The answer is at once simple and complex. The Phoenix AZ market is currently driven by the lenders selling foreclosed properties. In addition, there are many people who face foreclosure. Currently there are over 40,000 notices of default pending. These  factors depress listing prices.

Buying activity is centered on these foreclosed homes, with the dominant players being investors chasing these homes with CASH. It is very difficult for the traditional buyers to successfully compete in this market.

Sun City is slightly different, in that there are few foreclosed homes and buyer activity has been stable, if lower than normal, for the last few months. The problem here is that the prospective buyers who would like to sell the old family home and move into an adult community cannot sell because they are competing with the REO (foreclosed) sellers.

My analysis of the current conditions lead me to believe that sales prices will stabilize, indeed may have already stabilized, but cannot go up any significant amount for at least 2 more years.

It remains difficult to sell a traditional listing, but not impossible.

Buyers, it is no longer a buyers market, but the conditions remain good for the purchase of a new home, especially for first time buyers. A caution, interest rates are now creeping up, and traditional inventory is gradually being absorbed. The first time buyer credit is scheduled to expire in December, don’t wait too long.

Jim Little, Your Sun City REALTOR®
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The lowest priced homes, under $100,000 are selling withind a few days, often with multiple offers.

Bank owned homes, (REO) ar also selling very well. REO new listings have been averaging 4,000 per month. Pending sales in this category are currently 6000. Obviously, even the older, stale inventory is now being absorbed. As a side note, this means if there really is a “shadow inventory” of foreclosures that haven’t been listed yet, the market seems to be standing ready to buy them.

On a more local level, homes for sale in the Sun City neighborhood have decreased in the last couple of months, and sales + pending sales have increased, a sure sign of a recovery in its early stages.

New appraisals are coming in at or above contract prices, and the Market Condition Report appraisers are now required to file no longer defines properties as being in a declining market.

Interest rates, while still at an artificial low, are starting to creep up. If you are thinking about buying a home, do it soon. Historically, when interest rates reach a low, they will rebound to prior levels quickly. This rebound can be very dramatic. Interest affects buyer costs much more than the sales price over the term of a loan. It also limits the home you can buy on any given income. Act soon to take advantage of these very attractive rates.

The government First Time Buyer Tax Credit is working, bringing renters into the market. HUD is now allowing lenders to provide bridge loans so the tax credit can be used toward closing costs. This reduces the out-of-pocket expenses for a home buyer. It is important to note that this is for closing costs, not for down payment purposes as some reported in error.

Another promising piece of news, Friday 6/19/2009, large banks began paying back the TARP loans. It is nice to see this program seems to have worked, but 75% of the money loaned has yet to be repaid.

And last, it is a small step, but GM announced Friday the company would be recalling 900 laid-off workers. Just a drop in the bucket, but the right direction anyway.

Jim Little, Your Sun City REALTOR®

Jim Little, your Sun City Neighborhood REALTOR®