There is a big debate going on (well less of a debate and more of a conundrum) about Phoenix home prices. Are they actually falling as many media outlets report or are they, on the contrary, rising? If you talk to leading economists from Robert Schiller (half of the Case/Schiller duo) to your local college economists you hear that home prices (everywhere- not just in Phoenix) are falling fast. The Bears are telling of doomsday scenarios in which home prices fall for years to come amid dismal hiring reports and a lack of consumer confidence.
However, in the hour or so it took me to start my research and type the previous 3 sentences, my phone rang no less than 4 or 5 times with buyers/agents inquiring about prices and other info on my already under contract listings in the Phoenix area (we’re talking about 3 separate listings, 2 of which are lender-owned, and the 3rd is a short sale). One of those callers made an appointment to see the under-contract short sale home, OK with the fact at best he’d be able to make a back up offer on the 1BR/1BA condo in a nice part of Phoenix. The out-of-town, 2nd homeowner said, “I keep hearing how bad the market is, but we put our 2 bedroom condo in Scottsdale on the market and got an offer in 3 days.” He went on to say, “I’ve spent the last 5 days calling on other places because we want to downsize and I’ve called no less than 100 listings. Most were under contract- maybe 1 or 2 were actually available”.
How can this info be so contrary? Well, the first rule of real estate is: Location, location, location. What happens to Phoenix home prices may not be the same for Los Angeles, New York, Chicago or Dallas.
In Phoenix, as I’ve posted in recent blogs, I’ve watched most of my listings this spring go in days for as much as $10K over asking (according to that buyer’s agent “just in case, to avoid a multiple offer situation”). I had a listing in Tempe under contract for $1,000 below asking fall out due to the buyer’s inabilty to obtain financing. Within a few days of the change in status, I had multiple full-price and 2 over asking offers.
Phoenix area home prices here appear to be rising slightly, or at the very least staying the same. Over time, if you have an abundance of listings and those listings all start to sell. As buyers jump in to take advantage of “falling prices” or “falling rates” (Freddie Mac and multiple other news outlets are reporting today that the 30-year fixed mortgage rate is the lowest it’s been for all of 2011 at 4.49%), when those listings go and there aren’t many more available, simple economics says, prices will start rising.
I’ve been searching for investment properties for various clients over the last 6-12 mos and have many people say to me, “if you see a deal… (Phoenix area homes with a price typically under $100K) please send it my way”. I really haven’t seen an abundance in quite some time. And the ones I’m seeing are probably priced “appropriately” for the horrible condition and/or location. We are clawing our way one scratch at a time for most “deals”, and sweating every step until it closes. The remaining buyers I’m working with are seeing “falling” prices evaporate into thin are and start rising to be “ridiculously high” then watching with mouths wide open as those “ridculously high” priced listings go under contract and sell for full price…
The single best advice I can give to any buyer in Phoenix (or anywhere) trying to take advantage of falling home prices in this uncertain market is to target your ideal home and look at the SOLD prices today, but then ask for those same reports of what comparable home prices (again SOLD) were 3 mos. ago and compare those numbers (a trend). Then make your own determination of whether home prices are falling or rising. You have to be pretty realistic here. If you really want to buy, you have to pay attention and know what your strategy is. If you have time, take it, but make sure you periodically check the data and see how it’s changing so you can adjust your plans/goals accordingly.
My opinion is that some of the home prices in Phoenix that are falling are primarily due to unrealistic sellers who are pressured to sell and have to get in line with the market . The price isn’t really “falling” if it was over-priced or priced incorrectly to begin with. Knowledge is your best tool and where you think you need help talk to a local Realtor who really actually can back up whatever they are saying with numbers- you don’t have to look far. So whether prices are falling or going up, there is still opportunity, it might just be wearing a disguise.
Happy house hunting!