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Jay’s 2nd Quarter 2005 Overview of the Phoenix Area Real Estate Market

Existing Homes: Strong Sellers Market!

Demand for existing homes continues to be extremely strong. The supply of existing homes seems to have stabilized somewhat, although supply is still low (but it has increased slightly over the first quarter. Homes are still selling very quickly. It is still not uncommon for homes on the market to get multiple offers at or over the listing price. A recent trend in offers has buyers waiving the “appraisal contingency”. The standard Arizona Residential Resale Purchase Contract states that a home must appraise at the asking price or the buyer may cancel the contract. However, recently, many buyers are waiving this contingency, in effect saying they will purchase the home regardless of the appraised value. There is certainly a risk involved in waiving this contingency and is something that should be discussed in great detail with your realtor.

New Homes: Builders Market!

Demand also far outstrips supply. Many new home developers have lengthy waiting lists for home sites, and are releasing home sites via “lotteries”. We’ve seen build out times ranging from 6 to 13 months. Many builders require new home buyers to list their existing homes within days of signing a contract and are requiring substantial non-refundable down payments. A recent development was announced in Chandler, Arizona. The developer is planning to build 600 new homes. The size, price and style of these homes are yet to be determined. Despite this, over 7,000 people are on the “interest list” for this development!!

Condos/Townhomes: Sellers Market

The condo/townhome market isn’t quite as crazy as the single-family detached market, but it is rapidly approaching it. A couple of months ago, condos seemed to stay on the market longer than single family homes. That is no longer the case. Condos and townhomes are moving swiftly. A lot of buyers seem to be getting priced out of the single family home market, and are looking harder at condos and townhomes.

Investment Property: No real changes from the 1st quarter!

New homes: Many builders are not allowing investors to buy new builds. They place contract and deed restrictions on renting out homes, owner occupancy rules, and minimum time periods a home must be held before being sold (up to 2 years). There are some builders who sell to investors, but they are becoming very difficult to find.

Note: I’ve had several people ask me about the above statement. There is (rightfully) confusion about the word “investor”. For the purposes of new builds, an “investor” is considered ANYONE not planning to actually live in the new home. This DOES include second home owners. There are *some* builders that will sell to second home owners, but not many. *VERY* few will sell to someone intending to rent out the new build home.

Rentals: With the recent (last 6 months) increase in investors purchasing homes to be rented, the rental market is approaching a saturation point. There are MANY rental homes on the market right now. Renters can be found, it just takes some time.

Land: Land is smoking hot right now! Always a good investment, land values are steadily climbing. The West Valley area is especially active right now. Areas such as Tonopah and Wittman (Whittman, Wittmann – I’ve seen it spelled many ways) may seem far away from the center of Phoenix right now, but the principle direction of growth for the Phoenix area is west. There are many rumors of large residential developments being planned for west of Buckeye and Surprise, and Tonopah and Wittman are right in that path.

Go to ThompsonsRealty.com

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Hurricane Katrina. Wow. What can one say? What a tragic disaster this is….

Once, in my college days, I hitchhiked from Galveston, Texas to New Orleans. My roomate and I had a blast spending a day and a night there. It took us about 10 hours to get there (it’s an 8 hour drive by car). We made **amazing** time. Got a really long haul on the back of a new car carrier. We strolled down Bourbon Street, found some incredible live music joints way off the beaten tourist path and partied all night. Around 6:00am, we finally slept on some park benches right by the Mississippi, right on a levee.

We were woken up at about 9:00 that morning by two of the biggest cops I’ve ever seen. They were actually amazing friendly considering they were waking up two 19 year old college kids who looked like trouble. They pointed us toward I-10 and told us to get the hell out of their town.

So we thumbed our way back to Galveston. Gota ride from some guy named Chicken George that was hammering gin straight out of the bottle. It took us 10 hours to get there, It took us 34 hours to get home.

I never did make it back to New Orleans.

Now I wonder if I ever will.

Some of the media coverage of this really irritates me. Blaming global warming really irritates me. Looters really irritate me. I’ll pardon someone for taking some food or water. But some guy using air mattresses to float a plasma TV through the French Quarter is rediculous. He oughta be shot.

It’s hard to have sumpathy for the people who had the opportunity to evacuate and chose not to. Those people just aren’t very bright. You didn’t need a degree in meterology to see the satellite image of Katrina and know that storm was going to lay waste to a large swath of coastline.

I do however feel really sorry for those that lost everything. A lot of people have had their lives destroyed. Some people say, “that’s what they get for living there. They knew the risks”. What crap. Sure they know (or should know) the risks of living below sea level on a warm water coast. But that doesn’t make all this “OK”. I choose to live in a 900 degree desert. People in California choose to live on a fault line. My father chooses to live in the shadow of an active volcano.

We don’t choose to live where we live for the HAZARDS and the POTENTIAL of danger. We all choose to live where we live for a multitude of reasons. Some good, some make no sense. But I seriously doubt anyone chooses to live in the Rockies because they HOPE to be burried in an avalanche.

So to the people of New Orleans (and Buloxi, Gulfport, Mobile, and the DOZENS of places we’ll never hear on the news) I wish you God’s speed. You *will* make it through this. We will help however we can. Keep your chins up, stand tall and be proud of who you are and where you’re from. God Bless you all.

TO DONATE: CharityNavigator.org

(be watchful! There are countless pieces of worthless “people” out there already scamming good-hearted folks who are trying to help. Make sure you give to a known charity. Remember, every dime counts.)