I have received more comments and emails about a comment I made at the end of the Market Update presentation at February’s AZREIA meeting than I have received in a very long time. My comment was something like, “Rarely in life do you get a second chance. The current opportunity to invest in the Greater Phoenix real estate market at a price point that is equal to the previous low point in the March/April 2009 time offers that second change opportunity. So, if you missed the previous low or are just now getting into real estate investing you have a tremendous opportunity.”
Now, that doesn’t mean that our prices can’t go lower, they can. It is hard to generalize in a short article like this one as our market has so many different segments to it, but when we last reached this range of average price per square foot for REO property 22 months ago, investors flooded into the market. The effect was to drive prices up and supply down. Now, prices are down as supply has been increasing and volume is increasing.
At the Phoenix Real Estate Club where we have the time to discuss the market, the consensus of the room was that prices will go down another $3 a foot. Personally, I don’t think they will. They may drift down a little or they may hold for a little while, but I don’t think there will be much additional downward price pressure on the REO side. If I’m wrong and the price goes down another $3 a foot, on a 1500 square foot house that is only $4500. I wouldn’t want to miss out on opportunity trying to time this market perfectly. (A short commercial for the Club. It is an exceptional networking meeting with 60 to 100+ investors in the room every month. The structured networking combined with the open discussion on market trends is invaluable.)
I ended the Market Update with the green/yellow flag meaning that in my opinion we are in a “go” market to invest, but with caution. Mistakes are being made every day in this market especially when the acquisition decision is based solely on price. Use sound business practices to make you buying decision and complete your due diligence on the property.
The Market Update (without analysis) is available in the Member’s Area at www.AZREIA.org as is every monthly Market Update for the past several years. I encourage you to review the information yourself and draw you own conclusions as ultimately you are the final decision maker and responsible for you own investments.
The next AZREIA meeting on March 14th in Phoenix at the Celebrity Theatre will take an even more in-depth look at the market and the numbers behind it. Mike Orr of the Cromford Report is conducting our Workshop. His analysis is outstanding and he brings a unique perspective to his analysis. Don’t miss the opportunity to get his perspective.