An article from CNN caught my attention this morning, as I was doing my daily morning scroll through my Facebook wall. The title: “Home Values Rise for First Time in Five Years.”
I started to scroll through the article and realized that they were getting their data from Zillow.com. It was showing them that home prices have hit a bottom and are finally bouncing back.
Nationwide, home values rose .2% year over year to a median $149,300 during the second quarter. This was the first annual increased since 2007. Prices were up 2.1% just from the first quarter. They go on to talk about different markets that are rising fastest and when she know it, Phoenix is leading the way!
In Phoenix AZ, the median sales price for homes for Apr 12 to Jun 12 was $112,000. This represents an increase of 23.7%, or $21,432, compared to the prior quarter and an increase of 31.8% compared to the prior year.
So why is real estate gaining so fast, particularly in Phoenix? Well, the media and politicians would like you to believe that it is from policies implemented, and improving employment rates, that have spurred the real estate recovery. This is simply false.
The reality is that home values crashed so fast and so hard when subprime borrowers, and even other borrowers, were unable to continue to keep paying the interest on the massive debts they had taken on to buy real estate.
This crash was so devastating to values that it put them at all-time lows at a time where interest rates are also at all time lows.
The thing no one talks about with interest rates being at all-time lows, is that there are very few people in general who can qualify for a traditional loan. First time homeowners are having a hell of a time, and second and third time homebuyers trying to move up are facing similar situations, especially when they have negative equity on their current croperty.
So, again, what is causing this increase in value? Well, it’s really simple. Values got so low that investors from around the world (yes, I did say around the world) are sending their cash to America, specifically Arizona, to invest in the real estate. Borrowers trying to purchase property to live in themselves are finding it very hard to get an offer accepted when competing with all of these cash offers that are investors.
So, the reality is that as the middle class is wiped out and the poor class is getting bigger, the rich are also getting richer. Some people are moving from the middle-class to the rich instead of to the poor, by taking advantage of the markets through financial education.
There has never been a time quite like this where properties were so cheap and easy to cash flow, at the same time as interest rates being so low. Yes I did just say it is very hard to qualify for loans, however, if you can find properties that cash flow or have equity, times have never been easier to find the private financing or hard money loans to acquire that asset.
So go out there and find a deal to take advantage of this market and join the new rich. What choice do you have? Life is not getting any cheaper, but if you can increase your financial education and start investing in assets, you can achieve the lifestyle you want and deserve regardless of the economy, real estate, or unemployment rate.
Written by: Joshua Gayman
Sent from my iPhone