Arizona Real Estate Looks Grim for 2-5 Years - Which Means So Do A Lot of Things

I attended the SYEP (Scottsdale Young Estate Planners) Meeting this afternoon. A local realtor shared some info that is supported by what I've seen from many other sources including my clients in the Real Estate business and in related businesses from fine dining to dry-cleaning:

-The next 2-5 years in local RE market will be ruled by short sales;
-FEDs are pushing banks to allow and work with more short sales;
-Lending is happening but mostly under the $400K (jumbo loan) limit;
-50% of AZ homes are underwater;
-Less than 5% of loan mods are working;
-The Tax Credit only worked primarily on homes under $400K;
-Inventory is slowly being absorbed and fewer homes are hitting the sale market (rentals?);
-All income levels are in trouble, but big homes in Paradise Valley are suffering the most - some are at 50% discount;
-Don’t plan on making money on "flipping". The local properties are all being bought up by syndicates that are making close deals and keeping individual players out of the market - they will outbid you on the courthouse steps.

Personally, I'm concerned about what's coming next year, when all the 5 year A.R.M.s written in the 2006 buying frenzy all mature and can't be re-financed, and will trigger a second massive wave of foreclosures and walk-always in the Phoenix metro area.

Those affected include builders, developers, and all others who make their living off the sales, maintenance and furnishing of new homes, from AC service to the pool guy.

I'd guess the consignment furniture business will be big along with mini storage and residential rentals for those out of their homes. It will be great time to be in debtor-creditor law, bankruptcy, debt settlement and credit repair.

Those in businesses that are logically related need to take a good long look at their assets, expenses, liabilities and legal and financial planning ASAP while they still have legal, cost effective options available. It will be too late when you really feel the pinch.

Those that are prepared will be in a great spot to take advantage of a buyers market and emerging opportunities and cash, AS ALWAYS, will be king. For more thoughts on getting ready for the flood - see what I sent my clients in Dec 07, and every year since, here: 2010 Business Survival Plan - http://arfinance.blogspot.com/2009/10/2010-business-survival-plan.html

Ike