Many potential homebuyers who sat on the sidelines watching metro Phoenix
But many are finding they cannot buy.
Armed with a preapproved mortgage and even enough cash for a hefty down payment, they bid on foreclosed homes and houses up for short sale -- but are outbid by investors buying houses for cash on the spot.
Traditional homebuyers, who typically make an offer contingent on other steps such as an appraisal and securing the loan, find they can't compete with someone who is willing to pay up front the entire asking price or more.
Tight supply makes the competition even stiffer.
Home resales, averaging 7,500 a month, are at their highest level since the peak of 2005-06. But the number of homes for sale is at the lowest level in more than a decade. There currently are about 23,000 homes for sale in metro Phoenix
With demand for houses high and supply so low, many are drawing multiple bids.
That is not to say the bidding wars are driving up prices in the overall housing market nearly as much as they did in boom times. Median resale prices remain near the bottom of the lows to which they fell after the housing crash and wave of foreclosures that began in 2007.
But those low resale values have kept many traditional sellers out of the market, too, experts say. Many homeowners don't have enough equity to sell, or just don't see enough profit to make selling and moving worth it.
The result is that much of today's bidding is on foreclosure homes or short sales, where banks approve a sale for less than the current borrower owes.
And in these cut-rate homes, cash is king.
Foreclosures have declined in recent months, as banks increasingly approve short sales to help residents avoid foreclosure. The drop in foreclosure inventory is working to push up home prices a little each month.
Most metro Phoenix
But for the housing market to truly recover, they say, it must see a return of the regular participants: homeowners confident enough to put their houses on the market, and perhaps more importantly, regular buyers with mortgages and jobs who can afford to buy homes of their own.
"Phoenix 's housing market is in a state of fast changes," said Mike Orr, real-estate analyst for Arizona State University 's W.P. Carey School
"Prices are ticking up, and buyers are getting more and more frustrated they can't find homes," said Orr, who also publishes daily real-estate analysis called the Cromford Report.
Traditional buyers
Nakisha and Lenny Williams heard about the great deals for Phoenix
The young couple quit their jobs, sold their Chicago-area home for a modest profit and relocated to Phoenix Litchfield Park
Nakisha Williams works for a water company. Though Lenny Williams recently lost his construction job, the couple have been saving for a down payment and are preapproved for a mortgage they can afford, if their offer of $120,000 for the home is approved.
"It's crazy for buyers now," said the couple's real-estate agent, Yvette McDonald of Monopoly Realty. "The Williamses are still looking for other homes while they wait to hear back from the lender on the Litchfield Park
She has several other potential buyers in the same position, making multiple offers that aren't accepted or are topped by other bidders, especially investors.
Investors
Andy Rysdam has $10,000 for a down payment and is preapproved for a mortgage to buy a home for as much as $175,000. Recently, his real-estate agent found a potential house listed late in the afternoon. They went to see it first thing the next morning, and already there were seven other offers on it.
"It's the investors getting the best homes. They have cash," said Rysdam, who is renting and not giving up on buying a home despite already being beaten out by investors several times.
Cash buyers, who are typically investors looking to resell the properties or use them as rentals, account for nearly 60 percent of all Phoenix-area homebuyers now, according to data compiled by AZBidder.com, an online foreclosure-auction service.
"We are seeing multiple offers on any decent home," said Rysdam's agent, Brett Barry of Phoenix
Wealthy investors can make more money buying foreclosure or short-sale homes in growing areas like Phoenix
Watson can't find enough homes for her Canadian investor and is considering approaching homeowners underwater on their mortgages and late on their payments to sell through a short sale even before their lender suggests it.
"I am about to go door to door," she said. "People don't realize they have the short-sale option because the deals have been so hard to do in the past, but not now."
Laura Gonzales thought she had found the home of her dreams in Phoenix Phoenix 's Desert Ridge area since she moved from California
As foreclosures have climbed in her neighborhood and home prices have fallen, she has slowly saved for a down payment. In January, she found "the perfect home" listed for short sale just a block from where she's renting. The house was bigger, and her monthly mortgage payment would be less than her rent.
She made an offer the day it was listed for sale. But already a dozen other offers had been made. She upped her offer by $10,000, but at least two investors upped their offer by twice as much.
The home ended up selling for almost $200,000 -- more than $50,000 over the asking price.
"It was heartbreaking," Gonzales said. "And last month, the same thing happened to me on a house I didn't want nearly as much, but I felt like I had to keep bidding because the homes I like are going so fast in this area."
Diane Brennan of Scottsdale Scottsdale
A rush to avoid higher prices
Metro Phoenix Phoenix
Some first-time buyers with Federal Housing Administration financing have a bit of an advantage now, said real-estate agent Barry.
Those buyers are required to put down only 3.5 percent, so they can often keep bidding with investors, knowing that if they win and the appraisal doesn't come in that high, the lender will have to lower the price to meet the housing agency's requirements.
Banks might boost supply of homes
Banks still hold many of the homes they took back through foreclosure in recent years; the rush to buy could push them to put more on the market.
"If lenders are holding back on foreclosures and waiting for a sign the homes will sell, well, the time is now," said Jim Sexton of Phoenix
"Real-estate agents and buyers are all frustrated. The demand for homes is real."
Lenders did slightly increase the number of new notices of foreclosure they sent last month, which could mean more short sales or foreclosures for buyers to choose from in the next few months.
Housing analysts say the current buying frenzy may run its course in six months and not create a lasting recovery. Experts say the region's housing market won't really recover until regular homeowners, who can afford their mortgages, feel like they can sell and make a decent profit -- not the profit of 2006, but enough to pay off their mortgage and net a slight profit if they bought before 2000.
Regular buyers, who have to put down 10 to 20 percent for a mortgage, might have to wait for those regular sellers to put their homes on the market, creating enough supply to ease the bidding frenzy. When demand is strong enough that multiple bids are made on houses owned by homeowners, not lenders, that will be a strong sign of a return to a normal market.
"Once sellers begin to realize the market is recovering, and they can actually make some money on their home, then the market will truly start to stabilize," said ASU housing analyst Orr.
by Catherine Reagor - Mar. 10, 2012 11:25 PM The Republic | azcentral.com
Phoenix-area homebuyers squeezed out by investors
Posts
