The economy seems to be successfully fending off a recession. I doubt you could have found many economists predicting a positive GDP for the first quarter that was reported. From the looks of things, we might squeak out one in the 2nd quarter. I'm not convinced the government's stimulus package did much, as exports and the cheap dollar did more to help. By the time this 300 billion dollar housing plan hits the streets, the damage will have been done and it won't have much of an affect, except be used for politicians for reelection purposes. When the oil bubble bursts, that will do more than anything the government could put together to help the economy. That's a prediction that no one seems to be able to nail.

   In the Phoenix metro area, there has been a bit of leveling off in pricing and the mood is like, "hmm, I think we are close enough to the bottom to buy!" We have had some market numbers start to show a turn around. The number of listings is at a 13 month low, but still around a 9 month inventory number. The number of pending is up over 7000 and I'm betting at the end of June we'll be over 5500 houses sold for the 2nd month in a row. However, the number of properties going to foreclosure is still rising and the number of houses going back to the banks is rising. Thusly, there will be more inventory of homes coming to market, which could continue to create pricing pressure and lengthen the time to resell a home.

   The activity level and interest at the auctions and bids on REO's is way up. There was a time at the auctions that there were very few people bidding. Now I'm hearing complaints that people are bidding them too high. Sometimes end-users are going down there buying houses at margins too tight for the investors, but for them, they paint, carpet and they are in to a house 20% less the market! I get requests for LSR's for REO's all day long, sometimes five a day.

   On the conventional financing side, we saw some improvement, and then there has been a few knew jerk reactions which caused problems. I think we'll have another quarter before that shows some stabilization. Lenders haven't found the right mix of lending standards and underwriting requirements that everyone can live with yet.

   I have added a net $1,900,000 of new investment money; we have $16.2 million in the portfolio. I had a lot of ins/outs this quarter. Some of the money that came in this quarter is planned to be short term investment.

   I have updated the pictures of the current properties on the website. Thanks for your trust, investment, and referrals.

   Denny J. Chittick 

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