The Brad Hole

Beth and I have recently begun searching for a home in earnest. We've spent the past few years getting our finances in order, and now we're looking to buy our first home. I thought we were somewhat prepared for the experience, but we've had some real shocks along the way.

The largest shock can be broadly expressed like so: the housing market in the Phoenix metro area is red hot right now. Some articles at azcentral.com provide a bit of backstory, but let me sum up a bit. First, housing prices have risen on the order of 10-30% across the valley in the past year or two. This has caused a lot of real estate investors to flock to the valley and snatch up homes, flip them for a profit and dump them back on the market.

That has started a chain reaction that has caused home prices to continue to rise along with a few twists: houses tend to not stay on the market for more than a week or two, and new housing developments sell out lots so quickly that they have resorted to "lottery drawings" to give out space. It's not unusual to walk into a new home center and see signs proclaiming "no invenstors/2nd home buyers" to try and avoid that. Further, Beth and I had looked at new homes in the Laveen area last summer to get a feel for pricing vs. size, and saw a 3200 square foot monster going for $215k. That same home now sells new for over $320k. The increase in prices over the past year is staggering.

Our loan agent was telling us yesterday that now loan companies are balking on financing homes if they find out the home was flipped within the past few months. That means that if Beth and I find a home and make an offer, it's possible that the lender our mortgage broker chooses could potentially back out if the home we pick was recently flipped. Buyer beware, indeed.

We had some first-hand experience with the wacky market last weekend, our second weekend looking for new homes. We saw a house last Saturday that had been on the market for 4 days (give or take). It stood above the rest we had seen since then, but being our second outing looking at houses, and feeling a bit gunshy, we didn't make an offer on the spot, naturally. However, we were aware that houses were selling somewhat quickly, so we decided to talk it over last Saturday evening and see how we felt the next day. We decided on Sunday to arrange for a second viewing to see if it was worth it and asked our agent to hook us up. Shortly thereafter he called to inform us that we were too slow - someone had made an offer on the house the night before. This was a bit sobering.

Anyway, we've decided to get a bit more aggressive about this. For starters, we probably can't wait until each weekend to look, so I'm going to attempt to "preflight" some homes during the week and then bring Beth to look at the most interesting possibilities of those as soon as reasonably possible, given her work and school schedule. It's far from ideal, particularly for a home purchase -- to say nothing of our first home -- but it may be the only way we can pull this off without getting stuck with the dregs or looking for months at a time.

Our real estate agent so far has been very helpful and understanding, and he's been aggressively sending us new listings several times each day so we can get a feel for when things appear and how long they stay active before selling. As I type this, he just sent us a new listing for this morning. Since last night, a new home has appeared (grossly overpriced IMHO) with an all-too-familiar blurb in the description: "BRING YOUR INVESTMENT BUYERS!"

Game on!