East Mesa housing bubble (Phoenix, Kingman: for sale, real estate market, foreclosure)

[john3232]

Do home prices in East Mesa still have a long way to fall or have they about leveled off?

I'm looking in that area and and noticed homes which sold in 2004/$160,000 and peaked in late 2005/$245,000 range now sell around $230,000

Does anyone feel such homes will fall under the $200,000 range?

Thanks for any advice you can offer.

[Ponderosa]

If we knew we could be rich. Seriously, no one has the answer to that. We are in unchartered territory on home prices these days. Credible sources like RL Brown, a highly respected consultant to the local construction industry, predict another 12 months or so of flat prices as excess supply gets sold off and then a return to historical appreciation rates - just above area inflation. They could be wrong, but there has been a noticeable uptick in construction activity in new subdivision areas suggesting a return of customers. On the other hand, no one is predicting much appreciation for this year. So if you are looking to buy, you could always wait and see with minimal risk. Of course, you loose the tax deduction, tie up money in deposits, have to put up with a landlord and rules, don't have the pride of ownership and the enjoyment of decorating and making personal touches, etc.

If your credit is less than stellar or you do not have a lot of cash for a downpayment, or you want a long term loan, now may be the time to buy regardless of market direction. The availability of these kinds of loans is drying up for the time being and you may have trouble finding one if you wait much longer.

[shariv]

I don't know about Mesa, but in Kingman prices are steadily dropping. Price reductions seem to be the word of the day and I've seen a few houses lately that are priced below what they paid in 2005. For some reason, they are still advertising zero down and stated loans here. But we are always behind the curve.

[sheena]

Originally Posted by john3232

Do home prices in East Mesa still have a long way to fall or have they about leveled off?

I'm looking in that area and and noticed homes which sold in 2004/$160,000 and peaked in late 2005/$245,000 range now sell around $230,000

Does anyone feel such homes will fall under the $200,000 range?

Thanks for any advice you can offer.

I really doubt they fall that far but you never know. The foreclosure rates are suppose to pick up and another concern is these builders coming in that got a deal on the land and will start pricing their houses cheaper in order to make a buck. My dropped 30,000 since summer 2005.

[MicheleVanDetti]

I think that average prices in this area are going to stabalize, but your best bet is to work with an agent who can find you a property that may be distressed. Even if the prices don't sink below $200K, you may be able to find an owner with some equity who just needs to get out who would accept a lower offer. That way, you're in the home you want at the price you want now. Ponderosa is absolutley right in saying that if you have challenge credit you're going to want to buy as soon as possible. That market is tightening up, but talented loan officers are still able to find loans for most people.

[azjack]

I am extremely confident that we are not at a price bottom in the Phoenix area, including east Mesa. Inventory continues to climb. The loose-credit fueled speculative mania took off in 2004 and came to an end in late 2005. Since then, we have sputtered along with 15-20% drops in some areas of Maricopa County. Obviously, Pinal County prices have dropped at least that much or more.

The ability to easily borrow large sums of money is gone for many people. The credit tightening will get pretty extreme. If the only "buyers" are people with >750 credit scores and 20% down payments, then house prices will definitely fall to early 2004 levels and below. Of course, the banks (REOs) will battle the builders in price cutting, as they already have started doing.

The bottom for Phoenix area house prices is probably two to three years away.

[sierraAZ]

Originally Posted by Ponderosa

If your credit is less than stellar or you do not have a lot of cash for a downpayment, or you want a long term loan, now may be the time to buy regardless of market direction. The availability of these kinds of loans is drying up for the time being and you may have trouble finding one if you wait much longer.

Ponderosa, you were a prophet on this one. I've gotta watch your other posts.

[ivanabacowboy]

I work in construction lending (ie we finance the builders who are building the new subdivisions). We have offices all over the country and Canada. I can tell you Arizona hasnt hit bottom yet as far as prices. "Full circle" on the real estate market is a ways out, most builders are predicting 2008 or beyond even in AZ. That said, overall bet in the industry I work in is Arizona markets will remain at inflated prices, just less inflated.

That said, some markets are much worse off. Miami-Dade and surrounding counties in Florida where we also do business is in much dire straights and possibly in for more serious and longer price corrections than Arizona. Places like Ohio, Michigan, Colorado, Virginia and the like generally didnt "bubble" as much as the warmer destinations, so will "correct" much quicker.

Ponderosa made an excellent observation that is coming true. Standards will tighten and only get tighter. The fed hasnt yet shown amenable to bailing any of the lenders/buyers/builders out of the mess, so things will continue to tighten up as the lenders do it themselves to minimize their risk exposure.

[mortimer]

john3232 wondered:

> ... homes which sold in 2004/$160,000 and peaked in late
> 2005/$245,000 range now sell around $230,000
>
> Does anyone feel such homes will fall under the $200,000 range?

Some might already have done so. It all depends on how
hard you are willing to work and and how patient you are
and what the value of your time is.

If a house is affordable to you at $230k then dropping to $190k
would make a 30-year mortgage payment lower by about $290-300.

We are selling a house - just trying to price it in the middle
of what other similar houses are going for. We started out at
$465k and lowered it to $455k in a couple weeks. A couple months
later, we got some (better) advice on price and dropped it to
$425k then $415k a couple weeks later and so on. It is at $410k.
(Just trying to keep it from looking "distressed.") We would take $390k.

No one can predict the market, but you can see that almost all markets
that experience a 'bubble' drop and then 'go sideways' for a while till
both enough discouraged owners of whatever it is - stock, commodities,
tulips, homes - sell and buyers perceive the prices to be reasonable.

'Sideways' moves can last for many years, so if you can't afford that
$230k house, then keep your eyes open for 'discouraged' people
finally getting out at your $190k price target.

Only you can weigh whether it is worth it to spend your nights and
weekends scouring listings and driving neighborhoods looking for
possible deals out there while living wherever you are now living.

A possible angle is to rent a house that has formerly been for sale.
Once in there, you can tell the owner that you are willing to buy it
for $xxx. Maybe after a couple of years, you will get an offer to sell.
In the mean time, the owner has taken care of defects for you and
you know the condition of the house and neighborhood.

[Winkelman]

Originally Posted by Ponderosa

If we knew we could be rich. Seriously, no one has the answer to that. We are in unchartered territory on home prices these days. Credible sources like RL Brown, a highly respected consultant to the local construction industry, predict another 12 months or so of flat prices as excess supply gets sold off and then a return to historical appreciation rates - just above area inflation. They could be wrong, but there has been a noticeable uptick in construction activity in new subdivision areas suggesting a return of customers. On the other hand, no one is predicting much appreciation for this year. So if you are looking to buy, you could always wait and see with minimal risk. Of course, you loose the tax deduction, tie up money in deposits, have to put up with a landlord and rules, don't have the pride of ownership and the enjoyment of decorating and making personal touches, etc.

If your credit is less than stellar or you do not have a lot of cash for a downpayment, or you want a long term loan, now may be the time to buy regardless of market direction. The availability of these kinds of loans is drying up for the time being and you may have trouble finding one if you wait much longer.

Actually there are quite a few people who got rich during the last run up in prices. So there are people who seem to know. Its pretty simple: Look at amount of homes on the market, 55,000 plus, when it gets down to 20-30,000 homes on the market prices will go up. Until then there is no pressure for prices to increase, just way too many homes.

Vegas proceeded the Phoenix market on the way up and it seems to be doing so on the way down. Prices are back to early 2005 levels. Saying prices in Phoenix will go sideways for the next year is being pretty optimistic.