the Phoenix market. One agent mentioned, “Higher prices and positive news from the media have driven buyers to keep going on with their search.” Another agent mentioned, “Low interest rates and increasing prices have given rise to urgency, with buyers not wanting to wait on the sidelines.” Another agent mentioned that snowbird season has started off well, while another highlighted that Canadian buyers were continuing to drive demand. However, agents did note that some buyers were facing difficulties securing mortgages for homes under $150,000, while others were not drawn to the quality of current inventories.

Prices higher while inventories remain flat. Prices were higher once again in November, as our home price index came in at 82 from 86 in October, with readings above 50 pointing to sequentially higher prices over the past month (12th consecutive month).   Meanwhile, agents indicated that inventory levels were unchanged in November, following the first increase in levels in over a year in October. Our home listings index came in at 48 from 33 in October, in-line with a neutral reading, which points to flat inventories. In addition, our time to sell index came in at 58 (from 61 in October), just above a neutral reading of 50, which indicates a slightly lower time to sell in November. We view this as a positive for pricing.

Source: Credit Suisse

There has been quite a lot of talk recently about what is going to happen with the Mortgage Forgiveness Debt Relief Act which is due to expire on December 31, 2012. Even though we have not seen anything concrete, there appears to be some positive news on this front. eCreditDaily.com reported that the House Minority Leader Nancy Pelosi believes that the extension of this act will be included as part of a bigger deal. Minority Leader Pelosi’s spokesperson, Nadeam Elshami, told the Huffington Post the following: “Extension of this tax provision has passed by a bipartisan vote in the Senate Finance Committee, and we anticipate that it will be part of the Congress’ year-end negotiations. Democrats hope to work with the House Republican leadership to support bipartisan measure which benefit the middle-class homeowner.”

If this continues to be true, we should see an extension of the Mortgage Forgiveness Debt Relief Act this year. Leave it to Congress to wait until the last possible second, but there is still hope. We will send out a notice when the final word comes down on this.