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Thoughts on today's article on more foreclosures?

Per today's article and in the news on increasing foreclosure rates, and Arizona being mentioned, http://finance.yahoo.com/news/Banks-repossess-1-million-apf-1937862554.html?x=0; I'm planning to buy an investment house to lease out, and to get positive cash flow from rental income. What's your opinion on the article and if investing in Phoenix, AZ is a smart move? Should I invest in a larger and more expensive homes in the nicer part of Phoenix (around 130K), or should I buy cheaper homes in the other areas so that I can purchase more properties? Should I get smaller homes in the nice areas vs bigger homes in further away areas? Will renters be able to afford bigger houses? Would they want to rent a bigger house much farther away from downtown Phonix? Would they even care what school district they're renting? Also heard Surprise has lots of senior citizens? Would I find renter if I bought there? (Since retirees would own their homes most of the time)... Pls give me your opinions and outlooks Crystal Ball!  Thx..!
  • January 13 2011 - Gilbert
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Answers (7)

SnowDesert

The Phoenix population is staying fairly steady according the numbers I see.  We do seem to have a tremendous amount of out of state buyers in the market, some are investors and others are buying 2nd homes.  Neither of which is adding much to the population at this time.

Jobs are an issue in most markets it seems and we are just trying to hold our own.  Intel is in the market and anounced an expansion a couple of months ago so they seem solid.  We have attracted some Solar as well. 

I was down at the legislature on Tuesday and was told by the Majority Leadership (Republican) they are going to focus on changing the tax structure to gain higher quality jobs.  The Minority Leader echoed the same while recognizing the route may differ some. HA

One of the reason I like the east valley is due to the Williams Field complex and its attraction to jobs once the economy opens up a little more.  I have been provided estimates of 50-60,000 jobs in the area.  Another freeway extension is also being planned into Queen Creek that will cross right though the Williams Field complex.  Part of the reason for the freeway and job growth potential is the fact that Phoenix bought into the airport as well a few years ago.

I hope we are answering some of your questions.

Doug McVinua
HomeSmart

Arizona Homes for Sale by a Guy from Iowa
  • January 13 2011
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Also, is the Phoenix population still growing it did a few years ago when it experienced one of the biggest recent increases?

What's your opinion on the Arizona immigration laws, and what media is playing AZ as the bigot capital of the world (which I think is untrue, rather just media frenzy feeding anger to the viewers. How has this affected the real estate condition? if any at all, or affected businesses? Are businesses leaving as a result of this? Thx.
  • January 13 2011
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Thank you for your responses. And this goes to HomeSand, Detroit is supported by a single industry, the auto industry, so it that went bust, the whole city went bust. What industries are supporting the Phoenix area to are bringing buyers and renters? I know Intel is in town, any other major players here to support a return to the housing boom? Thx. 
  • January 13 2011
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Is is not a first time the media talks about more foreclosures are coming, they say as same everyday since 2007.
Take Detroit for example, many investors got rich since they bought the distress homes at the bargain price then rent it out. Now the Auto industry come back, the auto workers need to rent some place close to work, those bargain homes value rose double. the Arizona's market is not going to be different, It is depend on you to take the chance or not.
Small and cheaper houses are easier to rent out and get pay then the expensive ones.

  • January 13 2011
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SnowDesert

Rentals are doing well in the Valley as so many are loosing homes to Foreclosure or Short Sale.  Many of the investors I represent are electing to purchase in the suburbs of Chander, Gilbert, parts of Mesa and even Queen Creek.  They are purchasing pretty decent affordable properties in neighborhoods that are nice for multiple reasons.  One reason is they believe they will attract better tenants and have less difficulty with the property and secondly that the property will have better resale down the road when they are ready to liquidate.

Many are purchasing REO properties that may need some work, paint, carpet, appliances etc depending on your financing and cash available.  We will often help them manage the improvement and get it ready to rent.

I have to laugh, just last night I was out hanging a blind and syncing up a new garage remote for a property that is rented and move in is 1-21-2011.  The property is now completely ready for move in, we understand that as a remote landlord the details can be a challenge.

Let me know if you have further questions.

Doug McVinua
HomeSmart

Arizona Homes for Sale by a Guy from Iowa

  • January 13 2011
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That is one of the states hardest hit by the foreclosure situation. Many more foreclosures are going to arrive. Buying now will likely see you lose equity rapidly.


Look at the site below
Arizona
The hard hit economy in Phoenix, already with home values down more than half from their peak highs, is raking up low home sale figures. As re-sales remain sluggish without the addition of more federal aid and new home builders hold-off pulling building permits to construct houses, the housing market will have difficulty making strides towards recovery.

Average home values in
Phoenix are forecast to fall another 8.3% by year's end.

Did you know that when interest rates go from 5% to 7% that buying power drops by 23.7%? In essence that means your payment at 5% that buys a $200k house now at 7% will only be able to buy a $153k house.

We all know that interest rates must rise in the next few years. How high is the scary question. Do some calculations on a mortgage calculator to see how different amounts of money are needed at different interest rates to buy the same amount of borrowed money.
  • January 13 2011
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Dear SnowDesert:

There are renters looking for cheap rents and also renters looking for bigger 3-5 BR houses also. You will not have a problem either way. Good school districts are always a plus for rents. 

The bottom line? Buy low, Sell high. The market is low now. Investors are coming back in right now.

Surprise is in a "long commute" area but has many new homes. The best rental areas are with a shorter commute distance to the city center or ASU.

Jeff Masich
HomeSmart
Scottsdale
  • January 13 2011
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