What Issues Keep Investors Away from the Phoenix Housing Market?

What Issues Keep Investors Away from the Phoenix Housing Market?

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The housing bubble caused quite a surge in the Phoenix area until 2006, and the recession hit hard. However, during 2011 and 2013, real estate agents had a few reasons to rejoice since investors seemed to slowly get back in the game and bring their contribution to a stalling market. However, the fact that investors were more interested in purchasing real estate properties instead of families only hid the true problem: these investors are always looking to flip houses for a profit, and without potential buyers, their interest is bound to dry out.
July 2012 – a peak for investors
The surge in investors’ interest for the Phoenix housing market reached a peak in July 2012, when they bought about 40% of all the houses sold during that month. However, the enthusiasm was going to wear thin, as no later than April next year, their part in the total number of sales reached 16.7%.
The unwanted side effect
Having more buyers on the market is a good thing, because prices start rising again, helping the entire sector recover. However, if the rise in pricing is caused mainly because of an interest manifested by investors on the lookout for a quick profit, this can actually hurt the market. Potential buyers, American families truly interested in purchasing a home, are only bound to shy away from the rising prices, since they cannot afford them.
For a better picture of the situation, the recovery for the median household income in Phoenix, for the duration when the investors showed their biggest interest in the housing market, was only 0.5%.
The job market continues to lag behind
The main factors that influence the housing market in Phoenix are the same that keep investors out of the game. For instance, the job market continued to lag behind the national trends, and this means one thing: plenty of Phoenix inhabitants cannot even think about getting a loan, especially a long term commitment such as a mortgage loan.
Difficulty to qualify for new loans
Potential home buyers have a lot of troubles with getting a new loan, for the simple reason that lenders still have tough underwriting guidelines that do not allow these buyers to get a mortgage loan and benefit from low interest rates.
Unfortunately, it is quite a game of cat and mouse, since would be home buyers cannot afford high interest rates, and lenders do not want to risk anything by lending money to clients who have lower income levels.
New listings are added
In the same time, real estate agents are hard at work, and new listings are added, especially during spring. Prices have so far improved a little, but the volume of sales continues to remain low.
Investors may have plenty of opportunities to choose from, but the real question is whether they have a solid interest to take them or not. Only as the economy of the area improves, will the real estate market get better again, as more and more Phoenix inhabitants will start becoming interested again in purchasing real estate properties.
Increased activity in 2015
Recently we have seen a jump in activity and it seems to be turning into a good sellers market. Prices are rising and buyers are quick to respond. Investor and rehabbers are marketing hard for distressed properties and making a decent return on their investments. Interest rate are still cheap but lenders are still choking out the little guy. Maybe someday bankers will realize who’s driving the market and who’s putting on the brakes.

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