How low will they go?? (Houses)

[sierraAZ]

Originally Posted by Winkelman

You can read the data for yourself right here:

OFHEO -- Downloadable Data

Winkelman, thank you very much for this link. I hadn't come across it. Great data for analysis and comparisons.

[Winkelman]

sierraAZ

It's hard to find this kind of historical pricing info for some reason.

[artyst]

i think someone mentioned location as to whether housing will go down significantly. there are two houses in my neighborhood that are listed for more than two of the same model were last year. the area i live in is holding its value very well.

[sierraAZ]

Originally Posted by Winkelman

sierraAZ

It's hard to find this kind of historical pricing info for some reason.

Yeah, you're right. Even though I'm big on research , sometimes the most valuable links come from random searches, buried pages and pages down. After I posted, I remembered that I had found the last report this way, but didn't pay attention to the actual web site because of the kind of cryptic name I wasn't familiar with. I didn't have enough time to compare and try to analyze all the numbers, but it looks like AZ is on the same timetable as FL, which I find strange... Didn't everybody say the bubble started in FL...? Based on this data, CA and NV topped much earlier, whereas AZ and FL topped in 2006. There seems to be a lot more panic in FL, but their appreciation for the 1st quarter of 2007 is almost the same as AZ, just a bit lower. Granted, they have other problems - high taxes and insurance, natural disasters, which drives people away. I'm just afraid that since we were late to the party the effect may be delayed here. On the positive side, AZ really was undervalued and the volume of new construction and the percentage of toxic loans wasn't that high. The latter two may be more true in Tucson than in Phoenix...

To return the favor, here are some quite interesting IMO links:

I was very surprised to find out that the housing boom-and-bust cycles in the US have been historically waaaay milder than in Western Europe, for instance:

http://www.networksfinancialinstitut...ing_Bubble.pdf

I haven't been in this country long enough to observe the Southern CA boom and bust in the late 80s and early 90's, but frankly even if I were here I wouldn't have noticed. People tend to not pay attention to developments that don't interest them at the time. People also tend not to learn from history and it does repeat itself... I find this timeline quite disturbing :

History of a housing bubble

But to finish on a lighter and more optimistic note , people have always thought houses are expensive no matter how much they cost and prices have never gone back to levels some hope they would today.

Matrix » [Time] Housing Story Redux

Even if you just account for inflation and the real appreciation is only about 1% a year, I believe one will still be ahead buying vs. renting a similar property, unless you're forced to sell in an unfortunate downturn. Rent will go up, and up, and up, but if you stay put, the amount you pay on a fixed mortgage is the same. OK, property taxes and insurance do go up. I believe it just comes down to quality of life, not as much investment, and that's what houses were meant for. There should've never been "opportunities" like those last few years to buy a big-ticket item for nothing and create this mess. Timing the market for flip-flops is a risky business and I don't feel for speculators one bit, but I do feel for uninformed people who were conned by greedy crooks into these suicidal loans. On the other hand, I'm pretty sure that if one is satisfied with living in a one-bedroom apartment and maxes out 401K, IRAs, other savings and investments, he/she may very well come ahead in the long run. That's pretty much an option only for singles or couples without kids, though.

I'm glad I found these forums. My best buddy at work is trying to sell a house and certainly doesn't wanna hear any of my yapping about the gloom.

[foma]

We are going to be first time homebuyers and are in no rush to buy. I've read analysts say end of 2008 and others here have said 3+ years before the market "bottoms". Beats me. We're going the traditional route, 20% down pmt with fixed rate so when we get there, we get there and I'm not listening to anybody pressuring me "Buy now buy now."

[whowants2know]

Originally Posted by foma

We are going to be first time homebuyers and are in no rush to buy. I've read analysts say end of 2008 and others here have said 3+ years before the market "bottoms". Beats me. We're going the traditional route, 20% down pmt with fixed rate so when we get there, we get there and I'm not listening to anybody pressuring me "Buy now buy now."

Good decision! You are very wise. The old adage, "What goes up, must come down" may or may not hold true for areas like CA that have gone past the point of sanity in the housing market.

I grew up in CA and the nightmare began in the mid-70's when the land speculators came to CA and began buying and selling real estate at an accelerated rate. The real trouble started when homeowners in CA decided to jump on the bandwagon to reap a fast profit. The rest is history. The speculators had enough sense to know when to stop...but the CA homeowners did not have that experience to fall back on and did not understand where it could all lead.

Will housing in CA ever be affordable? Affordable is relative as to how much money one earns/has in the bank/inherits, etc.

[Winkelman]

I lived in Southern California during the bubble / burst of the late 80's early 90's. It reminds me a lot of what is going on now in Arizona.

Historical Median Home Sales Prices From 1982

Big differences being the out of state speculator driven market here and the exotic loans that fueled things here. The California market back then was a lot more fundamentally sound then this one is. And Southern California still fell over 20%. I chuckle reading some of the posts here saying "My neighborhood has bottomed out, the worst is over" or "The listings are higher around here than last year". The reality is inventories are huge (now a record 55,000 homes for sale in Phoenix, up from 10,000 in 2004), sales are slow and the sub prime fallout is not really going to kick in until October according to most experts. Add to that the tightening credit market that will eliminate a lot of potential buyers and interest rate spike that hit last week. Trying to now predict the market bottom is like catching a falling knife.

The "Canary in the coal mine" for real estate is places like Pinal County here in AZ or the Antelope Valley, Bakersfield, Sacramento and the Inland Empire of California. If you go to zip realty you can see the huge price cuts and short sales all over the place. Anyone who feels that after this huge run up that prices will level off here and begin to go up has not looked at or lived through past bubbles.

To me the only hot places to invest in AZ are the copper mining towns which are booming with the high copper prices. Other states that have towns that rely on Mining or Oil or Gas are also great spots to invest.