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« Inspecting an Asphalt Shingle Roof in Phoenix, AZ | Main | Vote Yes on Prop 300 - Bring the Waveyard to Mesa! » Tuesday, October 30, 2007Low Interest Rates + Lower Prices + High Inventory = Time to Buy Arizona Real EstateMany are waiting with anticipation as the Federal Reserve meets (today and tomorrow) to discuss a A lower Federal funds rate won't immediately affect mortgage rates, but it will (almost) immediately boost consumer confidence, and eventually it will lower mortgage rates. Those homeowners with Adjustable Rate Mortgages (ARMs) will get some relief as their interest rates adjust, hopefully preventing some foreclosures. We're nearing the bottom of a slow real estate market, with high inventory (supply) and lower than normal demand. While some people are scared by the current real estate market, it's actually an incredible buyer's market with great deals just waiting to be made. If you're thinking of buying real estate, the rest of this year is going to be perfect buying time - crazy deals and incentives are being offered. After mortgage interest rates have decreased and the real estate market begins its recovery is NOT the time you can make your best deals. If you're buying for the long term (3 or more years), you really don't need to worry about buying at the very bottom of the market. But you do want to buy before the market starts to recover since that's when the best deals can be negotiated. The real estate market is cyclic - it goes up and down. Here's why you should buy real estate before the market starts to recover (I stole this explanation from my friend and fellow Arizona Realtor, David Thomas, who read it on a blog!). Think of the real estate market as a "V", the current trend is definitely downward, toward the bottom of the "V". We don't know exactly how close we are to the bottom of the "V" right now, but most think we're pretty close. As we approach the bottom, inventory is at its highest and sellers are most willing to negotiate. But once the market reaches the bottom and the upward trend begins, deals begin to diminish. Inventory (choice) decreases, prices begin to increase and incentives go away. As the market recovers, interest rates are also likely to increase which will make it even more expensive to buy a home. So when do you want to buy - near (but before) the bottom? Or do you try to wait until the very bottom and take a chance that you'll catch the upward trend instead? It's impossible to know exactly where the bottom of that trend is, until after the upward trend begins. So if you wait, you might wait too long. By the way, don't believe anybody that claims to know exactly where the bottom of that "V" is!
Posted by Shannon Hubbard, AZ Realtor & Computer Guru on October 30, 2007 | Permalink CommentsThis seems like a perfect opportunity for anyone looking to buy! Posted by: Louisville real estate | Nov 2, 2007 3:58:37 PM This is a great article! We come across so many interested home buyers that are just “waiting,” even in luxury home market. Statistically speaking, Arizona is one of the best places in the world to invest your real estate dollars. I’m glad more people are finally starting to speak up. All of the major ingredients for a thriving real estate economy are here! Don’t miss out. You may not have another opportunity like this ever. See our website www.luxuryrealestateweb.com for more community information on luxury properties in Arizona. Posted by: Terra Morales | Dec 17, 2007 11:10:35 AM We are hopeful that the market will come around in 2008. Posted by: Sharon | Dec 21, 2007 1:09:57 PM Great article, I was under the impression that Arizona's market was way over priced like So Cal. I am looking for other markets to enter. I will give Arizona another look. thanks for the tip. jimi Posted by: jimi redmond | Dec 28, 2007 6:55:34 PM The comments to this entry are closed.
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possible cut in interest rates. After lowering rates a half a point in September, the Fed is still concerned about the 'credit crunch' and a slower than normal housing market. However, with extremely high oil prices, the Fed is also concerned about inflation (which could prevent them from lowering interest rates). But most analysts think the slow housing market and lending problems are currently a bigger concern than inflation, and most are predicting a quarter (.25) point reduction in interest rates tomorrow.
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