Be Still My Beating Heart

The housing market currently is causing a bit of grief for more than a fair share of homeowners. In late 2006 to early 2007, the the Phoenix real estate market had hypertension and clogged arteries. For the past 18 months, this same market has been vacillating between cardiac arrest and life support.

I can just see well meaning folks getting together, lighting candles and holding vigil outside the local MLS office, praying for a speedy recovery to the current housing market. And, somewhere there is a self-righteous real estate investor telling all of us, if the housing market had eaten right, exercised and given up its indulgent habits, maybe there wouldn't be this problem.

Up until early this year, I was smug in the knowledge that I bucked this downfall by investing out of state. Birmingham didn't have the significant housing boom a few years ago the way Phoenix did. The housing boom there only inflated inflate a home's price by about $10,000--not $100,000. So, I breathed an errant sigh of relief, not accounting for the fact the home prices there usually start below $100,000.

Recently, the Phoenix market started showing signs of life. The bandages are still on. The oxygen tank still attached. Damage has been done to the values, but people have started buying. Lending regulations are tight. But for folks with good credit and money down (the way homes were bought as little as ten years ago), homes are available.

Birmingham however, which may have missed the super-over-inflated pricing, is still suffering the ill effects of the economic crunch and the former ultra-lax loan standards. Where we Phoenicians may be uncomfortable, these folks are hemorrhaging.

And, they are bleeding in my homes. Right now, I am working deals with more than fifty percent of my tenants. They are paying. Just not on my time frame. It isn't the scenario I want. But, it keeps them going. It keeps me going.

Every time a home sells in one of the neighborhoods where I own property, Jack sends me an e-mail, giving me the particulars(and yes, the values are down). With today's e-mail, he sweetly sent it with an unsolicited plan of action, "Rent them for what you can get and hold on to them for the long run."

All of this isn't news to me. And, I am not sure who he is helping with this advice. Afer all, real estate is his livelihood. This is just my all-encompassing hobby.

Today I wrote Jack back, explaining the Phoenix market is starting to show signs of life. Granted, prices are down, but inventory is moving. That's the first step. Stimulate demand.

I assured him Birmingham can't be too far behind. In fact, it might even be just be a heartbeat away from turning around, with a much longer time devoted to recovery. And, if it doesn't work this way, it will be straight to the cardiologist for those of us investors who didn't eat right and exercise.