Arizone Still in Mild Recession

The economy in Arizona continues to deteriorate. According to an article in AZ Central, the Arizona Business Conditions Index fell to 46.7 in June from 48.3 in May. An index value below 50 indicates contraction, a value above 50 expansion. The index has remained below 50 for 7 months.

Arizona used to be one of our favorite markets, since it's in the sun belt and hence very popular among Baby Boomers for retirement. The economy in AZ used to be one of the strongest in the nation, together with Nevada. But with the housing decline, the economy in AZ took a fairly steep dive starting middle/end of last year. Unlike Las Vegas, the major markets in AZ do not have strong drivers which guarantee job growth short term. Long term I remain bullish about AZ, as the majority of the Baby Boomers hit retirement age over the next few years, but short term I believe this market has some more issues to resolve.

Happy Investing!
Robert

Las Vegas - A Buyer's Market - REALLY??

We've been trying to acquire investment property in Las Vegas for a client for a while. Reading the press about the real estate market in Las Vegas, we expected our purchase to be a walk in the park, a piece of cake, like fishing in a barrel. After all, isn't Las Vegas one of the most hit markets in the nation? Foreclosure heaven? Well, we were wrong! We were VERY surprised to find out that the market has become VERY competitive recently. As of a few months ago, the same market has all but been pronounced yet, but now activity has gotten very brisk. Yes, the market is still dominated by what I call "distressed sales" (Foreclosures, Short Sales, REO Sales or Bankowned Properties). But there is a heck of competition for these distressed sales. A phenomenon many Californians still remember from the "good old days" is back: Multiple offers! We've written ~5 offers for the aforementioned clients over the last few weeks, and each time we've been beaten by other, higher offers. We're not trying to low ball. In some cases, we even offered more than the asking price. Many banks now set their asking price very low (ridiculously low in some cases) to attract multiple offers. Well, it's working! We still have to get an offer accepted. We realize that we have to be more aggressive (means: offer more!).

Here is why I'm not too unhappy with this situation: Multiple offers means more buyers being active in the market. Multiple offers also means price stabilization and eventually climbing prices. It also means inventory being absorbed at a faster rate. It means all the things you need for the market to turn around