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Housing: The Phoenix bargain bin

PHOENIX — With many Valley homes in foreclosure and government-insured loans available to boost a sagging economy, the Valley is currently rapidly becoming a buyer’s market for first-time home buyers.

While interest rates have fallen to a 20-year low 5.5 percent and prices of homes drop have dropped a record 8.5 percent over the past year, many first-time home buyers are being rewarded for their patience.

“The people that don’t own homes right now, that should be their primary move,” says Anthony Kamouzis, owner of Maricopa-based Desert Allstarz Realty. “You have low prices, low rates and lots of incentives such as down payment assistance. If you only have $500 or a thousand bucks, you can buy a house right now.”

Typically, it costs up to $12,000 down to buy a $200,000 house (though 20 percent down is encouraged to avoid paying private mortgage insurance, or PMI). Today, with incentives, people are getting into homes for as little as no money down.

“They’re trying to do this stuff to boost the economy and get the housing market rolling again,” Kamouzis says. “It’s the perfect time to buy. People buy clothes when they’re on sale. They buy groceries when they’re on sale. Right now, houses are on sale. The financing that comes with houses is on sale.”

Lending guidelines are more strict today than they were in the early to mid-2000’s because of everything that has happened in the market. During the housing boom of the early to mid-2000’s, people with sub 600 credit scores were approved for loans. These sub-prime loans, or loans taken out by borrowers with poor credit, carried adjustable or variable interest rates (loans that start out with a low fixed rate the first few years, then balloon over the life of the loan), which has led to the high number of foreclosures in the Valley.

Some Valley Realtors and brokers have balked at certain financing practices. One popular method was dubbed the “NINJA” loan – mortgages acquired where the homebuyer had No Income, No Job or Assets.

“In 2004, they could get you a loan with a 500 credit score. You didn’t have to have good credit. Now you have to have good credit. If you do, the benefits that are there for you are fantastic,” Kamouzis says. “You don’t even have to have money, more important than anything right now is good credit.”

The favorable market for people with good credit has Valley residents, such as 28-year-old James Van Zanen of Chandler ready to take advantage of an opportunity. Van Zanen is planning on becoming a first-time homebuyer and believes now is the time to act.

That “time” is expected to last until mid 2009, which is when flagging home values and sales are expected to rebound, according to a recent panel of Valley real estate experts.

“With families foreclosing on houses all across the Valley as homes are on sale and interest rates are low, it made me want to get in on the market while it’s still good. In three to four years the market will return to normal and I will have made a pretty penny,” Van Zanen says.

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>>Email the editor at aklaw@zoniereport.com.