Moody's predicting 17.8% price collapse in Phoenix home prices (Scottsdale, Tempe: real estate market, houses)

[Winkelman]

Double digit home price drops coming - Sep. 19, 2007

[ArizonaBear]

Originally Posted by Winkelman

Double digit home price drops coming - Sep. 19, 2007

When it is said and done: going from the 2005 housing price peak; the Phx area will likely have an overall 40% drop in prices.....factoring in core inflation in all fairness.

Some areas will dip slightly as in S Scottsdale, N Tempe, Paradise Valley and the Arcadia section of Phoenix.....think 24th St/Camelback--------but, Queen Creek, Maricopa, Gilbert, Goodyear will probably take a severe hit.

[sierraAZ]

Originally Posted by ArizonaBear

factoring in core inflation in all fairness.

Imagine if you start factoring REAL inflation!

[arun196]

Originally Posted by Winkelman

Double digit home price drops coming - Sep. 19, 2007

-17.8% in 2 years. Predicting in 07Q4 for 06Q2 - 08Q2 isnt really helpful.

[david434]

There is no mention of their methodology.

There is no mention of the accuracy rate of past forecasts.

Yet Moody can magically predict the quarters when a real estate market will peak (sell! sell! sell!) and bottom out (buy! buy! buy!).

I don't doubt that home prices will drop, but this article states with exact certainty about things that are not so.

[Boatdrinks]

Originally Posted by Winkelman

Double digit home price drops coming - Sep. 19, 2007

While I don't disagree that the market will continue to decline, I don't put much stock in those predictions. Seems like every week another article comes out with new predictions. What I'm amazed it is that there are still places where you can buy a house for $120K! Wow!!

[Winkelman]

Originally Posted by ArizonaBear

When it is said and done: going from the 2005 housing price peak; the Phx area will likely have an overall 40% drop in prices.....factoring in core inflation in all fairness.

Some areas will dip slightly as in S Scottsdale, N Tempe, Paradise Valley and the Arcadia section of Phoenix.....think 24th St/Camelback--------but, Queen Creek, Maricopa, Gilbert, Goodyear will probably take a severe hit.

Dropping 40% will put houses back to where they would have been without all the investor buying and the sub prime mess. When comparing apples to apples I believe we are already down 10-15%. With the glut of houses the ones selling now are the nicest with the most expensive upgrades, pools, etc. Two years ago any house would sell for top dollar.

[Monster Daddy]

I highly doubt the home prices will drop that much. Reason being homeowners are going to be too stubborn to drop that far and banks unwilling to lose that much. And Phoenix is a big place. Maricopa and Queen Creek and other outlying areas will decline more than more central areas.

Report was also compiled before the Fed interest rate cut so with buyers can now afford more expensive homes.

[NYtoAZ2007]

Originally Posted by Monster Daddy

I highly doubt the home prices will drop that much. Reason being homeowners are going to be too stubborn to drop that far and banks unwilling to lose that much. And Phoenix is a big place. Maricopa and Queen Creek and other outlying areas will decline more than more central areas.

Report was also compiled before the Fed interest rate cut so with buyers can now afford more expensive homes.

That's what we're seeing as potential buyers actively seeking a purchase. However, in many cases, the builders ARE willing to "lose" and continue to drop prices to reduce inventory. I doubt they're actually going in the red, just not reaping the sizable profits they did during the last couple of years. But I've seen some go back up again as their inventory declined: first $60k off, then $100k, now $80k.

It will be interesting to see what happens when they deplete their inventory and start raising prices on new builds again assuming resales remain stagnant based on the statements above.

[sierraAZ]

Originally Posted by NYtoAZ2007

That's what we're seeing as potential buyers actively seeking a purchase. However, in many cases, the builders ARE willing to "lose" and continue to drop prices to reduce inventory. I doubt they're actually going in the red, just not reaping the sizable profits they did during the last couple of years. But I've seen some go back up again as their inventory declined: first $60k off, then $100k, now $80k.

It will be interesting to see what happens when they deplete their inventory and start raising prices on new builds again assuming resales remain stagnant based on the statements above.

Of course they're not in the red because of the price of the houses (is anybody losing when you buy a "$200" dress for $20 ). These pathetic chicken-wire structures are probably not worth 1/4 of what we pay for them. Luckily, we don't have natural disasters here. The builders are in financial trouble mainly because they had to walk away from many deposits for future projects they gave up, just like their customers walk away from the contracts. Well, the reduced volume obviously doesn't help, either. They already laid off so many workers that the overhead shouldn't encumber them all that much.

I've read many builders' SEC filings and earnings calls lately. They just used to make obscene amounts of money out of the crazy mark-up before and are sad they can no longer do that...

Not all builders build specs now, though, or ever for that matter. And AZ is one of the best markets for many, even now.