Weak housing market? I don't think so....

[JKnight]

I have no doubt this is specific to certain markets and price ranges. We are looking in the sub-225k arena. I'm sure we would have an easier time in the upper end, but I'm not at that point in my 28 year old life yet. I'm content with that though, as it's really my hobbies and friends that make my life fulfilling, not my house. Plus, I'm ok with trying my hand at household renovation since the Camaro is finished...to some extent.

When it comes down to it though, a significant percentage of the country lives in, and is shopping for, homes that are in the range in which we are shopping. The dollar value of that home will obviously vary by region, as we all know Phoenix's $200k is California's $350k (or more). Given that, I continue to be surprised at the fervor in this portion of the market.

[Vegas69]

I thought the whistle blew and I was off work.

Seriously though, I've been an agent in Vegas for 11 years and I've owned investment property in the Vegas valley and greater Phoenix area. Our markets are very similar with a stronger job market in Phoenix. I've been seeing multiple offers on reasonably price bank owned properties since 2008. Here's where it gets interesting. The market in both areas has continued to depreciate. Here's the problem. For every sale, another 1.xx distress homeowners replaces it. We have been in the 3000-4000 sales per month range for well over a year. That's exactly the same volume we had at the peak of the market. Difference, very few were in foreclosure or in a bad financial hardship at that time.

Will prices continue to decrease? Probably... Here's what I find. You can buy for less outlay per month or close with rates at 4.25% today! We have leased more properties this year than have been put up for rent. Why? All these folks that have lost their home to foreclosure or short sold their home must go somewhere. Also, many like Dave won't jump off the fence. Can't blame him.

The bottom line, it may very well make sense for you to buy now even if the market depreciates. If you lock in a rate of 4.25% now and the market depreciates 10% in 2 years, but the rates are now 6.25%, what cost you more money when it's time to sell?

Which leads me down the next road, timing is everything in Real Estate. How long do you plan to own the house? Let's say you answer 10 years, but in 5 years you get a job transfer or whatever. What is your payment vs. market rent. I can tell you now, you will likely be in the black every month. That is what we call an investment property. Your tenant pays down the principal every month and you pocket a few bucks. You sell when the TIMING is right.

See, that's what everybody forgot about in 2005. Real Estate can't go down in value, I can always refinance, everybody makes a killing. Wrong, you must put yourself in a postion where you can time the market, regardless of economical circumstances.

200k in Phoenix is well above average, unless you are in Scottsdale. My advice is not to get sucked into paying to much. Another one is coming down the pipe. One thing your agent can look for(And you better have a really good agent with a proven track record, if not, fire them and find one of I can)is a pre approved short sale or one that has been approved in the past and the buyer got sick of waiting. Everybody wants to buy bank owned and they go mulitple offer all the time. Especially around median or under. Just be careful and make sure your agent asks alot of questions. If the answers aren't right, move on. Those questions are:

Is the homeowner in default?
What is their hardship?
How many lien holders and which banks?
Are they in the hole every month?
What terms were approved in the past?(If it had been approved)

30% of short sales close due to inexperienced listing agents. Mainly, taking on short sales that don't have a chance.(no hardship) Or they just flat don't know what they are doing and sell the property way to cheap.

[Flash68]

Todd knows what he speaks of. Lots of good info there. (Surprised it took you so long to post on this one Todd. )

Too many people also just want to buy just to be "homeowners" (not saying that is you, Jeff, but just putting it out there). You know, the George Bush "Ownership Society" propaganda.

As Todd said, timing is paramount. The longer your holding period, the less important the exact timing of the buy or sale is. But I like to nail the timing on both ends as much as I can. Being one of, or the absolute, single biggest "investments" of most people's lives, people should do more research and educate themselves as much as humanly possibly on the process, stats, etc.

Best of luck in your search. Patience and time is on your side.

[JKnight]

I appreciate your input Todd. Much of what you discussed fits in with my current thinking. My "plan" is to stay there for at least five years, but it could very well end up 15. We're not looking in Scottsdale. Neither of us care about having a Scottsdale address and the club/bar scene is not important. We're more of the 'build/buy a nice backyard and have the party at your house' kind of people. Maybe down the road for our second house we will be looking for a more upscale Scottsdale locale.

With all that said, your points about the real estate agent and the questions they should be asking has me thinking I'm not working with the right person. I don't get the impression that this lady knows much about short sale/bank owned properties since I haven't heard her ask any of those questions, or provide me with the corresponding answers. I think her lack of comfort with these sales is confirmed by her gently nudging us towards traditional sales.

[JKnight]

Originally Posted by Flash68

Too many people also just want to buy just to be "homeowners" (not saying that is you, Jeff, but just putting it out there). You know, the George Bush "Ownership Society" propaganda.

As Todd said, timing is paramount. The longer your holding period, the less important the exact timing of the buy or sale is. But I like to nail the timing on both ends as much as I can. Being one of, or the absolute, single biggest "investments" of most people's lives, people should do more research and educate themselves as much as humanly possibly on the process, stats, etc.

Best of luck in your search. Patience and time is on your side.

I definitely know a few of those "homeowners", and a few of them are good friends. Part of my motivation to buy is I find myself fixing up the rentals I live in far too often, and am ready to put those efforts into something that actually belongs to me. Not to mention, I could really use the tax breaks!

I've definitely got a lot to learn, but my hope is that I can be patient enough to make a good decision when the time comes.

[Vegas69]

Originally Posted by JKnight

I appreciate your input Todd. Much of what you discussed fits in with my current thinking. My "plan" is to stay there for at least five years, but it could very well end up 15. We're not looking in Scottsdale. Neither of us care about having a Scottsdale address and the club/bar scene is not important. We're more of the 'build/buy a nice backyard and have the party at your house' kind of people. Maybe down the road for our second house we will be looking for a more upscale Scottsdale locale.

With all that said, your points about the real estate agent and the questions they should be asking has me thinking I'm not working with the right person. I don't get the impression that this lady knows much about short sale/bank owned properties since I haven't heard her ask any of those questions, or provide me with the corresponding answers. I think her lack of comfort with these sales is confirmed by her gently nudging us towards traditional sales.

The days of your brothers, friends, buddy that does it part time successfully are long gone. The market is just to complicated to make a living at it casually. If you need a referral, I have access to a list of certified residential specialists along with the RE/MAX roster. All I need is your primary city and I'm happy to do it for you.

[slow4dr]

*sorry for the long post*

Something else I bet Todd could elaborate on is "Shadow Inventory". IMO a 4-5 month surplus of houses is IMO a good amount to have a stable market. If all the houses that are currently in default were suddenly placed on the market we'd probably have a year or more of inventory driving the prices even lower.

I was in the market in SoCal with a similar budget as you just last year. I live in the outskirts(70 miles East of L.A.) so you'd be surprised what $200K can get you out here(since the $200K vs. $350K comparison). Anyway, I viewed over 100 houses and made 30+ offers over the course of 7 months. I used 20 or more different agents during this time too. I started a small database with pictures, listing dates and all pertinent information to track them all. Even though this was my second house I learned much more this time around than I did the first time. I found all the houses myself via Redfin because not one of those agents were very heplful finding what we were looking for. I was browsing Redfin 2-3 times a day trying to find properties.

I was losing my mind because I kept getting outbid and/or equal bids but cash offers. Either that or we'd find a great house but it was damaged in one way or another pushing it out of our price range due to repair costs. After nearly 7 months of stressing out we finally closed on an REO property the day after Christmas. The funny thing is we looked at this house back in the Summer and kinda wrote if off due to it needing all new floor coverings. It kept falling out of escrow so the listing agent sprung for carpet(not my favorite but since it was new I agreed). This situation was the one thing that was very surprising to me was how many houses that I made offers on were coming back on the market months later.

Many of the houses that were bid over asking were not appraising for enough so the financed offers were taking the back seat to cash offers. The absolutely craziest thing to me was in spite of that fact we were still able to buy this house and walk into 19% equity. FHA loan that I was immediately able to start negotiating the removal of PMI.


One thing that I am a little purturbed about is this house was vacant for nearly 300 days. The lawns were trash and I would strongly suggest if you end up with something like this to have the house gased before you move in. I think every creature in the neighborhood had shacked up in there.

My life lesson is to just try and be patient, the right one will come along eventually.


-J

[JKnight]

So it looks like we may have been on the receiving end of some good luck and gotten ourselves exactly what we were looking for. There was one particular house that we loved, but missed out on due to an offer on the first day of listing. In fact, that was part of what prompted me to start this thread. Turns out the buyer who placed the first offer ended up backing out, and we were able to step in.

There were two other offers on the same day as ours, but we sweetened the pot just a bit and the seller has accepted our offer. Now we just need the bank to approve. We've been told the bank is done with all of the "paperwork" and that the hardship (medical) has been substantiated and approved. There is a 1st and a HELOC, so both entities will need to give their approval.

Fingers are crossed, I want this process to be over!

[GregWeld]

Good for you Jeff!


I own a condo in TEMPE (Broadway just off the 101) --- it's worth far less than HALF what I paid (all cash)... so I'll "time" the market by just passing it down to my grandkids IF I ever get any...

In the meantime - I'll use it a couple times a year -- it beats a hotel during Barrett Jackass season...

[Flash68]

Best of luck Jeff!