Hey, aren't we suppose to be in the biggest recession since the great depression? Weren't there a record number of foreclosures announced in April? That's why many people are asking themselves "Hey, What happened to the buyers market?"
It's simple! It's a matter of supply and demand! If you remember back in 2008, the real estate market seemed to be getting increasingly worse. In Phoenix people were asking themselves if the home prices would ever stop falling, because literally, there seemed to be no end to the drop in prices. Banks were losing money hand over fist because of the plummeting real estate market, and more and more people were walking away from their homes, not only because they couldn't afford their payments, but also because they were so upside down on their value. Former President Bush began the process in December of 2008 to halt foreclosures (called The Moratorium) until the end of the year. The Moratorium continued until President Obama took office and he continued it until April 1st. Remember all the news articles about the record notice of defaults (Pre-Foreclose notices sent to buyers in default) and record numbers of foreclosures expected? Well, that was because nothing had been happening since December.
So why did the White House administration, together with banks, put the Moratorium into effect? One big reason was that it gave the banks a chance to figure out what they were going to do with their inventory and the buyers in default. But ALSO equally important, it gave the inventory a chance to decrease. If you remember, we started seeing multiple offers on properties in March of this year, and it became increasingly difficult to buy a home. The supply decreasing together with the government incentives, on a federal level together with a local effort, to buy homes such as $8,000 tax credit, and city down payment assistance programs, the demand rose substantially.
The next question is, "If the Moratorium ended on April 1st, why is it so hard to get a home? Why is there so much competition?" Because the banks have not 'opened the flood gates' as everyone expected. They have been placing the homes on the market slowly, causing prices to go up. This is good for home owners because they can feel a little more secure about the value of their home. That also might stop people from walking away from their homes simply because they worry that the value might never come back! And the banks can sell their inventory at less of a loss.
As the real estate market started to turn up together with the stock market, investors flooded in to take advantage of the really low prices in Phoenix. This created the type of environment that we haven't seen since 2005!
So what do we do if we need to buy? Here are a few tips.
*You need to pick a really good Realtor to work with you, especially if you're not experienced in buying a home. That realtor needs to know what's going on in the market and have connections and the ability to negotation ferociously on your behalf.
*If you don't feel like you're realtor is doing the job right, don't be afraid to fire them. If at all possible, don't tie yourself down by signing an exclusive agency agreement until you actually have a property under contract, and then only for that property.
*You need to make multiple offers, and be prepared to bid well above asking price. As I mentioned in a previous blog, your agent needs to know what's going on with the other offers. There is no reason to blindly offer a high price when there is a chance for you to know where you should make your offer. There are a lot of agents who are not being as secretive about the highest bid as they should. If you're agent cannot find out, on most of your offers, where you need to place your offer , you need to get a different agent or you'll be beaten out by the people working with agents who can!
*Don't get frustrated. If you feel frustration coming on, maybe you should sit down with your agent and take a better look at your strategy for purchasing a home. Speed & price are key to getting an offer accepted.
*Get a fresh list of properties sent to you every day, and when you see a home you like, move on it FAST!
Feel free to email me with other questions about getting offers accepted! There is more inventory coming soon. We can be happy and grateful that prices are recovering and things are looking up. The Real Estate Market together with the Stock Market are always leading indicators when coming out of a recession... while the jobless rate is always a lagging indicator, meaning the last thing to correct itself. Remember that there is light at the end of the tunnel! The supply is already growing and it's expected to continue!
