Home sales up (Phoenix: renting, movers, appliances)

[japhi]

Good post Bill, I tend to agree with you on timing the bottom. I do believe that house prices will continue to fall but timing the bottom perfectly is less important than getting great value on a home IMO. So what if you lose 10-15K equity in the short term if you get a great home at 50% of the 2005 price.

For most people RE should be a long term play and I can't see anyone losing over the long term, buying today. Real Estate is one of the best ways for the middle class to get rich and this is the market that will make people rich over the next 10-15 years. I'd buy and hold ten houses if I had the money.

[sheena]

Originally Posted by JoePAz

It does look like things are starting to turn around. Sales are up, interest in homes is up and prices have dropped alot. I think the lower prices are finally starting to get inventory to move. Yeah the next few months will be important to determine if the worst is over or this is just a blip on the way down still. I am however hopefull.

The price drops are what's selling these homes. I have also noticed a few sellers that fell asleep and think they have woken up in 2005........Time to wake up in 2008 and they are in for a shocker once they realize it's a different ball game now and they paid wayyyyyyyy to much for the house.

With that said I will be buying soon and have my eye on a few homes right now

[Garson]

Thank you CaptainBill for your level headed posts. People keep saying that prices still need to go way down but the Phoenix area is still quite resonable compared to other markets. I live in a MPC in an outlying area and in talking to the builders it seems most of the cancelled contracts for new homes have been by people who could not sell their old home elsewhere in the country - and a few here in the valley. Does that not tell us that when the market picks up that the valley will heat up again quickly? Probably not at the pace of the last few years but at least have postive appreciation?
Some of the negative posters forget that not everyones main goal in buying is for an investment. We bought six months ago and sure we could probably get the house for less now but we bought into a lifestyle out here and for the quality of life and since we plan on being here long term...who cares. The last six months here have been awesome.

[rareorchid]

Well we are one of the buyers buying right now. I can tell you out in our area that the homes priced lower have been selling quickly recently. We missed out on 3 houses we liked as they are priced now where people can buy. We are buying a house in Surprise Farms that is 2429 sq ft for 169500. With the lower interest rates we will be paying about the same amount that we do for rent so for us it made sense. Also we plan on being in this house long term so even if the market goes down some more I'm not too concerned.

Also qualifying for a loan wasn't hard at all and we will be in a fixed rate 30 year loan so no being stuck with rising interest on an ARM. This is all on one income too as I will be home for 1.5 years more until our kids are all in school. Then I will go back to work and have more income to put towards paying our house down or other expenses.

[steve22]

Originally Posted by Captain Bill

There are a lot of non-real estate professionals on the forum that seem to have a crystal ball and profess to know more about the average home buyers needs than the home buyers them selves (stating that they are stupid for buying a home instead of renting for the next decade).

And they profess to know more about the real estate business than the people who are in the business and see on a daily basis what is happening in their markets and sub markets as well as in the national economy, and who talk to and work with buyers and sellers every day.

And they insinuate that all realtors are dishonest and are fabricating anything they say.

I get a kick out of reading some of the doom and gloom posts of these people who know more than the professionals, some of whom have been in the business either on the selling end, or on the investing end, or both, for more than 40 years and have experienced many different phases of the market cycles, in addition to the 16% interest rates.

One of the things that these individuals miss is that real estate prices, like many other products is driven by supply and demand, and that demand does not have to be purely an overall number. There can be an overall 10 month supply of homes in a city, but if there is one very desirable community in that city that only has a couple of homes for sale, the price on those homes is going to stay up and even increase as competition for those homes increase.

Another thing they miss is that a market turn around does not happen on a dime. The real estate market is more like a freight train than a sports car. The sports car can stop fast and reverse course instantly. It takes time for the freight train to do this, just as it does for the RE market. But if we listen and watch, we can hear and see the train slowing down.

There were indications that the upward market was reaching the top, and some people, who kept their eyes on the information and the statistics, saw this coming and got out before the turn. They didn't get out at the top, because they couldn't forecast that. They got out before the market turned and left some equity on the table. Those were the smart ones who knew they couldn't time the top. Others who were not watching, and/or didn't know how to watch the market didn't get out in time.

There will be some people who will see the down market beginning to correct and they will get in before it turns. They may see some decline in their equity before the turn, but because it's impossible to see the bottom until it passes you on the way up, they will have gotten in at the right time.

The inventory is high at the present time, giving us an over supply of homes, with a large number of them being excellent homes.

And while there are a lot of homes coming on the market every day as foreclosures rise, most of those homes are not excellent homes. Many of them are in terrible condition. Many of the REO homes that may be on the market for $300k may take $150k to repair all the damage the vindictive homeowner caused.Those homes are not competition for the excellent homes, or even the more average homes. So the pure number of inventory homes is going to be a misleading number because of the sheer number of undesirable homes that will come on the market.

Currently the buyers are able to take their time and cherry pick these excellent homes, but the supply of prime condition homes will not last forever. The buyers who are coming out will pick them all off. As the market turns, and it will, the supply of those prime condition homes will have dwindled, and the competition for those remaining excellent homes will begin to heat up.

What will happen when the demand for these prime homes exceeds the demand? And isn't it possible for that to happen even with the overall supply being high?

The average home buyer wants a home that is ready to move in. They do not want a home that has been vandalized and trashed by the previous homeowner. They will leave those for the investors.

The realtors report what is happening in the market today. We report when the sales are picking up in our area, and I don't think anyone has posted it, but we also keep track of the "pending" sales, because that is a strong indicator of whether the next months sales numbers will be up or down. The pending sales in this area have been on the rise.

If the doom and gloomers want to take the information that we provide and call people stupid for buying, and insinuate that all realtors are dishonest, then have at it.

However, at times I tend to believe that many of the doom and gloomers are ones who may have sold their homes and are renting, and/or they may also be investors. Many of those are hoping that the market will continue on down so they can jump in and make their purchases at what they hope to be the bottom. It makes perfect sense for one who does not currently own a home to want to help bring the market down further before they decide to jump in.

So just as some will say that realtors are not to be trusted because they are in the business, then why should one trust anonymous posters with no credentials, especially when those posters may be painting a doom and gloom picture to further their own personal agenda.

I'll just have to interpret your post as a thinly veiled, passive-aggressive jab at me, since it's pretty clear that's what it is. And that's fine. You're entitled to write whatever you want.

I would, however, caution you before rushing to any conclusions (although it's quite clear you've already done so), that since you have no idea who I am, what I do for a living, what my current financial OR living situation is, or what my educational background is, you therefore really are in no position to make any judgements as to my "knowledge of the profession", the market, or much of anything else. Without going into detail, I will assure you that my educational background in business and personal finance is pretty extensive, I make a very good living doing what I do, and by following my own instincts according to the markets and many great economists' advice, I've done VERY well, and continue to do so even in this economy. The truth is, regardless of what you or the NAR have to say about the current housing market, most great economists in this country at the current time are very bearish on the housing market, especially in places like Phoenix, for the reasons I've already gone into in my previous posts. People a whole lot smarter about business and finance than you or I are share my opinion on this matter (but that's beside the point, I suppose, in your opinion b/c that's in contrast to your "expert" professional viewpoint, so you'll obviously just dismiss them as "doom and gloomers" with an agenda. Please).

Considering that most realtors are really just salesmen with a high school level of education, and no significant graduate or formal schooling in economics or finance, I would say that given the choice between the two, I would side with the majority opinion of the country's foremost economists in this situation. And overwhelmingly, they're bearish right now on the real estate market, as I am- especially in the overinflated, recently over-speculated, previously "hot" markets like Phoenix, Florida, or Vegas.

I have no agenda, pal. Just calling it what it is. And not a good time to buy right now, in PHX, is what it is. Now in 6 months, which is when most economists are predicting that supply may get down to a level that will make average price declines start to level off, and the big wave of foreclosures is beginning to ebb, then it may be time to buy. Until then, the smart money is staying on the sideline. Sorry if that hurts your pride or your bottom line.

[Greatday]

Originally Posted by steve22

Considering that most realtors are really just salesmen with a high school level of education, and no significant graduate or formal schooling in economics or finance, I would say that given the choice between the two, I would side with the majority opinion of the country's foremost economists in this situation. And overwhelmingly, they're bearish right now on the real estate market, as I am- especially in the overinflated, recently over-speculated, previously "hot" markets like Phoenix, Florida, or Vegas.

Lets see: I guess I fall into that REALTOR category - I've been in the Real Estate business for over 40 years. I have a BA, MBA, JD - I teach internationally on subjects including finance, real estate, real estate economics and law. I am a published author on similar subjects.

With this said - the fact is, residential re-sales are UP in the Phoenix Metro area (and Las Vegas btw) as the original link in this thread points out. And, preliminary numbers for March indicate that sales will be higher than February.

Now - the number of sales is not the same as prices. Prices have been, what we call, soft for sometime. But even here, there are signs that prices are bottoming out.

No one, least of all me, is suggesting that the increase in sales will continue - BUT, there is definitely an increase in the number of potential buyers looking. There is also a definite increase in the number of potential buyers going to mortgage lenders and getting themselves pre-qualified for home loans.

Let's be clear - I'm only speaking about the Phoenix Metro market.

Give us 6 months of this type of activity - and then, and only then, can more accurate predictions about trends be made.

[Captain Bill]

Originally Posted by steve22

I'll just have to interpret your post as a thinly veiled, passive-aggressive jab at me, since it's pretty clear that's what it is. And that's fine. You're entitled to write whatever you want.

I would, however, caution you before rushing to any conclusions (although it's quite clear you've already done so), that since you have no idea who I am, what I do for a living, what my current financial OR living situation is, or what my educational background is, you therefore really are in no position to make any judgements as to my "knowledge of the profession", the market, or much of anything else. Without going into detail, I will assure you that my educational background in business and personal finance is pretty extensive, I make a very good living doing what I do, and by following my own instincts according to the markets and many great economists' advice, I've done VERY well, and continue to do so even in this economy. The truth is, regardless of what you or the NAR have to say about the current housing market, most great economists in this country at the current time are very bearish on the housing market, especially in places like Phoenix, for the reasons I've already gone into in my previous posts. People a whole lot smarter about business and finance than you or I are share my opinion on this matter (but that's beside the point, I suppose, in your opinion b/c that's in contrast to your "expert" professional viewpoint, so you'll obviously just dismiss them as "doom and gloomers" with an agenda. Please).

Considering that most realtors are really just salesmen with a high school level of education, and no significant graduate or formal schooling in economics or finance, I would say that given the choice between the two, I would side with the majority opinion of the country's foremost economists in this situation. And overwhelmingly, they're bearish right now on the real estate market, as I am- especially in the overinflated, recently over-speculated, previously "hot" markets like Phoenix, Florida, or Vegas.

I have no agenda, pal. Just calling it what it is. And not a good time to buy right now, in PHX, is what it is. Now in 6 months, which is when most economists are predicting that supply may get down to a level that will make average price declines start to level off, and the big wave of foreclosures is beginning to ebb, then it may be time to buy. Until then, the smart money is staying on the sideline. Sorry if that hurts your pride or your bottom line.

You're certainly entitled to your opinion, even the mistaken opinion that most realtors have only a high school education. Unfortunately, you're mistaking the minimum required level of education for licensing for the actual education that most realtors have. The fact is that just as the realtors don't know who you are, or what your back ground is, you don't know our backgrounds either. It's just a mistaken assumption on your part.

I have a BA with extensive studies in business and finance, and began studying real estate formally in 1974 at the same time I began investing in real estate. I've invested in real estate off an on from that time forward, and also owned two successful business while at the same time pursuing my 27 year career as an international airline pilot with Pan Am.

Many of the realtors that I know have advanced degrees and came from a business background, many from the corporate levels and many have owned their own businesses. So your continuing attempt to degrade realtors as being nothing but an inferior, uneducated bunch of salesmen who don't know what they are talking about is based on fiction and apparently on prejudice, not on reality.

In your last post you were insinuating that people should not begin buying for up to a decade. You post advocates that people rent.

Posted by steve22
...If someone were to buy today in most of the nation's markets, they should expect zero to negative appreciation for maybe as much as a decade--because the starting point is way above the historical trendline. Taking into account the ridiculous rate of inflation today, that nets out to something significantly less than a 100% return on your initial investment. But hey, what do I know, obviously the realtors have it all, figured out, don't they?...

And now you're saying that the economists are saying that the prices should level off within 6 months. I think that's in line with what the NAR is saying, and Leniger with Remax has said that he thinks it will be later in the year; and it's in line with what the realtors here have been reporting as happening in their markets.

Posted by steve22
...Now in 6 months, which is when most economists are predicting that supply may get down to a level that will make average price declines start to level off, and the big wave of foreclosures is beginning to ebb, then it may be time to buy. Until then, the smart money is staying on the sideline. Sorry if that hurts your pride or your bottom line...

Now what I've been saying and what the other realtors on this forum have been saying is that we are seeing a pick up in buyer activity, and while you chalk it up to just being seasonal, I disagree, and that is based on everything that I'm seeing, not just those numbers. I've stated that our pending sales have increased, which is a forward indicator. Since the closed contracts (Solds) are a lagging indicator it makes sense that we should pay close attention to the Pendings.

I also stated that the market turns slowly. It doesn't turn on a dime. I'm talking to buyer/clients in other states who need to sell their home, and some of them are now going to go ahead and buy here, because they can afford the two mortgages, and because they need to get their family moved and settled. Also, they recognize that there is a wide choice of homes available today at good prices, that will not be available when the market does turn.

Another thing I've said is that those trying to time the bottom will end up paying more for their homes and have less choices available, and possibly pay a higher interest rate for their mortgage.

Two of my relocating clients just this week got me started looking for a home for them now. They'll worry about selling their own later. When those others who have to wait to sell their homes do get them sold, then they will be buying. One is already here renting month to month and has decided to go ahead and buy now.

I have only posted the indicators and what I know is happening with the pent up demand, but all of these, and other stats and indicators that I use seem to be pointing to what the economists are saying.

If the market is going to level off in 6 months as the economists predict, then something needs to be happening now to cause it to level off, and I have been seeing that happen. It is not going to level off all of a sudden, 6 months from now.

So show me where the dumb realtors, with their indicators and stats are wrong, when they are in fact in sync with those economists that you quote.

Don't worry about something hurting my pride. I'm quite proud of my life and my accomplishments. Especially having been born poor on a farm in TN, and growing up in the factory neighborhoods of Detroit, having worked in those factories, to getting a degree, being able to invest, own businesses, and to have a wonderful career with Pan Am in aviation that most people, and most pilots, can only dream about. I have been very fortunate, and I'm also very proud.

And don't worry about hurting my bottom line. I don't have to work. I do this because I love both the sales and the investment sides of the real estate business. I've been in and around the business since the early 70's and have done quite well in the real estate field, and the other business that I owned, as well as my airline career.

And as far as my real estate sales bottom line, I'm doing quite well thank you, and because of my business plan, marketing abilities, customer service abilities, and my knowledge of the markets, I will continue to do well. So there's no need for you to feel sorry for my bottom line.

Now if you'd like to stop calling buyers stupid for buying, and stop insulting the realtors with your incorrect assessment of their education and qualifications, and discuss only the stats and facts, maybe that will help make the forum a little more educational.

People have their own way of digesting information that is posted here, and they will make their own decisions based on the information here and the information they receive elsewhere.

Attempting to run realtors down when they post information that you disagree with does nothing to promote intelligent discourse.

[steve22]

Bill, my last post was in direct response to your previous post, in which you essentially tried to make the point that realtors are the "true professionals" in this business, and that there were others in this forum (quite clearly referring to me, among others) whom you believe to have inferior knowledge to yours, and therefore, our posts in these regards are to be dismissed as invalid. That was quite clearly, to me, the gist of that post, and it was pretty irritating to me, not to mention inaccurate and rather brazen. Any mistaken assumption or accusation here was made by you originally, in essence because my opinion differed from yours, and you automatically assume that you're the penultimate authority, and in a superior position to anyone else on this forum to have a valid viewpoint on the matter. So if you want to now backtrack and insinuate that I'm the instigator here, then sorry, but I'm merely defending my own qualifications in this instance, which YOU called into question before in a not-so-subtle manner. My suggestion to you is that if you don't want to be insulted, then don't insult me. Fair enough?

Now from my point of view, you don't need to be a real estate professional to understand the market's current state, because the real estate market's current state has much more to do with the economy at large and other compounding, negatively influencing factors that are going on outside of the real estate market itself. True, the real estate market bust was a large contributing factor to the current economy's woes; but the real timing of when things are going to finally turn around for the real estate market is contingent on a whole lot more besides the real estate-specific issue of supply and demand, which is currently way out of whack and will take months to correct.

The reality is, the recent boom was fueled in large part by the now-extinct subprime lending industry, which created a huge abundance of buyers, turning the market into the most bullish situation in history. But now, the days of 5% down (or less), interest-only loans and such are gone. Now the qualifying potential buyers' pool has dwindled significantly, the credit market is extremely tight, other costs of living are soaring, and those who may be interested in buying in many cases no longer will be able to. Someone looking to buy a single family home on a 40K a year income isn't going to be able to afford a 300K home, or anything close to it. So until those values come back down to what Joe Average can afford and, more importantly, can even dream of qualifying for utilizing a standard fixed-rate 30-year mortgage with 10% or more down, the market's not truly leveling off or turning around. Whether that's in 6 months (a pretty liberal guess), or a year, or longer, I'm not sure. But my point is that if you buy now, because of the starting point being grossly above the inflation-adjusted level that it should be historically, any appreciable gain in value of a home likely won't be felt for a decade or so.

But to backtrack, there were multiple reasons for the most recent boom and subsequent bust of the housing market, and certainly banks were greedy with the interest rate-only loans, ARM's, etc. There was also certainly an element of irresponsibility on behalf of many borrowers who leveraged in some cases 5, 6, even 7 times their incomes, with little or no down, and without understanding the terms of their contracts, to get into homes they had no business purchasing. But equally guilty, from my point of view, were the realtors, who certainly by and large didn't discourage this type of overborrowing among buyers, and who basically had a field day during the boom while ostensibly stuffing their own pockets in the process. And now that the whole deck of cards has come down, you're saying that people should trust the realtors' advice on when the market will be swinging back in the positive direction? Gee, I thought that according to the NAR, real estate never goes down, it only appreciates. Forgive me if I have a bit of a tough time taking you seriously now.

And the generalization may not apply to you, but in truth, there are a great many realtors who are basically just salesmen. I would say that it's not much of a stretch to conclude from reading your personal history that your background is not typical of most in the profession, and would not in any way resemble that of most realtors. Among other things, it sounds as though real estate was not your primary career, rather something that becaome an interest or personal hobby later on. Therefore, the general characteristics of an individual who became involved with real estate as a primary career don't really apply to you. You say you know some who also have higher qualifications, similar to yours, and that's fine; I've known many who didn't, who took a short, basic course to become realtors. I'm sorry, but many of the agents with that type of background don't have any business giving anyone else advice on much of anything. Regarding those whom I'm referring to, I've probably forgotten more about finance and economics in my lifetime than these people have learned. If there's anything good to come from this situation, it's likely that the current glut of newly minted agents who jumped on the bandwagon for the promise of easy money will be trimmed down, and these hangers-on will be forced to take their GED's back to the service industry where they belong. Now again, this may not apply to you- but it does apply to a significant number, please don't pretend that it doesn't. My general rule is, I don't trust people who use other people's hard-earned money to make money for themselves. I think it takes a certain mindset and a certain type of person to do that. And it certainly isn't something I'd ever feel comfortable with.

[joninaz]

Originally Posted by Pettrix

What is that level? $150K, $250K???

I've recently been offered some interesting jobs. One in Venice, CA. One in the Bay area. Another in mid town NYC. The wages are higher but don't come close to matching the comps here when it comes to housing prices.

- The "terrible" downturn in SoCal prices currently results in 10 homes in Venice under $999,000 (and those are tiny places), the cheapest being 795K and looks about 500 square feet (and way inland).

- San Fran, DC, NY and others are just as high (more likely higher).

Bottom line - the cost of living in many top markets, despite all the negative press, is still very unattractive if not prohibitive to most. AZ, on the other hand, is very fair across all price points. A CEO can buy a mansion here and their entry level folks can own an home. Few large cities can offer this.

[Jaded]

Originally Posted by joninaz

I've recently been offered some interesting jobs. One in Venice, CA. One in the Bay area. Another in mid town NYC. The wages are higher but don't come close to matching the comps here when it comes to housing prices.

- The "terrible" downturn in SoCal prices currently results in 10 homes in Venice under $999,000 (and those are tiny places), the cheapest being 795K and looks about 500 square feet (and way inland).

- San Fran, DC, NY and others are just as high (more likely higher).

Bottom line - the cost of living in many top markets, despite all the negative press, is still very unattractive if not prohibitive to most. AZ, on the other hand, is very fair across all price points. A CEO can buy a mansion here and their entry level folks can own an home. Few large cities can offer this.

Homeowners in CA, NY and DC will hold out longer than the ones in Phoenix before homeprices drop further there. But keep in mind, that a home under 800K in Venice, CA isn't "expensive." CA in general is about twice to three times more expensive than AZ because well, it's CA!

Look in parts of the Inland Empire for real price drops in CA. Anything in LA County will be much higher.

Now, the reason I think buying in CA is better than buying here in AZ, at least for your primary residence, is that you can easily start off small in CA - a condo for example - and buy up in less than five years. The market will rebound much faster there than here. Salaries will always be at least 30 to 40 percent higher in CA too.

Entry level folks in AZ (Phoenix) buy homes 20 to 40 miles away from the city in the suburbs. Traffic is horrible as a result. There are still "hot" areas of Phoenix that aren't affordable to entry level employees.

I say the big cities are where it's at for young professionals. You are more than likely going to be very well paid, and even if you have to buy a smaller home to begin with, your equity will grow much faster and transfer into a better home elsewhere, once you're "tired" of the city life.