Phoenix MLS Predicting Lowest Median September Price in Nine Years (theater, live)
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sh9730, while the average price fell over 8% from July to August, sales were up slightly. Many people who had contracts with long closing dates to use the tax credit are included. September 30 will be the last day people can close on contracts started prior to April 30th.
With prices falling this far already, my predictions of a 25% decline in home values might be too optimistic. The others in my sales office who said 30-40% could be more accurate.
Re-Calculate. It was about a 6.5% fall (not 8%). An 8% drop would make the figures lower by $2676.
Much of the sales numbers in the past year were driven by the $8,000 and $6,500 tax credits. According to the numbers, it was over 45% for the Phoenix area. Without the tax credit, prices have resumed their decline, as have sales numbers. September is looking especially slow. This is why our sales office has been recommending anyone wait 6 to 9 months to buy to see how bad things get. There is no point in catching a falling knife.
Yeah, everyone should sell their real-estate now - you can buy it back when unemployment is at 2%. I'd suggest using any excess funds to buy bottled water, bullets, and MRE's. Another suggestion from my sales office is to consider raising chickens - chickens do well in metro Phoenix (they eat the pebbles used in our landscaping!), and they're a great source of protein.
My sales office predicts that chicken futures will be up over 100% as people in the area return to their roots and grow their own food on our 5000 square-foot lots. Apartment dwellers will go hungry, since their small balconies prevent them from creating their own food supplies, although those in ground-floor units may be able to supplement a subsistence income if they can dig their own wells and barter well.
I talked with a couple of friends in AZ who are in the RE finance market. I asked why the values are currently dropping. Here are their answers:
1.) Appraisal values are coming in lower than market. The appraisers are coming in a lot lower and the buyers are later re-negotiating the price to a lower value. In 2005, it was just the opposite, values were being inflated. So if your appraiser (who no longer can be selected by the mortgage officer) doesn't think the pool is worth $5K, then it's not even though the buyer thought it was worth $20K to them. In other words, people use to say "a house is worth what someone is willing to pay". In 2010, "a house is worth what an appraiser says it's worth. " This is another reason why banks want cash. If it gets appraised, chances are it might come in lower than the offer.
2.) Credit is extremely tight. There is no fluffing the ratios. A much smaller subset is qualified to buy in 2010. The demand for your home might be high but if less people qualify (by 1/2) then the real demand is down by 50% than just a few short years ago.
3.) People are deleveraging and they don't want credit. They don't have the desire for a bigger home. There was a lot of pent-up demand for 1st time buyers. That was unleased on the volume of homes in the lower price points. Now that those buyers pulled their demand forward, no one is buying those smaller homes and they are dropping in price to attract cash bottom feeders.
4.) Inventory is rising slightly.
5.) Since the tax credit dried up, there is no longer a sense of urgency to buy. Volume was pulled forward leaving many of the remaining buyers investors or cash buyers. Both of investors and cash buyers want and demand a deal. This is an important part of the reason it is dropping. Investors or 2nd home buyers don't HAVE to have a place to live in AZ. So cash is King and they are bottom feeders. I fall in that camp.
6.) Shorts have picked up steam and can no longer be ignored. So between short sales AND foreclosures, They dominate the market.
See Bank Owned Bargains Home as you can look at how many foreclosures are coming online (and where). There are about 7450 foreclosures in the Valley. The foreclosure inventory is building. I think it was around 3800 in February of 2010. Never mind that short sales are substitutes for foreclosures and shorts are WAY up.
From Banks' Key Role in Housing Prices - WSJ.com "The speed at which house prices fall over the next few months could depend less on mortgage rates and Americans' appetite for home buying than on how banks decide to manage the huge number of foreclosed homes they own or may take from delinquent borrowers in the near future. Unlike home owners, banks often are much quicker to slash prices to unload properties quickly."
I think it is fair to conclude that the market correction is in the process or overshooting.
I know EnicAZ, your "sales office believes it will decline 25%-40% by year end."
My main curiosity is which office are you associated with? What is your source of revenue if you advise people not to buy (and conversely, what do you advise sellers)? Also, if you are so inclined, you could put a link to your website (if you have one) in your profile.
I also value integrity and honesty. But I don't overstep my bounds and make future predictions that I'm not qualified to make. I provide market stats that clients can review to make their own decision (you can see some on my websites). If they still want to buy, I facilitate the transaction, which is my job.
I'll go one step further. I would consider it suspicious if a person did NOT feel comfortable to list their office information. After all, that person could help out a lot of people to save them from a 25-40% declining market.
"1.) Appraisal values are coming in lower than market. The appraisers are coming in a lot lower and the buyers are later re-negotiating the price to a lower value. In 2005, it was just the opposite, values were being inflated. So if your appraiser (who no longer can be selected by the mortgage officer) doesn't think the pool is worth $5K, then it's not even though the buyer thought it was worth $20K to them. In other words, people use to say "a house is worth what someone is willing to pay". In 2010, "a house is worth what an appraiser says it's worth. " This is another reason why banks want cash. If it gets appraised, chances are it might come in lower than the offer."
If skittish, ultra-conservative appraisers are a consequence of this financial mania, I heartily welcome the development.
If someone is on the FHA, little to nothing down program (tax credit inspired or not), that person really needs someone to assess what they are borrowing mortgage funds for. A cash or high down payment potential buyer has more to lose, and is more likely to look out for their own interests.
I see little choice for an appraiser in the Phoenix area other than to find the three most comparable sales, and then skew downward to account for the declining market. Absent the tax credit, the downward momentum would not have (briefly) ceased in 2009-2010. I see no reason for an appraiser to pretend otherwise in the post tax credit period.
No, it's just not appropriate to be advertising on City-Data. It's stated in the rules. I am fine with discussing the falling prices in today's housing market, but advertising for business isn't appropriate.
Yes, but you are allowed to state that you are an agent in your status, and to have a link to your RE website in your public profile. Others have mentioned their office during the course of related debate (not advertising) with no apparent violation of the TOS. And nothing to prevent discussing your business model (how do you make money with no clients).
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