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Viable Investment Opportunities Return to Phoenix Real Estate Market!

The Phoenix real estate market has finally softened sufficiently that we’re starting to see investors flow back in. I receive emails and calls daily from different types of investors, most of whom are far more sophisticated than the ‘day-traders’ who are partially responsible for the super-heated run of 2004-2005.


A few interesting dynamics to note:


-As lenders take back more and more properties that fail to sell at auction, some large investor groups have amassed huge funds (up to $100M) to acquire ‘bundled portfolios’ of properties at pennies on the dollar. Indeed, some believe that ‘the small guy’ will be crowded out of the foreclosure market as banks continue to bundle and sell off their REO portfolios.


-One Business Week report estimated that more than 50% of all mortgages taken out in Maricopa County in 2004 and 2005 were interest-only, which has very interesting implications on our housing market in the near-term.


-Tightening lending standards were the X-Factor that most didn’t think would happen as quickly as they did. A few weeks ago, lenders called agents in my office and encouraged them to get their buyer-clients re-qualified and to obtain backup approvals for those under contract. A buyer who qualified for a program days earlier could suddenly find they no longer qualified for that program, or that the program went away altogether.


-None of the last several properties that my team has sold hit appraisal. Falling prices have trickled through the system so that the historical comps that appraisers utilize don’t support today’s sale prices. Expect this to become a more significant issue as more and more short sales occur.


-We’re starting to see properties come up for sale that could be cash-flow positive rentals, which has not been possible in Phoenix for years, and is quite exciting to those investors who are bullish on Phoenix in the long-term. Indeed, Phoenix real estate and Scottsdale Real Estate are ON SALE!


It’s worth pointing out that this is a great market for anyone who’s looking to ‘move up’ (that is, sell a home and purchase a higher-priced home) or simply to purchase. The ones who are the most adversely affected are those who purchased since 2005 and, for whatever reason, *need* to sell today. Fortunately, that’s a small percentage of homeowners.


The fact is, homes ARE selling…they just need to be staged better and priced lower than other homes in the community.


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