http://www.azreoconnection.com/ Jeff Cameron MRW Homes 480-502-7699
Thank you to Jay for sending this article!
Steve Sjuggerud’a Daily Wealth posted the blog below. In it he talks about how cheap homes are today. Well relative to ….. Relative to Everything ….but Steve focused on relative to the cost to build. I would argue they are low relative to a 30 year trend line, relative to the rent ratios (many of my investors are making 20% cash on cash returns), relative to their highs, relative to their payments, and of course Yes Steve, relative to the cost to build.
Builders in the Metro Phoenix area are building again, however, mostly on the out skirts of town. The main reason they are able to build is they wrote the value of their land to zero during the financial crisis. So, there is no land cost. Also, with so many construction guys out of work, labor cost is way down. And lastly, those homes are stripped! If you are looking for an entry level home in Surprise, AZ, they will not come with Granite counters as they did in 2005. They come with the basics and everything is an upgrade.
New homes are selling in the Desert Ridge area of north Phoenix, just north of the 101 freeway and 51 freeway intersection, but in the high $500’s. They are pricey compared to what is on the resale market, but they are brand new turn key homes. After about 5 years of selling, they are finally selling out. They are selling at a much lower price point than years past, as with all homes.
Boy off on a tangent again!
I believe we are experiencing a bounce in the entry level across the valley. For some areas we are talking $40K to $70K homes and others we are talking $100 to $150k homes and in Scottsdale we are talking $150 to $225k homes. In these areas with these product lines, homes are selling immediately for full price or better. Just a few months ago, there was fear of appraisal. Not today. Buyers are reaching as there is no inventory. We shall see how this plays out with the Short Sales and Foreclosure homes for sale across the valley in the coming months.
I listed an REO, Foreclosure Home, yesterday. I pushed the price above the comps to $65k, just a little condo in central corridor area of Phoenix. The bank chose $62,500. I woke to a full price cash offer. Let’s see what else I can work over the weekend. Baby I want to see higher prices.
While we are surely seeing a bounce in the lower to mid range of housing, the upper end is still weak.
FHA loan limits are set to be lowered here in Maricopa county as of October 2011. They are going from $346,250 to $271,050. No matter how you spin it, this will effect home values in the price range of $275 – $350K. I would think it will push more buyers at the beginning level, raising prices. But, from oh about $290k to $350K it will hurt the market. Any time you remove demand for a product, you lower value. By removing FHA loans at these price points prices will be affected.
Gotta go sell a home.
If you need information about short selling, or foreclosure or all that stuff call me now at 480-502-7699. You will probably get voice mail as I am always talking with someone like you, please leave a message. Or go to my website http://www.goshortsaleaz.com/ watch videos, read great information or down load our “Guide to Short Sale!”
Thanks I hope you enjoy the article below.
by Steve Sjuggerud
House prices are dirt-cheap… Mortgage rates are at record lows…
And this week, the U.S. Federal Reserve committed to push mortgage rates even lower to “help support conditions in the mortgage markets.”
Banks have responded… As of this week, my local bank (Everbank) is offering 30-year mortgages below 4%. I checked LendingTree and found the same thing.
Between “printing money” and pushing mortgage rates lower, it’s clear the government wants to see the value of your house go up.
Everyone is scared of housing now. Housing prices have fallen by one-third, and nobody wants to get burned again.
But don’t forget… prices are dirt-cheap, rates are at record lows, and the government is trying to force the price of your house higher.
With this in mind, I strongly believe housing prices won’t go down much farther. It comes down to some basic math…
Consider this: The median existing home price in America is currently $168,000. But it might cost you roughly twice that to build one from scratch…
If you’re going to build a typical 2,500-square-foot home, at a cost of $100 per foot… it’ll cost you $250,000. And that’s just building costs… by the time you add in the cost of the lot, permitting, labor, and more, you’re up near $300,000.
You might be able to drive down the cost per foot a bit… But at $80 per foot, you’re still looking at a $200,000 building cost, plus the lot and permitting. At the very best, you might get to $225,000.
This is 33% higher than the price of an existing home.
I believe that existing home prices have plenty of room to run higher. At these mortgage rates, and these home prices, housing is more affordable than it’s ever been in America.
If you’re in a position to do it, now is the time to buy a home or refinance your existing home.
Don’t catch yourself looking backwards at what we went through… A few years ago, houses were extremely expensive, and rates were much higher.
Instead, look forward. Today, housing is cheap. Mortgage rates are now below 4%. And the government has renewed its commitment to force home prices higher.
Why fight that?
While I can’t promise you’ll make a fortune, I do believe all three of these things will take effect at some point.
If you can, consider buying or refinancing today.