Dr. Housing Bubble 08/06/14

[Crewleader]

The real estate gamble in Arizona: Inventory is up 35 percent from last year as cash investors begin to pull away from the market.

In many markets, investors were purchasing properties to rent out for a short period of time before they had any intention of selling. Many of the large investors have hinted at buying places and holding them for 5 to 7 years before selling them off. Since big money entered the market in 2008, we are already seeing that phase one is being completed and big money is certainly exiting the market. The impact of course is what you would expect. Take a look at Arizona for example. In the Greater Phoenix Area, cash buying now makes up “only” 24.8 percent of all sales. This is the first time since 2008 that it has fallen under the 30 percent range. And what has happened because of this? Inventory has shot through the roof increasing 35 percent year-over-year. Because real estate trends move like molasses, the next phase will likely include pressure on prices (which we are already seeing). The Arizona market was hyper obsessed with big investors. As those investors pullback it is no surprise that inventory is shooting up. Yet the psychology of the market is always lagging because prices peak when inventory and sales are changing and this tends to be a better leading indicator. Arizona is an excellent example of a market where investors are now pulling away.

The gamble for cheap property

http://www.doctorhousingbubble.com/arizona-real-estate-gamble-in-the-sun-home-values-investors-arizona/