March 22, 2008: In the Metropolitan Phoenix real estate market, our long, slow slide in home prices is finally encountering demand
If you've been looking for the bottom of the Phoenix real estate market, it might well be upon us.
The world beyond our control -- Washington and Wall Street -- is so volatile right now that it's hard for anyone to make plans.
The Federal Reserve Bank is determined to keep markets liquid, so its own interest rates are heading back toward record lows. The investment banks that brokered the mortgage-backed securities that made sub-prime loans possible are in turmoil. Meanwhile, Congress is desperate to do something -- which will almost certainly make things worse.
The interesting thing about all that chaos is that it seems to be isolated to the real estate market. The larger economy is growing so fast that the twitterpated monetary policies of the Fed seem not to have had much of an impact.
That's a good thing, and let's hope things stay that way.
Meanwhile, in the world we have some control over -- the local real estate market in Metropolitan Phoenix -- our long, slow slide in prices is finally encountering demand.
Because so many people wanted to buy houses in Phoenix, our builders gleefully over-built the Valley. This caused the glut of inventory we have been trying to absorb over the past nine quarters.
Many of the resale homes that have languished on the market are by now short sales or have been taken back by the bank. Lenders don't want to own houses, so they're cutting prices until the homes get sold.
At the same time, our reliable inflow of population, along with investors and second-home buyers, is there to absorb these newly-affordable homes. The snow belt just got belted with its worst winter in memory, which will bring even more newcomers to Phoenix.
It could be we'll be back to normal inventory levels fairly soon. The bad news? If your home is for sale, the price it will sell for right now is probably quite a bit lower than you think it should be. If you don't have to move now, you might be better off staying put for a year or two.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
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