PHOENIX MARKET UPDATE, Why is inventory low? (days on market, mortgage)

[shiphead]

Originally Posted by Morotoriumxxl

You guys are delusional. Home prices in are once again rising for the wrong reasons and need to reverse another 60% to be in line with median income.
Housing recovery is a fraud created by Wall Street, Banks and the Fed.

11 posts.... doesn't seem to interested in expanding on poster's statements. But this kind of chat is reserved for the "great debate" section.

inventory is low?

truelia shows 12.5K available

realtor.derp

20 mile radius from downtown phoenix shows 12.2K available

I'm a bit confused how this is low... If we are going to start charging 300-400K for new homes inside the Phoenix area loop, not out in Gilbert or Timbuktu, can you devs start buying up old homes, destroy them, and building communities in their place? Who am I kidding sell them for 500K. We don't need loser creditors.

And I mean really, homes should be an investment.. Families have kids, rent and move. No one should be treating homes like a "home."

[Captain Bill]

Originally Posted by shiphead

11 posts.... doesn't seem to interested in expanding on poster's statements. But this kind of chat is reserved for the "great debate" section.

inventory is low?

truelia shows 12.5K available

realtor.derp

20 mile radius from downtown phoenix shows 12.2K available

I'm a bit confused how this is low... If we are going to start charging 300-400K for new homes inside the Phoenix area loop, not out in Gilbert or Timbuktu, can you devs start buying up old homes, destroy them, and building communities in their place? Who am I kidding sell them for 500K. We don't need loser creditors.

And I mean really, homes should be an investment.. Families have kids, rent and move. No one should be treating homes like a "home."

As of today, the Phoenix Metro area has 14184 homes Active, including single family residence, condo's and mobile homes. This is excluding homes under contract but still being marketed (UCB).

In June, the total closed sales were 8,068 homes, including single family residence, condo's and mobile homes.

[Tall Traveler]

Originally Posted by warmbeerhater

Bangkok condos for sale - New condo for sale Sathorn - Condominium

Here is 4070 USD psm in Bangkok, for a one bedroom condo. I still routinely meet people who have never eaten at Mcdonalds. Prime land is 50 million USD per acre. Median household income is less than 1000 usd per month.

Perfect example of a place where the price of housing thumbs its nose at the median income. Material costs are going to be there no matter where you build. Only labor costs are lower. But when you factor productivity of labor, your manhours increase to where you are not getting savings to construct in countries like Thailand compared to a developed economy like the USA. The big factor there is, Bangkok is a wonderful city (I love it) and foreigners (farangs) bring their money from China, USA, UK, S. Korea, etc. and drive up the prices.

It's hard to find anywhere in the world where you will get much more house for the price than the US and Phoenix is high on the bargain list still.

[Captain Bill]

Here is a snippet regarding pricing and inventory in their July monthly report from the Cromford Report:

"...There are no promising sources of new supply:

• delinquent borrowers - already back to normal levels of delinquency
• pre-foreclosures - dwindling fast
• banks - not going to happen (they hardly have any left)
• investors - not going to happen (most homes are leased and appreciating nicely, no good reason to sell now)
• ordinary sellers - many still underwater and those who aren't are scared they won't be able find a new home because of the short supply
• new homes - permits are still being issued at only one third the normal rate

We are now seeing what happens when the whole country under-builds dwelling units by about 3.6 million homes over 5 years. The creation of new homes is vastly exceeded by the creation of new households.


The disturbance to the market is going to be large and doesn't seem to have been widely appreciated yet. Only the home builders themselves, a few specialist housing analysts and isolated individuals seem to be aware of the enormity of the situation. The general public appears to be focused on relatively minor issues like interest rates, the foreclosure inventory, high unemployment and (especially) investor-owned homes.


These may slow down price rises in a few areas, especially those that have no population growth or have been slow to handle their delinquent loans, but most of the country is in for a shock. The home building industry will have to grow from around 900,000 a year to over 1,500,000 a year just to stop the home shortage situation getting more extreme. That is probably not even feasible with the current construction labor shortages. Note that these annual numbers include multi-family as well as single family and condos.

Although we will see a relatively quiet period for the next 3 months, there is still immense upward pressure on pricing due to all the homes that were never built between 2008 and 2013. This effect is starting to hit in areas other than Arizona, especially those with strong population growth rates.

California is only just behind Arizona in its speed of clearing up the foreclosure mess and in the urban areas like San Francisco, San Jose, San Diego and Los Angeles they are already starting to see eye-popping appreciation, even greater than the 18% we currently have in Phoenix. We will just have to get used to not being in the spotlight..."

(Note: The Cromford Report is available to everyone, including the general public, on a subscription basis. I'm not trying to sell this for them, but those who are proponents of the shadow inventory, or any other theory, and are making decisions based on misconceptions perpetuated throughout the internet, that make them feel the AZ market is going to come tumbling down, would be well served to invest a few dollars and get a subscription for only one month, where they can become fully educated on the facts, trends, and the reason for the trends. Then they can make educated decisions based on factual data.)

[pgc323]

^ Very interesting...thanks Bill. This forum, particularly your posts, and snippets from the Cromford Report, have helped me make some very profitable home purchasing decisions in Phoenix metro.

[TransatPhD]

Originally Posted by Captain Bill

Although we will see a relatively quiet period for the next 3 months, there is still immense upward pressure on pricing due to all the homes that were never built between 2008 and 2013. This effect is starting to hit in areas other than Arizona, especially those with strong population growth rates.

This is why I kept bugging my husband to buy a home NOW instead of waiting 6 months for seeing some stability in mortgage rates then.

[Captain Bill]

Originally Posted by TransatPhD

This is why I kept bugging my husband to buy a home NOW instead of waiting 6 months for seeing some stability in mortgage rates then.

Another problem in waiting is that it is very possible that when homes come on the market that you really want, you may be out bid on several of them until you are finally able to win one.

One of my clients has been trying to buy a home in the 400-550k range since November. We lost several bids.

Finally, we saw one come Active just 15 minutes after the agent put it on the mls. We were able to make a full price offer immediately and got that one. Luckily the seller did not insist on leaving the home on the market all weekend to see if he could get a higher offer.

So, waiting for 6 months to begin to buy, could mean waiting 6 more months before finding one and getting an accepted offer.

[Morotoriumxxl]

House prices have nowhere to go but down, in Phoenix at least another 50%.
The Fed is desperate to create another housing bubble. That's all they know. They think 'growth' and inflation are the only story and don't see that everything in nature has to rest, has to deflate. They keep pumping, pumping, trying to protect the banks that will still be gored if housing takes another leg down, which it will. It is destined for another big leg down.


This housing mini-boom is a scam invented by Bernanke and the Big Banks and the weak White House leadership in order to prevent another meldown in housing prices and send the banks into the second stage of their insolvency.

Public relations. Lure more buyers into the market and trap them in overpriced housing as the last chance to avoid the deflation cataclysm.

[sunluv]

Originally Posted by Morotoriumxxl

House prices have nowhere to go but down, in Phoenix at least another 50%.
The Fed is desperate to create another housing bubble. That's all they know. They think 'growth' and inflation are the only story and don't see that everything in nature has to rest, has to deflate. They keep pumping, pumping, trying to protect the banks that will still be gored if housing takes another leg down, which it will. It is destined for another big leg down.


This housing mini-boom is a scam invented by Bernanke and the Big Banks and the weak White House leadership in order to prevent another meldown in housing prices and send the banks into the second stage of their insolvency.

Public relations. Lure more buyers into the market and trap them in overpriced housing as the last chance to avoid the deflation cataclysm.

Good god none of this crossed my mind but I think you're on to something.

[Tall Traveler]

Originally Posted by Morotoriumxxl

House prices have nowhere to go but down, in Phoenix at least another 50%.
The Fed is desperate to create another housing bubble. That's all they know. They think 'growth' and inflation are the only story and don't see that everything in nature has to rest, has to deflate. They keep pumping, pumping, trying to protect the banks that will still be gored if housing takes another leg down, which it will. It is destined for another big leg down.


This housing mini-boom is a scam invented by Bernanke and the Big Banks and the weak White House leadership in order to prevent another meldown in housing prices and send the banks into the second stage of their insolvency.

Public relations. Lure more buyers into the market and trap them in overpriced housing as the last chance to avoid the deflation cataclysm.

I went and looked at the ratio between housing prices and median incomes over the last 30 years. It's true that another 10-15% reduction in housing prices or increase in incomes or a combination of the 2 would put the ratio more in line with the pre-2000's bubble prices ratio. However, Phoenix market is about 30% below the national average price so the ratio in Phoenix is actually slightly better than the historical average.

The other huge factor is with interest rates so low, it takes a lower median income to afford a given price point. But I do think that when interest rates rise as they inevitably will, it will negatively affect housing prices...more so in high cost housing areas such as Cali, Seattle, NYC than lower cost areas like Phoenix...things are going to get very interesting in Cali when that happens.