Phoenix Real Estate Market Heating Up - Multiple Offers Again???

I have not been as faithful as I would like to be writing my blog posts.  The reason is that I have been SUPER busy and the real estate market is really heating up.  Something has triggered all the buyers who were on the fence to jump off and the investors have re-entered our market and are gobbling up the bargains.

I have been telling people for the last 12 months that I did not know exactly when the market would turn around, but I felt like whenever it started, it would be a mini-frenzy - not too unlike our 2004 - 2006 years.  I am not suggesting we are going to see another real estate boom like that, but we are in multiple offer situations in many cases and I personally have qualified buyers who are having a hard time finding a home.

The “mini-frenzy” is what happens when the consumer believes they are not going to be buying at the lowest point and get the greatest deal.  As the news travels that homes are getting multiple offers, all the buyers who have been on the sidelines jump in so they don’t miss “the bottom”.  This will cause prices to stop tumbling and will drive them back up to where they really should be.

For example, I have seen older homes in Central Phoenix listed at prices that were lower than what they sold for in 1982!  That means these homes that slid far beyond “pre-boom” pricing and have been driven down to super cheap due to the inventory and glut of bank owned homes that need a lot of work.  This mini-frenzy will get those prices back to where they should be, but no where near the type of inflated prices that we saw during our boom.

What is causing his turnaround?  I believe it is a number of factors.

1. Homes are really cheap now and buyers just finally realized that the value was there even if they did not exactly time the bottom of the market perfectly.
2. Interest rates are so low that buyers can’t resist.  Take a 5% mortgage with a $99,000 house that should be $125,000 and you just can’t help but call that a great situation.
3. Homebuyer tax credit.  I personally know this has motivated several people to buy before December 1, 2009.  An $8,000 tax credit is significant and money in the pocket….just for buying a home in a great buyers market and great interest rates!
4. Investors have returned.  Investors can cash flow on rental properties again and that is causing many to put their cash in housing for a nice return on their investment.  Short term investment opportunities exist as well for the rehabbers of the investor world.

While I am happy that the market is rebounding, I also find it frustrating that in a blink of the eye I am running around with buyers and calling the listing agents to ask, “How many offers do you have on the home?”  I have a very qualified couple now that has been out bid on 3 different property in the $200 - $220k range and they bid over list price every time.  Crazy…..