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

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.

Entry filed under: Arizona Real Estate, Chandler Real Estate, Foreclosures & Short Sales, Phoenix Real Estate, Real Estate Deals. Tags: , , .

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