This is my column for this week from the Arizona Republic (permanent link).
This just might be the optimal time to buy a home in Phoenix
Who should be buying residential real estate in Phoenix right now?
If you have been planning to buy a home sometime soon, and if you know for certain that you won’t need to sell it for at least five years, this just might be your magic moment.
Interest rates are still deliciously low, but both current events and long term trends suggest they’re headed higher. You’ll probably have to sell your current home for less than you wanted to, but you’ll be buying your next home at a bargain-basement price.
Sadly, you may not have enough equity in your home to move up. But if you do, there are some amazing homes out there selling for unheard-of prices. Houses that sold for $375,000 in 2005 are going for $175,000 three years later.
If you do have substantial equity in your home, even at today’s prices, moving up now may make a lot of sense. The rules for the capital gains exclusion on primary homes change on January 1st. If you’ve been in your home for more than the last 24 months but fewer than the last 60 months, moving before the end of the year could save you a significant amount of money on your taxes.
It makes sense to me for college students and their parents to snap up condominiums and starter-homes while prices are so low. After the start of the year, if the student holds title, it will take five years to realize the full benefit of the capital gains exclusion — approximately the length of a college career.
First-time home-buyers are taking advantage of this market, as well, with low-down-payment or even nothing-down government-sponsored loans.
Who else should be buying? Investors, of course, but the smart ones have already figured that out. For now, it’s very easy to acquire a premium home in a commuter-friendly suburb that will be cash-flow positive from the first tenant. Investor loans can be hard to obtain, but prices are so low that many investors are simply paying cash.
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Jim Boyer Chatham NJ says:
I agree Greg, This is probably the best time there is going to be to buy a home in Phoenix Arizona. I was out showing houses all weekend to people who have been watching and waiting, and not getting all upset about what is going on in the financial markets. Both couples are now on their way to accepted contracts to purchase homes from people who should never have purchased in the first place. Your reading that right, both will be trying to purchase homes which are in Foreclosure, and we have started the process on both of them. Keep your fingers crossed, and the banks are never fun to deal with even when you are on the buying side of a Foreclosure.
October 20, 2008 — 6:35 am
Kim G, Realtor, Pensacola, FL says:
These are interesting times to be in the real estate industry. Just when you think you see the end of a downturn, you see you have a little further to go.
Here in the Pensacola market it looks like we will be out of the “Real Estate Bubble” near the end of 2009. This is based on unit sales, active inventory and average sales price.
But now, the big unknown is the economy and all its prickly thorns; credit, unemployment, gas prices, Wall Street and Government policy.
November 14, 2008 — 10:21 am