Archive for December, 2010

WHY BUY IN ARIZONA?

Why Buy Homes in Arizona?

I was on vacation in California last week for the holidays. During my trip, I spoke with a California native who thought that now is not the right time to buy real estate in Arizona because the prices continue to drop and the inventory of homes is high.
It is easy to conclude in this manner specially for anyone who’s business is not real estate. But for someone like me, who breathes real estate and tracks the market, this conclusion is one to belittle.
First, the inventory of homes in Metro-Phoenix averages a 5-6 months supply which is considered a healthy market by real estate standard. Second, The Cromford Reports that there are currently 16,463 homes under contract ending November 2010, a very healthy number for the season, and although this is down from 17,859 at the same time last year, it is more than double the number we saw on November 29, 2008 (7,064) and almost four times the number we measured on November 29, 2007 (4,629). Demand has definitely rebounded from the slump over the summer and is particularly strong from landlords buying homes to rent out to people who no longer have the credit to enable them to purchase. Third, Interest rates are very low, prices have declined anywhere from 85% to 40% from the peak. This is worse than the time of the “Great Depression.” Many homes are priced below building cost and it is easy to generate positive cash flow for those whose strategy is buy and hold. This brings me to the question, How low will it go? The answer is, dependent on the balance of demand and supply. Because the prices are at its lowest, demand picks up and supply scales down.
I anticipate continued buying as investors are realizing the gain in investing in today’s Arizona real estate market. If you have cash sitting, it’s time to carefully consider investing in Arizona. Unfortunately, you don’t hear media talk about multiple offers on homes in Phoenix. Neither do you hear media talk about buyers who have to go through several offers prior to closing on a home due to competing bids. Surely, once media talks about good things about real estate, people are likely to jump in. I just hope it’s not too late when that happens. The public usually reacts slower by half a year to the real estate market because much of what they hear is from the media whose sources may not have the most updated figures.

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December 29, 2010 at 10:21 pm Leave a comment

Arizona Sues Bank of America

by: Maria Hass

The Dec. 18, 2010, edition of The Arizona Republic reported that the Arizona State Attorney’s office is filing suit against Bank of America for wrongfully foreclosing on many homes.
What are the positive and negative consequences of this action?
Positive:
1. Homeowners whose lives and futures were destroyed by the alleged “wrongful” foreclosure of their homes may see justice served. Although we don’t know how this case will end, at least these people now have some hope.
2. Lenders who foreclose on homes will be more careful about working within the guidelines allowed by law.
Negative:
1. This legal procedure will likely cost “average Joes” lots of taxpayer money.
2. This action may prolong the housing recovery if foreclosures are halted. The inventory of foreclosed homes increases and once they are dumped onto the market, it could cause further declines in home values.
Unfortunately, the government has not done anything effective to help homeowners truly save their homes for the long-term. It is hard to understand why the Obama Administration bailed out the lenders instead of the homeowners.
The actual solution is simple — allow homeowners to refinance their homes based on current home values, not the values of the boom years. Doing this would mean homeowners will no longer be upside down, will have equity in their homes and will start spending to help drive the general economy forward. Done correctly, the result would be a quick recovery for the housing market.

December 21, 2010 at 7:31 pm Leave a comment


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