For the second month in a row, home prices in the Phoenix market are down. Unfortunately, it can’t be attributed to one thing, and thus it’s not something that’s expected to go away any time soon. This definitely means it’s a buyer’s market, but hold on, because that’s part of our 5 reasons. Here we go.
1. The number of buyers are down. This is easy to know why, as unemployment is high and thus that would leave fewer buyers to pick up these homes. There’s something else to add to the mix, that being…
2. Foreclosures are still happening. The best news seems to be that they’re slowing down, but there’s still more people having their homes taken away than homes being purchased, which will depress any market.
3. The tax credit went away. Though controversial, this was predicted to be a home buyer killer when it went away at the end of April. Without that extra incentive, people didn’t want to put up with trying to get loans from banks on homes whose value was questionable.
4. Banks are still holding back on giving out loans. Credit has drastically tightened up, and even with very low mortgage rates most people don’t even want to bother with the process. The best news is that only one bank in Phoenix has closed this year, and only 3 overall in Arizona, so at least it seems that the banking system has stabilized.
5. There’s a glut of homes. With so many homes on the market, prices will decline. It seemed that Arizona banks would go the route that a few other states went and withhold some homes from the market. Although that would artificially increase home prices, which could slow home sales, since home sales are flat anyway stabilizing prices might not be a bad idea, as those people who already own homes don’t need to see the worth of their homes doing down.
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Mitch writes on real estate, finance, and many other things.