Tuesday, October 21, 2008

Investors are Flocking to Bargain Homes In Phoenix, AZ

Investors are flocking to bargain homes in Phoenix
Oct. 10, 2008 ~ Special for The Republic

The Phoenix area is hosting a wave of real estate investors like we haven't seen since 2005.

Unlike the novices who came here during the boom, these are experienced landlords. They're here now because lender-owned homes are selling for bargain-basement prices.
They're not alone. Savvy home-buyers are scooping up bargains, too, especially first-time homeowners. Interest rates are still attractive, even if the homes themselves are less appealing.

Interestingly, over the last couple of weeks, many of the lowest priced homes have seemed to evaporate. I'm guessing that October is going to be a banner month for closed transactions.

Yes, most of these will be foreclosed homes, but buyers are performing the liquidator function, restoring the value of underperforming assets.

With so many homes selling, are we nearing a bottom in the metro Phoenix market? It's plausible, if the number of sales meets or exceeds the number of newly listed homes to be sold.

But, even now, around 7,500 homes a month are entering the foreclosure process.
It could be a long time before that inventory is absorbed. And if it comes onto the market faster than buyers can snap it up, prices will continue to decline.

Visualize the real estate market as a pipeline. The home that gets a foreclosure notice today won't hit the lender-owned market for three to six months.

Are there enough investors and other buyers to snap up record numbers of homes, month-after-month, for the next two years ... or longer?

The answer to that question is yes ... if the price is right.

If the demand for low-priced homes already exceeds the supply in the pipeline, prices will stabilize or even start to rise. If not, lenders will be forced to cut prices until buyers find them impossible to resist.

It's an awful time if you have lost your home, and it's not great if you are living in a home you cannot sell profitably.

But if you have cash or can qualify for a mortgage, this is an ideal time to snag a bargain-priced home in the Valley.

To purchase a lender owned home in Phoenix ot the Phoenix-Metro area, visit a listi of REO's For Sale or Lender's Homes For Sale website.

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Sunday, October 12, 2008

ZERO DOWN HOMES & Stock Market Update 10/09/08


Despite all of the government's efforts, markets here and around the world plunged this week as the financial crisis continues to grow.

On Tuesday, the Fed and Treasury Department announced plans to purchase short-term commercial paper that many companies rely on to finance their day-to-day operations, to help businesses with their short-term credit and funding needs. The government hoped this announcement would help ease uncertainty, restore confidence, and give Stocks a boost. They hoped for a similar result on Wednesday when the Federal Reserve cut the Fed Funds Rate by 50 basis points, and coordinated an emergency global interest rate cut with the European Central Bank, Canada, the UK, Switzerland and Sweden. The Central Banks in Asia followed suit and cut their benchmark interest rates overnight as welll.

However, on Thursday, Stocks plummeted nearly 700 points to a five-year low, and on Friday Stocks ended the day another 126 points lower (after plunging 500 points three times throughout the day). Bonds and home loan rates also worsened sharply in the second part of the week, as Bonds dropped below several important floors of support, and home loan rates ended the week .50% higher than where they began.

From a historical perspective, we are in the midst of a brutal bear market that began on October 9th 2007. Remember that a decline of 20% constitutes a bear market...and a 10% decline is a "correction." The last bear market occurred between March 24th of 2000 and October 9th 2002 saw a 49% drop. Overall, the average bear market lasts for 12.3 months, with the average decline being 32%. The current bear market is right in line with the average historical time frames, and the extent of the decline is worse than previous bear market averages, but still slightly better than the bottom made in 2002. So the historical data might suggest that we could be nearing a bottom. I will continue to monitor this situation closely, and let you know how this will impact home loan rates in the weeks and months ahead. One bright spot is that oil prices are also plunging, falling from a high of $147 per barrel last July to around $80 per barrel Friday morning...which at least makes a tr ip to fill up at the gas station slightly less painful.

Forecast for the Week

Last week was a volatile one despite the lack of scheduled economic reports, and this week several big pending reports could add to the volatility...even with the markets being closed on Monday in observance of Columbus Day. Wednesday will bring the wholesale inflation measuring Producer Price Index and the Retail Sales report for September. The Retail Sales report is a measure of the total receipts of retail stores, and changes in these numbers are closely followed as a timely indicator of broad consumer spending patterns. It will be especially important to see what kind of impact the financial crisis has had on recent spending trends.

More inflation news will follow on Thursday, as September's Consumer Price Index (CPI) report, which gives a read on inflation at the consumer level, will be released. CPI tells us how much more expensive goods and services are this month over last month, and this widely watched inflation indicator will definitely make headlines. And given what's been happening in the markets, it will be important to note what's happening in the housing sector, which Friday's Housing Starts and Building Permits Report for September will reveal.

Remember when Bond prices move higher, home loan rates move lower...and vice versa. As you can see in the chart below, Bonds and home loan rates worsened this week, due to a variety of factors. I will be watching closely to see if Bonds and home loan rates can change direction.

Buying Real Estate now, however, has begun to once again improve in certain areas of Phoenix.

Look for a Phoenix area home or a Historic Phoenix home by going to http://www.historiccentralphoenix.com/

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