What is REALLY going on with the Phoenix real estate market?!

As our market trudges along, I can't help but wonder what the average person thinks about our current market conditions. Although there is no denying the dismal immediate future, there is a light at the end of the tunnel.

First let's go through our challenges:

Foreclosures

It seems to be inserted into most conversations about Phoenix from people who live elsewhere. Any why not? We are the #3 or #4 foreclosure state in the nation, depending on whether we move above or below California in any given month. Top 2 are Florida and Nevada.

Many Arizonans exemplified the American way off take all the money out of your home to take a vacation, pay off student loans, credit card debt, car loans, but a NEW car, etc. Some of these reasons are more noble and smart than others. Others (most actually) bought at the peak, looking to "get in" before it was too late and prices went up even further. Qualifying for loans they really shouldn't be qualifying for, there's no doubt financial institutions are to blame as well. We all kind of got "swept away" with emotion.

For the record the peak median home price in Phoenix was $260,000. Last month it was $123,900

Umemployment

Although we have been hovering around the 10% range I believe we are now closer to the 8-9% percent range. In fact this area is improving, as evidenced in a recent article written by the AZ Republic that some companies are starting to hire again

Upside-down homeowners

Many would-be buyers who would love to take advantage of prices aren't buying because they are upside down and are not looking to short sale/short sell their homes, and won't rent them out because the mortgage payment exceeds what they can get in rent.

For those who actually have any equity (gasp), many of the "deals" on foreclosures and short sales cannot be bought if the owner must buy contingent on the sale of their home.

Tax Credit

This is a negative because it went bye-bye. Although an artificial stimulus to home sales, it was one that we needed during this time and there is no doubt that home sales have fallen off as a direct result of its disappearance.

Savings, or lack there of

Others looking to purchase simply don't have the money necessary to buy. You need a down payment of 3.5% in order to purchase, and wages are pretty low right now due to layoffs, etc, and other living expenses are taking precedence, not to mention most individuals do not have a systematic savings plan in place.

Getting the mortgage

Big one, many who have money and a job don't have the credit. The aftermath of the foreclosure crisis is many people are going to have to wait anywhere from 2-7 years to buy again, depending on whether they filed bankruptcy, short sold their home, or were foreclosed on.

Even if they didn't go through this, any credit score below 620 is having major difficulty in obtaining financing.

ON THE BRIGHT SIDE

Interest rates

With historically low interest rates in place, you couldn't find a better payment or interest rate structure around if you tried.

Prices cannot be beat

Although there may be some more downward movement for prices (especially homes $150,000 plus), no one can dispute that housing is more affordable now than it's been in 10 years time. Market bottom one was 4/09 with $119k and we may approach that again (currently at $123k), but there are so many deals on starter homes right now it borders on ridiculous.

Although it will take awhile to pull out of this, opportunities abound for those who can avail themselves to it.

For more information about homes for sale http://mc.searcharizonarealestate.com

Author Matthew Coates, West USA Realty Revelation
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