Phoenix housing won't return to pre-boom until 2015 - article (Mesa: section 8, rent)

[gtbguy]

Originally Posted by HonestOne1

No offense Captain. But you called bottom in Spring 2009 and claimed steady appreciation thereafter.

Or was that just for "Val Vista Lakes in Gilbert".

HonestOne,

Come on, nobody has a crystal ball. I along with many investors believe we are playing in the bottom now. Yeah, we could see prices dip a bit more this coming year but we're not goinig to see a HUGE drop in prices like we did right after the bubble burst. At the end of the day if you are buying now and are willing to hold on to it for a few years, then you will do just fine. The Phoenix metro area has a lot to offer for retirees, snow birds, and the job situation will recover as well.

[Captain Bill]

Originally Posted by HonestOne1

No offense Captain. But you called bottom in Spring 2009 and claimed steady appreciation thereafter.

Or was that just for "Val Vista Lakes in Gilbert".

No offense taken HonestOne.

The Cromford Report reported the bottom in April 2009. I reported their information. It remained the bottom until a few days ago when Cromford reported that we have dipped below that.

What is important to know is that prices lag behind supply and demand, but will eventually follow.

At the bottom of this page is a historical chart Courtesy of The Cromford Report showing their Cromford Market Index.

It measures the balance of the market. It is derived from the trends in pending, active and sold listings compared with historical data over the previous four years.

• Values below 100 indicate a buyer's market,
• Values above 100 indicate a seller's market.
• A value of 100 indicates a balanced market.

Notice that in April 2005 the demand (CMI) peaked and began a steep decline.

• It dropped to a low of 26.5 in Nov 2007
• Nov 2007 began an increase from a low of 26.5
• December 2007 in began increasing from 27.4
• You can draw a trend line from November 2007 to January 1, 2011 where the Cromford Market Index had increased to 101
• It continued to increase in January to 110 as of January 23 (As shown on their daily chart)

This recovery toward a balanced market (CMI = 100) has held a steady inclining trend line, with some ups and downs above that trend line since Nov 2007 (nothing will happen on a straight line)

During the time that this CMI has been greatly improving, the prices have remained relatively flat. Could one speculate that if the CMI is increasing, that at some point the prices should follow, based on the history of these stats?

The Pending Listings, which gives an indication of Sales in the next 4-6 weeks, and when combined with other stats can give a rough forecast of prices in the next 4-6 weeks took a jump up in January.

Jan 2, the Pending Listings were 8,695
Jan 23, the Pending Listings had increased to 10,195

A lot of buyers have come out in January. They are a mix of investors, first time home buyers, relocations, snowbirds and retirees looking to buy a home at the low prices to rent out until time to retire.

Typically the buyers don't come out in force until spring, so I would ask if this is a sign that the spring market will be stronger than previously expected?

Thank you for mentioning Val Vista Lakes in Gilbert. It's one of the premier communities in the valley, and I'm proud to live and work in that community; and I also volunteer my time to help make it an even better community.

I have about 30 videos on YouTube and in my blog about Val Vista Lakes, and recently began a new video series about some of the changes and improvements the Association is doing for the community.

The prices in Val Vista Lakes are slightly higher than the surrounding communities because of the desirability of the community and all of the amenities of the resort like clubhouse, coupled with the low monthly dues of only $88/mo. The dues were not increased for 2010, and likely will not need increasing in 2011.

Just one more fact to throw out for consideration. The Baby Boomers will begin retiring soon, and they are a very large generation. How do you think they will affect the valley economy and the housing market?

Thanks again, Honest One, I hope you find this information helpful.

[azriverfan.]

Originally Posted by gtbguy

HonestOne,

Come on, nobody has a crystal ball. I along with many investors believe we are playing in the bottom now. Yeah, we could see prices dip a bit more this coming year but we're not goinig to see a HUGE drop in prices like we did right after the bubble burst. At the end of the day if you are buying now and are willing to hold on to it for a few years, then you will do just fine. The Phoenix metro area has a lot to offer for retirees, snow birds, and the job situation will recover as well.

However, if you read this article, this group keeps readjusting it's predictions based on economic factors. Just because they are saying prices will return in 2015 now, doesn't mean they won't readjust and claim it will return in 2016 or 2017 in the future. Even the article states that. In 2009, they made this claim would occur in 2012. In 2010, they claimed it would occur in 2014. Now it's saying 2015. So you have to take these reports with a grain of salt and use your own common sense and understanding of the market. There is no way the bottom was reached in 2009. There were plenty of readers on this forum including myself that disputed that notion at the time it was being posted here knowing there still existed a large surplus of homes that had not been released onto the market. As I've stated, I would be very surprised if houses just suddenly began appreciating by 5%-7% starting in 2012.

[gtbguy]

Originally Posted by azriverfan.

However, if you read this article, this group keeps readjusting it's predictions based on economic factors. Just because they are saying prices will return in 2015 now, doesn't mean they won't readjust and claim it will return in 2016 or 2017 in the future. Even the article states that. In 2009, they made this claim would occur in 2012. In 2010, they claimed it would occur in 2014. Now it's saying 2015. So you have to take these reports with a grain of salt and use your own common sense and understanding of the market. There is no way the bottom was reached in 2009. There were plenty of readers on this forum including myself that disputed that notion at the time it was being posted here knowing there still existed a large surplus of homes that had not been released onto the market. As I've stated, I would be very surprised if houses just suddenly began appreciating by 5%-7% starting in 2012.

I'm sure not disagreeing with you Doc. As I said nobody has a crystal ball and we can read reports and articles on the internet till we're blue in the face, come up with our own theroies and still end up being way off base. I believe we are in a market right now that we'll probably never see again (at least in my life time). Buying homes at these low prices and hanging onto them at least for 5 years, I really doubt you will loose money. If you keep then longer than of course, the profits will be greater. I've purchased several homes and the last one I bought two weeks ago (in Queen Creek) I paid $37 a square foot and I'm confident it will be worth more than that 5 years from now.

[tolovefromANFIELD]

Phoenix-area real-estate market may face new reality

Maybe I don't have to wait for Captain Bill:

If it wasn't for the investors, this market would be dead," said the Mesa-based Orr, who publishes the Cromford Report, a housing-market update read by many real-estate investors.

Phoenix-area real-estate market may face new reality

[azriverfan.]

Originally Posted by gtbguy

I'm sure not disagreeing with you Doc. As I said nobody has a crystal ball and we can read reports and articles on the internet till we're blue in the face, come up with our own theroies and still end up being way off base. I believe we are in a market right now that we'll probably never see again (at least in my life time). Buying homes at these low prices and hanging onto them at least for 5 years, I really doubt you will loose money. If you keep then longer than of course, the profits will be greater. I've purchased several homes and the last one I bought two weeks ago (in Queen Creek) I paid $37 a square foot and I'm confident it will be worth more than that 5 years from now.

I agree with your overall point but as you know it depends on what type of market you are in. The luxury home market is still going to drop and homes in that range are still overpriced and will continue to fall. But I agree that for the 3 bed 2 bath starter homes, right now is a really good time to buy

[Captain Bill]

On January 22, 2011, Tom Ruff, also of The Cromford Report had this to say about the Phoenix housing market. This is a small excerpt from the article.

"...The lesson here: never underestimate the power of federal policy to make or break a market. While I missed the impact of the tax credit initially, the fact remains that I have been and still am very bullish on the Phoenix housing market.

Anyone who has followed my writings will know that in late 2008 I encouraged people “to get out and shop,” and in early 2009 I asked, “What are you waiting for?” followed by 2010’s “blood in the streets.”

For the past two years I’ve written time and time again about the opportunity that currently exists in the Phoenix real-estate market, and I still feel that way today. The people who had the courage to act in early 2009 are amassing empires by buying, holding, and collecting rental income, wishing they had more properties to meet the demand.

While on the other side of the street, investors living by the same mantra, “you make your money when you buy,” are buying and flipping and boasting to their barbers and hairdressers about the deals they are involved in. Two of my friends visiting from Nebraska last week called and told me about the incredibly low prices they were seeing, and they wanted to know what I thought; so instead of golfing or climbing Camelback, they were headed to look at houses.

Through history we’ve heard of the shoe-shine boy giving stock tips before the great stock market crash in ‘29 and the retired investor talking about the steal he made during the RTC days in Phoenix after the Savings & Loans crashed.

We are living in the time after the crash, not the time before; Phoenix is now offering the same opportunities we saw in the early 90s. I haven’t heard anyone say, “Boy, I wish I’d have bought that home down the street in 2006 when I had the chance,” but I’ll bet you, ten years from now when they look back at this unique time in history……"

[EnicAZ]

This story is something which reflects what most in the industry already know, sadly. The housing decline is a permanent feature of the economy. Here is an updated version of the Realtor's Pending Price Index which shows the continued decline of home values coming up.

http://www.armls.com/Libraries/STAT/...2011.sflb.ashx

[Captain Bill]

Originally Posted by tolovefromANFIELD

...maybe Captain Bill can tell us what percentage of purchases were non-owner occupied. Now I know many of those so-called investors in 2005-2006 drank way too much late night infomercial cool-aid, but Phoenix market needs stability, rather than speculation.

I couldn't find a total investor number (rehabbers, wholesalers, etc), but the numbers from Maricopa County Recorder as reported in the Cromford Report for landlord types who state on the affidavit that they do not intend to occupy the property is 24.8%.

[rjrcm]

Originally Posted by EnicAZ

... The housing decline is a permanent feature of the economy. ...

Where I can I get a crystal ball as good as yours? However, I think I can safely say it's not a permanent feature.