What happened to Gilbert, AZ, the former “Hay capital of the world”? The formerly sleepy Phoenix suburb has gotten a bit of a wake up call, and home prices have skyrocketed.

Gilbert is just one of several booming suburbs in the Phoenix metropolitan area. The demands of a skyrocketing population in the region are driving new development at a fever pace and pushing up real estate prices to unprecedented levels. While the region has historically been a very affordable place to live, the booming real estate market has introduced new challenges for residents and newcomers alike.

An abundance of jobs, sunshine and affordable housing have fueled and sustained this growth explosion for many years already in the region, though experts say it is shortsighted to believe this surge will continue indefinitely. Even a region that thrives on growth can have growing pains, they say.

Read the whole article here (Inman News - subscription).

Lower income Washington state residents who thought they were priced out of the housing market forever might be surprised what they can afford. Even workers who do not think of themselves as “low income” can qualify for programs that range from teacher buying programs that defer loans for 30 years to land trust programs.

“It was kind of amazing to me,” said Fairchild, who learned last year that she was eligible for thousands of dollars toward the purchase of her Seattle home. “I thought I made too much money.”

That misconception, say those working with home-buying assistance programs in Seattle and across the state, often prevents renters from making the leap to home ownership. “So many people that I talk to (think), ‘Well, I just don’t qualify. I’m not low or moderate income,’ ” said Emily Nolan, a program manager at the non-profit Washington Homeownership Center in Seattle.

Note: Most states have similar programs.

Read the whole article here (Seattlepi.com).

Although the pace of home sales are the slowest they’ve been for two years, they are still very strong by historic standards, according to the National Association of Realtors.

“In the wake of interest rates peaking in November, I expect we are in a bit of a trough that may be followed by a modest rise and then a general plateau in the level of sales activity,” said David Lereah, the Realtors’ chief economist, in the group’s statement. “Existing-home sales should stay below the record levels experienced over the last two years, but they’ll maintain a historically high pace.”

The group reported existing home sales of 7.08 million homes in 2005, up from 6.78 million existing homes in 2004.

Read the whole article here (CNN Money).

From Realty Times comes a report on the current market conditions. While some markets are cooling, some markets are doing quite well and continue to set records. Take Indianapolis for instance.

For the second consecutive quarter, Indianapolis, IN, was the nation’s most affordable major housing market — this figure coming from the National Association of Home Builders.

Looking for an affordable market in other areas of the country? While there are deals and steals in most any market — brought on by a number of factors, such as rising interest rates or a sellers need to move quickly — some areas of our nation are showing consistent numbers that are making buyers smile.

Read the whole article here (Realty Times).

Thinking about moving to downtown LA? The Los Angeles Downtown Center Business Improvement District has just launched a new interactive map of the downtown area, complete with information on individual buildings. Clicking on a building will reveal property details, such as photos, web links, contact information, and comments about the property.

You can access the new map here.

“The future vision of Los Angeles rests with downtown,” said Carol Schatz, president and CEO of the business improvement district. “As more and more businesses and residents consider moving downtown, we want to give them every tool possible to research the advantages of moving here. That means providing building-by-building specifics, including photos and contact information for potential leases and sales.”

“The advantage of this type of map is that residents and business professionals are saved from conducting their own research, in turn saving them significant time,” said Schatz. “It’s a one-stop shopping of sorts for those looking to come to downtown.”

Read the whole article here (Inman News - subscription).

It’s not flashy but it is reliable, and now the 30 year fixed rate mortgage is going from scoffed at to scooped up. As the housing market cools and interest rates begin to climb, home buyers and refinancers are faced with new questions about how much house they can afford. In recent years the adjustable-rate mortgage (ARM) became increasingly popular as home prices skyrocketed.

The allure of adjustable-rate mortgages — which typically offer lower rates than fixed-rate loans — is disappearing. The spread will decline this year to less than one percentage point, says Fannie Mae. Meanwhile, at a recent average of 6.2% for loans of less than $417,000, 30-year fixed-rate mortgages are still near historic lows. Kiplinger’s expects that the average rate will settle between 6.5% and 7% by year-end.


Read the whole article here (Yahoo Finance).

Sleepy Baton Rouge just might pick up where New Orleans left off last September. Although it lacks the grandeur of it’s wild neighbor, Baton Rouge has been growing in size and economic stature for more than a decade, while the Big Easy has been shrinking. The recent opening of the iconic New Orleans Galatoire’s restaurant in Baton Rouge is a powerful symbol of the transfer of power.

With much of New Orleans still in ruins, Baton Rouge seems destined to become Louisiana’s population and business center — even if it never comes close to New Orleans in art, food, music or tourism.

“Baton Rouge has come a long way,” said Justin Galatoire Frey, who moved to Baton Rouge to run the family’s new restaurant. “A lot of people said Baton Rouge couldn’t support something like this, but business has been very good. I think Baton Rouge is going to be bigger for a while, I really do. It’s going to be a long time before New Orleans ever gets back the population it had, if it ever does.”

Read the whole article here (LA Times - reg required).

It looks like mortgage giant Fannie Mae’s recent problems are not as bad as they first appeared. In a report released last week, Sen Warren Rudman said that says the company’s major accounting errors already have been disclosed.

But the long-awaited Rudman report said it did not find that former chief executive officer Franklin Raines knew the company’s accounting departed from generally accepted practices in significant ways.

“We did find, however, that Raines contributed to a culture that improperly stressed stable earnings growth and that, as the Chairman and CEO of the Company from 1999 through 2004, he was ultimately responsible for the failures that occurred on his watch,” the Rudman report said.

Read the whole article here (CNN Money).

Financial guru Suze Orman gives us the lowdown on the ever-popular interest-only (IO) mortgage. Her advice? Stay away. Far away. Although you may be talked into taking out an IO or negative amortization loan because of the monthly “savings,” you will have to pay the principle sometime, and by the time that comes due, there’s a good chance you won’t be able to afford it.

A typical arrangement is that you might just pay interest for the first 10 years of a standard 30-year fixed mortgage. That means from years 11 to 30 you have to hustle to get the interest and principal paid off. If you need to pay off $200,000 in principal over 20 years — at a 6.28 percent interest rate — your monthly payment will be $1,465. That’s nearly a 40 percent jump in your mortgage cost!

Even worse is the lost opportunity to build up equity over the 10 years by paying down some of the loan’s principal. With a standard 30-year fixed rate loan that requires some principal payment each month, in our above example you would have paid off about $32,000 of your principal in 10 years. With an interest-only mortgage, you’ve saved zilch over the decade.

Read the whole article here (Yahoo Financial).

If you are one of the lucky home owners who bought or sold in last year’s super-hot real estate market, take a moment here to learn about these four common real estate transactions that could leave you vulnerable in an audit.

For example:

If you bought a home: One huge benefit of buying a home is that you generally can deduct the mountains of interest you pay. That probably means you’ll graduate into the class of taxpayers who can save more by itemizing mortgage interest, property taxes, certain loan costs and a raft of miscellaneous expenses rather than settling for the standard deduction every taxpayer is entitled to grab.

Tax trap: That $1 million can also include a loan on a second home, but you can’t deduct interest on what you borrow above that threshold.

Read the whole article here (Newsday).