ON E OF A R I ZON A’ S N AT U R A L R E S O U R C E S
S e p t e m be r 2 0 1 0
Nate Martinez Team Is it a good time to buy?
I hope this newsletter finds you well and enjoying the end of another blistering hot summer in the Valley of the Sun! Is it a good time to buy despite the uncertain economic times? I would like you to decide after you read this article. I want to share some simple facts about the market in Arizona – the true reality that you won’t see on the six o’clock news. We may have thought the interest rates were fantastic “back in the day” or during the upward boom of our market, however, I am here to report, the current rates are blowing away those numbers – even in our recessed economic times. Right now, rates are hovering between 4.125 and 4.50 for fixed rates and as low as 2.875 for conventional ARM type loans. For a $100,000 purchase, this interest rate will put your monthly payment far below what you could find in a decent rental in Phoenix today. I know some of you are thinking you missed boat on the best time to buy because you didn’t purchase while the $8,000 tax credit was available – well consider the fact you may have had to pay more money for the same
house you can buy today, because you are not competing with every other buyer who was trying to secure a deal before April 30th. I am not discounting the benefit of the tax credit, however, my point is that there is life after and there are still phenomenal deals to be had in our market. Let me give you a real-life example of what I mean by “phenomenal” – I had an REO listing in Avondale, built in 1998 which sold the end of July for $89,000. This was a clean, 3 bedrooms, 2 baths, 1600 s/f home – in move in ready condition. In 2007 this home fetched a whopping $218,900 sales price. The shocking part of these numbers is the fact that brand new, in 1998 this home sold for $104,406. The pricing today, in 2010 is below what this home sold for new 12 years ago! Why would you want to wait any longer to take advantage of these prices? Wouldn’t you agree, if you made purchase like this example, the market can only go up from here? Arizona Regional Multiple Listing Service came out with a report for home sales in the month of July. The
report showed the total number of home sales and what type of financing was used for each transaction. Out of 5,227 total sales, there were 1,850 reported to have been all cash transactions – that is more than 35% in cash transactions. This tells me, there are still people out there with money who are willing to invest it in our economy. Consider this: if you kept $100,000 in the bank earning the average 1% per year interest you would yield approximately $1,000 after one-year of interest – or if you break it down to the ridiculous, that is only $83.00 per month return on investment. Now, let’s go a step further with this analogue. The average 3 bedroom, 2 bath single family home in Phoenix rents for approximately $1,000 per month. If you were to purchase a $100,000 house and rent it for $1,000 per month, less any property management fees you potentially earn anywhere from $9,000 to $12,000 on that same $100,000. Potentially, you could net $850.00 per month in rent on a property you own free and clear
– that is 10 times more return that keeping your money in the bank! This simple calculation does not include the tax benefits you stand to gain and the possible future appreciation you will earn in equity over the time you own the property. Basic math tells me, this is not only a great time to buy – it is the time to buy. But I want to hear what you think. Tell me how you would answer the million dollar question – is it a good time to buy? I want to hear your feedback and comments regarding the market we are currently in. Please email me at Nate@NatesHomes.com and we will post the results on our blog next month. If you or someone you know is sitting on the fence trying to decide whether or not to buy or invest, please call us now to learn more. Do not wait. There are hundreds of opportunities out there today which will not be around forever. We look forward to hearing from you soon!
NATE & TEAM.
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