Buy or Sell Homes in South East Valley of Arizona

Residential real estate in greater Phoenix continues to see price appreciation, driven by modest personal pay increases and falling interest rates.  Current 30-year conventional loans are 3.82% with .5 points. (Fannie Mae, June 2019)    Further, the Federal Reserve is now forecasting a drop in rates through next year with many Wall Street analysts predicting three reductions of ¼ point each over the next 12 months.   Why the change in rate forecast? Late last year, signs of a significant slowing in the U.S. (and global) economies began to emerge.  The Gross Domestic Product (GDP) had slowed, and forecasts were predicting continued slowing over the next several months.  Also, the U.S. found itself in a significant trade dispute with China (and for a brief time, Mexico), and trade disputes are almost never good for global economic growth.  With the economy significantly slowing, the Fed announced its intent to change its forecast of approximatel...

In our  East Valley Real Estate Investor  article, we talk about a fictional man named Carl who has owned four homes since 1999. The homes were built in the 1970’s and the mortgage on each home is $650. Carl charges tenants $750 per month, well below the $1300-1800 market rate for rental homes in the area. When the air conditioner in one home needs to be replaced, Carl has no choice but to finance it. This creates more debt on what should be a cash flow investment. He is in a real bind and his family is asking him if it is time to sell the investment property. While fictional, this scenario represents a lot of investors who haven’t managed their properties and end up in a different financial position than they had likely intended. When is it time to sell the investment property? The reality for Carl is that it may make sense to sell at least one of the four homes. Because the homes have not been renovated, he may not get market rate on the sale but will still likely have...