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Those areas were never desirable before the boom and only were built up because of cheap land to build on and speculators to sell to. There is nothing out there.
I'd like to see statistics showing the ratio of investors (failed flippers 2.0) and people who plan on actually locating there with their family. I just don't see a 4000 square foot stuco box planted in the middle of nowhere and surrounded by failed developement as being desirable at any price.
For the person who is buying to sell "when the market turns around" the cost of maintainance of such a huge empty house will certainly cut deep into the bottom line. If and when the market does turn the flipper will then be selling house that has sat empty for several years competing with new builds.
So, while it may be true that those areas are seeing sales, I don't find it as a sign of a rebound toward price recovery. To me it seems like a sign the bottom is not in sight because these fools have forgotten how the market was overpriced and fueled by easy credit. A bottom appears when even the stupidest speculators no longer believe they can flip real estate for easy money.
I don't have statistics for QC Pinal County. However, for QC Maricopa County, the last month sales were 14.5% to investors according to the county record land use statements.
Phoenix in February was 32.7% investors.
I don't think there are many 4000 square foot homes in QC.
A lot of people like Queen Creek, and move there because it is more rural and is up against the San Tan Mountains. Many just like the rural atmosphere.
I think the people buying to live there today are buying because they like the area, don't mind the commute, and find the homes very affordable along with the very low interest rate.
Every individual sees things differently and has different needs.
The investors today are not the speculators of yesterday. There is no easy money today. The investor needs to know what s/he's doing. If the investor is experienced then it's a great time for them.
One of my friends who owns a property management company is buying 3 homes per year starting last year.
A neighbor owns two homes in QC that he bought during the last 6 months. They are both rented with cash flow.
The investors today are either doing like I'm doing, which is buying very low and wholesaling, or rehabbing and retailing. In the case of wholesaling, the property is sold to a rehabber within days, and where I rehab it, we get it sold within 30 days after rehab is complete. I only hold a property if I know I can rent it right away and have good cash flow. I have two like that.
So, an investor today must have experience, or work with someone experienced, and have a couple of exit strategies determined prior to making a purchase.
Also, the typical landlord type investor is not going to be buying a 4000 square foot house, because it won't be cost effective. They want a 3 bed room 2 bath 2 car garage that will rent quickly. They are not going to let it sit vacant.
I think it's too early to tell if the sales increase and the slight price increase in QC will be sustainable. The price increase was more of a flattening out, and for a relatively short period.
I agree with you that it is something that we have to watch to see how the trend plays out.
I don't think there are many 4000 square foot homes in QC.
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There are quite a few with huge lots. I looked at the area and the access in and out is very limited from what I remember. If there was an expressway to the area I could see it as much more desirable.
The rental prices seem to be holding pretty steady right now but I wonder if that can last if with the latest wave of foreclosure purchases coming up for rent. Again I look at everything as an anxious buyer. Fear and greed drive markets. Right now fear is my position. Of course the fear of the greedy of missing the next big boom is always a factor and while I see a lot of turmoil ahead those who are trying to catch the bottom could be responsible for an uptick in sales. At least if they are wrong this time they have less to lose if prices drop another 20%. For me though I can't afford to lose my down money. My caution has thus far kept me from losing anything in my retirement accounts. I'd rather risk a few percentage point gains on paper if I'm wrong and buy now than loss to my actual funds. Of course not everyone is as prudent as I am. For example I would have never bought into the boom areas with a loan payment greater than I could afford after two or three years.
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For example, the record number of foreclosures in the pipeline can not be accounted for in this way. Also, when sales rates peter out in mid-summer or so (as they historically do), the number of "months supply" simply goes up.
Just to comment on the foreclosures:
There will be considerable overlap between the Notice of Trustee Sale properties (foreclosures in the pipeline) and the Short Sales on the MLS.
Also the Notice of Trustee Sales include commercial, raw land, multi-family, etc. - not just residential properties
The short sales on the MLS may not have received a foreclosure notice, so they are already on the mls when the NOTS is sent out..
Sometimes the bank will agree to a short sale before starting the foreclosure process.
The pre-foreclosure numbers include bankruptcy cases, where the court appointed trustee may have cancelled the foreclosure
What this means is that if we have 48,000 residential mls Active listings plus 30,000 Pending trustee sales, we do not have 78,000 potential Active listings.
That's because many of the 30,000 pending trustee sales are raw land, multi-family, and commercial properties, in addition to all the Short Sales that are already listed on the MLS.
Regarding sales:
There are many sales occuring that are never on the mls.
Wholesalers buy at trustee auction and sell directly to investors -not on the mls
Rehabbers sell properties direct to their buyers list - not on the mls.
Short sales. There are many companies who buy short sales, that need a lot of rehabbing, at deep discounts, and wholesale them to their buyers list without going through the mls. They have a pool of buyers just waiting for the telephone call.
A company that I associate with in Connecticut has bought and sold over 500 short sales and only a few of them have been sold on the mls. The same occurs with that type company all across the country, including the Phoenix area.
Auction companies. This is becoming a big business. Most of their sales are not showing up on the mls.
Bank home bulk sales. Buyers with $5-$10million buy in bulk and sell very cheap, with neither sale on the mls.
I have a contact that markets these homes, but they don't have any in the Phoenix area yet.
There are quite a few with huge lots. I looked at the area and the access in and out is very limited from what I remember. If there was an expressway to the area I could see it as much more desirable.
The rental prices seem to be holding pretty steady right now but I wonder if that can last if with the latest wave of foreclosure purchases coming up for rent. Again I look at everything as an anxious buyer. Fear and greed drive markets. Right now fear is my position. Of course the fear of the greedy of missing the next big boom is always a factor and while I see a lot of turmoil ahead those who are trying to catch the bottom could be responsible for an uptick in sales. At least if they are wrong this time they have less to lose if prices drop another 20%. For me though I can't afford to lose my down money. My caution has thus far kept me from losing anything in my retirement accounts. I'd rather risk a few percentage point gains on paper if I'm wrong and buy now than loss to my actual funds. Of course not everyone is as prudent as I am. For example I would have never bought into the boom areas with a loan payment greater than I could afford after two or three years.
You're wise to be prudent, and it's obvious by the current trend that the prices are still declining in the valley. The small flattening out is currently limited to QC because their inventory got so low.
By watching the statistics, the economy and the interest rates, I think one can get a good feel for when things are beginning to change.
Access is a real detriment to QC at the present time. Another negative to me is the fissures in the area. That shouldn't bother me, having lived in the Bay Area for around 40 years with the earth quakes, but it does. So I won't buy investment property out there.
"When you compare the current month number with the previous years number, then you are comparing numbers within the season, so that you know what's happening year over year."
Yes, but I have seen you make conclusions like Exurb A, Arizona has a 4.8months supply right now and that will eventually lead to price increases there. But as foreclosures pile up and "buying season" goes away, the "months supply" likely increases dramatically in Exurb A. Or are you suggesting that houses will sell at the same rate in Fall and Winter, as in April? Or will the current record pace of foreclosure filings yield far fewer foreclosures?
=azjack;8212256 Yes, but I have seen you make conclusions like Exurb A, Arizona has a 4.8months supply right now and that will eventually lead to price increases there.
Price increase is a natural follow up to lower supply and higher demand
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But as foreclosures pile up and "buying season" goes away, the "months supply" likely increases dramatically in Exurb A.
I'm not sure about "dramatically". But as that happens, compare it with last year same month to see how the trend is continuing.
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Or are you suggesting that houses will sell at the same rate in Fall and Winter, as in April?
I didn't suggest that. We all know the seasonal pattern.
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Or will the current record pace of foreclosure filings yield far fewer foreclosures?
There are a lot of plans in place to curtail the foreclosure rates. I don't know what they will yield. I look at the numbers as they happen and am trying to keep track of the progress.
I just received this email discussing the new HUD incentive programs. Haven't digested it yet but thought I'd post it here for discussion purposes.
A HUD home is a 1 to 4 unit residential unit that HUD has taken back through foreclosure on an FHA insured mortgage. The home did not sell at the Trustee Sale so HUD becomes the property owner and places it up for sale.
Anyone can buy a HUD home if you have the cash or can qualify for a loan.
HUD Homes are first offered to buyers using the home as their primary residence.
After the priority period for primary residence buyers, they are available to all buyers, including investors.
“The Department of Housing and Urban Development ("HUD") has a new buyer's incentive program which recently went into effect allowing home buyers to purchase a HUD homewith only a $100 down payment under certain circumstances.(Guidelines attached above)
The $100 down payment HUD program allows people to buy homes in which they plan to live, using an FHA loan. The government is waiving their standard down payment requirements in order to sell their HUGE inventory of foreclosed properties.
Closing costs, homeowners insurance, property taxes, and even repairs can all be financed using this special federal purchase-money loan program. The loan amount may go up to 110% of the homes "as is" appraised value. The appraisal is provided by HUD, which is another benefit of this program. The buyer doesn't have to pay for an appraisal, so there's virtually no chance the appraisal will be challenged in underwriting. So again the only amount needed to buy a new home is a $100 down payment!
HUD has also initiated a special $1,000 sales allowance paid at closing to owner occupant purchasers on full price HUD homes. The government currently has a large inventory of homes available qualifying for this special, limited time program, in cities all over Arizona - Phoenix, Scottsdale, Tempe, Gilbert, Glendale, Chandler, etc.
FHA 30-year fixed interest rates are at an all time low. First-time home buyers (individuals not owning a primary residence within the previous 3 years) are able to receive an $8,000 tax credit on their taxes! To qualify for this credit in 2009, buyersneed to close on the home before December 1st 2009!!!
Here is a Q&A of FAQ’s:
Q: Which properties are eligible for the $100 down payment incentive?
A: Any property listed as available for FHA financing (203B, 203B with repair escrow and 203K) on the effective date of 11/23/07 will be eligible. However, the purchaser must be an owner occupant to qualify and the full price offer must be accepted after the effective date. Properties with an accepted offer or currently under contract will not qualify.
Q: What is a “full price offer?”
A: The current list price is a full price offer, even if the property has been price- reduced. HUD will still pay up to 3% of the list price for closing costs and up to 5% for the selling agent commission. This is a great opportunity for buyer’s to purchase a HUD home at a reduced price and with an affordable down payment.
Q: Are properties listed under special programs available for the $100 down payment incentive?
A: Properties sold under the Good Neighbor Next Door Program currently have this provision if FHA financing is used and are also eligible for the $500 Selling Broker Bonus if FHA 203K Financing is used. Offers accepted under HUD’s Nationwide Sale to Disaster Evacuees (FEMA) and Non-profit Purchasers are not eligible.
Q: How long will this incentive program last?
A: HUD has not published the length of time these incentives will be offered.”
We've been looking in the $300K - $390K range and these houses once sold for an upwards of $650K (West Valley area). Since I am not one to make impulse decisions, I never just make an offer without really thinking about whether or not I really want the house. My "dream house" got swept from under me for this reason. I've noticed homes in this price range aren't exactly just sittin' around like the more expensive or less expensive homes. Since $390K is about as much as I really care to pay for a house, I think we have to lower our standards a bit and shoot for a "house we like" rather than a "house we love".
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Many Foreclosures Duplicated in MLS Listings
I've noticed homes in this price range aren't exactly just sittin' around like the more expensive or less expensive homes. Since $390K is about as much as I really care to pay for a house, I think we have to lower our standards a bit and shoot for a "house we like" rather than a "house we love".
