By Mike Bodeen · 14 December 2020
I was chatting with a long-time friend and client earlier today I’ll call Graham. Graham owns a nice home in the Tatum Ranch area that we sold him a few years ago. He’s made some nice improvements and along with the local market’s rise in values, his equity has increased significantly. Now Graham is looking for a larger home. He may have the option of holding onto his existing home as a rental or selling, using the equity to buy his new home.
So, what should Graham do? Everyone’s situation in life is different, personally as well as financially. There are ALWAYS underlying factors in everyone’s situation. So, what might work for one client, may not be best for the next client.
In Graham’s case, my first thought about his situation was to buy the larger home now, keeping the existing home as a rental.
“The real winner in this market is not the seller or buyer of real estate – it’s the owner of real estate!”
However, as I talked with Graham about his situation it became clearer that he would not be a good candidate for a landlord, or even to have a management company handle it. It did, however become crystal clear that he should sell the existing home, buy that larger home now, especially one needing work. He and his son are interested in flipping homes. This way they could get their feet wet. When we started talking in this direction, he got excited about the prospect of doing this project with his son.
Since we’re seeing the higher price ranges accelerating in sales and value, sooner than later might be the wiser way to go. I stressed to Graham the need to move quickly. Our market will be wonderful for him as a seller but might be merciless as a buyer. Faithful Snapshot reader, you know the drill why; rising values and historically low mortgage rates.
The real winner in this market is not the seller or buyer of real estate – it’s the owner of real estate!
So my best counsel to local folks, or those considering moving to our sunshine state? Now is not too soon to be an owner of Arizona real estate! Phoenix’ skyrocketing market is not slowing down in the near term.
A topic we’ve discussed recently is the Exodus from states like California and New York, relocating to other states such as Florida, Texas and Arizona. Lower taxes, cheaper living costs, larger homes for the money, are just some of the reasons. There are more. This will only increase, and Arizona will continue to be one of the states getting much of that increase.
“The tangible nature of real estate and the times we’re living in, beckons people to have something real to sink their personal roots into.”
Check this out. Bloomberg News reported that 47 metropolitan areas across the country were analyzed by LinkedIn to see specifically how the pandemic was shaping demographic changes, specifically moving out of one state to another. LinkedIn reported that the Phoenix metro communities were the #2 metro area in the country that folks were moving to, behind Austin, Texas.
https://www.bloomberg.com/news/articles/2020-12-14/best-us-cities-to-move-to-during-covid-where-and-why-americans-are-relocating
Realtor.com, via an article in the Phoenix Business Journal, recently published their 2021 annual forecast for the sale and appreciation of residential real estate in the country. Though their numbers are, in my opinion, too conservative, they nonetheless point to the Valley sales increasing over 11% this next year and will be the 12th leading metro area in terms of price appreciation.
https://www.bizjournals.com/phoenix/news/2020/12/02/valley-housing-market-forecast-2021.html
I don’t yet have stats to prove it, but if you observe who’s buying a lot of real estate, it’s the very wealthy, those who have come into lots of cash from stock yields, inheritance, whatever. The tangible nature of real estate and the times we’re living in, beckons people to have something real to sink their personal roots into.