Phoenix Real Estate Market Keeps Tanking (deposit, eat, financed)

[oldtrader]

Average price has gone up, is average of all homes on the market or all sold. It is not an indicator of what actual prices are doing. As long as you average the overall market, at a time the very low end has been sold off, the average often rises even if the actual prices of remaining homes had remained the same or even if they had fallen.

Over the past few months, the number of real cheap homes have dropped substantially which means the average moves up even if the actual prices do not change. Median and average overall prices, or square foot costs are poor indicators of the true real estate market.

To find the true average price change, would be take homes in a certain area of town, of similar construction, size and quality including quality of neighborhood, and average that group.

[whodiman]

Originally Posted by oldtrader

Average price has gone up, is average of all homes on the market or all sold. It is not an indicator of what actual prices are doing. As long as you average the overall market, at a time the very low end has been sold off, the average often rises even if the actual prices of remaining homes had remained the same or even if they had fallen.

Over the past few months, the number of real cheap homes have dropped substantially which means the average moves up even if the actual prices do not change. Median and average overall prices, or square foot costs are poor indicators of the true real estate market.

To find the true average price change, would be take homes in a certain area of town, of similar construction, size and quality including quality of neighborhood, and average that group.

This might be partially true but not entirely at least not in Surprise where I tend to keep an eye on. I still see smaller houses similar to mine or even smaller. The ones 400-500ft smaller are selling for 15-20k more than what I paid and the ones that are the identical to mine (I bought a cookie cutter) are selling for 40% more than what I paid for mine.

[MN-Born-n-Raised]

Originally Posted by whodiman

This might be partially true but not entirely at least not in Surprise where I tend to keep an eye on. I still see smaller houses similar to mine or even smaller. The ones 400-500ft smaller are selling for 15-20k more than what I paid and the ones that are the identical to mine (I bought a cookie cutter) are selling for 40% more than what I paid for mine.

Like you, I watch the Surprise market. A home like my floor plan was just listed for 25% higher than I paid. It sold in 2 days (possibly) more than asking. Another one sold 5-6 months ago with the same floor plan and that sold for about 33% more than I paid. The one that sold for more had nicer jewelry (wood/iron stairs, travertine back splash etc).

OldTrader has given his average price theory for a year or more now. Math savvy folks are not confused by this simplistic point of view. I'm going to listen to a Phoenix mathematician like Mike Orr who has studied this Phoenix market for years. You and I both know that houses in our neighborhood have increased by 25% or more. It's really not up for debate.

[MN-Born-n-Raised]

Originally Posted by LookinForMayberry

My surprise is that there is a market there at all. Having been there many times, I cannot imagine why anyone would want to live there.

Where you live (Kenmore WA) it's only sunny 10% a year for over 1/2 the year.
Source: City-Data.




Now let's look at Phoenix




As you see, the same thing can be said about the west coast of Washingon state. Why on earth would someone want to live 70% of the time where it is cold, gloomy, and rainy?

[Captain Bill]

Originally Posted by oldtrader

Average price has gone up, is average of all homes on the market or all sold. It is not an indicator of what actual prices are doing. As long as you average the overall market, at a time the very low end has been sold off, the average often rises even if the actual prices of remaining homes had remained the same or even if they had fallen.

Yes, that's correct, and that's why we look at the hyper-local markets. However, the data for neighborhoods takes a lot of labor, and that's what we do when running comps for buyers or sellers, whereas the data for price range and cities, zip codes, etc., are readily available.

Below are two charts courtesy of the Cromford Report. One is average price per square foot for city, and Gilbert is the city that was chosen. The average price per square foot smooths out some of the issues with average price. (Surprise, as well as a community in Surprise has already been mentioned)

The other chart is appreciation by Price Range for the Metro Area.

We know that one size does not fit all, and that there are variations in prices in certain price ranges, cities, zip codes and communities.

However, the empirical data gained through quantative research indicates that prices in the Phoenix Metro Area have actually increased.

[Guitarmaan]

Originally Posted by MN-Born-n-Raised

Why on earth would someone want to live 70% of the time where it is cold, gloomy, and rainy?

Being from the UK, that's a sentiment I can certainly relate to

[Home Addict]

Originally Posted by Guitarmaan

Being from the UK, that's a sentiment I can certainly relate to

Why would there be significantly more cloudy days in July/August than in June/September in Phoenix? I assume the charts are data collected over many years.

[sh9730]

Home Addict - Because we get the monsoon (google it) in the summer and many times after the big thunderstorms dissipate in the evenings, the "debris" (leftover) clouds spread out all over and it can actually be pretty cloudy for most of the next morning until the sun burns them off, and then we start all over again.

BUT, at least some days those clouds keep the temps down a bit, abeit it more humid (for us anyway), and if we are really lucky, we get some RAIN! June/July are two of our wettest months a year.

P S - now back to our Phoenix Real Estate situation in this thread.

[sunluv]

The Monsoon start date averages early July, though there's considerable variance year to year. Thus June, along with April and May are the driest months of the year. June therefore also has the highest absolute temperatures, which decrease somewhat with the onset of the Monsoon season in July. September also dry, post-monsoon.

Monsoons are generally pretty mild here, pretty much just what are called thunderstorms in the rest of the country unlike what is seen in Asia and elsewhere, so the humidity and rain are low by the standards of other places but are up from the driest months here. And ya, the humidity and precipitation numbers are skewed because most of it happens in late afternoon/overnight, and only some days.

[sh9730]

Sunluv,

You are correct on June being dry. I meant to type July/August!