More Investors Buying at Trustee Sales as Gov. Incentives Impact Market
As the Phoenix Valley’s average home resale prices continue to stabilize, more and more all-cash investors are lining up to purchase single-family detached houses via trustee auctions. While the median price paid per square foot has fallen year-over-year since October 2006, Jan. ’10 statistics combined with the past months numbers indicate that the average resale price paid for homes did not decline from the level set a year ago. It’s been nearly 3 years since such an instance has occurred.
Trulia.com is reporting a $1000+ median home sale price gain in Phoenix Metro for the quarter of Dec. 2009 to Feb. 2010 when compared to the Sept. through November ’09 period.
Escrow closings in the Metro cities of Maricopa and Pinal Counties neared 6300 for new and resold homes and condos during the month of January. Up 15% from the same span a year earlier.
Over 50% of houses and condos resold during Jan. were previously foreclosed homes (prior 12 months). This runs parallel with December and November ’09 statistics, and is another consecutive month down from the foreclosure resale high of +66% of all homes resold during the Month of March, 2009.
The total number of homes and properties purchased by investors and cash buyers rose in January, as did the percentage of homes selling below $100k. Naturally, this resulted in a slight dip for January median sale prices compared to December ’09.
The market remains fairly rigid for the traditional listing seller. Home owners are being shutdown by competing fix and flip foreclosure investors, while many neighboring comp. properties have been selling short thanks in part to the Dec. ’09 program initiated by the U.S. Treasury.
With government incentives set to expire this Spring (ex. first-time home buyer tax credit), expect previously less-motivated sellers to begin reducing list prices these next couple of months as the pressure to sell will build in an attempt to lure the remaining owner occupant, first time buyers.
Our bode: Buy and hold investors will be out on the prowl competing with owner occupant home buyers for stretches of discounted real estate in traditionally strong rental districts. In turn, Maricopa and Pinal County trustee auctions will open up for property rehabbers to buy foreclosed houses low, upgrading and improving residences for less.
The fix and flip marksmen won’t be discouraged from purchasing foreclosures when/if listing prices tighten this month and next. Investors will be chomping at the bit to buy and improve foreclosed homes via trustee sales, looking to market their offerings to an extra wave of buyers. It’s not by happen-chance that the Fed. went and removed the 90 day seasoning rule when they did.