I posted links to several several real estate related news stories this morning here. Individually they each make a valid point about the current real estate market.
- Lack of new construction leading to stagnation
- Maricopa County homes sell at 20% below asking price
- Existing home sales are at the highest level since 2009
- 37% of Phoenix homeowners are still underwater
But taken all together they create a confusing and even scary picture of the market. Other stories today (that I didn't link to) show home prices rising as well as interest rates. Some experts tell us that we have arrived at the "New Normal" (I don't even know what that really means) while some say that we are "on the road to recovery" and all is well while still others warn of "the impending second crash."
If the nationally known economists can't agree on what the future brings, I'm not even going to try to predict. I will offer some advise, however, that will serve you well no matter who is right:
- YOUR HOME IS NOT AN INVESTMENT.
- If you have a home you like, are comfortable in and can afford the mortgage, GREAT! Don't worry about if you owe more than you could sell the home for. If you don't intend to sell anyway it doesn't really matter - just enjoy your home. If you stay in your home making the mortgage payments long enough it will eventually catch up.
- If you are looking to purchase a home; purchase on the basis of what you can comfortably afford, your lifestyle, the location you want or nay other criteria that be important to you (schools, nearness to employment, views, whatever) your home is no more an investment than your car or your television.
- REAL ESTATE IS STILL A GREAT INVESTMENT
- The unique financing and favorable tax treatment of real estate still make it one of the best investments available
- Investment decisions must be made on realistic cash flow expectations. Positive cash flow on a property allows you to pay all the operating expenses and debt service and still have money left at the end of the year. (with the tax advantages of real estate some of all of this may even be tax free money)
- Keep appreciation out of your investment decision. If we continue to have appreciation and your investment property is worth substantially more when you sell than when you buy, that is a great BONUS, but that is the big unknown. Now don't get me wrong, I want you to make money on appreciation - I just don't want you to base your investment strategy on appreciation. Make sound investment decisions based on conservative cash flow estimates and you still have a good solid investment even if appreciation does not occur.
Keeping these two principals in mind, you will be fine whichever of the popularly predicted outcomes for our economy come to fruition.
Phoenix - It had been over a decade since the company's last apartment property purchase in the Valley, but IMT Capital LLC in Sherman Oaks, Calif. (Cory Thabit, et al., general partners) has jumped back into the Phoenix multi-family investment market in a big way. The company paid $100.5 million ($120,793 per unit) to acquire the 832-unitDeer Valley Village apartments located at 3010 W. Yorkshire Drive and 19645 N. 31st Avenue in Phoenix. The seller was Deer Valley Apartments NF LLC, a company formed by Sterling American Property Inc. in Great Neck, N.Y. (Michael Katz, Richard Wilpon, co-CEOs). The transaction was negotiated through Tyler Anderson, Sean Cunningham,Asher Gunter and Matt Pesch of CBRE in Phoenix. Maricopa County records show IMT Capital III Deer Valley LLCacquired the real estate using a $500 million credit facility from Freddie Mac(Federal Home Loan Mortgage Corp.). In April 2008, BREW reported Sterling American Property paying $85.2 million ($102,404 per unit) to acquire Deer Valley Village apartments. The complex, which was built in phases in 1996 and 2000, is now being called IMT Deer Valley. The With the acquisition, the privately-held IMT now owns 3,232 apartment units in seven Phoenix-area projects. The company also owns multi-family assets in California, Colorado, Texas, Florida and Georgia. The projects are managed by affiliate IMT Residential, which currently manages more than 20,000 apartment units in six states. IMT Capital is looking for additional multi-family investment opportunities in the Valley, as well as other target markets. In its last Phoenix-area purchase reported by BREW in August 2004, IMP (formerly called Investors Management Trust Real Estate Group) paid $24 million ($46,875 per unit) to buy the 512-unit Desert Palm Village apartments at 1215 E. Vista Del Cerro in Tempe. In addition to those two communities, IMT owns the 292-unit Rancho Murietta apartments at 1717 S. Dorsey Lane in Tempe; the 420-unit Del Coronado apartments at 843 S. Longmore Street in Mesa; the 406-unit Moorings at Mesa Cove apartments at 1233 N. Mesa Drive in Mesa; the 464-unit Superstition Vistaapartments at 450 S. Acacia Street, and The Meadows, a 306-unit community at 2151 E. Southern Avenue in Mesa.
