Phoenix Real Estate 101
Truth be told, there are some moments when it feels everything’s been said. And sometimes when that happens, it’s best to go back to the beginning and start the story anew. Chazak chazak v’nitchazeik.
More often that not I find prospective buyers in the Phoenix real estate market are looking less for information than affirmation. The wide world of the Internet has provides a wealth of information for those looking to buy a home and some of it even turns out to be useful now and again, assuming you can sift through conflicting data.
For those wanting affirmation of what they’re reading online, seeing on the national news or hearing at a cocktail party, this isn’t the place to be. Because it’s just as likely that what you believe to be the state of the Phoenix market isn’t really the market.
THE PHOENIX REAL ESTATE MARKET IS NOT STAGNANT
Over the past 30 days, nearly 5,000 homes have closed escrow - that’s just under 170 homes a day changing hands. Inventory of single-family detached homes remains around the 23,000 mark, which means there’s less than five months of inventory of homes for sale here in Phoenix.
Well-priced homes, whether bank owned or traditional sales, are selling every day here. Last week I sent to one buyer a list of homes under $175,000 that should pull at least $1,000 in rent. Several of these homes were under $150,000 and all of these have gone under contract since the e-mail was sent.
THE PHOENIX REAL ESTATE MARKET IS BOTTOMING
This has been the case for nearly a year now … there’s no definitive bottom with a sharp uptick, rather there’s this consistent churning and activity at current levels. Some areas have continued down, others are rising slightly. It all depends on the price range and area in which you happen to be looking.
Homes are not available for pennies on the dollar, unless you’re looking at a dollar in 2006 before the bottom fell out of the market. Low priced homes continue to sell quickly at list price or above. That’s the simple reality.
LOWBALL OFFERS ARE A DIME A DOZEN
It’s quite possible you can find a seller willing to sell for 70 cents on the dollar. It’s also quite possible a meteor might fall on your head and you can end up on Meteorite Men.
The statistics show homes are selling at 90 to 95 percent of list price. Forget the original list price you may see, as all that tells you is the owner’s gotten serious along the way.
Odds are you’re not the only one looking at a given home at any time. And in many cases, investors who spend their days sending letters of intent with stupid-low offer prices (in the 60 to 70 percent range) already have tried to purchase the house. You’re not going to be the first to try and you likely won’t be the last.
THE DEALS ARE IN FRONT OF YOU
In some areas, homes are selling for prices from the early 2000’s. Sometimes there’s even more room the prices can be pushed down for those who are somewhat reasonable in their approach. The so-called smoking deals, homes priced well below list, either sell quickly for list price or more or are the ultimate bait-and-switch, short sales without bank approval.
Want a deal? Roll up your sleeves, get some help and create your own. The base already is there in the decline, the rest is up to you.
THERE’S A REASON THE MEDIAN IN THE MEDIAN
If the median price for a property is $100,000, what do you really think a $40,000 home might look like? I assure you, it’s not going to be a $150,000 home at a near 75 percent markdown. It’s going to be a home that either needs work, is in the outskirts, or both. In short, that home is selling for $40,000 because that’s what it’s worth.
If you’re shopping below the median price point, you need to realize you’re going to be getting below-average quality as well. The price is the price for a reason.
These are just the basics of what’s happening here more. Market stats and more to follow as I get those going again.
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Barely a half-mile away on the other bank of Skunk Creek (I guess I ought to mention, it’s a largely dry creek bed aside from the artificially created lake) is the Eagle Heights in Glendale. There’s one spec home available - a 2,991 square foot, five bedroom layout on a quarter-acre lot for $575,000 - and there are four floor plans in general with base prices ranging from $568,124 for the 2,991 square foot plan to $617,382 for the 3,719 square foot Osprey.
One of my buyers is closing on a home here at the beginning of February and another 10 specs remain ranging from 2,149 to 3,111 square feet and priced at $163,000 and change to $199,000 and change.
