I sat down with a past client this morning who had recently seen Kristin’s latest Phoenix housing market report. He asked me about what I thought was going to happen in the Phoenix housing market in 2012 and two things came to mind immediately.

Phoenix housing price increases

It is coming. Inventory in the Phoenix East Valley housing market is extremely low. Foreclosures are way down in Arizona, we are no longer one of the top states for foreclosures. With prices flat for the last year and with inventory so low, in my opinion houses will never be this cheap again in Phoenix East Valley.

We also are still seeing a large demand from both first-time home buyers and investors. With a high demand, and low inventory, prices have to eventually go up. We will not see the crazy increases of 2004-2006, but we very likely will get back to moderate 2-3% increase per year.

Year of the investor in Phoenix

2012 is the year of the investor in the Phoenix and East Valley real estate markets. While flipping may be a little harder because of the competition to get a house, anyone looking to stay in a little longer and rent or do seller financing is in the postion to make a good ROI in the right situations.

There are many people who over the last year have done a short sale or have a foreclosure and are current on every other bill they have. These people would make great home owners again, if they could get a loan, but they cannot for a few years. This is a perfect opportunity for those who have some cash reserves to do some seller financing.

Some advantages to seller financing are you get 10-20% down from the buyer so you know they are invested into the deal. And if something goes wrong you have that original investment. The seller who is doing seller financing also does not need to worry about repairs and upkeep like they would with a rental property.

Finally and most important the return on the investment is going to be much better. When you do seller financing you do not need to worry about an appraiser coming in and killing a deal. The home is worth what both the seller and buyer agree the home is worth.

We are working on a new project for investors that we will be announcing soon. Stay tuned for more updates.

*Disclaimer: These are my ideas and my thoughts. In NO WAY are they a guarantee of what will happen. Just like when Terry Bradshaw tells you on Sunday who he think is going to win the game, in no way is this a guarantee, just an informed and educated observation on the Phoenix housing market.