Signs of health in the real estate market in Phoenix

Signs of health in the real estate market in Phoenix

Signs of health in the real estate market in Phoenix During this year, the rapid rise in real estate prices in Phoenix that citizens have been looking forward to has finally happened. This is a sign that the housing market has re-opened. The median price of homes in the greater Phoenix area has increased 30% in the past year. The number of homes available for sale is at a six-year low, with many homes receiving a flood of offers, many from investors. These conditions may seem similar to previous housing bubbles, but housing analysts say the situation is completely different. The housing boom in 2005 and 2006 was driven by investors. The median home price surged by 50% before plummeting by 65%. But in the recent market, many facts show that the price rise is well-founded and will not be another round of bubbles. For example, credit qualifications strengthen, as prices rise, investors decrease, and traditional buyers and sellers become the main body of the market. One thing that immediately proves the housing market isn't overheated is that the median price of a home in Maricoopa County was less than 1 percent in June. This is due to a shortage of homes on the market, which is driving prices higher and has begun to discourage many investors from buying. If the supply of homes for sale begins to increase, pent-up demand could still push home prices higher at a modest pace in the coming months. "The housing market is healthy and not overheated," said Mike Erkel, a real estate analyst at Arizona State University's College of Business. Unlike the market during the housing bubble, buyers and sellers are trading on different types of homes. Few buyers these days can meet the loan requirements, and most sellers owe the bank too much money instead of making money from selling their homes. During the real estate bubble, there were almost no market restrictions, home loans were very easy, and there was no assessment of borrowers' ability to repay, which made the market completely out of control. Most investors put down very little cash or even put down no cash to buy a house. These facts lead to the final collapse of cash flow. During the bubble period, housing prices rose by 4% to 7% per month, and almost no houses went bankrupt. From February to May 2012, housing prices rose by approximately 5% per month, and began to slow down in June. Olcay said the increase in Phoenix home prices is driven by investors buying lower-priced homes. That doesn't mean all homeowners are seeing an increase in home values. Instead, most homeowners see a 10% to 20% increase in home value. All the current hot spots are based on low-cost housing. In the past two years, low-cost housing has dominated the entire market, accounting for 75% of the market in 2009. In contrast, during the bubble it was new homes that captured most of the market. The investor market in August 2011 was for homes under $112,000. Although Phoenix real estate prices have risen over the past year, the median price of a home purchased by investors is $146,000, which is equivalent to the pre-bubble price in May 2003. The Difference of Investors What's causing Phoenix real estate prices to rise right now is a large number of investment firms and small buyers paying cash for bankruptcies and short-sales properties, and they're all long-term investors. During the housing bubble, most investments were made with loans. When they saw that real estate was failing, they left with almost no losses. As prices rise and there are fewer bankruptcies, there will be fewer investors, but the homes they invest cash in will be more stable. More Signs the Market Will Recover Traditional home sales will be tied to the market's recovery. Because market demand will continue to rise in the coming months. Most houses bought before 2003 will have the opportunity to make money and be put on the market again. 30% appreciation this year is unsustainable....but home appreciation will continue because the demand is still there. For more information about real estate, please contact Tinna of Goldtrust Realty (480) 287-0180 E-mail: Goldtrustrealty2010@gmail.com