Buying property in Phoenix area?

[JacqJolie]

I'm considering purchasing a home in the Phoenix, AZ area in the next year. I would be purchasing the home outright for cash. I'm a Canadian citizen and would be only using the property on a snowbird basis. I'd like to keep the purchase price just under $100k and it seems like there are a lot of properties online in this price range.
I'm kind of planning on keeping the house for a number of years until prices go up and then selling, but am not opposed to keeping it as a residence for quite some time if prices don't recover. I'm also planning on selling my current home in six months and would ideally like to start looking after this house is sold, but I could carry both properties simultaneously without a problem. Our housing market is still going strong so I'm not worried about the sale of it.
I know that nobody has a crystal ball, but is this an opportunity for lower prices that I should probably move on sooner rather than later? Or is there some quirk to the housing market and short sales and foreclosures down there that I'm not considering (ie. prices appear lower than they really sell for, getting competing bids or the banks taking a long time to close a deal).
If this has already been discussed (and I'm sure it has), can somebody point me to the thread? I did a search and couldn't come up with anything. Thanks so much for the help!

 

[W2R]

Have you considered putting your present house on the market, moving to Phoenix, and renting for six months? You could use the time to find a good realtor and investigate many of these issues, and to determine what neighborhoods would interest you most.

 

[Midpack]

If you Google, you can get all kinds of responses. What is clear is prices are much lower now than they were 2 years ago. I know someone who bought a house there 5 years ago. It appreciated about 50% and now it's right back where it was when he bought it if not a touch lower. What the future holds is anybody's guess, but I suspect the current good prices aren't going away any time soon. In other words, no need to rush to buy in Phoenix, you've got time.

Real-estate advice for Valley: Hang on until 2012

Long term, availability of water is what keeps me away from the US SW. Best of luck...

 

[Ed_The_Gypsy]

I REALLY do not like the idea of owning property where I can't see it every day.

Yes, Phoenix property is a bargain today, but is it still a bargain if somebody trashes your property or burns it down just for grins while you are away? What happens if a pipe breaks? Who is going to mow the lawn? I don't know Phoenix, but houses in the southern states often need to have the air conditioning on all year to keep mold from growing on the walls.

You may have to wait a LONG time before housing prices go up.

As an American in Calgary, several Canadians have asked me about buying depressed property in the US for investment purposes. I tell them I would not do it myself (like, never, never!) and they are asking to be taken to the cleaners.

A carefully selected, well-managed condo makes better sense for a snowbird. Or a second-hand time-share.

Follow W2R's advice. It is good advice.

Ed the Icehole

 

[JacqJolie]

Buying property in Phoenix area

Hi W2R, BTW congratulations on your retirement, I've been lurking for a long time and have so looked forward to the day when you pulled the plug.

I've been to AZ quite a few times - primarily on business when I used to live in Houston - but also just traveling on extended vacations (aka sabbaticals) and have looked around at the communities before. I like the Queen Creek area, particularly if I'm not looking at a commute - which I wouldn't be doing. But you're right, it would probably be a smart move to wait, rent for six months next winter and then decide whether I would want to buy or not. So I would be looking at not buying for close to 2 years. And who knows what the market would be like then. But there's always deals somewhere.

Truth is, I hate renting - dog, cat, kid... But also hate the -30 weather we've been having too even more than renting!

I did just find Martha's thread on the purchase of her condo, and that was helpful.

 

[Ed_The_Gypsy]

JacqJolie, good; you know the area. That puts you way ahead of the people who were asking me about such property.

I understand your feelings. It is -24 in the back yard of my rooming house in Calgary as I write this. (-30 on Sunday, they say. And I don't even see the Northern Lights down here!)

 

[W2R]

JacqJolie, thanks! I am pretty happy these days.

I am facing a similar dilemma regarding my move sometime in the next year, to Springfield, Missouri. We have spent almost all of our vacation time in the past four years in Springfield, and I feel like I know the town quite well by now. We have attended real estate "open houses" there, and I check the real estate offerings online quite a bit.

There is a house there that I really liked at an open house over a year ago. They have come down on the price. Houses are cheap there, and I could easily write a check for the house simply out of my cash allocation, without having to sell a thing. What torture! But one thing I have noticed over the years is that when one wonderful house there sells, others even more wonderful (to me) appear on the market.

Like Ed_The_Gypsy, I do not want to own, maintain, and take care of two houses in two different states. My current tentative plan is to put my house on the market for a very attractive asking price (since the market here is pretty slow), and then move to Springfield and rent while it sells. I could drive back to New Orleans to check on the house every few weeks, in the meantime.

Time will tell whether or not I can resist the temptation to buy, though.

 

[JacqJolie]

JacqJolie, good; you know the area. That puts you way ahead of the people who were asking me about such property.

I understand your feelings. It is -24 in the back yard of my rooming house in Calgary as I write this. (-30 on Sunday, they say. And I don't even see the Northern Lights down here!)

Hi Ed, I'm just north of you on the QE2!
That commute into Calgary is getting uglier every day. But I'm done work at the end of January, and will only be doing a bit of consulting work at home for a few months after. I don't even mind the cold that much, it's the driving and not being able to use the RV for 6 months out of the year.

W2R, I have kicked myself on more than one occasion when I haven't jumped on great prices in real estate in the past. So I don't know if it's always such a good thing to wait. I was lucky enough in my current home to buy when the market was really low and the price doubled in the last 5 years. But then there's that lake property out in BC that I didn't jump on 3 years ago that sold again this last summer for triple what I could have bought it for... The ones that got away really hurt in hindsight.

 

[Martha]

I am in the process of moving right now. As in today. The movers are here and loading the van. Given the amount of work involved in a move I would be hesitant to rent first and buy later unless there is a really good reason to wait.

 

[HpRyder]

I don't own in AZ, but an ex-coworker who I keep in touch with owns a SFH in Tucson. He spent 6-8 months living in the area about 3 yrs ago, before he purchased the house brand new. He's been an absentee landlord since he rented it after buying it, because he had to move away for work. He bought it 15% under market then, and its gone down close to another 35% since then. There are just too many vacant houses for sale there.

Since renting it he has had 1 good tenant, who paid on time and left the house in decent condition. All the others were late or no payers after about three months. One quietly moved away one night, one trashed the place and one he just got through evicting. Every month it seemed he was on the phone, sending e-mails or mailing letters to the tenants to get the rent. Each time he rented it he had to make a special trip there for several weeks to coordinate fixing up the place and getting a new tenant. He looked in getting a property manager, but could find no trustworthy one. All seemingly wanted about 10% of the rents as well as complete independence in getting tenants plus bonuses.

So if your into periodic AZ traveling, have the time and cash flow to repair the rental, have the time to "jaw bone" tenants to pay the rent and late fees and have a good eviction attorney on tap there go for it.

 

[JacqJolie]

Hi HPRyder,

I understand the concerns, and there would be no intention to rent it out. Loaning to friends and family if wanted definitely, but I wouldn't want to be an absentee landlord. Too many headaches for not enough return it seems to me. It sounds like your friend should have rented if he wasn't stable with his work.

Many people have a second home away from their primary location, so that's definitely nothing new. Several of my retired relatives have bought second winter homes in the San Carlos, Mexico area, so that's also an option. It would be nice to be somewhere where I know people too.

If only western Canada had a more affordable temperate climate...

 

[calmloki]

We've considered buying a second home - no way I would rent it - have no desire to fold up my bed and move in and out of the place as if it were an apartment. Count me in with Martha - moving is work! Looked around in AZ a couple months ago and there were some pretty places for very attractive prices. There were also things that kept us from buying. Like, the temperature & traffic. Cheap ain't cheap if its purgatory to live there. OTOH, after freezing up an upstairs laundry room and dealing with the flooding and ice and two undercounter water heater replacements in the last week I'm about ready to head down there to see what the inversion layer and air pollution is like this time of year.

W2R - you've been in your place over three years, right? Think that qualifies you for $6500 in Obamabucks if you are buying another home as your new permanent residence - be a shame to lose that little perk...

 

[W2R]

W2R - you've been in your place over three years, right? Think that qualifies you for $6500 in Obamabucks if you are buying another home as your new permanent residence - be a shame to lose that little perk...

Yes I have, and there is that too. I am not sure but it seems to me that that expires pretty soon, too, maybe April.

Decisions, decisions. Plus, it would be SO much easier to move to a known address because I wouldn't have to change addresses twice.

 

[nanannjen]

We bought a condo over in Phoenix in 2004 - watched it go from $130,000 to $200,000 - now it's back probably below what we paid for it. We don't rent it out - we did once for snowbirds, but probably won't again. We were planning to retire to Phoenix, but have now changed our minds. If you can do as we did and pick up a cheap property - use it for vacations, whatever - now is as good a time as ever. I don't see prices going down a whole lot further - I also don't see them going up too quickly. If you find a place you love in a great area of town, I'd say go for it. There's certainly areas I wouldn't recommend (too much risk) but there are a lot of values in good stable areas that would be a good value and a place for you to spend your winters. OTOH, if you wait a year, it will probably still be there!

 

[Urchina]

If only western Canada had a more affordable temperate climate...

If it's temperate you're looking for, Phoenix ain't it. (Though as you've been there before you probably already know that). 85 degrees at 10 a.m. in March or April does not qualify as "temperate" in my book.

Phoenix has been hit hard by the recession, and so I'd be careful to buy in a neighborhood without a lot of REO or reposessed houses -- suburban blight is a problem in some neighborhoods.

I also wouldn't worry about mold, as a PP mentioned. Phoenix is desert. Your only mold problems are going to be what happens on your cheese when you forget it in your fridge, or if you have a leaky pipe in your walls that goes undetected. But as for whole-house infestations due to ambient humidity -- don't think that's going to be an issue for you the way it is in parts of the Southeast and the Gulf Coast (which have the magic mold combination of wet and warm).

 

[bssc]

Well, I am sure that there are plenty of real estate agents who would like to show you around here. My neighbor is one and she said that the repos are selling like crazy. However, I am in central Phoenix and being in a more established neighborhood, we haven't seen that. Since you are not going to have to commute to work, you will be able to buy further out and cheaper. One of my friends is looking in the Luke AFB area and has been very happy.

When I talk to my Canadian cow-orkers in Toronto I remind them that 122 F = 50C but since you said you would be a snowbird, how about 61F = 16C

 

[Dawg52]

I did just find Martha's thread on the purchase of her condo, and that was helpful.

Someone point me to this thread. I can't find it in a search. Missed it along the way I guess.

 

[Martha]

Or it might be:

http://www.early-retirement.org/forums/f28/investment-in-phoenix-property-44441.html

 

[Dawg52]

Or it might be:

http://www.early-retirement.org/forums/f28/investment-in-phoenix-property-44441.html

Ohhh OK. I thought the poster meant you just bought a new condo that you were moving into. I knew you just sold your property in MN so thought I missed something.

 

[Martha]

Nope, haven't bought anything in the south. I'm coming to park in your driveway. Do you have a 30 amp plugin?

 

[REWahoo]

I'm coming to park in your driveway. Do you have a 30 amp plugin?

Dawg, be careful how you respond. I know at least one forum member who fell for it...

 

[Dawg52]

Dawg, be careful how you respond. I know at least one forum member who fell for it...

Everyone knows we don't have electricity in MS.

 

[Delawaredave5]

For me, the problem with a second home is the "obligation" to use it.

My friend bought a beach house years ago - decent investment and they spent a lot of time there. But that's the only vacationing they did.

We did the opposite - went to a different beach / lake / mountain / international destinations three or four times per year for 20 years.

We are full of an incredibly varied pile of memories and experiences - I would not trade that for any "second home investment"........

We want to do the same with ER - only monthly (or 2 month) stays instead of weekly.

 

[lloyds]

I just returned from spending Christmas in Phoenix with my oldest son and his family. He lives in an average area where the homes are fairly new. His front door was recently kicked in, in the middle of the day. His three sons fled to the bedroom armed with a baseball bat. When the intruder found them facing him with a bat and screaming, he fled. There are eight houses facing his street. All have been entered except for one. That one is the only house on the block that has a dog. Todays' Phoenix is the same as the Phoenix of 20 years ago when I did some short assignments down there. A lot of crime. There are much better areas to live in than Phoenix, in Arizona. An average three-bedroom, double garage, 1300 square foot home runs in the $130,000-$150,000. There are lots of parks and open spaces and amenities but they just can't seem to get a grip on the crime. The big thing now is "BOBS". Burglars on bicycles. The cruise the neighborhoods and then do the random breakin.

 

[azauthor]

buying a home in Phoenix

Hopefully, my response will be a little more specific.
When you say Phoenix, you are talking about several cities in the valley. I live in Mesa and my location is just a block east from Tempe and 2 blocks north of chandler. Then there's Glendale, Peoria, queen creek, apache junction and several others within 30-60 minute drive. And you can't forget Scottsdale. They are often generically referred to as Phoenix.

What you plan to do when you are here will factor into where you want to buy. Lots of seniors in Apache junction with tennis golf etc., but you're far away from downtown, museums etc. Someone did mention that there are nicer places to buy and they're right. Sedona is very pricey, Prescott, (my favorite) has come down in price from the highs and you get 4 seasons.

Summer in Phoenix is a killer and it is long. However, right now it is 70's and I have windows open.... there are tradeoffs.

Crime is subjective. We have it, but I came here from Philadelphia and know I am much safer...

good luck