Is it Time to Buy, or Time To Sell?? (Phoenix: foreclosures, mortgage)

[Jammie]

You're right. It's possible that even numbers can be skewed by different groups. I got that info from the link I added to JCO's thread this morning. I don't believe the article actually said where they got those stats from.

IMHO houses and condos will always sell in the Phx. area if they're priced right. I don't know if your condos even had taken such a tremendous jump because that's what we've been researching and they're nowhere as out of line as houses are. And it's not just in Az., but houses jumped so tremendously in so many places that people are just afraid to buy at that price. I had read that in the past, houses appreciated at 3% to 5% per year. Then a few years ago many areas took jumps of 300% and more in just months. What would be nice is if we went back to the values in 2002 and added 5% for each year since then. I honestly believe people would be much more comfy with buying a home then. Many people are renting now and waiting this out. But unfortunately, the buyers during that time will be the big losers and many will have to give up their homes.

[mortimer]

Jammie wrote:

> ... houses ... will always sell in the Phx. area if they're priced right.

Another way of thinking about it:

If you were shopping for a house and you could buy a nice house in great condition in a nice area - convenient for you - that was sized right for you and priced at $50/sq ft would you buy it?

I'm guessing that all home buyers out there would say yes (I'm assuming they are already in the market, of course).

Most people selling their houses would be really happy to get $200/sq ft (the price for most homes at the peak - give or take).

After that, you are just negotiating the price and the buyer sets it today.

[sheri257]

Originally Posted by SOON2BNSURPRISE

Just my own observation but, whether it's the stock market, real estate, whatever ...

When you buy stocks do you hold them or sell them off? I like to hold them, so it doesn't matter if they decrease in value today.

To me it does matter ... especially with my retirement account.

I do sell my stocks off and did so during the summer when I thought the stock market peaked at 14,000. Now I'm in bonds and conservative investments until I think the stock market bottoms out which, IMO, will probably take a couple of years.

I'd much rather be earning 4-6 percent than having to wait out a 20-30 percent dive in stocks for 2-3 or more years in a bear market. I'll get back into the market when stocks get really cheap again and it looks like the bear market is over.

As for homes, that's a different situation because you always need someplace to live. During the boom, we moved out to a cheaper area so we wouldn't have to pay a fortune for our house. It doubled in value shortly thereafter but, of course, now prices are dropping big time.

But it's no big deal since we didn't pay much for the house to begin with and still have a lot of equity. We knew the higher prices were ridiculous and wouldn't last.

[Captain Bill]

Originally Posted by sierraAZ

I don't know if all these numbers represent the same area because they do vary widely...

Housingtracker.net - HousingTracker.net: Collecting, Interpreting and Disseminating Real Estate Data - shows 50,339 now whereas bubbletracker - Bubble Markets Inventory Tracking: Phx Inventory - last showed 64,740. Maybe local agents can chime in - they can do better counts on the MLS (I'd think...). At least I haven't heard of Phoenix changing their reporting areas. Tucson will be a total mess until May '08 because TARMLS decided in May it was the best time the skew the data by changing the areas included in the Tucson MLS. Therefore, at this time their report compares apples to oranges. Good thing there are some local blogs trying to eliminate the areas currently excluded from last year's reports and make some sense out of the numbers.

As of November 27, there were 44,493 single family homes on the market valley wide.

Including town houses, condo's etc. the total valley wide is 54,170

On a search for single family homes in Phoenix the MLS shows 9,812

Searching for all types of units including town houses and condominiums the return is 12,644.

Bill

[gail1979]

Everything is cyclical. EVERYTHING! Real estate is the same way but unlike the stock market always maintains some sort of value. The boom/bust cycle seems to be every 12-18 years. Throughout history there has always been a correction after a spike in prices. How long is relative to other economical factors. If you don't HAVE to sell...don't! prices will flatten and go back up. There are so many panic sellers right now who think the sky is falling down. (A couple people I know that have positive cash flow on thier rentals are slashing prices and taking big losses -crazy!)

I CAN tell you I've seen an increase of showings on my listings in the last month. Buyers have been sitting on the sidelines now for almost two years and are starting to realize that the clock is winding down. Now is a great time to buy. If prices drop slightly more over the next year, its not going to effect the owner who buys now and stays in the home for several years or more.

Its nearly impossible to exactly time booms and busts but "buy when the sheep are selling, and sell when the sheep are buying" ...and if you're in it for the long term you usually come out ahead. (The tax benefits of owning real estate is reason enough!)

[sierraAZ]

Originally Posted by Captain Bill

One must study the market history, the present economic conditions and statistics, and ignore the sensationalism reporting of the press. Then you will be able to make an educated decision based on your own research and your own personal needs.

Bill

Look what's in the press and it doesn't appear to be sensationalism...

Lennar dumps properties for fraction of previous value - Dec. 3, 2007

In October, credit rating agency Moody's downgraded the debt of Lennar, No. 2 builder Centex (Charts, Fortune 500) and No. 4 Pulte Homes (Charts, Fortune 500) to junk bond status.

Holy guacamoly...

Troubled Builders, Bargain Seekers United - WSJ.com

[Captain Bill]

Originally Posted by sierraAZ

Look what's in the press and it doesn't appear to be sensationalism...

Sierra, I agree this article is not sensationalism.

It is an article about one builder, and there are other builders in the same boat. This is not surprising because over building was was one of the major factors in the housing problem, along with sub prime mortgages and people jumping on the bandwagon bidding up prices, hoping to get rich quick.

Below are a couple of small snippets from the article that kind of puts it into perspective.

..."You've got a benchmark to use now," Larson said. The 60 percent discount paid by Morgan Stanley doesn't mean that homeowners looking to sell their own homes are facing that kind of discount, he said...." (my emphasis)


..."For sellers holding out for unrealistic prices, it should be a wake up call..."


We know that many sellers are trying to get the unrealistic 2005 and 2006 prices for their homes. They can't get those prices, and may as well take them off the market.


What you have in the Lennar sale is similar to what we have in the foreclosure market in the valley, where wholesalers are buying up foreclosed property at a 30% to 40% discount, and selling them to investors at a very small mark up, who in turn will sell them to end users for around a 10% discount. We have a wholesale department in our office and the department head has been buying properties on the courthouse auctions as a wholesaler for about 20 years. There have always been and will always be foreclosures. Today we have more than usual, and in time that will go back to normal.


There are auction companies now that are stepping in to work the foreclosure and short sale markets. They will be around until the market stabilies and will disappear because I don't think they will be able to compete with the established wholesalers in a normal market.



..."The biggest discount in prices might be in undeveloped land and in condos in vacation and retirement markets such as Florida where overbuilding was rampant, according to Moore..."



..."It's important to remember that all real estate is local," he said. "I don't think you're going to find en masse suburban single family homes selling for 50 cents on the dollar. But I wouldn't be surprised if you can find some (my emphasis)for 75 cents on the dollar...."


My take on the article is that it is not sensationalism, nor is it doom and gloom. It is one of the more realistic articles I've seen because it reports on the Lennar sale, emphasizes that some of the largest losses with be in the land sales where builders overextended themselves buying up land.


It does not predict any doom and gloom and states that some single family homes may be had for a 25% discount.


I see that to be the case here. If someone must sell their home fast, and if it is not the most desirable home in a great neighborhood, then they will most likely end up selling it at a discount in order to sell it fast.


If they are in a new build area where there are a lot of homes for sale, they will most likely be the ones who will have to take the 25% discount.


It is the doom and gloom articles that I think are harmful. Those that give an impossible 5 year forecast such as the article that predicted that the East Bay in California, which is across the bay from San Francisco, an area of 3 counties and maybe 30 cities ranging from drug infested areas to multi million dollar homes, will decline by 31% in 5 years. Such a prediction is impossible because there are many pockets there that are in great demand, and there is little space left to build.


Bill





Bill

[altus2006]

Captain Bill,

How does a party find out about the wholesale properties for sale? I assume that the people in your office dealing with foreclosures sell them at a reasonable markup.

altus2006

[sierraAZ]

Originally Posted by Captain Bill

It is an article about one builder, and there are other builders in the same boat.

While the article does focus on Lenar, pretty much all builders are in that boat. No, I'm not an advocate for their previous greed... just wondering what's in store... Has anybody ever seen major national builders' debt being downgraded to junk? Looking at builders' stock lately makes me dizzy.

There have always been and will always be foreclosures. Today we have more than usual, and in time that will go back to normal.

But all these foreclosures are becoming comps, aren't they? Once a house is sold, regardless of the circumstances, it doesn't make any difference to the appraisers if it were a foreclosure, pre-foreclosure, or REO. At least that's my understanding. Somebody correct me if I'm wrong. Really wish I were... particularly after I saw the price a house in my future neighborhood was listed at the other day... And even if I'm wrong, this will be a regular sale if the seller manages to get out of the upcoming foreclosure.

[ILuvAZ]

Ummm, I'd say it's time to stay put unless you have to move for some reason. lol. The market will stabalize eventually and then begin it's slight upward trend again. I know someone who bought a house as an investment from a builder over a year ago. They put their house on the market and it took them almost a year to sell it. So this is how their "investment" turned out. They sold their house in a low slump for over 100k less than what they had planned and the house they bought as an investment (in Florence of all places) just continues to lose value. They lost in both places and on top of that had to make double house payments for almost a year. It was very foolish.