I had to quickly check my calendar just to make sure this wasn’t July 2005. Here is what is going on in the real world for this frenzied Phoenix home buying market. Just this past Friday (3 days ago as of this writing), I had a client send me her list of 6 homes she wanted to preview on Tue (tomorrow). Well, right now, 4 of those 6 homes have accepted offers on them. So by tomorrow who knows what will even be left to show. In my opinion the bottom of this market decline is behind us and buyers are out in full force snapping up virtually everything in sight, while home prices and interest rates have not jumped yet.
And these homebuyers are not alone! Well over 11,000 transactions took place (the highest level in a decade – even during the real estate bubble). We are now seeing homes in the market for only days (instead of months), multiple offers being received and many offers over list price. In a few years, I feel we may very well look back at the spring of 2011 and say “can you believe what they were giving these homes away for back then?”
Case in point: you often can’t even insure these homes at the price you paid. Try obtaining homeowners insurance on such properties and most insurance companies will use the replacement cost method to determine your coverage amount and ultimate policy cost. One such client of mine secured a 4000 sq ft home (built in 2006) for just $197,000 only to have the insurance company insure it for over $400,000 (their determination of its replacement cost – and what some would argue is perhaps closer to its fair market value).
So is the boom back? Hardly. But the bottom is behind us. Inventory of homes for sale in Phoenix has dropped substantially from just a few months ago. Talk to any buyers actively looking for a home and they will likely tell you how hard it is to get an offer accepted. In my opinion, this is all good news for home prices in the very near future. Sellers – enjoy the strong and continued recovery!