| |
 |
I was asked a very common question last week and after a considerable amount of thought I replied. It was a good question and, if I do say so myself, I think I had a good answer so I thought I'd share it with you.
Question: I feel that I should wait out the market a few weeks to see if there is any additional decrease in prices. With your experience in the current market, what do you think? Do you think the prices might drop a little more over the next month?
Answer: I understand your concerns and your strategy. The last thing anyone wants to do is buy property only to have the value go down in the following months. One problem with waiting for the bottom of any market is that you have to be coming out of it before you know you were at the bottom and at that point it could be too late.
There are many signs that we are at or near the bottom, but, the experts said we were there in the summer of '07 and '08 and here we are entering the summer of '09 and the market is lower still.
Here are my thoughts: we are at very low housing prices right now especially if we consider where they were a few years ago, and yes, they could still go down but by how much is the big question .
Interest rates are another thing you may want to consider. Interest rates going up can make as much of a difference to your monthly payment as prices going down. I have heard it said that interest rates may be going back up as the economy starts to recover. Of course, that should be qualified by saying " IF" the economy is starting to recover.
As far as the actual values of properties, I think we really could be at the bottom and if not now then soon (maybe over the summer). What we'll see once we do get there is the prices will stay at the bottom for 18 to 24 months, therefore, “ IF” we are at the bottom today and you purchased a property for $200,000, it will be worth $200,000 next year. So, what's the hurry? The only thing I can think of is the interest rates going up and any tax incentives the Feds create. There's already the “First Time Home Buyers” tax credit already in place for people who have not owned a home in the last 3 years but you have to close escrow by November 31 st, 2009. Single people can make no more than $75k and married couples no more than $150k .
A couple weeks ago it was all over the news that foreclosures nationwide and in Phoenix were lower then they have been. What they failed to report is that Fannie Mae and Freddie Mac had a moratorium on foreclosures since last fall and it lasted until March 31st of this year. Now that the moratorium is over, I expect more foreclosures to start happening again. I think they could have an affect on values but I have recently shown homes in today's value for $28k to $350k for single family homes and, I have to say, based on the quality of the home and the neighborhood it was in, I can't see the prices coming down much more. I have also submitted offers for buyers that were out bid, for example, one single family home that was listed for $285,000 got a $350,000 cash offer. Without having run a market analysis I would say the house was worth more than $300k in today's market.
I hope I didn't go on too much, I understand the concern about buying a home today and then it going down in value but, as you can see, it's not an easy question to answer with all the variables involved. In the last 36 years the average price a home increased was a steady 6.4%, and that includes all the ups and downs. We just had a huge up and now a huge down and I think in 10 years when we look back we'll be right back at that 6.4% per year increase or so. If you're plan is a 5 year plan, then I think the value will recover and you'd see a small but reasonable profit even if values go down a bit more but like all investments, there are no guarantees.
There are still many benefits to owning a home. So if you see a place you really like it might be the right time to buy for you and I’d be happy to help. Call me at 602-224-0554 or e-mail me at Chris@RooPhoRealty.com.
Please feel free to contact me with any questions or concerns about the market or go to my website and see my blog and ask me questions there.
Please let me know if you’d like to get this via e-mail and save a tree. Just e-mail me your home address so I’m sure to remove you from the hard copy and I’ll add your e-mail address to the e-mail version of my news letter.
Best Regards,
Looking for a property for under $50k?
There are a lot of single family homes as well as condos on the market now for under $50k. Fannie Mae has a program called Homepath that can help. It's only for homes that Fannie Mae owns and it’s for homes of all prices not just those under $50k. Go to www.homepath.com and put in your desired zip code and price range and there are many properties that qualify. You can also get more information about the Homepath program. Then, you can contact Joey Parisi at Champion Mortgage who can help you with the mortgage. Of course, I'd appreciate you calling "Yours Truly" to write the offer. Joey's phone is 818-742-3404 and his e-mail is joparisi@prospectmtg.com .
Freddie Mac has their own program called Homesteps. In many ways it works the same way. Go to www.homesteps.com for more information. These are both great ways to get a property directly from Fannie or Freddie and from what I’ve seen a good prices. You can contact Shelley Wiggins at (480) 348-3123 shelley.wiggins@ncmc.com for Homesteps help. This may be your only way to finance a home under $50k and it may be some of the best deals on the market at any value. If you find a way to find better prices for the average buyer, please let me know.
Be careful where you buy.
Many of the apartment-to-condo conversions did not completely sell out and the developer has returned to renting. There are still condos for sale by developers but also are for sale by owners who are selling them as a short sale or Banks that have foreclosed on them. I believe it’s a bad investment to buy a condo in an apartment complex. With the future economy uncertain, there’s no telling when the rest of the apartments will be sold as condos or for how much. You could buy one today for $75k and the developer could start selling them next hear for $50k. It’s hard to say and very risky. I’m doing the best I can to keep track of these so if you’re interested in buying, please contact me for more information.
Best Buy – and I’m not talking electronics or TVs
I think your best purchase on the market today is a B. Banks are really starting to deal and I’ve confirmed with a couple Listing Agents that specialize in B property that they are under pricing their properties to get offers in quickly and sell the property. I’ve seen this at least 8 times in the last 30 days. For example, a property is worth $200k in today’s market gets priced at $180k. Buyers are really watching the market so when it comes on MSL they all see it and rush out to view it. By the end of the day, it has sold for $200k. It’s faster for the Bank to under price it and get the bidding up then to over price it and wait 2 to 6 months only to negotiate down. Either way they understand they are going to get about $200k for the property, they just figured out a way to get it faster. Good for them, it’s time to get this homes off the market. Bad for buyers because you have to be quick to get the deal. I just sold 2 homes before anyone else knew they were on the market so we didn’t have to bid up the price. One sold for under asking price and my client is thrilled.
Some interesting numbers
There have been 58 homes in the Anthem Country Club that are over 2500 square feet that have sold since the first of the year. 12 were Short Sales and 31 were Bank Owned and 15 were regular sellers. There are currently 57 homes in the country club over 2500 square feet that are active, 17 are Short Sales, 4 are Bank Owned and 36 are regular sellers. There are currently 26 under contract, 13 Short Sales under contract, 8 Bank Owned and 5 are regular sellers. It might be good to keep an eye on Short Sales but keep after the Bank Owned, they look like they are the ones closing. Banks can close on their homes from 14 days to 30 days while Short Sales are still taking 30 to 90 days. Regular buyers are still faster too but they normally are asking more then the Banks.
AIDS Walk 2009
As you may know, the fight against AIDS is far from over. By now, many people at least know someone in all walks of life that has been directly or indirectly affected by this terrible virus. Please consider walking for AIDS Walk 2009. You can get more information by going to www.aidswalk2009.org.
If you are working with another Realtor, I’m sure they have information that is helpful for you. This is not a solicitation for business.
               
|