Real Estate
Ghost Inventories
Mar 9th
We all are aware that “Ghost Inventories” are the bank owned properties that the banks currently DON’T have listed for sale. Thus a “Ghost Inventory”.
Ed and Barbara Heiser/ The Heiser Team
480-830-8030 Office
BUT, I want to tell you of ANOTHER Ghost Inventory often not looked at. These are the HUGE number of people who are sitting UPSIDE DOWN in their homes. Think about it, you are sitting in a home you bought for $300,000 and now it is worth $120,000 to $150,000. You are paying $1,800 P&I for something that should only be $879 a month.
In these hard financial times, how long will a family continue to pay $1,000 more a month for housing than they should be.
Now they are good honest people. Yes they bought the home in good faith for $300,000 etc. etc. Now they have new neighbors next door, their home is the same floor plan and upgrades. BUT, they got their home for $130,000 and are paying $879 a month. IT IS THE SAME HOME AS THEIRS!!!!
Aunt Rosy says to them, “Your paying $1,000 MORE a month for the same house…my, my”! They hear it on the news, TV and Radio; they here it at work, from friends, family, on and on and on.
So how long will this go on before they are emotionally and spiritually beaten down and they simply give in and walk away? Thus, a “Ghost” foreclosure. It is there, just don’t know the exact time it will go.
As home values drop this scenario will play out over and over again.
Pat Newport, an analyst with IHS Global Insight said, “[Excess] inventory is the biggest problem in housing these days, and it leads to lower housing prices, which leads to more foreclosures.”
Talk about a vicious cycle!!
Not a lot we can DO about it. Kind of like having the Flu. You just got’a RIDE IT OUT!
Ed and Barbara Heiser/ The Heiser Team
480-830-8030 Office
Home Values 2011
Mar 7th
I am asked two questions almost every day. 1) Have home prices bottomed out and 2) What makes mortgage interest rates move up and down?
Ed and Barbara Heiser/ The Heiser Team
480-830-8030 Office
Today lets tackle #1. Nearly everyone is looking for any evidence that prices on family homes have finally “Bottomed Out”. Seems like a logical question. After all, home values affect every one!
But in reality this is a very arbitrary question. To put it another way, it is like looking at your finger nail and asking the question, “is my fingernail done growing yet?” Once a person understands that your fingernail continually grows though out your life, you wouldn’t even ask that question. The same goes for home values, once you understand what moves home prices/values, you would think the question is a silly one.
BUT, the reality is that MOST people really don’t know these things that effect buying a home. That is one of the things that Barbara and I really love to do is educate those we serve and dispel all the urban legends.
So, is there an all powerful Wizard of Oz standing behind a curtain who raises and lowers home prices on a whim? Is there some one in a dark, basement boiler room who throws a dart that decides home values? Let me assure you NO!
So what then is “driving” home values down? Well…YOU are! The home seller and home buyer. Here is how it works; Let’s take a home in a neighborhood today worth $300,000. For this example all homes in this neighborhood are the same and today are valued at $300,000. Home owner A just got a job offer and needs to move NOW, so prices his home to sell at $250,000. Appraisers base there valuations on “Comps” of recently sold homes so guess what, the homes in the neighborhood are now worth $250,000.
Home owner B sold his home in a short sale. The bank accepted $200,000. Home owner C lost his home in foreclosure. The bank accepted a “low Ball” offer of $160,000 when it sold. Home owner D now wants to sell his home. The appraisal comes in at…? You guessed it, [or maybe you didn't] $160,000.
So now, WHO is deciding the home prices/values? It is the Buyers AND the Sellers. The buyers are and always will, as their nature, make “low ball” offers. We all as consumers want to get something for “a DEAL”. But the sellers, weather banks or private parties when they accept these low offers, SET THE VALUE.
An Appraiser has to use resent sales of like properties, in the neighborhood or close by, a comparable, to base the “CURRENT” vale of a property. There is no ouji-board involved, no mystery, no gimmick, no conspiracy. Just the most recent sales of “comparable” properties in the neighborhood.
So to answer the original question, “when will home prices/values finally “Bottom Out”? When WE, the consumers, the buyers and sellers, decide to stop lowering them.
Ed and Barbara Heiser/ The Heiser Team
480-830-8030 Office
Reports of the real estate market’s demise are being greatly exaggerated
Jan 30th
The Phoenix metropolitan area is now the fifth largest in the United States. This market is much stronger than the national press paints it. Remember, BAD NEWS SELLS!
Ed and Barbara Heiser/ The Heiser Team
480-830-8030 Office
The Phoenix metro area generally has an inventory of about 25,000 homes. Right now it is hovering around 45,000 units. Is an inventory of 45,000 homes too many? Sure, but considering that 128,600 people moved into the metro area last year; That extra 25,000 will burn off burn off fast. We are getting a lot of bad press about the surplus, but Phoenix is truly still a strong market. You have to take every thing in prospective.
Ed and Barbara Heiser/ The Heiser Team
480-830-8030 Office
