Now I understand why flippers are having to work

[Rich Weese]

I saw an article on Phoenix TV yesterday that explains the current market for discounted properties. I know the local Phoenix BP members have been working much harder to find "good " deals and much smaller margins.

2009- Foreclosures sold for 24% less than non foreclosures
2011- Foreclosures sold for 9% less.
2012- Same Price!

Buyers/investors have flooded the market and have driven prices up, just like in the 05-06 era. Here we go again?

I assume Phoenix is just an example of most investable decent cities. Are you finding the same? Rich

[Rich Weese]

Hi Leon- I agree that the availability of credit is extremely important. I disagree that rates don't ALSO drive the market. An example:
Investment home at 4% interest on 120K loan or $570.
Rent is $1200 per month
Rates increase to 6% and payment increases to $720-$150 increase, or 26% increase.

If this home was good deal before at $120,000 and 4% loan, what would the value be now? Would you still pay 120K for home with 26% higher interest payment? Would home now be worth less? 26% less?

Having gone through these type markets before, I can assure you it does change the market. Just as the drop in median income changes what a buyer can qualify on payment, interest rates also drop # of buyers that could qualify at lower rates. Therefore, value as a rental also drops, imo. Rich