The time to buy is NOW!!!

Homebuyers ask me every day one of these two questions: "when is the right time to buy?" or "has this market hit bottom?" The media comes at us every day with negative stories about the housing market and the economy. But the truth is this- we are in the middle of probably the best homebuying opportunity of our lifetimes. Prices have decreased dramatically over the past few years and you are probably asking yourself when will it stop? Well, let's take a look at the data to see what's going on...

First of all, pending and closed sales numbers in the Metro Phoenix MLS are increasing each month as the number of active listings is decreasing, meaning more inventory is being absorbed. The Fed is also putting more pressure on banks to NOT foreclose and work out loan modifications and other alternatives with their borrowers, which will further reduce new inventory.

Secondly, interest rates rose last week after they dropped lower than they've been in over 40 years. Inflation is expected to rise which will push interest rates higher. Rates are expected to increase to around 6.5% this summer and we are expected to see rates in the 8-8.5% range by years end. Think about how much money that equates to if prices remained flat and rates increased even 1 to 2 points???

Let me go back to inventory for a second. During 2005 and 2006 we were building about 60K to 80K homes a year, a driving force of the building boom was cheap labor. With Arizona now being one of the strictest state in regards to illegal immigration, much of that workforce is now gone. Over the next few years we are only projected to build about 5-8K new homes, essentially the homebuilding has stopped in AZ. So basically the homes that are existing today are what will be around a few years from now...this leads me to another interesting fact. The vacancy rate in Maricopa County is about 12% currently, the highest it has been in a long time. In 3 years that vacancy rate is expected to reduce to 2%...rents will be going up. A home that rents for about $1000/mo today will almost double within 3 years to around $1800/mo.

There is also talk in Congress of reinstating Down Payment Assistance programs and extending the $7500 tax credit to first time homebuyers, also eliminating the pay-back requirement. Both of these measures are expected to pass and when they do, we will see a large influx of eager buyers into our market who otherwise wouldn't qualify.

So, if you miss this buying opportunity and rent for a year, rates will be about 2% higher and prices will be higher due to inventory shrinking over the next year. This is the time that buyers have been waiting for and we will only realize that we were at the bottom when we look back a year from now. If you or anyone you know is thinking about purchasing a home, now is the time to do it. Also contrary to what you hear in the media, great financing is still available including low down payment and even NO DOWN PAYMENT. If you are in a position to buy, your monthly mortgage payment could be less than renting a comparable home! Take advantage of this market now, there is a reason that investors are buying property again, this is the information that they have access to...