HOUSING PRICES ARE LOW IN PHOENIX, ARIZONA

HOUSING PRICES ARE LOW IN PHOENIX, ARIZONA

Why are housing so low in Phoenix, Arizona? I am asked this question over and over again from people who live in other parts of the United States, and abroad. "Why are the prices of the houses in Phoenix, Arizona so low? I say they are not low, they are normal! Yes, I said normal. I am not losing my mind, I am perfectly sane. Phoenix has always had wonderful pricing on homes, that is why we have grown by leaps and bounds in terms of our population. Affordable homes, in a warm climate, with beautiful winters, gorgeous blues skies and mountains galore is what keeps people flocking to the twenty-one (21) cities affiliated with the Phoenix metro area.

Greed, inflation, ignorance, and the old theory of supply and demand is what drove the home prices through the roof. As a result of these acts, Phoenix sadly carries the title of being one of the top foreclosure capitals of the USA. Yes, Phoenix, Arizona is on the map as a state that has the second highest rate in foreclosures.

How did this happen? Well, there are many theories as to why we are in this dilemma, here are a few:

1) The Investors Did It; they depleted the inventory by purchasing four, five, six homes in new home subdivisions which spurred a bidding war between the Investor and the Local Home Buyers; the "old supply and demand" theory, prices go up when inventory goes down,

2) The "Out of Towners Did it; they saw that housing prices were so low that they purchased all the inventory which caused a bidding war between the Out of Towners, Investors and the Local Home Buyers; again, the "old supply and demand" theory, prices go up when inventory goes down,

3) The Lenders Did it; they financed homes for people who could not afford the houses that were over priced due to the bidding wars between the Out of Towners, the Investors and the Local Home Buyers; again, the "old supply and demand" theory, prices go up when inventory goes down,

4) The Appraiser Did It; they were in cahoots with the Lenders who gave the pricing guidelines for the houses that the "Out of Towners, the Investors and the Local Home Buyer purchased,

5) The REALTORS Did it; because they sold the homes to the Out of Towners, Investors, and the Local Home Buyer who got the money from the Lenders at the prices that the Appraiser set as the pricing guidelines ..... and on and on, and on.

The facts are cloudy as to WHY it happened, but IT DID happen, and we are now paying the price - or are we?

If you look at what the housing prices were in 2004 at the time before the housing boom, we are pretty much where we would have been in pricing if we had stayed on a normal course of inflation and equity building. Exception are short sales which are considerably lower than most bank owned or seller owned properties on the market for sale today.

The challenge lies in home owners owing more to the mortgage companies than what the homes are current being valued in terms of sales. Most homeowners are upside down on their mortgages; owe more on the home than what similar homes are selling for in a community.

Additionally, a great number of homes that are currently in foreclosure were financed with subprime loans where rates have adjusted to record breaking heights with more adjusting to be levied between now and 2011. When those loans adjust, the mortgage payments will be unapproachable by the homeowner, subsequently he will lose the home adding to more unsold inventory.

Oh by the way, the Investor couldn't make money on the homes, so he dumped the homes back in the market, or abandoned them completely. And a home buyer today who is looking to purchase a home, is ..... well, he is sitting pretty.

He is sitting pretty because today, he can buy a home for almost half the price that the original buyer purchased it for during the housing boom. Additionally, a buyer can catch a better deal if the Seller convinces the mortgage company to accept a lower pay off on the home. This type of procedure is known as a "short sale", which can help the new buyer save even more money on the purchase of a home.

Example of a Short Sale Pricing





6BR, 4 BA, 3735sf, built 2005, Original Purchase Price $224,160, on sale for $84,500. Pricing is subject to Lender Approval on a Short Sale.

So in answer to your question as to why HOUSING PRICES ARE LOW IN PHOENIX, ARIZONA, it can be explained in one word

F-O-R-E-C-L-O-S-U-R-E-S.