Houston, we have a problem!
by: Payam Raouf, Associate Broker
There is no rim or reason what the market will do these days. You put a house for rent for $1200, it rents for $1500. You think you can get $1500 for this other one for sure, it brings $1200.
A house in El Mirage brings multiple offers and goes for $10,000 plus over the asking price, A similar one in a much better neighborhood in Surprise, sells for $10,000 less!
Oh, before I forget, I am approaching 50, Big banks are now renting their foreclosed inventory. Bank of America has been in it for a while, Chase is to follow and I heard Freddie Mac is taking applications from Property Management Companies.
In the rental market we see larger homes 2000 to 3000 sq ft, with extra amenities and preferably a pool in desirable neighborhoods flying off the shelves for few hundred more than the actual market price. Furnished rentals with two or three bed rooms are renting quickly as well. On the opposite end, the less expensive inventory need a lot more marketing to rent. We are talking about the 3 and 4 bed room homes in the outskirt of Phoenix. Condos only if they are in good neighborhoods and have tons of amenities, other wise it is a very tough market. Small cheap apartments, forget about it! You have to get really creative on those to rent.
First time home buyers are leaning more towards new homes in good neighborhoods where prices have gone down substantially like Stetson Valley, North Phoenix and Surprise.
As the result investors are now focusing more on the $130,000 to $200,000 price range in more established neighborhoods with better school districts, staying away from the small 3 bedroom homes, condos and apartments. The rule of thumb is, you should get 1% rent of your purchase price per month. For example: If you pay $150,000 for a property, you should get $1500 a month for it to make sense.
We also see a lot of buyers from the East Coast and Canada buying homes here now to move into when they retire. Prices went up by approximately 3 to 5 percent from November 2009 to February 2010. It seems they are going side ways in March.
My recommendation is:
if you are a seller, wait if you can.
If you are a qualified first time home buyer, get on it today and close before April 31, 2010.
If you are an investor, take it slowly, do not rush. find the right property. You a have 90 day window till the dust settles. BACK TO , LOCATION, LOCATION, LOCATION.
If you are a tenant,
Find the right property that fits your life style for the next few years. Ask your Realtor to check the foreclosure status of the property and secure a long term lease as the rents are going up.