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Foreign Investors Snapping up Bargain Priced Arizona Homes

A growing number of cash-rich foreign investors are seizing the opportunity to snap up U.S. homes at bargain prices.

Not all U.S. markets are universally appealing to out-of-country investors.  International homebuying activity is largely concentrated in a few areas of the country. Using public record data compiled by San Diego-based real estate data analysis firm DataQuick, Inman News has identified the 10 most popular areas in the U.S. for foreign homebuyers.

The majority of the markets, if not all, are recognizable as tourist destinations. Six of the 10 areas are in Florida; three are in the West (Arizona, Hawaii and Nevada); and one is in the Northeast (New York). No Midwest markets made the list.

The 10 markets, ranked by highest share of foreign buyers, according to public records data, are:

  1. Lakeland-Winter Haven, Fla.
  2. Cape Coral-Fort Myers, Fla.
  3. Orlando-Kissimmee-Sanford, Fla.
  4. North Point-Bradenton-Sarasota, Fla.
  5. Miami-Fort Lauderdale-Pompano Beach, Fla.
  6. Phoenix-Mesa-Glendale, Ariz.
  7. New York County, N.Y. (Manhattan)
  8. Honolulu, Hawaii.
  9. Tampa-St. Petersburg-Clearwater, Fla.
  10. Las Vegas-Paradise, Nev.

Foreign buyers account for a small but growing segment of overall U.S. sales. Sales of U.S. existing homes totaled $1.07 trillion in the 12 months through March 2011, according to the National Association of Realtors’ 2011 Profile of International Homebuying Activity.

Demand for U.S. real estate from abroad has inspired some real estate companies,  global franchisor Re/Max, to launch international versions of their real estate search sites.

Four states accounted for 58 percent of international sales in the year through March 2011, according to NAR: Florida (31 percent), California (12 percent), Texas (9 percent), and Arizona (6 percent). Other states corresponding to the markets on this list made up smaller shares of overall international sales: 3 percent in New York and 2 percent each in Hawaii and Nevada.

Only 37 percent of respondents to NAR’s national survey said their international clients intended to use their purchase as a primary residence. Of the remainder, 28 percent planned to use it as a vacation home for family and friends, 16 percent as a residential rental property for investment, and 13 percent for both vacation use and rental income.

Arizona’s Real Estate Market….The Good, the Bad and the Ugly

The Good:

Real-Estate economists across the country are studying an early but surprisingly broad Phoenix turnaround.

According to the most recent Case-Shiller residential report, Phoenix was the only city showing price INCREASES in recent months.

Jobs are returning, economic indicators are positive and new construction permits are up.  Look around the valley and you can see the signs of construction for both residential and commercial properties.

Watch for the Phoenix metro area to lead the nation in APPRECIATION over the next few years. We ARE recovering and there’s good reason to be optimistic.

The recession has “corrected” the natural market cycle of supply and demand. This recession was without question deeper, more global and a 24 hour news story. But the simple truth was in 2003- 2006 (just 6 short years ago) we were saying “this can’t go on forever, how are our kids going to afford housing?” That has been the correction. The supply is down, ability and demand is up and the natural cycle remains intact.

Golf Communities fared better that most:

While some parts of our valley saw 50% to 70% loss of value, there are always pockets of any market that will hold their value better than other areas. These are the close-in core areas, waterfront, view properties, and golf course communities. This recession has taught those that thought that these areas were “recession proof” were also affected but not to the extreme to the new communities in the outer areas of Maricopa, Queen Creek, Buckeye and Surprise.

Golf communities for the most part saw property values drop but demand for the communities remained strong.

The Bad:

If you have been sitting on the side lines waiting for the housing market to hit bottom, you missed it! However, there is still plenty of opportunity and time to make you move.

According to ARMLS (Arizona Regional Multiple Listing Service) our inventory has dropped dramatically over the last 8-12 months. At the time of this writing we have just over 22,000 homes on the market, down from the high of 53,000 in 2008. When we remove the homes that are under contract waiting lender approval of a short sale or other conditions we have just over 14,000 homes available. Taking a smaller snapshot, Scottsdale has only 1600 homes available!

The Ugly:

The latest recession has devastated many of your neighbors and perhaps your own family’s estate and net worth. There are still many properties worth far less than their mortgage balance. A recent report by CoreLogic showed 48.3% of homes with mortgages in the last quarter of 2011 in Arizona are “under water” (negative equity mortgage).

There are remedies available. You may qualify for a short sale, you may have the opportunity to negotiate a “deed-in-lieu” allowing you negotiate avoidance of foreclosure and return your property to the bank. There may be some that because of age, and loss of value that a strategy of allowing the property to go back to the bank is the best result for your estate.  You may now qualify for the new HARP 2.0 refinance program.  This program is projected to help over 2 million underwater homeowners refinance to lower interest rate by removing the appraisal restrictions.

Please consult a Realtor, tax consultant, and Attorney specializing in real estate.

What’s Next?

Whatever your age, income, and position you should be looking forward to the next cycle. Now is the time for you to pick up properties to look for steady long term appreciation. Yes, I said APPRECIATION!

Is Golf Your Game?

If you live in or would like to live in a golf community and considering a move, we recommend giving us a call. We specialize in golf communities throughout metro Phoenix from Sun City to Sun Lakes and all in between!

Invest in Arizona!
We market to the world wanting to purchase their place in the sun in Arizona!  Call us today for your market analysis and strategy consultation. 480-421-8116 or info@foregolfproperties.com

The Market for Resale Homes Remains Strong

Despite sparse home inventory, the National Association of REALTORS® reports that 4.59 million resale (existing) homes were sold in February on a seasonally-adjusted, annualized basis.

Last month’s sales data represents a 9 percent improvement from the year prior.

There are now just 2.43 million homes for sale nationwide — a 19% reduction versus a year ago. The complete home inventory would “sell out” in 6.4 months at the current sales pace.

Some analysts believe that a 6-month home supply indicates a housing market in balance.

The real estate trade group’s report contained other noteworthy statistics, too :

  1. 32 percent of home sales were made to first-time buyers
  2. 33 percent of home sales were made with cash (i.e. no mortgage)
  3. 34 percent of home sales were of foreclosed homes or homes in short sale

In addition, nearly one-third of all home sales “failed” last month, the result of homes not appraising at the purchase price; or, the buyer’s inability to secure mortgage financing; or, insurmountable home inspection issues.

Even accounting for last month’s high contract failure rate,though,  the Existing Home Sales report still posted its second-highest reading since May 2010. For today’s Scotttsdale home buyer, the data may be a “buy signal”.

As compared to last fall, home supplies are down and home sales are up. Basic economics tell us that home prices should start to rise shortly — if they haven’t already. After all, the Existing Home Sales data is 30 days old, reporting on February. It’s nearly April today.

The good news is that homes remain affordable. With conforming and FHA mortgage rates in the low-4 percent range, home affordability is at its highest in history. Home prices may rise this spring, but at least your mortgage payment should remain low.

Search the Arizona MLS for Golf Properties & Communities in Real Time!

iStock Housing Market Chart

Surprising Early Rebound for Phoenix Housing

As home prices continue to drop in most cities, and the  real-estate rebound here in Phoenix holds lessons for the rest of the country.

This sprawling desert metropolis was one of the hardest hit housing markets during the bust.Phoenix home pricesdeclined 55% from 2006 through the end of 2011, and Arizona’s foreclosure rate jumped to No. 3 in the nation in 2009. Hundreds of thousands of homeowners are underwater, meaning they owe more than their homes are worth.

Now real-estate economists across the country are studying an early but surprisingly broad Phoenix turnaround. The sharp drop in home prices has brought new buyers into the market. Unlike other markets where housing recoveries have been snuffed out by big overhangs of homes for sale and foreclosed properties, inventories are lean here.

“Phoenix has hit a bottom,” says Thomas Lawler, an independent housing economist who was one of the first to warn six years ago that prices in overbuilt metros were poised to fall.

The nation’s hard-hit housing markets face a tough act: engineering a housing recovery without traditional trade-up buyers, many of whom are either unwilling or unable to sell because of huge price declines.

Phoenix has found a viable formula. Low prices are igniting demand from first-time buyers and investors who are converting the homes to rentals. The local economy is on the upswing with several big employers like Amazon.com Inc. and Intel Corp. hiring again, which is further increasing demand for housing. And the region is benefiting from a surge of buyers from Canada who are using their favorable exchange rate to scoop up bargains in the desert.

Local mom-and-pop investors are also playing key roles in soaking up supply. “I’m running my Realtor ragged looking at properties,” said Robert Gerundo, who last month stood inside a two-bedroom condominium, scribbling his signature on an offer to buy the unit for $50,200, slightly above the listing price set by the bank, which recently foreclosed on the unit.

From Bloomberg News.

Mike Jones flips real-estate signs for a Realtor, David Rod, as they are printed. Investors are buying many Phoenix properties and renting them out.

Mr. Gerundo has bought 13 properties in Phoenix in the past two years and rents them out for as little as $950 a month. The 49-year-old, who drives around in a Jaguar with a Rutgers sticker on it, says he is making so much money as a landlord that he quit his job last year in New Jersey as a banker.

Nationally, housing demand still remains weak and bank-owned sales are expected to rise this year, putting more pressure on prices. Many economists say they expect home prices nationally could fall by another 3% or so this year before hitting a bottom next year. Most expect that prices will rise little for several years.

U.S. home prices fell another 2% in the fourth quarter on a seasonally adjusted basis, according to the Standard & Poor’s/Case-Shiller index tracking 20 cities. But prices rose by 2% in Phoenix, the biggest increase of any metro area in the country. Over the past year, prices in Phoenix are down by 1.2%, the smallest drop since its prices started falling in 2006.

Other markets are showing signs of life, too, as the spring buying season gets under way. Recent job gains for Detroit’s auto sector have helped rev up sales in recent months. Home prices in Washington, D.C., have fared better than in much of the country thanks to better employment prospects from government-related hiring.

Big price drops, like those in Phoenix, are another key. In Detroit, prices are down by 46% over the past six years and have fallen to levels last seen in 1994. Sales have picked up in Miami, where prices are down by 51% over the past five years.

But low prices alone haven’t been enough to so stabilize other epicenters of the housing bust where job growth still lags. In Las Vegas, where prices have tumbled 62% since 2006, including 8.9% over the past year, the local economy is heavily dependent on tourism and gambling, both industries that haven’t recovered. “A lot of markets in the country have hit a bottom, but I just don’t see them coming back the way Phoenix has,” says John Burns, a homebuilding consultant in Irvine, Calif.

The improving housing market in Phoenix isn’t much comfort to anybody who bought a home there a few years ago. More than 52% of mortgage borrowers owe more than their homes are worth, according to CoreLogic, a real-estate data company. And not everyone in Phoenix is convinced that the improvements will last, especially if the economy falters or oil prices soar.
Source: Wall Street Journal/Business

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