Luxury Homes Poised for a Comeback

by Merrill Moss on February 10, 2011

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Luxury Homes Poised for a Comeback

Yesterday I attended an update on the current condition of the Phoenix-area real estate market, given by local real estate guru Bill Gray. Two pronouncements really stood out to me.

The first was Gray’s overall assessment that the vital signs of the Phoenix market are in good shape. He said it will still take some time for this to be widely recognized and accepted, but meantime it offers those who know about it an opportunity to act ahead of the curve.

Gray believes that for some time now cash buyers have been telegraphing their expectation that the Phoenix real estate market (including Scottsdale, of course) offers profitable opportunity, on the basis of the fact that MLS data shows that, of all Maricopa County transactions  in 2010, cash was by far the most common means of purchase— 28,352 compared to 22,886 for FHA loans and 20,929 for conventional loans. This financing profile emerged in 2009 and strengthened  in 2010. Gray said it seems safe to assume that the preponderance of those using cash to buy a home in 2010 are acting as investors looking for a good return.

Second, he said that steady, impressive gains in the stock market have given equity investors increasing confidence, many of whom own and/or seek to buy luxury homes. In fact, showings of luxury homes have begun to increase and homes in the luxury category are starting to sell more readily.

Let’s hope these trends continue. The primary weakness in the Phoenix-area real estate market is now unemployment, typically a lagging factor in a recovery. Everything else, such as low interest rates and bargain prices, are beckoning.

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