There really is a big difference between reading or watching TV and being in the U.S. to see the pain and experience a recession first hand. From retail sales to foreclosures, job losses and the likes, it’s bad and there isn’t much sign of improvement.
If you’re someone considering purchasing a home for retirement or investment in Arizona, Nevada, or California – wait. Last year I thought it’d be worth waiting another year. If you did, the dollar came up another 7% or so, and prices dropped about another 15%. This year I’m here to tell you to…wait ANOTHER year for the same reasons. Foreclosures in those three states are still increasing, and the jobs aren’t coming back anytime soon. Low end houses are getting sold because of an $8,000 government tax credit until November, and by investors for cash. Right now, here in Phoenix you’re looking at about one-third of the price from the top of the market in 2006. Mid to high-priced homes have almost no market at all, even now.
Here’s an even more attractive, or desperate, story from Mississippi. Remember that the state hasn’t fully recovered from Hurricane Katrina AND now has the foreclosure and unemployment hits as well. The state has a development program that pays investors up to $70,000 to build rental homes. Buy a $20,000 lot, build an $80,000 home, and over the next four years the state will literally refund up to $70,000. If the house never increases in value, that’s still a potential 50% return per year, over five years. I’ve done the math, but not the due diligence, and have posted the link here: State of Mississippi Small Rental Assistance Program: http://www.gozonegateway.com/srap/
Two days ago, I was mystery shopping Lund Cadillac in Phoenix for an article I’m writing. Lund is one of the largest Cadillac dealers in the U.S. But imagine my surprise when I saw a very cool motorcycle in the showroom. It was a custom-made red Harley Davidson motorcycle that belonged to boxer Mike Tyson, who lives in Phoenix. Tyson earned more than $300 million in his boxing career, but he’s totally broke, and on the verge of bankruptcy. How sad, and totally unnecessary.
We’ll discuss more of the pain from south of the border next week.