Phoenix MLS Predicting Lowest Median September Price in Nine Years (Mesa: heat pump, incomes)

[EnicAZ]

R, A 3.5 - 4.0 % home value decline per month for the Phoenix area through the rest of 2010 is already in the bag. The question is what is going to happen moving into 2011 and afterwards.

With no buyer tax credits, the market has strongly resumed it's downward path that it was on in 2008. According to my ARMLS statistics, August prices dropped significantly from July's, over 6%.

[rjrcm]

Originally Posted by EnicAZ

...I have been advising my one client (for now) to wait 6 to 9 months before buying, to see how far prices are going to fall in the Phoenix area.

My office has been analyzing housing and economic data, and the long-term range of falling home prices will be 25-40% from where we were in June. ...

Great that you are saving your one client from themselves. I tend to take the viewpoint that my role is to facilitate a real estate transaction when someone is ready to buy or sell, not to act as their economic or financial adviser. Another agent said it well:

https://www.city-data.com/forum/real-...l#post15733173

Originally Posted by MikeJaquish

...
Other than some MLS stuff, consumers have access to all the economic news and financial trends that you and I do. I do not insult them by thinking they are so dull that they all need me to read the news to them and interpret it.
When a consumer has determined they want to buy a home, or sell a home, I am ready to serve. That is what I am trained and licensed for. Where is the hole in that approach?

[rjrcm]

Originally Posted by EnicAZ

I have always found it funny that real estate agents like myself are able to freely give out opinions, without being heavily regulated like people in securities are. Chalk it up to loose laws, we are free to say things without consequences.

I know my client has appreciated my insight into how the market is well underway in the second leg down in prices.

We have a difference of opinion on consequences. From the latest issue of AAR Magazine on E&O advice:

Dodging the E&O Bullet - September 2010

2. Stick to your area of expertise.

Your job is to facilitate the sale or purchase of property. If questions come up outside the scope of your services—whether they concern a crack in the ceiling or lingering financial liability after a short sale—tell your clients to contact qualified experts. And do it in writing. “Agents need to understand that by not allowing themselves to be pressured into answering those questions, they are better serving their clients,” says AAR General Counsel Michelle Lind.

Your prediction may or may not be correct, but I hope your clients still appreciate your advice should your predictions turn out not to be in their favor.

[MN-Born-n-Raised]

rjrcm. I don't think anybody thinks of you are a cheerleader. (There is another RE salesperson who posts that is an optimist / a cheerleader.)

If someone asks what you think and you answer honestly, that's all you can do. If they don't ask, then it's not your job to give economic advice.

[Ponderosa]

Originally Posted by MN-Born-n-Raised

rjrcm. I don't think anybody thinks of you are a cheerleader. (There is another RE salesperson who posts that is an optimist / a cheerleader.)

If someone asks what you think and you answer honestly, that's all you can do. If they don't ask, then it's not your job to give economic advice.

It's not the RE agent's job to give economic forecasts to clients even if they do ask. They might opine as to where they THINK the market is going, but to try to convince a client of deflationary spirals and a looming depression as one self-described "agent" claims he is doing on this forum is not within the scope and is unethical - not to mention that it is utter BS. Of course, the agent in question is nothing more than just another garden-variety blog/forum housing troll. If his imaginary client had half a brain, he would know as much.

[MN-Born-n-Raised]

Originally Posted by Ponderosa

It's not the RE agent's job to give economic forecasts to clients even if they do ask. They might opine as to where they THINK the market is going, but to try to convince a client of deflationary spirals and a looming depression as one self-described "agent" claims he is doing on this forum is not within the scope and is unethical - not to mention that it is utter BS. Of course, the agent in question is nothing more than just another garden-variety blog/forum housing troll. If his imaginary client had half a brain, he would know as much.

You are right. It's not the RE agent's job to "convince" it's a good or bad time to buy (either way). Google "now is a great time to buy real estate" and see how many Phoenix agents are attempting to convince how great of a time it was to buy from 2008-2009. IMHO, that is equally unethical.

[Howard Roark]

In a better part of my neighborhood near my Phoenix apartment I just saw another price drop...$21,000 over a day ago and the new listing price is $259,000. 2,000 square feet and very good quality neighborhood. That is a 7.75% drop, which is not 20%, but it's recent.

I'm a patient buzzard with lots of cash.

Originally Posted by EnicAZ

I agree with this in the year 2010 as well. Any agent currently in real estate knows the challengs that we face in the housing market, and that values are going to be tested at new low levels. This is why I have been telling clients of home prices declines of 25% from our current levels.

[MN-Born-n-Raised]

Originally Posted by Howard Roark

In a better part of my neighborhood near my Phoenix apartment I just saw another price drop...$21,000 over a day ago and the new listing price is $259,000. 2,000 square feet and very good quality neighborhood. That is a 7.75% drop, which is not 20%, but it's recent.

I'm a patient buzzard with lots of cash.

Here is what I'm currently thinking (it depends on how the numbers look in the next couple of months).

I might do better overall by bargaining hard with less competition this fall than waiting for next fall, even if prices move down between mid October 2010 and October 2011. No one knows what prices are going to do for sure but i think it is clear what is going to go on for the next couple of months. When there are 4 people bidding on a property your bargining power is near zero.

The key is bargaining hard when you have hard cash in hand in a s-l-o-w market – banks who have to sell are receptive to offers. Even if prices fall another 5 percent by next fall (after the Sept and October drops), if you can get a good deal now you’d probably do about as well as you’d do next fall in a busier market. The difference is SELECTION.

But there’s no need to rush into a deal that I don't like.

My plan is to only work with only the listing agent. The RE market is chaulk full of people willing to sell their sole for a double commision. If you are saavy, you can gain all kinds of competitive information when the listing agent has double commision at stake. They might not be willing to blurt it out but I expect to gain my unfair advantage.

The massive downside with this approach is you need to know what you want and do a ton of homework ahead of time. You cannot lean on someone representing you. Most people don't have the time or energy. I've expect to buy well below market and even if the market goes down 15% more, I won't be hurt too much.

I'm off to Phoenix soon to study the interesting areas with cash in hand.

[Howard Roark]

Minnesota, I like your strategy that you pointed out. Yes most people do not have the time or energy ... or patience! Being a cash buyer with several times more savings than what you will put into a house means you can certainly be patient.

However, are you willing to put up with that house for at least another 12 years, maybe 13 of no appreciation in your Phoenix house value, potentially no growth in stock market indices, when you could be in some CDs or government securities investments that yield 2% annually? A ten year note yields a little above 2.7%. I have AAA and AA Arizona issues yielding around 4% - a big chunk of my nest egg. I'm thinking for myself, getting a lease on a white BMW M6 would bring me more thrills buying a house now. Maybe I will change my mind in three years.

[gtbguy]

Originally Posted by Howard Roark

However, are you willing to put up with that house for at least another 12 years, maybe 13 of no appreciation in your Phoenix house value, potentially no growth in stock market indices, when you could be in some CDs or government securities investments that yield 2% annually? A ten year note yields a little above 2.7%. I have AAA and AA Arizona issues yielding around 4% - a big chunk of my nest egg. I'm thinking for myself, getting a lease on a white BMW M6 would bring me more thrills buying a house now. Maybe I will change my mind in three years.

Howard, I don't think we'll be waiting another 12-13 years before we see decent appreciation. Remember, we Americans have a SHORT memory and I expect we'll see recover much more sooner that that. I just heard on the news that SUVs were in high demand (again) and car dealerships are selling them just fine. I thought I remember (not too long ago) when gas was approaching $4 per gallon the word was to dump your SUV. Gotta love America.

Get you an M6 and buy a house you'll be a happy camper!