Phoenix Real Estate Market Update (Buckeye, Queen Creek: to rent, credit card, loan)
Please register to participate in our discussions with 1.5 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Captain Bill: the only negative I'm still seeing -and that is not directly related to the RE market at all- is the fact that real wages are still falling, as they have been for 11 years now. Come recession or recovery, the average American earns less and less in real terms as wage gains are consistently outpaced by inflation. So everyone has to spend more on essentials and has less discretionary "leftovers". This is a real (negative!) phenomenon That I have never seen in my life and statistics going back 100 years do not show such a long period of real wage losses ever before. Usually, you expect real incomes to go up during a recovery, but neither the mid-2000s nor the post 2009 recovery produced rising real incomes. Only the top 20% earners had income growth beyond inflation - and that is heavily scewed towards the top 1%. But they can't own all the real estate out there, which is build for the middle class. Interestingly, even <5% unemplyment around 2005 did not make wages go up. So, it is hard to see real wage growth with 9% unemployment. This is such a phenomenon that nobody has an explanation. This is the twin brother of the myth "real estate only goes up" and even more puzzling. I would be grateful for any explanation and -more importantly- remedy for this stagnation. Everything depends on rising real incomes. They will make the RE market in Phoenix fly again, too. What to do?
It's a big problem. Home price appreciation moves in lockstep with wage growth. There are a couple of considerations though. First, Americans are highly leveraged (in debt to their eyeballs). As they de-leverage they will have more disposable income to invest in homes. Paying a credit card is like getting a tax free raise. Second, in the local market, wages are, as the detractors never fail to mention, somewhat lower than in other places. If (big if) the quality of jobs in the local market improves then wages will grow locally even though they have fallen in other parts of the country and on average nationally. Prior to the recession, Phoenix was seeing strong growth in per capita earnings. I think it is reasonable to expect that trend to resume and continue as the city matures.
That's the glass half full look at it, but overall I do have to agree with you. No wage growth = no home appreciation. If we keep doing things that undercut the middle class in the US, we are in deep excrement.
Yeah, 4% y-o-y increase won't make it up for me who bought in 12/2009 at 180k and the house was worth 140k this April per a BPO. That's a >22% haircut even after we waited for the first big wave of decline. And yet we lost out brutally. At a rate of 4% appreciation we would have to wait more than 5 years to even out nominally (but still lose out big time after inflation is figured in) plus we would have to wait even longer if we wanted to sell and figure in 7% or so in selling costs. This is a catastrophe. No wonder everybody is down and cuts spending where they can.
The commercial sector is still off, and tenants are able to drive some good deals.
Office vacancy is 27% currently, but the commercial guy on the panel said it's improving.
North Scottsdale and the Kierland area are prime growth areas.
New leases are mostly to:
Health care
Insurance
Universities
Large companies wanting 50k-100k sf of space
Tenants looking to relocate their headquarters
Financial Services are dropping back
A lot of the land around Paradise Ridge, Grayhawk, Mayo Clinic, Scottsdale Rd and 101 is state owned land. They are both selling and leasing land.
For multi-family land around there, if I'm correct in my notes, one will pay $27/sf for the land.
Other Notes:
Apartment Vacancy is around 12% and ideal is around 5%
The Light Rail Corridor is very popular
Apartments are offering fewer concessions to new tenants.
We are considering relocating a business/residence lifestyle to AZ.
We have located commercial property that appears suitable, zoned A1.
Any problems with an owner living on property?
How do we best research neighborhood security and quality?
Current price is high considering cost to upgrade for our needs. How low of a cash offer discount, percentage wise is likely to be succesful? (silly question I know, but an informed guess based on recent sales data is all we are after)
What percentage of cash sale price would all closing costs likely be?
A newbie at commercial/residence property situation so PLS pardon amature questions...
We are considering relocating a business/residence lifestyle to AZ.
We have located commercial property that appears suitable, zoned A1.
Any problems with an owner living on property?
How do we best research neighborhood security and quality?
Current price is high considering cost to upgrade for our needs. How low of a cash offer discount, percentage wise is likely to be succesful? (silly question I know, but an informed guess based on recent sales data is all we are after)
What percentage of cash sale price would all closing costs likely be?
A newbie at commercial/residence property situation so PLS pardon amature questions...
I don't deal with commercial property so I can't answer the questions. You need a Realtor who specializes in commercial properties to guide you through that process.
We are considering relocating a business/residence lifestyle to AZ.
We have located commercial property that appears suitable, zoned A1.
Any problems with an owner living on property?
How do we best research neighborhood security and quality?
Current price is high considering cost to upgrade for our needs. How low of a cash offer discount, percentage wise is likely to be succesful? (silly question I know, but an informed guess based on recent sales data is all we are after)
What percentage of cash sale price would all closing costs likely be?
A newbie at commercial/residence property situation so PLS pardon amature questions...
A1 is agricultural land. Depending on how the zoning laws are written for your land will depend on whether you can live on the property. There are some zoning laws that will let you have a business but no employees, etc. You would need to go to the planning department and look up the zoning ordinance for that land. You can also do this online through the agencies website. Maricopa county does not have an A1 zoning, so I am assuming it is outside Maricopa. Rural (R1) C districts (commercial) IMD is industrial in Maricopa. Best of luck.
Don't expect the real estate market to turn around and reach the earlier price plateaus in less than 10 years or longer (probably a lot longer). Don't expect the prices to rise at even the current rate of inflation for years in the Phoenix area. The sale of homes in Phoenix is not for personal homes. Investors are the market, buying anything they can get at very, very, low prices. They are buying very cheap, renting them out, and expect to hold them for years before being able to sell and get a decent profit. There is no real market for real estate from the general public.
A clip from AZCentral Phoenix-area real-estate market may face new reality (http://tinyurl.com/4gzzfy8 - broken link)
Quote:
"There is a big swing from ownership to rental," Orr said.
The overwhelming majority of homes priced at or below $100,000 are being purchased by investors, he said, and nearly every investor has adopted a strategy that includes renting out the homes for a period of years.
"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. "There's very weak demand from ordinary people."
Closing sentence for the article.
It could be years before the Phoenix-area housing market of the future comes into full view.
Don't expect the real estate market to turn around and reach the earlier price plateaus in less than 10 years or longer (probably a lot longer). Don't expect the prices to rise at even the current rate of inflation for years in the Phoenix area. The sale of homes in Phoenix is not for personal homes. Investors are the market, buying anything they can get at very, very, low prices. They are buying very cheap, renting them out, and expect to hold them for years before being able to sell and get a decent profit. There is no real market for real estate from the general public.
A clip from AZCentral Phoenix-area real-estate market may face new reality (http://tinyurl.com/4gzzfy8 - broken link)
Closing sentence for the article.
It could be years before the Phoenix-area housing market of the future comes into full view.
Of course that article was published in Janary 2011.
This is November 2011. I also think they may have taken some of Mike Orr's statements out of context.
Here's a snippet from one of Mike Orr's recent September reports:
Quote:
quote by Mike Orr: ..."Now it seems to be popular to believe that prices will fall further. Indeed with the current negative sentiment it is certainly possible they may fall a little further for a short while, especially if the upper end of the market stays quiet.
However it is also inevitable that they will at some point increase from the current level and the market statistics indicate thatthis may be sooner than most people think.
When demand is well above normal and supply is well below normal, prices cannot fall indefinitely.
In the past the laws of supply and demand have only been ignored for about 18 months at maximum. Then we have seen them cut in with a vengeance.
We have gone 9 months so far with the market indicators and pricing going in opposite directions..."
Here is another negative article written last October 2010, which projected that the B of A moratorium on foreclosures would drastically, negatively affect the Phoenix market.
It also uses a quote from Mike Orr saying:
"I can't see how this will help the market," said Mike Orr, publisher of the "Cromford Report," an online daily analysis of metro Phoenix foreclosures and home sales. "It is more likely to hurt the market and drag out the pain a bit longer."
However, Orr said "the market" and probably was referring to the the national market rather than the Phoenix Arizona market, and therefore was used out of context.
The reason is simple: Arizona is a non-judicial foreclosure state, and only the judicial foreclosure states were affected by the robo signers. Mike Orr is well aware of this and has even mentioned in his reports that the moratorium does not affect non-judicial foreclosure in states like Arizona.
...The reason is simple: Arizona is a non-judicial foreclosure state, and only the judicial foreclosure states were affected by the robo signers. Mike Orr is well aware of this and has even mentioned in his reports that the moratorium does not affect non-judicial foreclosure in states like Arizona.
Here is a recent related article about the moratorium impact, which may stretch foreclosures out over decades for some states (eight on average). Note this comment about clearing the foreclosure backlog in Arizona:
Quote:
...In Nevada and Arizona, less than two years [to clear at current pace]. Foreclosures don't go through courts in those states.
Please register to post and access all features of our very popular forum. It is free and quick. Over $53,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 1.5 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
