how the economy is affecting phoenix az real estate

December 6, 2008

Everyone knows that the Scottsdale AZ real estate market is suffering to find firm footing. However, unless you are in the real estate or mortgage business, you may not know why.

There are economic indicators about consumer consumption, manufacturing, inflation, (to name a few) that mean a lot to analysts that paint a picture of the health of the markets , but require a Rosetta Stone for most Americans. And, … when all the news is assimilated, we are now told that we are in a “recession”, officially.

However, why do Phoenix AZ real estate prices continue to drop and drop?Is it simple supply and demand? And why are things like unemployment rising from 5% to 6% make such a significant difference to the health of the real estate market? All Good question.

Here is an answer that should help shed some light on the growing problem of finding a foundation in real estate so we may build towards a recovery.how the economy is affecting phoenix az real estate

I have several clients who were Scottsdale AZ real estate investors. They bought homes during the Phoenix AZ real estate boom with the hope of selling quickly.  As we know , ‘flipping’ became difficult, (or impossible) and as a result they made the necessary decision to rent the properties to help cover the monthly mortgage payment. A great strategy. Yes, if the home stays rented.

My client has 2 rental properties and his primary residence. He has had both homes rented.  It is now December 6th, his first tenant has not sent his rent check due.  The tenant has informed the landlord that he has had his hours reduced at work. And is looking for another job. However, with little success so far.

The Scottsdale AZ real estate investor second client came to his office with half the rent and a post-dated check for the other. This second tenant told a very sad story about his wife’s company going out of business. He was informed  that he will be laid-off as of the first of the year. As a result, he will try, but will find it difficult to continue to pay rent.

The resulting fallout of a bad economy is struggling business. Struggling business lay-off workers. Unemployment makes it difficult to pay rent or mortgages.

Me client, a Doctor, is now faced with letting these houses going into foreclosure.  The time-frame of the eviction process alone will make it near impossible for him to weather this storm financially.

As a result, the Phoenix AZ real estate market will see 2 more foreclosures. Foreclosures that will become inventory as REO  (lender owned real estate) at deep discount prices compared to resale.

I hope this helps give you a window in more simple terms of the intricate problems and the interconnected issues facing the Phoenix AZ real estate market and American housing market.

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Copyright © James Wexler *how the economy is affecting phoenix az real estate*

If you are a Phoenix AZ real estate investor or a Scottsdale AZ real estate buyer, lower interest rates and Phoenix AZ real estate prices down more than 30% provide a great opportunity to get thedeal of a lifetime.

Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short  Sales

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Written by James Wexler · Filed Under Articles 

Comments

One Response to “how the economy is affecting phoenix az real estate”

  1. Nordaune at Real Estate in Rochester MN on December 11th, 2008 11:01 am

    Great Real Estate post … I found it very interesting.

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