Many of our state and local economic indicators are looking better. The information in AZREIA’s Market Update indicates a continuing good climate for investing. There is cause for subdued optimism. So, what does that mean? Well it means different things for different people.
First, let’s take the investor that has been sitting on the sidelines trying to time the bottom of the market. This investor missed the first bottom in April 2009. We have had a definable second dip in pricing that gives this investor another opportunity to get in the game. My belief is that prices will drift sown slightly for a couple of more months and then start another climb upward. This climb will be slow, but discernable. Is this the last chance to get in at the “bottom”? No one knows for sure. But, we have been floating along the bottom for 21 months. The peak lasted 24 months.
Let’s look at the investor that has been buying throughout this extended time on the “bottom”. Those that I have talked with are still in full acquisition mode. Many believe that we will see an increase in prices during 2011. They think the rental market will remain strong and vacancies will remain low. Are they right? They think so, but also believe it doesn’t matter. They feel they are buying at such low prices that there is room for error.
Here is what we do know. The Arizona economy will come back. It is currently improving. Our employment numbers are some of the best in the country. All of our economic indicators are showing improvement for 2011. Foreclosures seem to have peaked even considering the backlog because of the moratorium. Throughout this entire downturn in our real estate market what happened to rental rates for single family houses? They went up!
Here is also what you should know. There are fewer investors in the market right now than there have been in a long time. You have enjoyed a couple of years of less competition. Currently, there is plenty of room for everyone that wants to participate in this exceptional real estate investing market. As soon as the press starts writing stories about the improving real estate market there will be investors coming back into our market in droves. This will cause upward pressure on pricing.
Considering the factors in this article as well as others, I believe that we will have a few more months of bottom pricing followed by many months of slow, but steady increases. But, my opinion doesn’t matter. What do you believe? If you feel the same as I do, what are you going to do in 2011? IF you feel differently, what are you going to do in 2011?
The point is to: 1) make up your own mind; 2) make a plan; 3) implement your plan; 4) stay connected and adjust your plan if necessary. I wish you a very prosperous and health 2011. I hope to see you at every AZREIA and Phoenix Real Estate Club meeting in 2011.