Have you heard the housing market is cooling off? Freddie Mac’s Chief Economist says this isn’t so, meaning the outlook is good for those working with residential Hard Money Lenders in Arizona.
“I don’t think the recovery is over,” Freddie Mac’s Chief Economist Sam Khater recently told reporters. “Economic growth is still very strong and essentially running at capacity.” This information came in amidst reports that the market was cooling, with slumps in home sales as evidence. Yet, Khater and other experts agree that demand for homes, both new and resale, is still quite strong.
Throughout 2018, many positive shifts impacted the housing market. For example, a stronger labor market paired with overall gains in the economy made it possible for more people to purchase homes. The natural result is diminishing housing stock, which means prices are rising. Adding to this, interest rates are climbing, construction of single-family homes has leveled out, and sales have dropped off.
“While the decline in home sales and deceleration in home price growth has been broad-based, the slowdown is more intense in the hot coastal markets — which is a natural reaction to rapidly escalating home prices and higher rates versus a year ago,” he explained. One other area seeing a shift is the low-end of the market, with supplies dwindling and many would-be homebuyers being priced out of the market.
Projections Suggest a Shift in Strategy Will Lead to Greater Success
Whereas 2018 was a strong year to cash in on luxury properties due to the gains being seen, those doing fix-and-flips or fix-and-holds with the help of residential Hard Money Lenders in Arizona may do better to focus on the lower end of the market this coming year. The greatest demand is coming from people in search of affordable homes, so those who find properties with strong bones in need of TLC and make them move-in ready will have little trouble getting them resold upon completion. However, greater emphasis must be placed in choosing properties, as fix-and-flip pros will not be able to rely on market increases to yield gains as much as they have in the past. As noted by Khater, specific locations, such as coastal areas, are the hardest-hit by the shit, whereas inland markets are still seeing value gains. Equally, the surge in prices which has left many unable to purchase suggests 2019 will also be a strong year for those who work in fix-and-holds with residential Hard Money Lenders in Arizona, particularly when it comes to multi-family units.
Alternative lending is a boon for savvy entrepreneurs ready to capitalize on the changing market.
Due to diminished stock and increasing competition for affordable homes, home rehab pros will need to move quickly to grab up properties before the competition does. Negotiating better deals will also become more important due to the slower value gains. Those who work with residential Hard Money Lenders in Arizona will be at a distinct advantage in both these areas, as sellers will want sure bets with mortgage approvals being down and cash-in-hand will be king when sealing deals.
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Dennis Dahlberg Broker/RI/CEO
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22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.