Arizona

CNN’s Money website has a list of the top 500 zip codes for foreclosures. Here are the eleven Arizona entries on the list:PositionZip CodeCity StateDefault NoticesAuction NoticesBank RepossessionsTotal Foreclosure Filings140.85242Queen Creek AZ123040271183.85323Avondale AZ517865248270.85379Surprise AZ214563210324.85243Queen Creek AZ017225197355.85706Tucson AZ016918187395.85086Phoenix AZ012554179415.85239Maricopa AZ015520175423.85037Phoenix AZ113933173445.85338Goodyear AZ212441167452.85326Buckeye AZ112243166456.85335El Mirage AZ212439165

Arizona State Senators Russell Pearce (R-Mesa) and Karen Johnson (R-Mesa) have killed a proposal to create three K-12 schools with an international focus, including teaching a second language starting at the kindergarten level. The proposal, from Rep. Mark Anderson (R-Mesa), would have created one K-12 school in each of Phoenix, Tucson, and Flagstaff, and created international studies programs at seven high schools. Global businesses and universities promised to provide assistance, so the total cost was $2.3 million for the first year of the program. Why’d they kill it? Not because of the cost, but because studying and understanding the rest of the world is evil and un-American. The opposition from some legislators was so strong that the bill was changed to refer to the schools as “American competitiveness project schools” instead of “international schools.” Karen Johnson brought in former Minnesota legislator and Bethany Lutheran College professor Allen Quist to testify against the bill on the grounds that “International Baccalaureate’s links to the United Nations are disturbing and that its sense of right and wrong is ambiguous” and “It teaches students to see the American system of government as one of many, not as the only one that protects universal and God-given rights to property, to bear arms and free speech” (to quote the Arizona Republic’s paraphrase of his remarks). This kind of blinkered provincialism and ignorance hurts U.S. competitiveness–if global businesses can’t find people with the knowledge and experience needed to run their operations from the U.S., they’ll find them elsewhere, like among foreign-born immigrants, or just run their operations from other countries. (Economics and demographics are more powerful than politics, so ultimately this problem will solve itself, and English-only and white-only areas of the U.S. will continue to shrink.) My employer, Global Crossing, just acquired another company in South America, with the result that about a quarter of our employees are now Spanish and Portuguese speakers. This makes multilingual employees extremely valuable. I would have loved to have been taught Spanish as a second language starting in kindergarten. Pearce and Johnson are politicians whose previous idiocy has been commented on at this blog. Both are Senators who have worked with the Church of Scientology on its anti-psychiatry efforts. Pearce is an anti-immigration activist who has shown poor judgment in what email he forwards to his constituents. Johnson is a senator who doesn’t understand the U.S. Constitution, thinking that as a state legislator she has the power to prevent the federal courts from ruling on separation of church and state cases.

Last night we attended “Bat Boy: The Musical”(reviewed here by the Arizona Republic). The play is based on a recurring character in fake (but sourced) news stories in the Weekly World News. While it didn’t exactly describe the Bat Boy we were familiar with from the WWN (for instance, he didn’t fight with U.S. troops in Afghanistan), it was a humorous and entertaining performance at the Phoenix Theater by the Nearly Naked Theatre troupe. The “Bat Boy: The Musical” play was co-authored by Brian Flemming, the director of the atheist DVD “The God Who Wasn’t There” and the silly “Blasphemy Challenge” that has prompted many YouTube videos.

The Open Government Act, a bill which would require the government to provide justifications for refusal to answer Freedom of Information Act requests, has been blocked in the Senate by an anonymous, secret hold placed by one Senator. This is the same process by which Sen. Ted Stevens placed a secret hold last year on a bill to create a publicly searchable database of earmarks. After the Society for Professional Journalists began a search for the responsible Senator who wants the government to continue to be able to stonewall FOIA requests without justification, he came forward–and it’s Arizona Senator Jon Kyl.

May’s total was 2009. The graph needs little comment this month, I think. M.C. N/TR Descriptive StatsMean939.6912752Median822Mode746Standard Deviation323.391527Range1527Minimum482Maximum2009Sum140014Count149

Someone should tell John McCain that pandering to the religious right and dropping f-bombs don’t really go together.

Anthony Sciubba, a student at Higley High School, was featured in a profile in the school yearbook. That profile edited out some of the statement he submitted–specifically removing a statement where he gave credit to God for his accomplishments. He was told in advance that his bio would contain no references to God. The school and yearbook editors have failed to understand that voluntary, student-initiated speech attributed to no one but the student does not violate the establishment clause of the U.S. Constitution. There was no establishment clause violation prevented by this censorship; the school was wrong to prohibit it. More detail and mostly uninformed commentary on this issue may be found at the Arizona Republic’s website. One commenter appealed to an Illinois federal court case in defense of the school–De La Rosa v. Rock Island School District, where a student’s cover artwork included the phrase “God Bless America.” The difference is that in that case, the expression was on the cover of the yearbook, implying that the school endorsed the expression. Ed Brayton points out that a similar case in Michigan was resolved in favor of the student with the help of the ACLU.

The Arizona Regional Multiple Listing Service just released their ARMLS Economic and Market Watch Report for the first quarter of 2007. The report says that the current market in Maricopa County (MC) for residential real estate is neither a buyer’s nor a seller’s market - it’s right in the middle. As I have argued elsewhere, to call the current Phoenix market anything other than a seller’s market is absurd. If you buy right now you lose, in my humble opinion. In spite of the fact that MC housing inventory grew from 43,164 homes (at the end of Q4 ‘06) to 52,055 on March 31st, and that the number of homes sold fell by 910, the report has the audacity to claim that “[c]ombined with historically low mortgage rates, home sales should continue at a steady pace”, and that Q2’s average sales price will be higher than Q1’s $350,400 (I’m not a big fan of using the average price as a gauge of anything. Its value is too easily influenced by outliers on the high end). In the section on “Trends”, Ken Fears says the following: …there were 26,135 sub-prime loans issued in 2005 [sic - I think that should be 2004] for the Phoenix-Mesa-Scottsdale metro area, which represent 15.4% of the total population of loans for this area. In 2005, the percentage of sub-prime loans in the Phoenix-Mesa-Scottsdale area rose to 31.5% for a total of 69,997 sub-prime loans issued. This figure was higher than the nation as a whole where 28% of loans in 2005 were sub-prime compared to 14% in 2004. So what does this mean for local Realtors®? There is no doubt that the rules for making sub-prime loans have been to [sic] lax. Furthermore, defaults will rise as mortgage rates rise and employment begins to falter with the waning economy. However, banks learned an important lesson in the last two mortgage banking crisis [sic]. It is much better to help the holders of sub-prime loans to meet their monthly payment than it is for the bank to write off the loan as a loss; a small bite to profits is better than a total loss. So banks will be much more inclined to re-work loan agreements. In addition, sub-prime loans make up a small percentage of the total number and dollar volume of existing mortgages. These factors help to mitigate the notion that there is a large overhang of defaults about to splash on the market, bringing down home prices and sales and the overall economy with it. David Lereah’s “Commentary” had this to say: On balance, I expect about 10 to 25 percent of subprime households to be unable to secure a mortgage loan because of today’s stricter lending standards. However, many of these households will probably, over time, purchase a home when they have attained the financial capacity to do so (e.g., saving for a down payment, growing their income). So the long-term health of the housing market will probably stay in tact. In the near-term, I would expect home sales to fall by 100,000 to 250,000 annually during the next two years due to tighter underwriting practices, slowing the nation’s housing recovery. As for the over 8 million adjustable-rate loans (25 percent of which were sub-prime) originated during the past three years, First American Corelogic estimates that about 1.1 million of them totaling about $326 billion are likely to end up in fore-closure. A bit over $300 billion of subprime adjustable mortgage loans are due to re-set by October 1st of this year. Most lenders will attempt to work out problem loans by refinancing borrowers into other mortgages. A disproportionate share of these foreclosures will occur in high cost regions, like California. Certainly, a rise in foreclosures results in an upward blip in housing inventories, depressing home values. But the good news is that these foreclosures will occur in relatively healthy local markets that boast decent levels of economic activity and job creation, improving the prospects of selling the foreclosed properties in a reasonable amount of time. Foreclosures will create temporary inventory problems, but inventories will be eventually worked out.“Inventories will eventually be worked out,” which will be “depressing home values” - but, nonetheless, Q2 in MC will see a “steady pace” in home sales and a higher average sale price? Hmmmmm… Dr. Lawrence Yun, in his “Forecast” section, says that in the last year Phoenix jobs grew by 89,000 and that this may increase the number of potential homebuyers. Yun acknowledges that Phoenix has seen a fall in home sales, but he says that rental rates have, as a result, been “climbing fast.” He asserts that, “very soon, the squeezed renters will begin to search for a home purchase." Rents in the area are definitely rising, as you would expect, but they’ll have to rise a long way to catch up with area home prices! Forecasting the impact of the subprime fallout, Yun presents this analysis: Consider, the subprime loans comprised about 13% of the overall mortgage market, and 20% of mortgage originations since 2005(though there are divergent figures depending upon the source). The recent overall rise in default rates is primarily associated with the subprime loans rather than with the predominant prime loans. The delinquency rate on prime loans was only 2.8% by comparison with the foreclosure rate running at 0.5%. Both delinquencies and foreclosures for prime loans have been steady with very little movement. Therefore, a 14.3% delinquency on 13% of the loan market means subprime problems are impacting close to 2% of all loans. Factor in the fact that one-third of all homeowners own their home free-and-clear, the subprime problems are associated with about 1.4% of all homes. History says that less than half of these homes with delinquent mortgage payments ever move into actual foreclosure. So roughly speaking, 0.7% of all homes will at most run into eventual foreclosure from recent meltdown in the subprime sector. Something tells me that Yun’s numbers are overly rosy. Using his 1.4% figure only gives us an average of 1459 Trustee’s Sale Notices per month in Maricopa County. Since we’re already seeing numbers higher than that, and there’s no indication that things are going to be slowing down, Yun appears to be missing a piece of the puzzle. To be fair, Yun’s numbers refer strictly to subprime loans - so one could argue that the additional numbers seen in the real world are delinquencies in alt-A and prime mortgages. In any case, the next few months should prove very interesting.

Given the explosive growth Maricopa County's Trustee Sale Notices saw in the second half of 2006, the numbers for the first four months of 2007 have seemed somewhat like a plateau. April’s total was 11 below March’s 1720, leading me to seriously wonder what the future holds. From a recent Reuters article: Subprime mortgages to less creditworthy borrowers comprised only 13.7 percent of outstanding U.S. mortgage debt in the fourth quarter of 2006, and their delinquency rate was 13.3 percent, according to the Mortgage Bankers Association. If, like the article, you believe that the woes of the subprime mortgage market are “well contained,” then perhaps we have a hint of what the remainder of 2007 has in store. Assume, for (extreme) simplicity’s sake, that... 1) All 1,250,231 houses in Maricopa County have a mortgage, and 2) The percentages quoted above remain the same for all of 2007, and 3) No one who does not have a subprime loan will become delinquent, ... then that means the average number of Phoenix-area trustee sale notices per month should come to 1898. I’m inclined to take it as a good sign that we’ve only seen a peak of 1720 so far, in spite of Mish’s contention, over at his Global Economic Trend Analysis, that containment is spreading. However, the graph below, far more than Mish’s falling sky pronouncements, gives me pause: Trustee’s Sale Notices are a lagging indicator, since they don't happen until the borrower has been in big trouble for several months. That fact, in conjunction with the data behind the Credit Suisse graph, leads me to believe that late 2007 through early 2008 (and beyond) is when we should be expecting the big wave to hit. How big? Who can say? Anonymous (2007-09-10): Is this ARM reset schedule just for Arizona?? ...

The series “America at a Crossroads” commissioned a series of films about Islam in America that will air next week. One of the films, “Islam v. Islamists: Voices From the Muslim Center,” by Martyn Burke, will not be shown. Burke, who was previously the producer of “Pirates of Silicon Valley” and “The Hollywood Ten,” says that his film was dropped for political reasons (including the fact that two of his co-producers, Frank Gaffney and Alex Alexiev, are neoconservatives from the Center for Security Policy) after “tampering” by PBS and managers from WETA Washington D.C. He listed these examples of tampering: • A WETA manager pressed to eliminate a key perspective of the film: The claim that Muslim radicals are pushing to establish “parallel societies” in America and Europe governed by Shariah law rather than sectarian courts. • After grants were issued, Crossroads managers commissioned a new film that overlapped with Islam vs. Islamists and competed for the same interview subjects. • WETA appointed an advisory board that includes Aminah Beverly McCloud, director of World Islamic Studies at DePaul University. In an “unparalleled breach of ethics,” Burke says, McCloud took rough-cut segments of the film and showed them to Nation of Islam officials, who are a subject of the documentary. They threatened to sue.PBS claims that Burke’s film was not completed on time, had “serious structural problems” and was “irresponsible” and “alarmist, and it wasn’t fair." Burke’s film featured Phoenix medical doctor Zuhdi Jasser, head of the Islamic Forum for Democracy, a non-profit that advocates “patriotism, constitutional democracy, and a separation of church and state.” Jasser, a staunch Republican and former U.S. Navy physician, was an internist at the Office of the Attending Physician at the U.S. Capitol in the late nineties. There are more details and a short clip of Jasser from the film at the Arizona Republic (from which the above bulleted points are quoted). ...