It’s the beginning of a new year and you can have a couple of different reactions. If you have been a member of AZREIA for a while and attending the meetings, I hope your reaction will be one of urgency!
Unless you just don’t agree with the analysis of the market over the last several months, then you know time is limited in the acquisition phase of our market. Sure there is some time left, but it may be a little as a few months. We told you in September that we would probably look back and realize that August was the second bottom of the pricing in the Greater Phoenix market. We now have data from September, October, November and part of December and that prediction remains accurate.
Don’t get me wrong. I wish the acquisition phase would last longer. This is the time to lock in good cash flow and highly probable future appreciation. However, you can’t get past a few facts.
- The window of opportunity has been slowing closing since December 2009. Yes, the number of foreclosure notices peaked over two years ago.
- The pace of inventory reduction accelerated significantly in 2011. At the current rate of reduction we could see most of the distressed inventory in any volume gone by the end of this year.
- Fewer and fewer properties are entering the front end of the funnel which will further reduce inventory.
- Lenders are accelerating their short sale decisions.
- REO inventory is rapidly going away and what is left is less attractive to investors.
- Virtually every indicator shows pricing will continue to rise for the next few months.
All of this points to now being the time to finish building your portfolio. I’ll say it again, urgency!
Okay, for all you “information purist” out there. Yes, there will always be good deals regardless of the market cycle, so no, I am not saying that you won’t continue to buy when the distress market is behind us. I am saying that you will have to work harder to find those deals and there won’t be as many of them and they won’t be priced as aggressively. I talking broad strokes here.
My New Year’s wish for all AZREIA members is to be able to tell your story in a few years about what you did during the great real estate crash. How you took the risk, invested in distress property, helped neighborhoods recover, provided housing to those that needed it, made good profits and set yourself and your family up for tremendous wealth accumulation. Or, said another way, never having to say woulda, coulda, shoulda.
I expect to see you at every AZREIA meeting and I commit to give you exceptional data, information and education to help you with your investing along with networking opportunities so you can make connections you need. I expect you to stay engaged through the end of the acquisition phase and be prepared for the next phase. I commit AZREIA will be talking about the next phase before and as it happens. We will help you be ready.
2012 will likely be like no other year. It is up to you what you do with it. Urgency!