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!