Buyers!! Jump on in - the water is great!

Economic woes and a cooling real estate market have created the perfect situation for those interested in investing in real estate. Why? There are actually several factors contributing to the opportunity available now.

Note that for this discussion, I will be referring only to the Tucson real estate market. While markets around the United States have been affected in a similar way, I am an expert in my local market and therefore speak only for what is happening here. After a heated market for several years, the past 18-24 months have provided not only a correction in prices, but a rising inventory as sellers compete for buyers.

1) New home construction has added to the melee by having produced so many houses that the entire market is flooded with inventory. As owners move to their new homes and attempt to sell their pre-existing homes, many properties have come on the market and are ripe for bargaining as home sellers become more anxious to sell. New home builders are severely reducing their inventory and their planned "new starts" for the upcoming year, so this situation will be corrected in the coming months. Therefore, now is the time to take advantage of the prices available in our current market.

2) Mortgage defaults and foreclosures have added a lot of inventory to the market. Many lenders made the choice to lower restrictions on loan requirements during the real estate boom. Many of those loans are now defaulting, especially those made to buyers who had an adjustable rate mortgage with large rate increases. When a home owner is faced with a payment that jumps several hundred dollars a month, he/she is usually left having to sell. If the home was purchased with an interest only loan, the result is that the person is left bringing thousands of dollars to closing to make up the difference between what the house was worth then and now (plus paying closing costs, agents fees, etc). Because of these factors, many homes are being foreclosed upon and are now on the market as banks try to sell them and recoup some of their fees. Hence, that creates an increase in the inventory of homes on the market.

3) Although the cooling of prices has been in effect for a while now, it is still adding to our inventory as sellers who initially held back in an attempt to "wait it out" are now at a point of needing to sell regardless of Tucson market conditions. The good news for buyers is that these sellers are informed about current market conditions and are pricing their homes accordingly. This has put a downward pressure on prices.

4) The Federal Reserve just cut the prime rate by half a percent. Although fixed rate mortgages are more closely tied to the bond market, this will affect adjustable rate interest mortgages more immediately. In addition, over time fixed rate mortgages will also continue to come down. Those with current adjustable rate mortgages will see a reduction in costs, thus allowing many of them to avoid foreclosure or the forced sale of their homes. Cutting the prime rate is a way to stimulate the economy and doing so will also stimulate the real estate market and will affect buyers' confidence leading to there being more buyers in the market which will certainly cause a reduction in inventory.

The next few months will be a prime opportunity for those who have the money to invest in real estate or those who are simply ready to buy. Now is an excellent chance to negotiate, get a good deal, and watch your equity grow over the next few years. If you are looking to buy or sell in the Tucson area, please feel free to contact me at (520) 481-3695. I can also be reached via email at Robin.Willis@azmoves.com. If you aren't sure if now is the right time for you, I would be more than willing to consult with you regarding your options so that you can make an informed decision.

Good luck in your endeavors. If you'd like to check out my website with local information, I can be found at www.TucsonExpertAgent.com.