Phoenix Skyline
Cash buyers competing for Phoenix’s bargain-priced existing homes
Phoenix Business Journal – by Mike Sunnucks
Date: Friday, April 22, 2011, 3:00am MST
Investors and second-home buyers are gobbling up bargain-priced properties across the Valley, and that’s prompting some intense bidding wars among those who have the cash to purchase homes — especially those less than $200,000.
It’s also in stark contrast to what others are experiencing in the local housing market.
Many Phoenix-area homeowners are stuck in their houses with underwater mortgages and can’t sell, move or refinance unless they want to walk away and go back to renting. Others can’t buy homes because of poor credit, they don’t earn enough money to qualify for a mortgage, or they can’t make the required 20 percent down payment.
That leaves the bargain hunting to those with cash.
“I’m seeing a lot of Canadian and out-of-state investors and second-home buyers,” said Diane Brennan, a Realtor with Keller Williams Realty in Scottsdale. “With the Canadian dollar getting stronger and stronger, more and more are buying and looking at investing here — not only for second homes, but also as rental properties.”
Brennan, a former radio announcer who hails from Canada, said sellers prefer cash offers to financing, which gives investors and those with money in their pockets an advantage over other bids.
She said wealthier out-of-town buyers are flying into Phoenix with $80,000 or $100,000 ready to spend on retirement, vacation or investment homes.
More and more Canadians moving to AZ
Other Realtors report the same market dynamics.
“I am working with buyers and Canadian investors in Phoenix, Scottsdale and Prescott. There are bidding wars up to $350,000,” said broker Lisa Schofield, owner of Desert Pines Realty. She sells homes both in the Valley and in Prescott.
“I am working with Canadians as well. We called on two homes. Both had multiple offers; one had six offers,” she said. “My clients in Prescott wanted two homes on Wednesday of last week and both had multiple offers. Both were in the $200,000 range.”
The housing market collapse continues to provide plenty of bargain opportunities for buyers with cash.
The median price for existing homes sold in March was $125,000, according to Arizona State University — down from $142,500 in March 2010 and $193,550 from August 2008.
ASU also reports an upswing in the volume of existing-home sales. There were 11,000 such sales in March, up from 8,600 sales in February and 8,300 in January. Those totals include foreclosures, which accounted for 43 percent of local existing-home transactions in January and February, and 37 percent in March.
ASU economist and real estate professor Jay Butler said housing prices traditionally increase during the spring and summer; but because of tight mortgage underwriting standards that require higher down payments, it’s investors and buyers with cash in hand who are in the marketplace.
“Sales and median prices tend to increase as the traditional owner-occupant moves to lock in a purchase before the start of schools and holidays,” said Butler. “However, even though mortgage interest rates and prices are attractively low, tighter underwriting standards and a struggling economy and job market could continue to be obstacles.
“The dominant group will probably be investors scrambling to take advantage of the buying opportunities that might be slowly disappearing in many areas,” he said.
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Diane Brennan is Your Voice in Real Estate. She helps Canadians and other foreign investors purchases property in Scottsdale, AZ. She’s an expert in the beautiful communities of DC Ranch and Grayhawk and her team includes experts in all areas of the Phoenix metropolitan area. Read what her clients have to say about her.
