Special offer

Holy Multiple Offers, Batman! Will Investors Save the Phoenix Market?

By
Real Estate Agent with Homesmart

Multiple Offers?  Bidding Wars?  Cash Sales?  Oh My!

Surely I refer to the good ole days of 2005, right?  Not exactly.  Try 2008.

How do I know that we have either reached or are very near the nadir of the Great Phoenix Real Estate slump of 2007-2008?  Well, I don't.  Unlike the "experts" who like to think they can accurately forecast our market's health, I offer no promises as to the month, week, day and minute that we hit absolute rock bottom.  I am but a simple Realtor.  I do know one thing.  When it does happen, there will be no starter's gun fired into the sky signaling that it is time to BUY NOW!  We will only know with certainty that we hit the mythical bottom when looking back from a vantage point of 3-6 months past the mark.  That fleeting moment in time will last about as long as a Bob Saget tribute reel before prices begin the slow march back up.  Until then, it's all speculation.

Speaking of speculation, I do offer the reappearance of the investor to the local Real Estate scene as anecdotal evidence that we may be finally nearing the elusive bottom.  While many still see only the inky darkness of the abyss, others have firmly planted their feet where they believe the ocean floor to be. 

Investors are back in a big way in the Phoenix Real Estate market.

Bank REO properties are getting gobbled up at an amazing rate.  In the most price driven market this agent has ever seen, the cheap properties are selling at a startling clip.  This is not just happening in the historically sought after communities, but in the far reaches of the Valley as well.  The dinner bell is ringing, and the professional investors are heeding the call.

Ah, the scavengers!  Loathe them or love them, the Real Estate investor can help stabilize a market by establishing the basement.  When the bottom feeders (affectionately dubbed in this instance) start snapping up the delicacies that fall to their depths, it's a signal that the tide may be set to turn.   Not only does it display confidence that values are at a perceived low point from a group of buyers that purchases for the sole purpose of making money, but it helps to cut through the ample inventory that has plagued our market.  With sales increasing with each passing month this year, builders pulling very few permits as they sell their existing inventory and investors now fighting tooth and nail over low-priced homes, I like our chances of turning the corner sooner rather than later.

Like it or not, the banks are setting the market.  Foreclosure properties are what is selling right now.  As long as investors keep gobbling up this segment of the market, it will bring the regular Mom and Pop buyers back to the regular Mom and Pop sellers.  They just can't compete with the deep pocketed investors (who often pay cash) for the distressed properties, and often don't have the means to invest in the required fix up costs.  Shoot, we still have one of the fastest growing populations in the country.  There is no shortage of demand.  With signs of life permeating the market, a nice big dose of consumer confidence may be just what the doctor ordered.  Needing livable housing, and unable to swim with the sharks, these buyers will turn to you, Mr. and Mrs. Seller. 

Fear not, better days are near

And they will begin on August 17th, 2008 at 5:24 PM.

Damn, couldn't resist.

Comments (40)

Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

Hi E - No need to erase it.  I have decided to go ahead and move the market turnaround to the 16th of August, so that everyone will be in a great mood for my birthday celebration blowout spectacular.

Jun 24, 2008 06:12 AM
Elaine Hanson
Coldwell Banker Realty - Malibu | Topanga - Malibu, CA
REALTOR - Topanga, CA Real Estate Agent

Jason, that's using the mojo!  It will be a great weekend for one and all!

Jun 24, 2008 06:16 AM
Eric Murrietta
Homeowners Financial Group USA, LLC - Scottsdale, AZ

I do hear what you are saying.  Investors back may mean the bottom.  Just sad that many FTHB are still going to find it difficult to get the home they want due to tight underwriting and the continued credit crunch, so to speak.  The competition will be good for real estate though, any way you look at it. 

Jun 24, 2008 06:48 AM
Jeremy Blanton
Myrtle Beach Homes Blog - Myrtle Beach, SC
Myrtle Beach REALTOR®- myrtlebeachhomesblog.com

Paul, I wrote about the bottom feeders about 2 months ago...good stuff you have here!

Jun 24, 2008 07:26 AM
Tom Plant
WINEormous.com - Murrieta, CA

Paul - We're witnessing the exact same scenario here. Bidding wars, multiple offers, you name it. I am shaking my head over the prices I'm seeing and wish I could get in on the action!

Jun 24, 2008 08:52 AM
Veronica DeCarolis
Weidel Realtors - Flemington, NJ

August 17 sounds good to me.  Veronica

Jun 24, 2008 09:05 AM
Amanda Evans
DFW Living - Fort Worth, TX
Real Estate Broker - Fort Worth Texas

Why isn't this one featured? 

Jun 24, 2008 12:44 PM
Paul Slaybaugh
Homesmart - Scottsdale, AZ
Scottsdale, AZ Real Estate

JESSE - While I thank you for the misguided plug, we all know that Lenza took those Italian loafers with him.  There will be no filling that cat's shoes.  Leather chafes my skin anyway.

PAM - That is but one of two high ironic coincidences on this thread.  Congratulations on being 50% responsible for the upcoming turnaround!

MISSY - Interesting, isn't it?  In the midst of our Valleywide buyer's market here, the submarket of bank owned property is shaping up as a seller-dominated arena as well.  The days of a buyer showing up and lopping another 10% off of an already aggressively priced REO home is basically already behind us, except in the doldrums of a few localities where absolutely nothing is moving.

DON - I have logged your predicition, and will compare it against mine.  Let the better prognosticator win!

ADAM - You have to be more forward thinking than that.  With the turnaround set to occur on August 17th, the big push will come on the 16th.  Pack a lunch?  Who'll have time?  I'll just have to make do with a glove compartment full of Slim Jims and Red Bull.

SUSAN - Why wait?  I'll raise my glass to the return of the investor right now.  All victories, large and small, are grounds for celebration right now.

KELLY - I understand your concern, but I don't see it that way.  These are not the naive speculators who descended upon our Valley from California and other parts to strike it rich on Arizona Real Estate.  These are deep pocketed investors who are not artificially fueling a boom, but who recognize value when they see it.  Lenn Harley wrote a great piece deconstructing the differences amongst Real Estate investors, and the categories are very apt.  Further, with lending guidelines so tight these days, there is little to no risk of such a frenzy occuring in the near future.  People who shouldn't buy houses won't be buying houses, and properties that aren't worth what is contracted for won't appraise.  The bust is too fresh to permit an immediate scrubbing from the collective memory bank.  We won't see anything like the boom period experienced here for a very long time, if ever.  We have never experienced such a thing before, just solid annual appreciation from the early 90s through 2004 before the big spike of 2005.  We'll see modest and sustainable appreciation when we eventually pull out of this in my opinion.

 

Jun 25, 2008 03:17 AM
Steve Harless
Resolution Realty - Las Vegas, NV

Paul - glad to see your market boucing back! especially because it will rub off on your neighbor state nevada! Be well.

Jun 25, 2008 03:22 AM
Paul Slaybaugh
Homesmart - Scottsdale, AZ
Scottsdale, AZ Real Estate

MELODY - I'm not really ready for another seller's market either, to be honest.  I didn't particularly enjoy our boom year of 2005 because buyers were too frantic to snap at the first available property out of fear of loss.  Too many rash decisions and poor investments made.  Give me a nice, relatively neutral market which does not provide a clear cut advantage to either party to a transaction.  That is the environment which fosters critical thinking, honest negotiation and open dialogue.  Each party can take the time needed to weigh options and make informed decisions.  Sounds lovely, yes?

JASON - I missed by 5 minutes?  I must be slipping.  That is just insanely ridiculous. 

ELAINE - It's not happening in my primary area here in Scottsdale as it is elsewhere in the Valley where price points are marketly lower.  Like Topanga, the buyer who is making out today in the Scottsdale market is the user who is leveraging the current environment to get a terrific value on a property he/she intends to occupy.  Every once in a while, a smoking bank owned deal will come along, and multiple offers will ensue as investors jump in.  Interesting to note, investors are buying such properties to hold as rentals, not to flip.  Another indicator of the investor confidence in the long term health of Scottsdale Real Estate.

ERIC - Yes, it will be hard for many first time home buyers, and renters with less than stellar credit for the foreseeable future.  I don't think I'm wrong that it should be somewhat difficult, however.  Buying a home is not an entitlement, and not everyone should be a buyer.  I welcome the movement back to selling homes to only those who can truly afford the property.  Not just for this year or the next either, but for the entire term of the loan.  It will make total recovery slower, but more sustainable.  We can't create any more foreclosure/short sale headaches.

JEREMY - You guys must be just ahead of us in terms of finding your temporary bottom.  When the bottom feeders come out en masse ...

LESLIE - It's been a slow process, but I really do think we are nearing a crucial juncture in the maze.  Most agents, title reps and lenders I speak with have seen upticks in their activity levels.  I'll see about sending a few of our displaced sellers up your way ;)

BILL:  I completely agree.  Things are getting better.  Values have suffered considerably to bring us to this point, but the market is beginning to tell us what buyers are willing to pay to reengage.

TOM - I lament every missed opportunity.  This is the type of market where a shrewd investor can really establish his estate.  I see deals come across my desk my every day that make me wish I was in a position to invest in personally.  I am actually exploring a few different financing options to pick up a rental property or two.  I am that confident in the value of Scottsdale right now.

VERONICA - Glad the date works for you.  I've already printed the flyers and embossed the party hats.

Amanda:  He Hate Me.

 

Jun 25, 2008 03:40 AM
Paul Slaybaugh
Homesmart - Scottsdale, AZ
Scottsdale, AZ Real Estate

STEVE - We Western states do trend off each other.  I always look to California.  While we never come close to mirroring the wild gesticulations in their market, we do tend to experience milder echoes.  I hope things start to clarify in your market soon.

Jun 25, 2008 03:43 AM
Eric Murrietta
Homeowners Financial Group USA, LLC - Scottsdale, AZ

Paul - Your committment to the blog is great and a sure fire reason why people enjoy reading it.  Your reply comments are thought out and creative.  I especially like "He Hate Me" - that is good.  In response to your reply; I completely agree that only those who can afford the home should buy.  My feeling is just that they may miss out if the price is "inflated" or "driven up" by investors, however...  you answered that concern of mine in your response to Kelly.  No more foreclosures and short sales - it should become a mantra of some sort.   

Jun 25, 2008 03:51 AM
Mike Slager - Holland
Greenridge Realty - Holland, MI
MI Realtor

I will set my alarm! I will have just come back from my honeymoon and I will be ready to make some money (to pay off this money-sucking wedding)!

 

Jun 25, 2008 07:40 AM
Paul Slaybaugh
Homesmart - Scottsdale, AZ
Scottsdale, AZ Real Estate

ERIC - Get the copyright on that phrase and I'll start silkscreening the t-shirts!

MIKE - Sounds like the ship will be righting itself just in time then.  I bet you're going somewhere they serve drinks in half coconut shells with twisty straws and little umbrellas, aren't you?  I think I hate you.

Jun 25, 2008 09:29 AM
Sharon Paxson
Sharon Paxson, Realtor® EQTY Forbes Global Properties - Newport Beach, CA
Newport Beach Real Estate

I have one in escrow that was multiple offers . . . and I showed one last weekend that had 9 offers on it as well . . .

Jun 26, 2008 03:18 AM
Mike Slager - Holland
Greenridge Realty - Holland, MI
MI Realtor

Paul, I wish I were. Wedding+New Realtor=Broke. We are doing some camping, visiting the Wisconsin Dells, making a trip to the Leinie Lodge, spending a  little time in the U.P., then a couple of days visiting wineries in Traverse City.

We HOPE to hit Hawaii in a year or two.

Jun 26, 2008 03:54 AM
Roberta LaRocca
Simply Vegas Real Estate - Las Vegas, NV
REALTOR®, Broker, Salesperson, NV. Lic BS.507

Paul, Yep, multiple offers on bank owned properties.  That is the same game we are having here in Vegas. 

Jun 26, 2008 03:33 PM
Andrew Monaghan
The Monaghan Group - Glendale, AZ
CRS, GRI, EPro Associate Broker

Its coming back but loans are either liar loans (FHA with seller contribution for down payment and closing costs) or cash deals.

its getting more and more difficult to get deals closed in this environment.

Jun 28, 2008 07:20 AM
Paul Slaybaugh
Homesmart - Scottsdale, AZ
Scottsdale, AZ Real Estate

That it is, ANDREW.  That it is.  We have to start somewhere, though, and the investors are establishing the ground floor.  Money should start loosening up a bit as confidence returns to the market, from consumers and the institutions alike.  Most of my transactions are actually still conventional.

Jun 28, 2008 03:33 PM
Kathy Anderson
Arizona Luxury & Lifestyle Living - Cave Creek, AZ
Arizona Homes For Sale

Paul, I work predominantly the west valley active adult communities and the Canadian clients are what has helped that market tremendously.  I also ran some numbers for the Surprise family communities and was shocked to see (at the time) that we had just over a 5 month supply of homes!  With all the short sales out here the prices have plummeted but I was shocked at how fast the inventory was moving.  Once the mortgage mess clears out...

I too feel as though we are at or close to the bottom.  For the first time in a few years our office sales are outpacing new listings.

Jun 29, 2008 02:54 AM