Phoenix Buyers Hesitate On Higher Prices
With no weather to blame, Phoenix area home resales may be running out of momentum. "The Arizona Real Estate Center Tuesday reported that the resale home market declined to 8,735 sales in April 2005 from 10,035 in March 2005, but well ahead of the 7,250 sales recorded in April 2004."
This is starting to sound like a coastal market, just without any water. "And with the increase in sales activity comes the continued hike in the median sales price, up 35 percent from $164,000 in April 2004 to the current $221,000."
A 35% increase sounds a little parabolic to me, but not to Jay Butler, director of the Arizona Real Estate Center. "The ever-higher home prices tend to sustain optimistic growth assumptions about the market, thus, both investors and owner-occupants seem to be buying on future expectations of continued appreciation."
"Butler cautioned that the higher home prices are seriously impacting affordability, especially for first-time home buyers."
10 Comments:
One of the guys that I work with recently took a real estate class.
He paid 6,000 for the class.
They provided him with "leads" to buy four houses in in the pheonix area.
They told him how to do 100% finance on all four house and purchase all houses simultaneously with different mortgate brokers as a "second home".
He has managed to rent the houses out.
Sounds crazy, doesn't it??
Anon,
Do you know if he has positive cash flow?
He has negative cash flow...he says that is OK because he will make money on the sale, which he intends to do within the next six months (bought the houses about six months ago).
Crazy and fraudulent, yeah. (Misrepresentation to lenders doesn't sound like a legitimate investment technique to me.) And that guy will probably make his profit, and he and everyone around him will think he is such a fine businessman. Hope someone drops a dime on him.
I may need more than just a real estate class.
They should also investigate the promoters and teachers of the class for conspiracy to commit fraud.
I read that in the AZ area up to 50% of purchases in the 4th quarter of 2004 were by investors....is AZ really cheap, or is this the third biggest bubble in the US (behind CA and FL)
8:11 anon,
with 35% increases, it won't be cheap for long.
Wait, wait let's do the math.
Say the homes increase 15% in value over next 6 months. After transaction costs I estimate about 15K on each house gross profit or about 60K. Don't forget to tell your friend about short-term capital gains at about 20%, so thats 48K net..... less his 6K seminar investment,that's 42K. Not to mention worrying about mortgage fraud, renting out the places, and running around. Yuk !!! I prefer the .Dotcom bubble, it was so much easier !!!
The guys is also from out of state, flew in and purchased all of the houses in one day. Rents through an agency for a fee.
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