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Get Off The Couch and Look Out Belay

All of Wednesday had me thinking about overcoming a fear that I never would have chosen to overcome.  When we’re faced with fear without choosing, and we stand up and push through it, we grow.  It’s even better when we choose to face something we’re afraid of, or even when we try something we never knew we’d be afraid of.

A little voice inside my head today told me that I would be fine; that I wouldn’t get nervous, and that I would be able to perform just like I envisioned I would.

As much as I tried to fight the feelings of apprehension, they were still there, but I pushed through, and by the time the night had ended, I was scaling the very same wall I started on twice as fast as the first time.

I never considered indoor rock climbing to be something I would ever be interested in doing, but tonight, I learned how to do so at the suggestion of my closest friend from my high school days.  After 9 years we reconnected as a direct result of Facebook (for those of you who find no value in it…think again) and spent the entire night catching up and climbing in the gym.

Belay (be-lay [bi-lay]) -verb: 1.  To secure a person by attaching to one end of a rope.  2. To keep your friend from falling to their death.

I learned both how to climb, and how to belay, which also means to stop.  One person climbs, one person stands anchored to the floor, and anchored to the rope that keeps your partner from falling.  While one climbs, the other takes up the slack and secures the rope after the climber’s forward progress.  It’s all about teamwork, and it’s great exercise.  The coolest part about it is that once you learn to trust the harness and your partner, it doesn’t matter how high the wall is.

There’s something about an activity that requires the work of two people and that involves putting your complete trust in that person to ensure you are secured.  I can’t quite describe it.  Perhaps the right word is Synergy.  There’s also something to be said for life-long friends who can pick up right where you left off.

So here’s to rock climbing, friends, fitness, and overcoming silly fears.

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Good News for Phoenix Real Estate

It’s not a big surprise considering the number of homes that have been selling recently that the inventory has depleted considerably and the availability of affordable housing is drying up after this massive real estate hemorrhage.

I cannot tell the future, but I can see when there’s a break in a pattern, as you will also see indicated in the graph below. Whenever a market corrects, it usually over corrects to a comparable intensity of the original inflation. Prices were so overinflated, and people have SO overreacted, that the low prices in the valley are deflated and can be considered as artificially low as they were high.

If I base my opinion simply on the pattern in this graph which outlines average monthly sales in the Greater Metropolitan Phoenix Market, then we are on track to recover, and we will bounce back. Since Arizona is a national leader in real estate trends, we should see a healthy recovery. Again, I cannot predict the future.

It was towards the end of 2003, beginning of 2004 that things started to exponentially bloat, soaring to ridiculous heights, and absolutely crashing as quickly as a 747 filled with solid lead.

In August of 2005, my neighbor bought the same unit I purchased in 2003 for $200,000.00 more than I paid for mine. They are still there. Oops.

The market’s plateau began in approximately June of 2006, rose a bit more, and then decidedly burned in flames at about January of 2008, through March of 2009. The number of homes sold began to increase in May of 2008, but the price continued to drop.

What would have happened if we had continued to grow at a normal, typical rate of 4% per year?  Perhaps the following, showing a line drawn at about a 4% increase over the same period of time.  This shows that a starting value of $175,000.00 would over the time represented in this graph, grow to approximately $244,000.00.

One could argue at this point one of two possibilities.  Either a) the market will quickly correct, over correct, and bounce back and forth over the next 8 years or so to find equilibrium along that blue line, or b) the blue line must be adjusted down, erasing all of the growth in this millennium.

If that’s the case, then the home you’re living in, which is now worth what it was pre-Y2K, will not be worth what it should be worth for as long, if not longer than it takes to re-write the entire first decade of this century.  To reach home prices that we should be at, we’re looking at roughly 10 years of steady growth at a “normal” rate.

The problem is that nobody knows what normal is anymore BECAUSE OF THAT GIANT HUMP in the middle of the chart.  Who’s to blame?  Many people think it was the government forcing the banks to lend to people who couldn’t afford it which drove them to “get creative.”  Dave Ramsey calls “creative financing” “Too Broke to Buy a House.”  I tend to agree.

Either way, it will be interesting to see what happens, and ultimately, it appears as though we’ve experienced the beginning of the bottom of this roller coaster ride.  Which means one thing…

If you haven’t bought a house yet, it’s time to buy.  There’s blood in the streets and the street sweepers (the investors) have been very busy recently.  Don’t miss out.

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More First-Time Home Buyers Than Before

According to the National Association of Realtors, in 2007, 39% of all home sales were by first-time home buyers.  So far in 2008, we’ve seen that number increase to 41%.  First-time home buyers have some very attractive incentives to enter the market, and it’s much easier than many would think for a first-time buyer to purchase a home because they aren’t tied to another property.

When you don’t have something to sell, you don’t have to worry about waiting.  You have complete freedom to shop the market and quickly purchase a great property. You don’t want to be renting forever.

Renting is money lost.  Purchasing a home puts some of that monthly payment back into the home which can be recovered when you sell (Equity.)  Not only will you recover it, but it will grow at an average of 4% – 7% annually over time as proven by history.

Even thought recent growth rates have receded due to economic conditions brought about by the mortgage crisis, if you choose the right area to buy your home, such as an affluent area of your city, or a city such as Scottsdale, Arizona which has seen year over year increases in value, you’ll be positioned well in the market and your home will increase in value.  They aren’t building anymore land in Scottsdale.

We’ve never seen a better time to buy than now especially IF you are a first-time home buyer with a LONG TERM VIEW.

Getting into the market to make money on your home quickly is not the attitude that you need to have.  Lenders are less forgiving when approving loans for investors or people who already own their first home and are looking for a second home or a rental property.  Since you are a first-time home buyer, you want to make sure that your perspective is one with a long term view of ownership.  Sellers in this market are either desperate to move because of adverse conditions, or they’re wasting their time hoping for an offer at a price that the market will not bear.  Lenders won’t lend when the home’s appraisal fails to meet the accepted price.

Understand that the average first-time home buyer stays in their first home for five to seven years on average in a normal market.  In this market, where inventory is high and demand is low, the only common denominator is price, and the purchaser must meet the seller in order for there to be a sale.  In a buyer’s market, this means the seller will have to move more than the buyer, which puts you in the driver seat. (Article Reference: Supply and Demand, X Marks the Spot)

Buying your first home can be a stressful venture, which is why you need to enlist the services of a professional.  By working with a Realtor you will protect yourself from the pitfalls associated with the home buying process.

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News is News, Facts are Facts

It’s not easy to sell a home right now.  If you’re a seller, you’re going to have a really tough time.  In fact, what we’re seeing in the marketplace now is an overabundance of bank owned properties and homes that are being sold short.

Foreclosures

A foreclosure occurs when you fail to pay your mortgage payment for 90 days or more, typically.  There is a point at which the bank will boot you out of your house.  Then the house goes up for auction.  If the house is not purchased in that auction, the bank owns it, and it sits.

Short Sales

This occurs when you sell your home for less than you owe.  This requires bank approval, but is much better for you in the long run than a foreclosure.

Yeah… So?

Both of these situations comprise approximately 60% of all homes being sold today in the greater metropolitan Phoenix area.  There’s no ifs, ands, or buts about it.  Title companies are reporting that they are having to change their marketing focus as a result.  This year, we’re seeing approximately twice as many sales per month as we were the same time last year.  What we aren’t seeing is twice as many regular resales as we were.

New home builds are down, new home sales are down, and the market’s response is to quit building and offer massive incentives to unload assets that are weighing the banks down.  The banks need to see their investments begin to pay off and in order to do that, new home builders have dropped their prices dramatically.  In the wake of these price drops come the Short Sales and Foreclosures, which naturally sell for less than the perceived market value.  When this happens, your property is less likely to sell.

So, you as a seller have two options.  Stay put, or compete for a sale.  To compete for a sale, you WILL have to price your home competetively against heavily discounted new builds, short sales, and bank owned properties.  There’s simply no other way.

Consider your financial situation and consult a financial counselor to determine what your best option is.  Those of you who are forced to sell due to relocation, death in the family, divorces, etc., will need to get real, real fast and face the facts.  Price your home right and it will sell.

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