Elisa Andreis J.D.
Your source for Sedona Real Estate
Elisa Andreis    Phone 928-274-1521
Ten Reasons to Buy real estate NOW!

10 Reasons to buy NOW!


1. ‘The Inverse Relationship’—As prices have come down sales have gone up…dramatically. • In Phoenix Metro from Feb 08 to Feb 09 the median price has come down 51% and sales have gone up 64%! • In short, ‘we can’t predict the future, but we can cite trends’.


2. ‘The conventional wisdom is usually wrong’—In 2005 buyers were buying like the appreciation would never stop and it was effectively over! Today buyers are fearful of further declines and missing out of the best buying opportunity in years. • Fantastic selection; Soft prices; Low interest rates; new Tax Incentives…


3. Low interest rates—For every 1% interest rates go up, the effective price of the home goes up about 9% (assuming an 80% loan). What buyers hope to gain in lower prices they may lose in a higher effective cost with higher interest rates. • Interest rates are arguably ‘artificially low’ to stimulate the market. However, with over 1 trillion in additional capital (printed money) being pumped into the economy it is inevitable interest rates will have to go up at some point to offset inflationary pressure. Inflation is cause by too many dollars chasing too few goods and

services. The Federal Reserve has historically raised interest rates to combat inflation. • Future inflationary pressures may bode well for real estate as home prices rise.


4. ‘The U curve’—Buying a home is at least a 3 to 5 year decision. No one knows ‘the bottom’. By the time you know the market has bottomed out you missed it. The historic reality is that prices have always rebounded. So, a buyer can feel confident taking advantage of the low rates, great selection and soft prices with the knowledge that historically real estate has always appreciated over time. Note: prices have already declined to 2004 levels (pre]hyper appreciation levels).


5. Demographic Trends—The demographics favor continued growth in our area. The baby boomers are retiring at 12,000 per month. They want their place in the sun. This demand has made Arizona a top growth state for decades. It will continue for at least another decade. As much as 25% of our in migration now comes from California!


6. Supply and demand—There is a pent]up demand of buyers who have postponed purchasing the home they would like to own for fear of further declines in the market. At the point that we reach ‘critical mass’ and buyers generally get the green light that it’s a good time to buy prices may actually accelerate quickly because of a limited / finite supply: • We are beginning to see signs of inventories decreasing in certain market segments.


7. Portfolio conversion—Many have cashed out their 401K’s and other stocks for fear of further stock market lose. They are looking for a safe haven for that cash. Real estate is a tangible asset that can provide that PLUS has the further advantages of tax benefits and leverage. • Tax benefits—Not only the interest rate deduction, but the 250 and 500K gain (while they last!) Leverage—Most prospective buyers who are not investors per se may not realize the power of leverage in real estate. For example, a 100K (20% down payment) on a 500K property that over time appreciates at an average rate of 5% yields a 25% return cash on cash i.e. 5% of 500K, not 5% of their 100K investment. • {This may be a marketing opportunity e.g. do a public seminar on the benefits of holding real estate.}


8. PricetoRent Ratio as a leading indicator: One conservative historical barometer of a healthy real estate market is when you can buy investment property and the rents cover the mortgage payment on a typical 80% loan to value. Economists feel the price]to]rent ratio is perhaps the most accurate gauge of fair home value. Most human beings are rational animals: If home prices get too high, many will choose to rent. If rents get too high, many will choose to buy. Prices and interest rates currently favor buying. As an example, even with Scottsdale’s ‘lifestyle premium’ it is not difficult to find properties today where you can put 20% down and rent it for the payment. Test this for yourself.


9. More than Shelter—‘Home is where the heart is’. For the 30% of Arizona homeowners upside down (owe more on their home than it’s worth) this may sound like more of a curse than a blessing. The clock has been turned back on home values. This is not good news for those who purchased in the last 4 to 5 years and want to move on. The sheer weight of this problem is the focus of both the private sector and government. Just as the 2009 Tax Credit is designed to provide an incentive to buyers, there are new programs and guidelines being rolled out almost daily to assist upside down homeowners. As the duress properties work

Mike Balzotti, M.Ed. Russ Lyon | Sotheby's International Realty

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Russ Lyon Sotheby's International Realty
20 Roadrunner Drive Suite A • Sedona, AZ 86336
Elisa Andreis • Phone 928-274-1521