Is anyone kicking themselves for not buying earlier? (Phoenix: real estate, 2013)

[johnmanners]

The mindset of acquiring Real estate these days has changed. It used to be something that was bought to put a roof over your head, have your own corner of the world and raise your family, something that held it's value with inflation over time. This model worked really well and was the American dream that most people wanted.

Now, it is totally different. Real estate is looked upon as a vehicle mainly for wealth building. It has become a speculative asset for both big name investors and small time armchair investors alike. This means that home prices have become extremely volatile and subject to boom and bust cycles just like the stock market. This isn't a good thing at all for people who are still looking at Real estate with the old mindset and in my opinion it isn't good for society at large for home prices to be rising at breakneck speed and then crashing down to earth because people on wall st. are "pumping and dumping" like they do stocks.

Phoenix may have risen sharply but then it may also bust there is just no way of telling when rampant speculation is involved by investors who tomorrow may decide that their plans to buy up half of Phoenix or [insert metro region here] and rent it out for handsome profits isn't panning out and they want out.

Remember the last time when investors swore than junk mortgage backed securities could never fail...what happened with that? Now they are saying that this buy/rent model is a sure thing? Give me a break! By causing massive unsustainable spikes in real estate they are just causing more disruption in the market and hurting people who really care to buy a home within their means just to live in.

Just my $0.02

[aerodmb]

Yes. Looked a year ago and lost 4 houses to cash buyers...now I'm looking again and losing a couple more. You need to be on top of it!

[phx1205]

Originally Posted by johnmanners

Phoenix may have risen sharply but then it may also bust there is just no way of telling when rampant speculation is involved by investors who tomorrow may decide that their plans to buy up half of Phoenix or [insert metro region here] and rent it out for handsome profits isn't panning out and they want out.

With the current shortage of inventory, it seems like an influx of homes to the market from investors that want out would actually be a good thing to balance supply and demand, right?

[johnmanners]

Originally Posted by phx1205

With the current shortage of inventory, it seems like an influx of homes to the market from investors that want out would actually be a good thing to balance supply and demand, right?

It would if the rise in inventory exactly matches the expected demand so that prices stay flat but judging from history it generally does not pan out that way. What happens is that everyone wants to sell at the same time to cash in profits but that results in a sudden rise in inventory competing for finite demand followed by price softening. When prices soften there is even more panic selling resulting in even more softening of prices as buyers pull out and wait not wanting to buy in a declining market.

Infact, investor buying is starting to moderate which may be an indication that the market has reached it's zenith. It may stay flat for a while and then start declining again. How far it will decline is an unknown, whether it will decline or stay flat for an extended period is another unknown...but obviously the fundamentals do not support another 20% YOY appreciation. Last time I checked AZ still has stubbornly high unemployment similar to CA. Even the 27% appreciation that has taken place since the bottom is a bit suspicious. It MAY not be supported by fundamentals if speculative activity by investors is taken out.

I am not privy to the Phoenix real estate market, the prices there seem dirt cheap compared to Southern California where the fundamentals are extremely out of wack. While I am totally convinced that Southern California is poised for a big adjustment perhaps in Phoenix things are not so skewed after all.

[lovfl]

I don't know about Boca Raton, but here in Orlando prices have gone way up too at least by 60K or more! It's really happening ll over the country from what I have read online.

[TiredOfyycCold]

Originally Posted by johnmanners

I am not privy to the Phoenix real estate market, the prices there seem dirt cheap compared to Southern California where the fundamentals are extremely out of wack. While I am totally convinced that Southern California is poised for a big adjustment perhaps in Phoenix things are not so skewed after all.

There are still a LOT of houses in the Phoenix metro area that are priced below what it would cost to actually re-build a house of a similar size/quality.... even with the large YOY price increases. I totally get where you are coming from as Southern California (especially San Diego area) certainly fits the model you describe, but this is currently not the case in Phoenix.

[maverick974]

"Is anyone kicking themselves for not buying earlier?"

NOPE! I bought at EXACTLY the right time. I wish I could say it was purposely done but I'm not the smart. Just lucky.

[Newporttom]

I started visiting Phoenix in Fall of 2009 and Spring of 2010 when my team (Reds) relocated to Arizona for Spring Training. That's when I started paying attention to Phx real estate. There haven't been too many times when I realized correctly that this was a real opportunity, but I did then.

I had to wait till Dec 2010 till I turned 59 1/2 so I could access some IRA money for down payments, but I was able to purchase 2 nice homes in Coldwater Springs in Avondale before the market starting going back up. It's worked out well so far, both homes have had almost continuous occupancy and I estimate both homes have gone up in value about $40K.

But I wish I could have started about 6 months earlier. The "one that got away" for me is a house we saw in Oct 2010 that went for $52,500 at an online auction a month later. 402 S 123rd Dr, Avondale, AZ. Nice 1300 sf home on a corner lot. Drives me crazy every time I see it.

[MN-Born-n-Raised]

Anyone who claims they knew that the Phoenix RE market would come back this strong for this long is not telling the truth. That said, I "knew" it would come back and get competitive. So I bought slightly before the official bottom (early 2011) to get the best selection. Others RE gloom-and-doom types were explaining how housing was going to drop to zero as the world would plummet into a ball of flames and financial chaos. I should have bought another. Oh well. Could-have-should-have-would-have.

I have two word of advice for those who are tying to understand Phoenix RE. The 1st word is Mike and the 2nd word is Orr. Google him and absorb what he has to say. Someday I need to buy this guy a dinner. I'm up about $100K by listening to his research.

[PoppySead]

Originally Posted by maverick974

"Is anyone kicking themselves for not buying earlier?"

NOPE! I bought at EXACTLY the right time. I wish I could say it was purposely done but I'm not the smart. Just lucky.

I got lucky to Maverick! I couldn't have timed it better and I had no clue I was.