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Hang in there. Gasoline is heading back toward $2.50+ a gallon, unemployment is going to continue to rise for at least another year, the $8000 credit disappears for anyone making an offer after October 31st as they won't be able to close before Dec,1, etc., etc. Also there was a moratorium on foreclosures the first quarter of the year which held back inventory and interest rates are rising which will put pressure on first time buyer's price range.
Things may be moving in the low end because of affordability and return for rental investors but how much upward price movement needs to occur to make the market unattractive to current buyers? When mortgage payments start to get much more expensive than renting price appreciation will stop. An increase 30 year fixed interest rates to say 6.25% could easily put the brakes on the market at present levels. It would raise the monthly payment but also have a huge psychological effect on people who have become accustomed to rates at or below 5%.
Of course I could be completely wrong and prices could sky rocket. It seems you can never underestimate the average persons ability to behave rationally.
I don't think prices are going to sky rocket. Currently, we're seeing some small upward spikes that are brought on by the heavy demand which is creating multiple offers with many winning prices being above the listed price.
My expectation is that we'll see a general flattening with some upward and downward movement for awhile.
The demand is what I believe we have to keep our eye on. I've pointed out before as I've seen the trend building during the past year of declining inventory coupled with increasing sales, that at some point the demand will exceed the inventory and the prices will naturally have to reverse. That is happening now.
As to the moratorium, and the possibility of increased foreclosure activity, I believe the demand will eat up that inventory pretty fast in the under $300k range. However, we have seen that the $300-400k range is also moving now.
Of course if the prices were to increase too much, the buyers would stop buying. The question is, how much do they have to increase? The prices are below the cost to build, so would they just have to rise to the cost-to-build before people would stop buying?
I'm hearing that there are changes being considered for the $8000 tax credit, and I would look for more government programs to help keep the housing market moving.
Unemployment will be a problem, although I understand that the last numbers were not as bad as were expected.
I believe we need to keep an eye on the items that you mentioned which can negatively affect the market; and we need to keep an eye on what is actually happening daily in the market. By following the trends it's relatively easy to see trends that will affect the market, long before it's affected.
By following the trends weekly I was able to determine for myself that the prices were going to be changing, but I was uncertain as to when that would occur. It happened sooner that I would have projected because the demand, that has been increasing for over a year, all of a sudden mushroomed with the first time home buyers rushing in.
If the house is in the luxury home price range, and/or is highly unique and has no real comps, then it is possible to have that large a difference in price opinion.
So by your comment, maybe I shouldn't totally be p*ssed off at my agent? (yes, i believe it is considered a "luxury" home)
Another winning article from Catherine "Rolodex of Realtors" Reagor.
BTW, the only person she quotes is himself a speculator buying foreclosures. He was bragging in an April article about his recent Queen Creek purchases.
Jack, I wonder why you keep jabbing at realtors and trying to discredit them instead of posting facts, or pointing out where they are in error.
Your attack on Reagor and Orr in this instance is completely uncalled for as it lacks any substance or evidence as to where they may be wrong.
What Reagor wrote in her article was all factual information that can be substantiated. There was no fluff, and no puffing. It was all factual statistical information.
I've been reporting stats from the Cromford Report on CD for several months now and you have not been able to disprove any of the stats that I've reported, simply because they are factual. She simply reported a snapshot.
You don't have to agree with them, but it is unfair to the rest of the CD readers for you to continue to discredit people without using any substance, simply because they are realtors and you seem to harbor a realtor hatred.
I think all of the readers would appreciate it if you could show them where the information is not correct. I would also like to know if they are not correct. But because I study the market daily and the Cromford Report and the ARMLS info at least weekly, I know they are correct.
The person she quotes is Mike Orr who is the President of the Cromford Report. He is not a speculator. He happens to have purchased a rental property in Queen Creek because he recognized the value. There is a huge difference in a "speculator" and a " landlord investor".
The statistical information in the Cromford Report is extremely valuable. The ARMLS recognized the value and licensed the company to utilize the MLS info (in addition to the county records) and recently to make the reports available to realtors.
ARMLS gave all their realtors a free subscription to the end of 2009. I had purchased mine, and got a refund.
So instead of continuously attempting to discredit people, why not focus on the information that they publish and dispute their information with your own facts.
I for one will certainly respect you much more if you stick to refuting the information, and posting your own opinions based on your facts, instead of the continuous bad mouthing of realtors.
If you do some research you'll find that in 2005 Mike Orr was very pessimistic about the market because the trend was showing him that, among other things, the inventory was increasing and the sales were decreasing, while the prices were still increasing. It took about a year for that building trend to reverse the prices with the huge drop in prices that occured in 2006.
Mike Orr is one who knows what he's talking about because his company gathers and churns this information on a daily basis, along with economic information, and naturally knows how to interpret the information and use it to get an idea of what is happening in the market.
So by your comment, maybe I shouldn't totally be p*ssed off at my agent? (yes, i believe it is considered a "luxury" home)
I think you should review the CMA that your realtor provided you, and go into depth in studying the comps that were used.
Ask your realtor to show you how the appraiser may have arrived at the $100k difference. And even visit some of the Actives. If there are some Sold comps, the new owner may allow you permission to visit the property to compare it.
It sounds like you really like the home, so some research time may be worth it to you. If you think the appraiser may be in error, you can show your lender your CMA and ask them to get another appraisal.
I think you should review the CMA that your realtor provided you, and go into depth in studying the comps that were used.
Ask your realtor to show you how the appraiser may have arrived at the $100k difference. And even visit some of the Actives. If there are some Sold comps, the new owner may allow you permission to visit the property to compare it.
It sounds like you really like the home, so some research time may be worth it to you. If you think the appraiser may be in error, you can show your lender your CMA and ask them to get another appraisal.
Is the CMA like the list of sold homes? Yeah, our house was about $15/sqft above the average. I will, however, ask him what you suggested. That's a good question. We do love the house and we're extremely peeved that this happened. I just don't know who we should be mad at.
Let me ask you this: what's the relationship between the County's Tax Assessor's appraisal of the home vs, the sales price? The reason I ask is b'c when we made the initial offer on the house, I looked at the County's webpage and our offer and the assessed value was just over $100K difference. The bank's appraisal came back even lower: $10K lower. I know those two numbers are never the same but is there usually that big of a difference between the County's assessed value and the sales price?
"Your attack on Reagor and Orr in this instance is completely uncalled for as it lacks any substance or evidence as to where they may be wrong."
I have been reading articles by Catherine "Rolodex of Realtors" Reagor for years before you even entered the world of Phoenix RE. I assure you that she has been writing numerous fluff pieces throughout this period, including this one. Read the comments section on the article to see what regular azcentral readers think of her perspective. I recall some "articles" where she let John Foltz endlessly deny that any price correction was coming post-2005. If you are interested in reading her past articles, Google is your friend. But it does not surprise me that real estate agents are fans of her "reporting."
Quote:
"What Reagor wrote in her article was all factual information that can be substantiated. There was no fluff, and no puffing. It was all factual statistical information."
She simply transcribed what Realtor/Speculator Orr (Cromford) told her. Nothing more.
Quote:
"able to disprove any of the stats that I've reported, simply because they are factual."
I have neither the time nor the volition to "disprove" your pastings of Realtor Orr's Cromford reports.
Quote:
"The person she quotes is Mike Orr who is the President of the Cromford Report. He is not a speculator. He happens to have purchased a rental property in Queen Creek because he recognized the value. There is a huge difference in a "speculator" and a " landlord investor"."
Realtor Orr (Cromford) is definitely a speculator. One does not purchase houses in the Queen Creek area of Pinal County with the realistic idea of renting them out in a reasonable period of time. Rental supply there is ample for a reason.
I'm hearing that there are changes being considered for the $8000 tax credit, and I would look for more government programs to help keep the housing market moving.
Being a fence sitter, I would be interested to hear about any details you have on potential changes to this credit. Particularly as it concerns extending the timeframe and/or increasing the credit.
Metropolitan Phoenix's foreclosure home-buying frenzy has caught the attention of other parts of the country.
Some national housing analysts are labeling the Valley's recent upswing in home sales another speculator- driven boom.
But while investors finding bargains on foreclosure homes did help restart the area's housing market in January and February, speculators aren't dominating the scene as they did during the boom of 2004-06.
In April, about 19 percent of all Valley homes were purchased by investors, according to real-estate analyst Mike Orr.
He works with the Arizona Regional Multiple Listing Service and the Information Market to analyze real-estate data daily for the Cromford Report.
During the boom, investor purchases accounted for 35 percent to 40 percent of metro Phoenix's record home sales.
Now, first-timers are the Valley's fastest growing group of home buyers. One housing-market watcher believes first-time buyers soon will account for half of the area's home sales.
..... Now most investors are paying cash. Investors who get financing are required to put down hefty down payments, which they aren't as likely to walk away from.
This is a different housing market, with more conservative investors and mortgages than the Valley experienced during the boom years."
Investors is a key word here - I saw a story on TV that was broadcast on Good Morning America yesterday, it was about a young engaged couple trying to get into their first home, but unfortunately, a real estate investor, who stepped in and paid cash for the house, even though the young couple had already started, and nearly finished the mortgage application process, and they were approved. Now they have to put their marriage plans on hold until they can get a house.
I know there were other factors besides investors that caused the economic disaster we're in right now, but I wish we can keep those greedy investors out of the real estate market to prevent another real estate bubble that will get bigger, then burst and cause another economic disaster in the real estate sector. There needs to be something to stop that and give the average consumers, like the couple I talked about in the previous paragraph, more leverage in the process, than an investor with cash.
Let me ask you this: what's the relationship between the County's Tax Assessor's appraisal of the home vs, the sales price? The reason I ask is b'c when we made the initial offer on the house, I looked at the County's webpage and our offer and the assessed value was just over $100K difference. The bank's appraisal came back even lower: $10K lower. I know those two numbers are never the same but is there usually that big of a difference between the County's assessed value and the sales price?
The short answer to the last question is yes, that's not at all uncommon. And, the assessed values lag behind, too, so it's hard to look at the two values the same way, as one is a current market value and the other is an assessed value from a year or more ago.
The bottom line in all of this is whether or not, one should buy or rent?
You see, the fact is that there is enough out there to attract fence sitters to buy now.
Example:
I am seeing homes (I'm not in the market right now) that once sold for $300-$400K, now priced at $180-$240 price range.
There will come a point at which the money one gives to a renter over the course of 12-24 months, will then reach equalibrium to what they may "lose" if prices start to level off...
The tax savings are another factor; however, it is not advice I am here to give, just an observation...
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RENT or BUY?
