Phoenix metro housing is on steroid. Take refuge! 7 to 9 percentage mortgages are around the corner.

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Payam Raouf
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Phoenix metro housing is on steroid. Take refuge! 7 to 9 percentage mortgages are around the corner.

It is very uncertain where the world is headed to but one thing is certain the interest rate will continue to go up and dollar will lose ground against most international currencies. When? It depends on too many factors but it is not that far off. As the result, home sales are coming to a halt. No one wants to sell except new home builders dumping their standing inventories offering incentives unheard of. They are almost done with that as well and some are even daring to release new lots! They have shareholders to answer to.

Meanwhile 7 to 9 percentage mortgages are around the corner. Debit ceiling crisis solved or not, more government borrowing at higher rate means someone has to hold the pan, the tax payers.

The fact of the matter is everyone is passing the buck onto the next person. My Gosh, if you own a business or not how many phone calls do you get that says, here is how we can “SAVE YOU” more money? LOL. I mean, everybody is trying to sell you some sort of SERVICES, all commission based.

What I am trying to say, household income in Phoenix metro seem to have doubled in the last 5 years. Everyone has two jobs and no one seems to be complaining about the higher cost of living. Certainly, I do not hear that from our tenants! They are pretty numb to it. Of course, the last three years landlords have increased the rents by almost 40% and this year they are giving the tenants a breather by either keeping it the same or raising it by 3%.

The seniors are the ones who suffer the most and we are one of the states that have the most of them. They are on fixed income and 10 even 20 percent increase in social security benefits has none or very little effect on their everyday life. Homes in 55 and over communities are having the least increase in price and rent.

Tenants went on rampage last three month clearing up the glitch in the new home standing inventory. Home prices have come down some but last couple of months it seems the resale inventory is moving faster and bringing multiple offers in the $350,000 to $450,000 range.

It’s all now wait and see game.

Unemployment is down, people getting used to the Hyperinflation. An eye for an eye. You raise the price on me, I raise the price on you. It will go on till it all blows up in your face. Even at that I recommend everybody, young and old, investor or renter, BUY A HOUSE NOW, because when it does, you can heat up your entire house with stacks of cash in your fireplace. Cash is Trash.

History will repeat itself but this time it is on steroids. So, if you think ok, I wait, by then you need to hurry to catch up to the next station see if you can get on the next ship and keep going. 

If you are waiting for the government to take care of you, God Bless you all, because Dr. Kevorkian is coming for you!  In 30 years the house you bough now for $500,000 it may be worth $5,000,000 if the dollar is still around.

All I am saying is we are a great nation and we have benefited from our strength for the past 75 years and we are going to stay strong as long as we can hold on but other nations are catching up fast and at the best we need to be prepared. Hope for the best and prepare yourself for the worst.

Gold, Silver, Bitcoin, bonds, stocks or real estate? At least you know a house is there and you can sell, trade or rent it at anytime and price and rents adjust to the rate of inflation . Where are you going to keep your gold and silver? Bitcoin, bonds, stocks, I am too ill educated to deal with things I have no control over. 

Today at 5:41 pm on 5/24/23 there are only 366 detached single family homes, 2000 and newer in the 350,000 to $450,000 range available on Realtor Multiple Listings Services (Flexmls) in the entire Phoenix Mero (Maricopa County) with these criteria: 3-4 bedrooms, 2 bath and up between 1700-1400 sqft with no pool. This seem to be in most people’s budget. 

Let’s leave the dense multi-unit family communities for next blog.

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Please do your own due diligent. Do not make any decision based on my opinion. This is only my personal opinion.  

This is my personal blog and any views or opinion on this blog is personal and belong only to the blog owner and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional and personal capacity, unless explicitly stated. Any views or opinions are not used to malign any religion, ethical group, club, organization, company, or individual.  

We haven’t seen 80% inflation yet. We have not seen 21% interest rate yet. Rental Market Evaluation 4/26/2023 in Phoenix Metro Arizona.

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By Payam Raouf
Designated Broker

We have had it too good for too long. No one wants our money (dollar) any more. We might as well print it on the toilet paper. A box of 8x11 copy paper at Staples was $89 today. We used to buy it for $29 two years ago. I bought the last box on sale for $59. 

We haven’t seen 80% inflation yet. We have not seen 21% interest rate yet. It is not quite around the corner. I have heard from some experts it’s 5 to 7 years away. It is a work in progress and not going to happen overnight.

Saudi Arabia is not dropping the petrodollar yet, but their activity suggests they might be considering other options. Saudi Arabia might be the keystone in the petrodollar too, and if for example, they begin to trade oil in yuan, this may cause a domino effect, and the other members of OPEC might follow suit. 

Homes that are $400,000 now could be $1,000,000 and then $2,000,000 and so on and a $2500 rental will be $5000 and $7500 accordingly by then (2027-2029). 

Of course, average household income will have doubled by then as well and is going to be around $150,000 to $200,000 per year. I look at credit applications all day. Average household income has increased substantially in the last two years and so have the rents. A $1200 rental is now $1700 and a $1700 rental is now $2400 just within the last 2 years and I don’t see most renters having any difficulty paying it.

Folks, I am buying rentals as we speak. I put my money where my mouth is.  That’s how you can keep up with a runaway inflation. Everyone needs a roof over their head. They will find a way to pay.

If I were a tenant, I would get off my butt right now and start looking for a house to buy today.

Institutional landlords are building multifamily and bungalows for rent everywhere you look in phoenix metro area. They want your money and will keep you a renter for ever if they can.

New home builders are literally giving them away.  It was on the news today that you can buy them cheaper than resale. Realtors receive emails from new home builders constantly that they are offering substantial discounts up to $90,000 on some standing inventories and even buy the rate down to make them more attractive. They are in the business of building homes. They sell more houses with less profit they get the same result as if the sell less at higher prices. EX: email from ******* Homes April 14, 2023: Our HUGE incentives will continue through this weekend!!  Please do NOT miss out on ‘up to’ $90,000 incentive :-) WOO-HOOOOOOO!!  

 

Banks are making money hands over fists. Did you see how much profits the bank made in the last quarter? They also go out of business if they don’t give loans. They will find a way to take your money. Don’t worry. Either you are paying rent or a mortgage. It’s your preference.

They say I write this because I am a Realtor and are pumping it to sell more homes. That’s fine I don’t care what they say. I am very blessed with a lot of clients. I am in rental management business. I see how investors and tenants are taking advantage of this market.

There goes not a month that I don’t get a few phone calls from tenants that we are giving our notice to move out, we bought a house and from investors asking where is a good place to buy and what rent they should expect to get.

As of today 4/26/2023 at 1: 52 PM, there is only 515 resale homes on MLS in the entire Maricopa county with 4.5 million residence with the following description: detached single family homes between $350,000-$450,000 with 3 to 4 bedrooms and more than 2 baths , 1700-2500 sq ft, build after year 2000 with no pool. These seem to be the most desirable homes to buy in the valley.

Once the new homes standing inventory runs out the resale home prices will go back up even higher. We have seen a substantual price increase in March 2023 already in Metro Phoenix 

Life is beautiful. Enjoy it and God Bless.

https://finance.yahoo.com/news/home-prices-rose-more-than-previously-thought-in-the-first-three-months-of-2023-202355995.html

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Rental Evaluation

Disclaimer: Please do your own due diligence. This is only my personal observation and opinion. Do not make a decision solely on the content of this blog.

How is the rental Market in Arizona? April 1st 2023. Market is moving fast.

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Payam H. Raouf
Designated Broker
Arizona Property Management & Investments

As I had predicted in the last blog, buyers are back and both the new homes and resales are selling faster than ever! Inventory has gone up a bit but so are the number of homes under contract. New home builders are offering unheard of incentives some over 20% to lure the buyers back in. Incentives are so aggressive that even investors are getting back into the game. I just negotiated an additional $4000 discount on top of the $63000 incentive a new home builder was offering. Deals are to be had. Resales have to compete with new home builders, some are slashing prices by up to 10%, some are offering incentives towards closing costs and buying the rates down.

Tenants are out there buying homes. All they have to do is walk into a new home builders show room, they come out with a signed contract putting their notices in to move out. New homes builders are running out of spec homes.

If you are an investor, it is time to move. Cash here is not trash. It gets you a ton of discounts. Just make sure the builder will allow rentals in that community, some exclude rental for a year some other don’t allow rentals below 6 months.

At the same time, investor friendly resale homes with 3 to 4 bed rooms, 2 baths, 2 car garage, 1700-2300 sq ft, year 2000 and newer and no pool between 350,000 to $400,000 are selling fast. It’s the new home buyers' dream home but again cash talks here too. Cities like Surprise, Peoria, Avondale, Good Year, Glendale, some parts of Phoenix in the west valley are the most desirable areas to buy a house as an owner occupied or investments. Rents in $1800-$2400 are the most desirable rentals. You can get decent tenants who will stay for a few years before they can qualify to buy their own.

We are seeing multiple credit applications on our rentals again. What you have to watch out for is not the credit scores as much as the debt-to-income ratio and the job stability.

Pets are the victim of the rental market. We encourage our investors to buy pet friendly properties. You can charge either extra deposit or more rent per month or both as them leaving a member of their family behind excludes some of your best renters.

If you are buying a new house make sure to look at the taxes and other charges. Even if they impos a special assessment, take that into consideration in the overall picture of how it is going to affect your bottom line.

(what is Improvement District tax? An Improvement District (ID) is a means to provide financing of infrastructure improvements (i.e, water and sewer lines, pavement, sidewalks) by imposing a special assessment on each property within the former district. The process can be initiated by property owners or developers.)

As we speak today 4/2/23, the number of active homes on Realtor's Multiple Listing Services (MLS) between $350,000 to $600,000 is 5,227 and 3,904 are under contract.

Back to rentals: tenants are staying put renewing their leases for one more year waiting for the buying opportunity. Landlords are either reducing the rents by a small margin or keeping them the same and if increase only by less than 3%.

Mortage rates are going down. You are going to see more sellers put their homes on the market as it is bringing the buyers back out. There are so many new spec homes to be had, they will run out fast and we will be back at the resale market shortage again. 

Falling dollar and collapsing banks one after another is another subject for another time. Things don’t look that promising in short. Watch a few clips on youtube you get the idea.  For the time being, it seems investing in real estate is a better option. 

I will keep you posted again by the middle of the April as things are progressing daily! Thank you for reading my blog. 

READERS MUST DO THIER OWN DUE DELIGENCE. THIS IS STRICTLY MY PERSONAL OBSEVATION AND OPINION. 

 

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How is the real estate and rental market in Arizona?

 Payam Raouf
Designated Broker
2/15/23

The Current Real Estate and Rental Market Conditions in the Phoenix Metro Area in February 2023

You don’t have to watch hundreds of videos on YouTube to understand the housing market in the Phoenix Metro area. Just take a look around your neighborhood to get a sense of it. There are not many “For Sale” signs,  just a few here and there, unlike 2008-2011 when nearly every other house had a for sale sign in front of it. 

Whether you are a renter or a landlord, you’re likely feeling the pain of the market. Rent has gone up significantly, so has the cost of acquiring and maintaining a rental property. Most renters are struggling to keep up with inflation, while landlords are passing on their increased costs to tenants, who are working two jobs to make ends meet.

This vicious economic cycle, where everyone is passing the buck continues as the Fed prints more money, causing more inflation and robbing Peter to pay Paul and vice versa. Home prices have come down slightly, but there is less inventory available. Homeowners are comfortable with their mortgage payments and reluctant to sell, while investors are unwilling to sell as they can’t replace it with another tangible asset to hedge against the hyperinflation. 

Qualified tenants, who are fed up with the rent increase are now buying homes, even if it costs a bit more. Three- to four-bedroom homes under $450,000 in desirable neighborhoods are selling quickly, sometimes with multiple offers, as sellers offer incentives to buyers to buy the rate down to lower their payments. As of February 9th, 2023, there are only 6,300 single-family homes in the entire Phoenix Metro area, and just 370 single-family homes between $350,000 and $450,000 with three to four bedrooms and between 1700-2200 square feet available for sale!

On the rental side, evictions are at an all-time high, rental applications are not looking that great, with most applicants disqualified due to high debt-to-income ratios, recent evictions, bankruptcies, and other issues. Landlords are keeping rents consistent or just slightly raising them to keep good tenants in place, as it’s hard to replace them in this market. Homes are also getting older and requiring more maintenance, which has become more expensive, both in terms of material and labor. 

Investors are sitting on the sideline with a lot of cash and with a falling dollar, buying a rental property is starting to make more sense. Investors are keeping a close eye on the market and are likely to get back in soon once prices level off, likely in the 3rd and 4th quarter of 2023. 

My bottom line: whether you’re a renter or an investor, it’s time to buy a house. You won’t regret it in the future. it’s important to do your due diligence before buying a house, especially as schools are becoming crowded and quality of life and crime may be affected in areas where there’s a lot of new construction.  

We offer services to help investors buy, rent, manage, and sell investment rental properties throughout the Phoenix Metro area. If you would like to learn more about our services, please click on the link and let us know. Thank you. 

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