I've said it before... there's no such thing as one market. [Q. How's the Market ... A. Which One?]
I like to focus on areas that show the most potential for those who bargain hunt. That means I spend a great deal of time finding properties for first time home buyers and investors. The first-timers want as much home as they can afford that is as close to work, family, friends, etc. as possible. The investors want a bargain home that they can rent or flip.
Since there is so much inventory on the market today, we usually have no problem finding properties that fit the needs. However, the bargain properties move briskly.
Last week one of my buyers, an investor, had to move very quickly.
We spotted a home in the mid-morning, made an offer that afternoon and received an acceptance the next day.
There were others who were scrambling to submit their offers, but we were first to the table.
The others were simply too slow. Ours was a full price offer... it could be re-sold today for much more... especially if the buyer fixed it up.
The media will tell you the market is terrible and no one is buying. In the market I work (the Phoenix metro area) the upper end is slow, the mid-range is somewhat slow and the low end is beginning to sizzle. Here's my reasoning on this phenomena:
- Banking- Lenders are requiring higher down payments on homes that exceed the conventional loan limits. In the mid-range, purchases that exceed the FHA limits are less difficult, but still more costly than FHA loans. Homes being sold below the FHA limits are very easy to purchase. And the rates are fantastic.
- Investors are Returning- Depending on your news source, there are those who feel that the market will bottom sooner in Phoenix than in many other areas. This way of thinking follows a certain pattern- our market has been bottoming longer than most other metro areas of the country- especially those that don't enjoy population growth. Arizona also has tended to recover sooner than other states (again... population growth being a factor). So... there are many who feel that history will repeat itself. Such talk is up for debate. Regardless- make no mistake about it- it's becoming easier to find properties that produce positive cash flow.
- Unbelievable Low End Pricing- There are many homes being transacted at prices well below construction cost. The home my clients purchased last week is being bought for one-third of 2005 pricing. When you can buy a home for $70k that was purchased 13 months ago for $210k ... well... that's hard to pass up... especially when current rental rates are nearly $500/month above the mortgageable amount on the property.
So... while the traditional market is still in a lull, the low end business is brisk. If you're searching for Phoenix area properties, I'd love to discuss this in greater detail.
Chuck Willman is an agent who specializes in the Phoenix metro area market.
Photo Credit: "Hurry Up!" by Melanie Kuipers