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More Real Estate Inventory For Phoenix

March 18, 2012 by 1 Comment

So I get this email from a colleague that likes to tease me about my ongoing argument that we are missing inventory. It states that FHFA is going to start selling REO property to investors. This real estate inventory is mostly rental property. Document here. I was fascinated by the fact that, yes, there are homes in this market for sale that are not in the MLS. Fannie and Freddie are in the landlord business. This program is a Pilot and denotes that it is a small number of potential homes available and if successful, there will be more sales of homes held by the Agencies. You can see the mix here. 90% of the homes are filled with tenants. It will be good to see the REO market come back and present further opportunities to investors in the greater phoenix area.

It was just two weeks ago that I sat down with a company that is approved by Fannie Mae to rehabilitate REO property for them. They had over 1,100 Fannie Mae REO properties in various stages of repair and rehab, which were not in the MLS. I asked them how much of the market share do they have. Their response was “Maybe about 10% of the market.” That would mean that there is over 10,000 properties here in AZ that are going to come to the market soon.

A recent report by Amherst Securities, I could not find the link and will provide once I find it again, analyzed that there is over 20,000 homes in greater phoenix that were purchased by investors at Trustee Sales that are being held as rentals till the market improves. Those homes being held, were not purchased to hold, it was the result of a foreclosure market that has increased in price such that flipping the homes were no longer affordable. The intention of those investors is to put them back on the market as soon as they can.

We may have a shortage of inventory in the MLS, but we don’t have a shortage of real estate opportunity in Arizona. This issue may little solace for homeowners that are significantly underwater in their home, but for those with break even or slight equity positions in their homes, investors that purchased in the last year with the intent to flip but stuck will start seeing a light at the end of the tunnel.

What homeowners who are upside down should take away from this is that NOW is the time to get out of that home and start looking at either purchasing a home now, prior to the short sale or locking in an affordable rental position post short sale so they can reestablish their credit quickly.

“Are you or do you know someone that is upside down in their home? Facing foreclosure? Considering walking away? Arizona has unique foreclosure and deficiency laws you should know. Contact me to understand your legal rights and obligations.”

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  • http://www.facebook.com/profile.php?id=100003405729584 Muskan

    Let me see if I can state my position as unoiuqvecally as possible:There are very, very, very few people who bought a house they could afford (that is, 20% down with a fixed-rate loan and a monthly payment under 1/3 of their income), who had adequate rainy-day savings (6 months of income is the traditional standard, although I’d recommend more with a predictable recession being imminent for years), and have lost their job and their home. I feel bad for those people, if there are in fact any in that situation. I also feel bad for the children of the irresponsible individuals who lost their homes through gambling (the only other scenario), may they learn from their parents mistakes and not gamble their well-being on similar get-rich-quick schemes.However, I do not feel bad for most of the people who have lost their homes (gambling bets) to this inevitable and predictable bubble correction. It’s grotesquely irresponsible and despicable to put your family in that situation, and I have very little sympathy, especially with the seemingly universal mindset of avoiding personal responsibility and blaming the evil lenders and evil corporations.I also feel virtually no pity for people who own houses as investment or vacation properties. All investments carry risk, and bubble assets are very risky; if you were not aware of that, you have no business investing in them, and you were likely just trying to hop on the get-rich-quick bandwagon (not you Brad, but the generic investor). If you bought extra properties as luxury items, and they decline in value, suck it up. In either case, you may get my sympathy and condolences at a social gathering, but you absolutely fail to qualify as a human tragedy case.If you put 20% down on a house in a massive bubble market and you’re now underwater, congratulations, you are now a more educated home buyer. Either you knew it was a bubble when you bought, or you were not educated enough to be buying (or you were gambling, which is the likely case, and I have no sympathy for you). If you believed everyone’s hype, your 20% down has bought you a valuable lesson: marketing (like NAR propaganda) is not the same as unbiased advice. Try not to get bamboozled next time.There’s no human tragedy here, or at most an imperceptibly small amount. What there is here is unrepentant greed, recklessness, consequences, and harsh life-long lessons. Yes, some of those are ugly, but your statistic is the silver lining: it means were getting closer to the eventual bottom, where everyone involved can bottom out and start rebuilding, hopefully a little wiser this time. That’s not ugly, that’s the cycle of life.