September 2008 Market Update

Per Flex MLS over 8,000 homes sold in August however over 18,500 homes came on the market! Prices have not found their bottom...so what does this mean? There is a 9.77 months supply of homes on the market as of the end of August. This makes it a buyer's market. With Fannie Mae and Freddie Mac being taken over by the U.S. Government interest rates have declined about 1% making it more affordable for buyers to purchase a home now. With the majority of economists in agreement (a miracle!) that interest rates will go up in 2009 it will cost a buyer less to purchase a home now over the long term in interest rate savings! Waiting for the market to go down further only to finance at a higher interest rate can be financially irresponsible over the long term. Real estate is not a short term hold, plan on being in your home at least 5 years given the current market conditions.

As for sellers, unless you want to stay in your home for the next 5-7 years you need to sell your home now if you want to maximize the equity you currently have in your home. National appreciation rates for real estate is 3-5% a year historically, 7% for a hot market. Let me give you an example, let's say your home is worth $275,000 but you do not want to sell it for less than $350,000. If the market started appreciating today at 5% a year it would take 7 years for the sellers to get their price! It would take 5 years in a hot market appreciating at a rate of 7% a year. Remember, this is assuming that the real estate market changed today and became a seller's market. For this to happen we would need to cut the active inventory by 50% and stop 90% of the foreclosures from coming on the market between now and next year. The question is, do you need to sell your home now, or can you wait? If you know someone who is thinking about waiting 1-2 years to sell their home, forward this to them now! You will be their best friend when you save them tens of thousands of dollars in equity in their home!

Foreclosure update: There are homes on the market now for 50% off their peak value in Phoenix that are 3 years old and all they need is carpet and paint! I have sold homes with over 2,100 square feet in newer neighborhoods for $130k!

Call me or email me now if I can help you or anyone you know buy or sell a home or an investment property!

This is a great article about interest rates and how the government bail out is not helping the market. Update on Fannie Mae and Freddie Mac as well.

Click here:

Housing fix backfires, raises rates for everyone - Aug. 27, 2008

Here is my latest video update on the state of the market. Please view and feel free to comment or ask questions!
Click on the following link to view my new video on YouTube:

http://www.youtube.com/watch?v=Qv31RaYY2Ws

Market Update August 2008

With the new house bill put out by Congress it will help some home owners out of bad loans, but when you sell your home you will owe the government a part of your proceeds. Please call me with any questions or read the details on the bill at http://money.cnn.com/2008/07/30/news/economy/housing_bill_Bush/index.htm?postversion=2008073011. How this new bill will affect our local real estate market will remain to be seen.

Down payment assistance programs are going away Oct. 1^st when the new house bill goes into affect. If you need down payment assistance and you cannot get a gift for a down payment from a family member, you need to buy now before the down payment assistance programs are no longer around. Call me now if you or someone you know needs to buy a home and also needs down payment assistance. If you do not have money for a down payment you have 3 options:

1. Buy a home now with a down payment assistance program
2. Receive a gift for your down payment from a family member
3. Save up 3% for a down payment and go FHA

After looking at the above information directly from the MLS it appears that while the market is improving, bank owned homes are increasing, thereby leading to falling home prices across the board. There are some areas that are more affected than others, but home prices have declined across the board. Active listings have decreased, months supply of inventory (MSI) is decreasing and sold listings for the year are increasing. NOW IS THE TIME TO BUY A HOME OR TRADE UP. The only way to know you are at the bottom is when the market starts to go back up. Real estate is not supposed to be day traded. If you buy and hold a home for 5-7 years you should see a healthy return on your investment. Lastly, most economists agree that mortgage rates are going up next year. If prices continue to decline and interest rates go up you can end up paying more for the home in the long run with higher interest charges and higher payments! Now is the time to buy a home or trade up. Call me for a free market analysis of your home if you are thinking about trading up.

While home sales are up, so are foreclosures. Now is a great time to trade up, or pick up a bank owned home as an investment. This is one of the best markets to buy in. Don't be one of those people who say, "I should have bought the home down the street when the market was down, I could sell it now and make $_______!" Buy low, sell high has worked in the past and will work in the future. Call me if you want to discuss how to profit off of this market.

July 2008 Market Conditions Report

With Fannie Mae and Freddie Mac on the rocks, and Indy Mac handing over their operations to the FDIC due to a surplus of bad loans and a run on the bank, we are experiencing challenges in this real estate market unseen since the great depression some 80 years ago. While times are tough in the market place, there are also many positive points that we need to focus on now.

Last month 5,751 homes sold in the Arizona Regional Multiple Listing Service (ARMLS). Sales are up 197% from January of this year! While there are some seasonal factors to take into consideration when looking at these numbers, sales are up 5.76% from June's numbers last year.

As of July 15^th there are 8,912 homes under contract (ARMLS). One out of five homes on the market is a bank owned home or a short sale. Just below 50% of the homes under contract are either bank owned (REO) or short sales. The average time on the market is just over 120 days.

Based on last month's sales, we have a 9 month supply of homes on the market (MSI). What this means is that if no other homes come on the market and buyer demand remains constant, it would take 9 months from now for all the homes on the market to sell. If we look at the average sales per month since the beginning of the year, (4,490 sales per month) and divide that by the number of homes on the market for sale today, (52,305) we have an 11.64 month supply, which is a more accurate number. A six month supply of homes is considered by most experts to be a stable market between buyer and seller with slight upward appreciation. Anything below a six month supply (6MSI) is a seller's market. Anything above a (6MSI) is a buyer's market. With just under a year's supply of homes on the market for sale, it is a great time to buy!

Most sellers are looking to trade up in a down market because it is more affordable now than it was a few years ago. This also allows them to purchase a bigger and/or nicer home for less money, and a smaller overall payment than if they had made this transaction when the market was hot. This is one of many ways to use the market to your favor.

It is also a great time to purchase an investment property. Prices are down, rents are up, and investors want to unload some of their holdings. Now is the time to use the contrarian method - when everyone is selling their investments, buy. When everyone is buying investments and the market starts to be irrational, that is the time to sell.

Overall, there are many strategies to profit in a declining market. Call me now or email me now if you would like more information on how to profit in a declining market. Many homes are 40%-50% off.  Now is the time to buy your first home or trade up!

Visit www.PenrosePropertiesAZ.com

Or, if your home did not sell, visit:  www.HelpMyHomeSellNow.com