What's Going On In The PHX Real Estate Market?

For months, some people have been attempting to manifest the real estate recovery by saying that the market is great, regardless of if that was actually true. So, let’s begin with some facts to determine what has been occurring since the new year;

THE REAL ESTATE MARKET IS IMPROVING IN MARICOPA COUNTY. Since January, sales have steadily increased by 18.50% per month. Additionally, the inventory of homes for sale is down by approximately 10%.

INTEREST RATES ARE GOING UP. Strange as it may sound, this is a good thing. Here’s why; When interest rates rise, a group of buyers falls into a lower price range of homes. With fewer buyers in that target price range, another change takes place. Sellers drop their asking prices and more homes become available for sale. The buyer now has more homes to choose from and can make offers at a less frantic pace. In other words, the buyer has more control. This is GREAT for first time buyers.

Our biggest obstacles to furthering improvement are oil & energy prices and rising foreclosures. A trend we’re seeing is the “buy & bail” strategy. Home owners who owe more than their house is worth are buying a new home for a lower price with the intention of leasing out their current home. Once they close on their new home, they stop making payments on their old mortgage, leading to the inevitable foreclosure. There are serious negative side effects to be considered;

1) Your credit report will take a MAJOR hit when you’ve had a foreclosure. Your ability to obtain a new mortgage will be put on hold for at least 5 years – that’s how long you’ll have to wait for a new mortgage.
2) The interest you’ll pay on other debt, such as credit cards and other consumer loans will also increase.
3) Your neighbor’s homes will lose more value when your home goes into foreclosure.

Sometimes it’s easier said than done, but you should exhaust every option before resorting to letting your home go back to the bank.

As always, should you have any questions, call me – Brian Yampolsky at 602-912-0222 and I will be glad to help you find the answers to your mortgage questions.