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Phoenix Real Estate Market Report ~ June 2015

Real Time_Supply

Pie Chart_Market

Average Sold Price_Monthly

Average Days on Market_Monthly

Active vs Sold Transactions

Foreclosures_Monthly

Short Sales_Monthly

The current real time market profile shows there were approximately 10,380 new listings on the market in April 2015 and 8,406 sold transactions. Since the beginning of the year the number of new listings has exceeded the number of sold transaction but the number of total listing has consistently decreased since April 2014.

Since June 2014 (12 months ago), the average sold price has increased approximately +4.1% (up from last month), the average days on market have increased approximately +0.0% (up from last month) and the number of transaction has increased approximately +16.2% (down from last month). Since the month of May 2014 the average sold price has teeter tottered up and down with no upward trend but in April 2015 the average sold price jumped higher than the last 12 months. The summer buying season has begun with strong demand. The current average sold price is approximately $269,000 which is up substantially since March 2015. This second month of price increases is a strong indication of a market reversal from the real estate market we experienced in 2014. Let’s hope (for seller) the market continues its upward trend throughout the summer buying season.

The volume of foreclosure purchases since June 2014 (12 months ago) has decreased approximately -42.2% and the volume of short sales have decreased approximately -6.5%. Since June 2014 the volume of foreclosure purchases went up and now the trend is back down once again. Since August 2013 the volume of short sale purchases have consistently decreased because the inventory of homes “up-side-down” have been exhausted and values have risen to a point where consumers can break-even or sell with some equity.

Since June 2014 (12 months ago), the number of homes for sale on the market have decreased approximately -11.2% or 28,776 homes for sale on the market to a gradually decrease of 24,410 homes. This decrease in the number of homes for sale could be a sign the market is beginning to shift once again back to a seller’s market (low supply and increased demand).

Real estate prices are still relatively low (near 2008 prices), mortgage rates are still at a historical low and the macroeconomic market is improving both in terms of prices and the overall economy. Give us a call to discuss your best investment strategy, TODAY!!

Position Realty
Office: 480-213-5251

Phoenix Residential Real Estate Market Report ~ March 2014

As you can see from the first chart above, Position Realty Market Index, the first time home buyer tax credit created a great deal of demand in the market similar to the real estate boom from 2004 to 2006. Currently the numbers of transactions are slowing down as a result there is an increase in inventory because the number of listings is not being purchased at a fast enough rate.

Since April 2013 (12 months ago), the average sold price has increased approximately +10.6% (up from last month), the average days on market have increased approximately +19.1% (down from last month) and the number of transaction has decreased approximately -23.6% (up from last month). The month of November showed signs the average sold price was starting to decrease and this trend has continued throughout the month of February but in the month of March the average sold price and number of transaction went up. This is not an indication of a market reversal until there have been two to three consecutive months of upward pressure on average sold price, DOM and number of transactions. The current average sold price is approximately $257,000 which is up approximately +6.3% from last month at $242,000.

The volume of REO purchases since April 2013 (12 months ago) has decreased approximately -50.2% and the volume of short sales have decreased approximately -75.4%. Since October 2013 the volume of REO purchases has increased approximately +8.2%. The volume of REO purchases is rising again because Fannie Mae and institutional lenders have been holding onto inventory and they are starting to release their inventory at a faster rate. The volume of short sales are still down but REO purchases are back on the rise.

Since April 2013 (12 months ago), the number of homes for sale on the market have increased approximately +45.2%. This increase in the number of listings is caused by investors leaving the market and sellers that purchased during the real estate boom are putting their homes on the market to break-even or sell with a small amount of equity. Real estate prices have reached a point where sellers are listing their homes at a faster rate than buyers are purchasing. This may cause a decrease in real estate prices but hopefully buyers will resume their buying trend as we enter the spring / summer buying season.

As more and more sellers enter the market and as more of the supply of residential homes increase, real estate prices may start to decrease (more supply and weaker demand causes prices to decrease).Real estate prices are still at an all time low (near 2008 prices), mortgage rates are still at a historical low and the market is improving both in terms of prices and the overall economy. Give us a call to discuss your best investment strategy, TODAY!!

How to Use Your Retirement Funds for Real Estate

In this articles, we will examine how one can use the tax-deferred money in their retirement plans to take advantage of real estate investing opportunities. This article explains how you can use your 401(k) funds to diversify your portfolio mix into real property.

The 401(k) Plan

First, it is important to understand some basic features of a 401(k) program. The 401(k) is a subsection of the Profit Sharing Plan section of the Internal Revenue Code. It allows for employee deferrals on a pre-tax basis. Employers may make this type of plan available to their employees by adopting an acceptable format forsuch a plan. There are limits of how much an employee can contribute. Adoption of such a plan also permits the employer to match employee contributions and to make profit sharing contributions (at the employer’s discretion).

An individual employee may contribute up to about 20% of annual compensation, to a maximum of $9,500 per year. Employers may make matching contributions (such as 25 cents on the dollar) up to 8% of total compensation for each employee. Sometimes profit sharing contributions may also be made and, under certain circumstances, one may have a combined package of 401(k), match and profit sharing/money purchase up to $30,000 in a given year. All of this is variable, and one rule does not apply for all cases.

If you are an employer, you can design the features of the plan and provide the investment alternatives for yourself and your employees. If you are an employee (not defined as an employer), you are permitted to operate your deferrals and investments as established by your employer. If some of the features we discuss here are not available to you as an employee, you may wish to discuss them with your employer to determine whether they can be adopted by your 401(k) plan. If your present plan does not permit the flexibility we are about to discuss, remember any plan may be amended and restated to make such capabilities available.

How to Use the 401(k) for Real Estate and Notes

After all this, how can the funds in your 401(k) plan be used for real estate transactions? Once you have found out that your 401(k) plan funds can be used for real self direction, and the trustee of the plan also permits such transactions, the rules are simple:

You can purchase assets into your plan which are not prohibited. Real estate is not prohibited. You may not deal with yourself or members of your family (other than siblings).

All Transactions Must Be Arm’s Length

This means that you can purchase mortgages with your plan assets. This means you may purchase real property in your plan for income purposes. While debt-financed properties may be subject to unrelated business income taxes, in almost all investment cases we are aware of this has not applied.

How It Works

How does it work? First, you find the property or note. These are self-directed plans, and no one is going to give you a list of real property to chose from. It’s all up to you. Remember, you take all of the risks and receive all the benefits. Neither the employer or the plan trustee has any obligation to you in a properly designed plan. Second, you request that the administrator of the plan ask the trustee of the plan to purchase the asset you have selected for your benefit in your plan. All this is performed through written documents. Third, the security interest in the asset you have asked to be purchased is perfected for the benefit of your plan account. Income and expenses are allocated to your account.

How Often Can You Do This?

As often as you like. Some people like to buy distressed properties, fix them up, and then sell them. Others buy discounted notes. Some purchase income streams. There are as many options as one can think of, provided you follow the rules.

Typically, employers will use the completely self-directed option for compliance with 404(c) of the code for self trusteeship safe harbor. Some combine the complete self direction along with a number of mutual fund choices, making complete self direction available on a non-discriminatory basis to all employees. There is a cost associated with this.

As can be imagined, the process of purchasing notes and real property is a labor intensive process; the process of purchasing mutual funds in a daily valuation environment is almost fully automated. Your 401(k) administrator can provide you with the costs. If your administrator doesn’t handle complete self direction, there are some that will. It’s up to you, as an employer or employee to ask. You may be surprised at the answer.

Position Realty
Office: 480-213-5251

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