Crisis Or Opportunity - The Truth About The Arizona Real Estate Market

The current real estate market is acting just since it should on the heels of the greatest real estate boom within the last few 40 years. There's quite a distance to fall to get back to "normal ".This falling back into a normal market, in conjunction with the contraction of the sub-prime mortgage market, has the real estate consumer and many homeowners in a situation of fear. The many media continue steadily to depict an extremely grim picture of the markets generally without distinguishing between the national market and local markets, including the Arizona real estate market, with factors unique in the methods for population growth and investor activity blue world city. I have experienced numerous articles referring to the sub-prime debacle as a worldwide crisis. That may be taking it just too far.

The reality is, there is no geopolitical significance to recent events in the U.S. real estate market and the sub-prime crisis. To rise to a level of significance, an event -- economic, political, or military -- must result in a decisive change in the international system, or at the very least, a fundamental change in the behavior of a nation. The Japanese banking crisis of the early 1990s was a geopolitically significant event. Japan, the second-largest economy in the world, changed its behavior in important ways, leaving room for China to move into the niche Japan had used because of the world's export dynamo. On the other hand, the dot-com meltdown was not geopolitically significant. The U.S. economy has been expanding for approximately nine years, a remarkably long time, and was due for a recession. Inefficiencies had become rampant in the system, nowhere more so than in the dot-com bubble. That sector was demolished and life went on.

On the other hand to real estate holdings, the dot-com companies often contained no real property, no real chattel, and in many cases hardly any intellectual property. It really was a bubble. There is virtual, (pun intended), no substance to lots of the companies unsuspecting investors were dumping money into as those stocks rallied and later collapsed. There is nothing left of those companies in the aftermath because there is nothing to them when these were raising money through their publicly offered stocks. So, just like whenever you blew bubbles as a little kid, once the bubble popped, there is absolutely nothing left. Not so with real estate, which by definition, is real property. There's no real estate bubble! Real-estate ownership in the United States continues to be coveted the world over and local markets will thrive with the Arizona Real Estate market leading just how, because of the country's leader in percent population growth, throughout the entire year 2030.

Are you aware that sub-prime "crisis", we have to take a go through the problem of the national real estate market? To start with, understand that mortgage delinquency problems affect only individuals with outstanding loans, and more than one out of three homeowners own their properties debt-free. Of those people who have mortgages, approximately 20% are sub-prime. 14.5% of those are delinquent. Sub-prime loans in default make up just about 2.9% of the entire mortgage market. Now, consider that only 2/3 of homeowners have a mortgage, and the total percentage of homeowners in default on the sub-prime loans stands at around 1.9%. The rest of the two-thirds of most homeowners with active mortgage prime loans which can be 30 days past due or maybe more constitute just 2.6% of most loans nationwide. Quite simply, among mortgages designed to borrowers with good credit at application, 97.4% are continuing to be paid on time.

Are you aware that record jumps in new foreclosure filings, again, you've got to appear closely at the hard data? In 34 states, the rate of new foreclosures actually decreased. In other states, the increases were minor -- except in the California, Florida, Nevada, and Arizona real estate markets. These increases were attributable in part to investors walking away from condos, second homes, and rental houses they bought during the boom years.

Doug Duncan, a chief economist for the Mortgage Bankers Association, says that without the foreclosure spikes in those states, "we'd have experienced a nationwide drop in the rate of foreclosure filings." In Nevada, for instance, non-owner-occupied (investor) loans accounted for 32% of the most serious delinquencies and new foreclosure actions. In Florida, the investor share of serious delinquencies was 25%; in Arizona, 26%; and in California, 21%. That compares with an interest rate of 13% for the remaining country. This creates some great buys for the savvy Arizona real estate investor in the area of short sales, foreclosures, and wholesale properties.

Important thing: Those nasty foreclosure and delinquency rates you're hearing about are for real. But they're highly concentrated among loan types, local and regional economies, and investors who got their foot caught in the entranceway at the end of the "boom" and are simply walking away from those poorly performing properties. Most of those investors still have homes to call home in, maybe a lot more than one.

In the wake of the boom years, we will have a higher inventory of homes in the marketplace, Investors and speculators who quickly bought up homes dumped them just as quickly back in the marketplace hoping for an easy return. The frenzy of investors purchasing homes put pressure on inventories and drove prices up, further increasing investor activity. Then, like all at once, many of those investors put their properties in the marketplace, creating an imbalance in the reverse direction. With so many homes in the marketplace, prices started initially to stall and then fell. Prices will continue steadily to fall until demand chews up excess inventories.

With investors no more a large element of housing demand, primary homeowners are slowly chipping away at the present inventory. The Las Vegas housing market will rebound in March 2008, according to the largest and most respected appraisal firm locally. The main contributing factor to the prior to later rebound with this southwestern city is an increasing population and thriving local economy.

Arizona and Nevada are anticipated to lead the nation in percentage population growth for another 20-25 years. The population of Arizona is anticipated to approximately double during the period so we can expect a powerful housing demand going forward. Normal inventory levels for Phoenix real estate are about 6-8 months. The current inventory is approximately 10-12 months. So, we are not far above "normal" inventories in Phoenix. You can find, however, outlying cities in this large metropolis that have inventories in excess of 1 year. Queen Creek real estate inventory may be the worst with approximately a 2-3 year surplus of homes in the marketplace, mostly as a result of the large percentage of new homes purchased by investors and then quickly flipped back onto the resale market. Surprise and Peoria real estate markets have a 1-2 year inventory for largely exactly the same reason. We are already seeing some Scottsdale real estate and Paradise Valley real estate prices upsurge in value. Billions of dollars are now being poured into the area economy in the manner of commercial development from the downtown area to Northeast Phoenix and Scottsdale.

The demand for Arizona homes will remain strong in years ahead as new populations create the need. The demand for housing across our great nation will remain strong as this next generation of young debutantes steps onto the house buying stage. Interest rates are still at historic lows and the lending institutions will continue to offer creative financing options. Sure, some hedge funds lost the air in their tires, but financing sub-prime loans is really a high stakes game for the super-rich and are not of geopolitical significance. They'll find alternative methods to lend their billions for huge profits in the wake with this sub-prime debacle. Let's not be gripped in worries developed by reports from all media types attempting to "make news ".Let's face it, the real numbers aren't that bloody exciting. Ask yourself, is this an Arizona real estate crisis, or an ideal time to get an affordable Arizona home? Proper timing and negotiating techniques make most of the difference in the current Arizona real estate market. Whenever choosing an Arizona realtor, trust the expertise and experience of Equity Alliance Properties.

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fareedy shakir Joined: April 22nd, 2019