A recent Wall Street Journal article conveys “Here’s More Evidence That Home Prices
The indicators for the Phoenix market are clear that the bottom was reached in February of this year and that rapid appreciation is continuing. The implications or effects are myriad:
Traditional home purchasers, those with FHA or VA loans and a low down payment, have several obstacles in their paths.
- First they sense an urgency to purchase before prices rise even more. Many parts of the Valley have experienced 20% appreciation this year.
- Second, the rapid change in prices makes appraisals more difficult since appraisals are typically based on a lagging average of comparable home sales. This makes the home sellers wary of accepting financed offers, for fear that the financing will not be approved.
Cash investors have the upper hand with their ability to respond to price changes and close on their purchases without the requirement of an appraisal. Many of these investors are purchasing to rent, not to immediately resell the home. The net effect is to further reduce the inventory available for traditional home buyers.
New home construction can be expected to expand immediately to meet the demand. There are tales already of customers lining up at new home construction projects throughout the Valley.
For more information hear our recent interview on NPR – The Housing Market: Have We Finally Hit Bottom?