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Phoenix Real Estate and Homes for Sale | Jonathan Dalton, Realty ONE Group – (602) 502-9693

Jonathan Dalton
REALTOR
ePro, SFR
602-502-9693

Youngtown Home Down 42 Percent

Youngtown Home Down 42 Percent

Jonathan Dalton, Phoenix Real Estate AgentTwo-plus years ago I was the listing agent for a home in Youngtown’s Agua Fria Ranch. This was November 2005, two weeks after the market had started to cool perceptibly. My sellers were anxious because it took three full weeks before we had an offer on the table.

We negotiated for a couple of days and they ended up selling their home for $290,500.

I was running the data for my bank-owned homes map and came across the same house – now available through the bank at $169,000.

That’s a difference of 42% in the span of 27 months. And, if sold at list price, the home will have appreciate a grand total of $6,000 from the time my original sellers bought it nearly five years ago.

Oy.

[tags]Phoenix real estate, foreclosures, bank-owned homes[/tags]

No Comments

  • Jonathan: By my math, they did ok. They bought for 163,000 in 2002. If they put 10% down, they had 16,300 in the deal. With a $6000 profit on their $16,300 they made 36.8% in 5 years, divide by 5 years, they got a 7.36% rate of return on their cash in an environment where a CD would have paid maybe half that. If they put 5% down the rate of return doubles to 14.7% because of the leverage. They got shelter and a tax advantage on top of a 2x return vs. risk free. Sure they had to rent the money, but they would have had to rent shelter as well.

    I guess the Phoenix market is just regressing to the mean with a vengeance. Real Estate value tracks inflation plus a location and cost of funds premium. You just can’t day trade real estate with a 90+% margin account and have it be risk free. Stock market investors have to keep 50% equity in the account (a simplification, I know).

  • My folks actually did more than okay since they got out at at the $290,500. Not so good for the people who bought and lost the house to the bank.

    I agree with the reversion to the mean. One side effect of the bank owned homes is the banks are hyper-aggressive and are forcing the action. If there’s a bottom to be found, we’re going to find it through the foreclosure pricing.

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