Cash Investors Force First Time Buyers Out
We have all been waiting for a real estate pricing recovery for the last few years since 2005 when the prices dropped nearly 50% in Phoenix just in the first year. Well, now it seems we got our wish, but not necessarily the one we asked for or at least not the kind of outcome that is a benefit to buyers.
In the last few months any affordable housing, specifically homes valued under 150 thousand, are seeing foreign investors purchasing those homes with all cash, close in two weeks and some now coming in higher than the asking price.
National Association of Realtors Credits Investors With Home Purchase Spike
A recent article published by Lawrence Yun with the NAR cited that Investors are pushing up market values again:
What does this mean to Phoenix and Scottsdale first time home buyers? Well, from personal experience it means that being able to purchase a home that is within budget may be quickly approaching an end. In the last 2 months I have personally written at a minimum 3 contracts for properties near Scottsdale and Fountain Hills at full price with no seller concessions and we have had those rejected. It generally takes a 4th or 5th try and with a first time home buyer the patience and romance of buying a home can be more than frustrating as they fall in and out of love. This is creating an emotional roller coaster and defeatist attitude of “I may never be able to buy a home now” feeling.
Phoenix and Scottsdale Realtors are feeling the pain
Writing contract after contract and showing more than 20 or 30 homes to one buyer with a purchase price of 150 thousand dollars can take 3-6 weeks before a resulting accepted contract is finally in place. With some of those properties being offered at a very reduced commission, the cost of fuel services and technology and tremendous time invested in writing a contract offer some will look at themselves in the mirror and start asking why they still continue?
That being said, I still continue to work without hesitation. The need of people is so strong in this price point I feel that as long as I have a real estate license I’ll always try relentlessly to give hope where it’s needed and my clients will attest to that.
Phoenix Area New Construction On The Rebound
All is not lost though. New construction is finally taking hold of the market and none too soon. Builders in the Valley are reporting record numbers of people coming through their showrooms and applications to the county for build permits are flooding in. Although one inhibiting factor is that most are pushing the price point above 200k and I anticipate that with the current employment payroll standards providing less that most people need to make a higher payment, we may soon see the 40 year mortgage loan gain ground so that once again people can qualify for the payment.
HUD, Fannie Mae and Freddie Mac Foreclosures Offer Some Hope
All of these above foreclosure sellers have rules in place that prohibit offers from investors being considered for a home they have for sale until a time line of 10-15 days from the date it is listed for sale in the MLS. This can help keep competing cash investor offers from coming in to play and if the offer is fair most will be accepted.
With the continued reduction of available homes in Phoenix it is likely that this will continue to create a problem for the affordable housing market in less that 150k.
Here is a list of Homes For sale Under 150k
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