Phoenix MLS Predicting Lowest Median September Price in Nine Years (sales, credit)

[azjack]

Some RE types have posted info in the past about these predictions using MLS statistics, but I have not seen anything about this July 20th report.


"Pending sales data predict that the average price will drop slightly in July to $178.6K and continue downward at a steeper rate in August ($170.3K) and September ($156.4K) then level out in October. The Median sales price shows more volatility rising fractionally in July and then falling back a bit in August (to $125K) and more in September before recovering in October.
If the predictions holds true, the Median price for September would be the lowest in the preceding nine years."


http://www.armls.com/Libraries/Websi...2010.sflb.ashx

[Howard Roark]

Interesting. I'm in agreement with it. Note it does not go into early next year. My own prediction is that unless unemployment drops down below 8% and real jobs with salary gains are added, the Phoenix house prices will be even lower in September 2011 and again in September 2012.

[azriverfan.]

Wow so I guess the bottom didn't occur in Spring of 2009

[azdr0710]

I want whatever crystal ball the ARMLS has.....

[Howard Roark]

It's easily found. It's macroeconomic fundamentals.

Phoenix metro has over 1% of the population of the U.S. That is a good sampling of people. Macro economics is more likely to affect large cities while microeconomics is more likely to affect small cities.

For example. Base Realignment and Closure can easily turn military towns into boom towns or ghost towns. But a BRAC in Phoenix is hardly noticeable (if they expand or contract Luke AFB).

Now for the issues. Phoenix's economy has not diversified out of construction. It had an unemployment rate of 2% ten years ago and now is 9.6%.

Not shown in that statistic is the amount of employed people who have been given the choice of salary cuts or the boot out the door.

Next you have an end of No Doc loans. Loan requirements have been made much tighter, with higher down payments.

Next you have the demographics of empty nest boomers trying to downsize their McMansions. There will be a glut of high end properties on the market soon and their prices falling will push down mid-priced and low end house prices as well.

Option ARM and ALT-A resets are very high this year and much higher in 2011.

Shadow inventory and REO homes not on MLS will eventually come on the market and add to the inventory. Or the bank stocks will drop if they (at most) destroy those houses. Inventory is value. If destroyed the stock shares fall. If put on the market the house prices fall.

The $8k tax credit is over. Only those who applied in that original time frame are eligible.

Jobs still being outsourced.

Taxes are most likely going up in January - the end of the Bush tax cut means less money to buy a house.

Want more? I have more. They all affect Phoenix.

Originally Posted by azdr0710

I want whatever crystal ball the ARMLS has.....

[Ritchie_az]

Wow so I guess the bottom didn't occur in Spring of 2009

I believe rock-bottom of the low end of the housing market was indeed hit in the spring of '09. The middle and top parts of the market have continued to fall. Notice how the prediction is for "median price". Remember, when the housing market crashed, it was the high-end of the market that fell last, so, in theory, it should also be the last to hit "rock bottom". Unless something major happens, I don't expect the low end of the market to fall any more (or rise, for that matter, at least for a few years).

[Howard Roark]

High end falling...

So let's say a house zillowed at $600,000 in 2006 is now zillowed at $280,000 in June of 2010. I know of one such. And then a house zillowed at $425,000 in 2006 at the peak also is zillowed at $280,000 in June of 2010.

Which house would you guess has more bang for the buck? And if you guessed the original $600,000 house, what does that tell you about the prospect of the other house?

High end price drops will push down low end prices. Why is it too hard to grasp that concept? High end prices may be in a better LOCATION. Schools, climate, lower crime, whatever.

Originally Posted by Ritchie_az

I believe rock-bottom of the low end of the housing market was indeed hit in the spring of '09. The middle and top parts of the market have continued to fall. Notice how the prediction is for "median price". Remember, when the housing market crashed, it was the high-end of the market that fell last, so, in theory, it should also be the last to hit "rock bottom". Unless something major happens, I don't expect the low end of the market to fall any more (or rise, for that matter, at least for a few years).

[Ritchie_az]

High end falling...

So let's say a house zillowed at $600,000 in 2006 is now zillowed at $280,000 in June of 2010. I know of one such. And then a house zillowed at $425,000 in 2006 at the peak also is zillowed at $280,000 in June of 2010.

Which house would you guess has more bang for the buck? And if you guessed the original $600,000 house, what does that tell you about the prospect of the other house?

High end price drops will push down low end prices. Why is it too hard to grasp that concept? High end prices may be in a better LOCATION. Schools, climate, lower crime, whatever.

OK, that's one example. One example doesn't say much. Perhaps the person who purchased the 600k home significantly overpaid (for that time) and the person who paid 425k got a bargain (for that time). Perhaps neighborhoods change. It's possible that the 425k home is actually the better deal in 2010.

Your housing market doom-and-gloom is getting tiresome.

[azjack]

"High end price drops will push down low end prices. Why is it too hard to grasp that concept? High end prices may be in a better LOCATION. Schools, climate, lower crime, whatever."

I agree. There may be less total downward dollar potential in buying something cheaper, but a hit is still a hit. Does anyone really think that the average nothing-down 2010 FHA buyer of a $130K house is going to stick around when a couple of his neighbors pay $90K? Most people live so close to the edge that they can not absorb a $4,000 hit, much less a $40,000 hit, even if it is just on paper. FHA, tax-credit induced purchases have some of the same type of risks associated with many subprime loans. No skin in the game, actually my federal taxes provided them with some of my skin so that they can achieve the American dream of knife-catchership.

[sh9730]

Zillow cannot be used as an accurate guage in ANY way (even trends) in AZ as they admit it themselves that their accuracy in AZ is very low.

Now, that doesnt neccessarilly change the premise of the argument...but my home on Zillow can vary as much as 10% down in a month (and has many times), only to go UP 15% the following month...