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2010 Phoenix Real Estate Crystal Ball December 17, 2009

Posted by mkuhbock in Arizona Vacation Property, AZ Real Estate News.
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We all try to predict, guess, prognosticate … what is going to happen in the future. Whether it is the outcome of a game, Tiger’s future in golf and divorce court, the price of gas next week, when the economy is going to recover and of course one of the most popular water cooler discussions is the future of the housing market.

I came across an interesting article today titled ‘Foreclosure backlog estimated at 1.7 million’.

What caught my eye were the following facts from this article and other past articles;

  • 1.7 million homeowners were on the verge of foreclosure in the fall of 2009
  • This is up 1.1 million from the previous year
  • Distressed sale properties will flood the market in the next 12 months (banks have held a high percentage of properties off the market to try to mitigate the value free fall we have been experiencing over the last 3 years and will finally be forced to move these assets off their books)
    .
  • 6.7 million U.S. households with mortgages, or about 13%, are behind on their payments or are in the foreclosure process
    .
  • About 20% of owners of single-family homes with mortgages owe more than the current estimated value of their homes, according to Zillow.com, in the third quarter of 2009 almost 10.7 million households had negative equity in their homes
    .
  • Option ARM Silent Bomb: $189 Billion in outstanding option ARMs with $134 billion recasting in 2 years, 94% of the borrows made the minimum payment

My personal observations include an increase in short sale listings and aggressively price properties in fringe communities. I define fringe communities as great places to live but they are a bitch to commute from. I have seen listings for 2000+ sq ft, 4 & 2 or 4 & 3 with granite & stainless appliances, freshly painted, pebble tech pool, nice community with an historic sales price of $350,000 now listed in the high 100’s, which is only the asking price. If you go into a market that is above $250,000+ then it is more aggressive with houses that have been on the market longer. Jump to the high six figure or million plus and you can write your own ticket as it seems that half of Paradise Valley has a for sale sign on the property…..

Bottom line my crystal ball says now is not the time to sell but a great time to carefully observe the market and look at jumping in sometime in 2010.

Cheers,

Michael

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