Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Your post is a little rosy for my eyes. Here are some facts: September through December 2018, Phoenix home sales were down 6% compared to the same (red hot) period in 2017. During Q4, the number of active listings increased 14%. Still, there is a 2.5 month supply which means a sellers market. Unlike your POV, that doesn't mean prices are going to continue to rise in 2019. We don't know. They might. But the economy might catch a small cold and we stay flat. if the cold turns into the flu, they could come down in some parts of town. Meaning, there is a reason to pause and wonder.
Realtors I know have suggested things have softened some (call volume, showings, etc). That's reflected in the numbers. CURRENTLY, new buyers don't and shouldn't feel the same sense of urgency to buy as they did from 2011 to mid this year. So IF inventory rises some more, and IF people imagine the market might turn some (I can easily see that happen), all of sudden people might be listing their home to try and time the top of the market including the large pool of investors and 2nd home buyers that have been enjoying some good gains. Putting it another way, If I had multiple homes like bulk buyers, I think it might be a good time to sell off at the top of the market. Pigs get fat, hogs get slaughtered. So far, that hasn't happened. But over heated markets (PHX?) have a way of slowing faster than expected. Time will tell.
Saying all of this, 3 months doesn't make a trend. But as sure as I am sitting here, we will have several more recessions. So the question that has to be answered is will the last three month trend continue? If so, that recession is coming sooner than you predict. If not, we might get another year of some PHX housing appreciation. I don't feel the sense of urgency to buy. That was happening a year ago. My gut tells me to wait. Lose some on my less expensive property and wait for the more expensive overly hot markets to drop some more. That's my approach. YMMV.
You're correct in that 3 months doesn't make a trend. Also, I would not consider Phoenix overheated at all. It's healthy, certainly, but not overheated (not like Seattle was a year ago or Vegas is now, where they've seen YOY appreciation of nearly 14% - Phoenix was at 7.5% as of most recent numbers). The supply numbers don't lie, however, and this market will continue to be undersupplied (and increasingly so) for at least the next few years. It's estimated that roughly 100k NEW transplants will have located to Phoenix in 2018, likely more in 2019 given recent strong job growth. Average household size is roughly 2.8 per census info. 100k/2.8 = 35,700 new units needed. In actuality about 20,500 new homes were started, plus ~9,000 new multi-family rental units, plus ~2,000 single family for rent units. That still only 31,500, a shortfall of over 4,000 of what's needed to satisfy the demand. Vacancy rates can only get so low, and not everyone can afford what's being built. That means demand is higher for homes on the lower end especially and that equates to overall rising prices. Even this past few months even though sales volume was down prices didn't drop. They actually remained flat, which is typical of every last quarter of the year due to drops in seasonal demand. If there is an indication of a strong selling season as it ramps up into February then I think we're going to be in for another strong first half of the year with continued strong price growth.
It's estimated that roughly 100k NEW transplants will have located to Phoenix in 2018, likely more in 2019 given recent strong job growth. Average household size is roughly 2.8 per census info. 100k/2.8 = 35,700 new units needed. In actuality about 20,500 new homes were started, plus ~9,000 new multi-family rental units, plus ~2,000 single family for rent units. That still only 31,500, a shortfall of over 4,000 of what's needed to satisfy the demand.
Is this 100k increase net? Or does nobody ever leave? Maybe this is a popular adage-my MIL once said people come to Phoenix for the warmth and then don't leave because their brains get fried.(It was possibly more eloquent)
Is this 100k increase net? Or does nobody ever leave? Maybe this is a popular adage-my MIL once said people come to Phoenix for the warmth and then don't leave because their brains get fried.(It was possibly more eloquent)
Yes, that is net in-migration. There were 87k net new residents to the Phoenix MSA in 2017, and 2018 is expected to be quite a bit higher (estimated 100k). Note that this is a reflection of the very strong job market here (87k new jobs added YOY as of November) and people fleeing higher tax and cost of living states for here (and boomers retiring here).
You're correct in that 3 months doesn't make a trend. Also, I would not consider Phoenix overheated at all. It's healthy, certainly, but not overheated (not like Seattle was a year ago or Vegas is now, where they've seen YOY appreciation of nearly 14% - Phoenix was at 7.5% as of most recent numbers). The supply numbers don't lie, however, and this market will continue to be undersupplied (and increasingly so) for at least the next few years. It's estimated that roughly 100k NEW transplants will have located to Phoenix in 2018, likely more in 2019 given recent strong job growth. Average household size is roughly 2.8 per census info. 100k/2.8 = 35,700 new units needed. In actuality about 20,500 new homes were started, plus ~9,000 new multi-family rental units, plus ~2,000 single family for rent units. That still only 31,500, a shortfall of over 4,000 of what's needed to satisfy the demand. Vacancy rates can only get so low, and not everyone can afford what's being built. That means demand is higher for homes on the lower end especially and that equates to overall rising prices. Even this past few months even though sales volume was down prices didn't drop. They actually remained flat, which is typical of every last quarter of the year due to drops in seasonal demand. If there is an indication of a strong selling season as it ramps up into February then I think we're going to be in for another strong first half of the year with continued strong price growth.
You have valid points. The problem is I don't hear you have any balance. As prices climb, it becomes less affordable and growth will probably slow. Whenever the economy softens, labor and material prices fall. Analogy: Just as oil dropped when people imagined less demand. I suppose I can point to more people on the planet and an increased in the desire for oil and why oil is going to go up and up. But mysteriously, it dropped by a lot.
Like always, there will be different markets and fluctuations inside of any RE market. So different zip codes, neighborhoods, and price points will behave differently. I'm not characterizing "overheated" markets as starter homes. Rather, the homes that have gotten the most competitive especially in the past couple of years. But again, I'm guessing because I have not put anywhere near the research into the topic as I did when I bought back in 2011. I'm not a buyer for a different house for a few years. The Valley is vast and I am going to take my time discovering what I can accept and study the area trade-offs. My gut tells me that some pockets are going to drop. Nothing more nothing less and a guess. I'm not calling it a "bubble" rather, a possible correction in certain areas of the market.
Here is what I do know. Recessions can cause people to freeze in their tracks. People squeeze their wallets and a domino of effects happen. All of a sudden, your POV ^^ falls apart.
You have valid points. The problem is I don't hear you have any balance. As prices climb, it becomes less affordable and growth will probably slow. Whenever the economy softens, labor and material prices fall. Analogy: Just as oil dropped when people imagined less demand. I suppose I can point to more people on the planet and an increased in the desire for oil and why oil is going to go up and up. But mysteriously, it dropped by a lot.
Like always, there will be different markets and fluctuations inside of any RE market. So different zip codes, neighborhoods, and price points will behave differently. I'm not characterizing "overheated" markets as starter homes. Rather, the homes that have gotten the most competitive especially in the past couple of years. But again, I'm guessing because I have not put anywhere near the research into the topic as I did when I bought back in 2011. I'm not a buyer for a different house for a few years. The Valley is vast and I am going to take my time discovering what I can accept and study the area trade-offs. My gut tells me that some pockets are going to drop. Nothing more nothing less and a guess. I'm not calling it a "bubble" rather, a possible correction in certain areas of the market.
Here is what I do know. Recessions can cause people to freeze in their tracks. People squeeze their wallets and a domino of effects happen. All of a sudden, your POV ^^ falls apart.
Right on. I do appreciate your POV. The reason I am optimistic however is because it's all relative, and relative to other places Phoenix is still very affordable. Especially in comparison to our nearest neighbor to the west, California which has prices more than double Phoenix and close to 40 million people, many of whom are looking to get out (at an increasing pace) to escape the high costs and taxes. Seattle, too, and Denver, have gotten out of hand and are way more expensive relative to Phoenix. That's helping to drive much of the out of state in-migration to Phoenix. Also keep in mind that pricing is still not at the peak of the last cycle over 10 years ago. Even further away when you take into account account inflation. Phoenix still has a lot of room to run before it becomes truly unaffordable, and unlike in your oil analogy, people can always choose to drive less or use alternative means of transport, but they will always need somewhere to live. Demographic, migration, and economic trends ALL favor us right now. This is the crux of why I'm still bullish on Phoenix. But yes, you're right, there is always the caveat of IF something major breaks in the economy, or some major black swan event that could throw a wrench into everything, but that's pretty much always the case, right? FYI, I prognosticate on and analyze this type of stuff for a living so have access to more sources of data on it that most people could ever dream of. It's my weird idea of "fun"!
Right on. I do appreciate your POV. The reason I am optimistic however is because it's all relative, and relative to other places Phoenix is still very affordable. Especially in comparison to our nearest neighbor to the west, California which has prices more than double Phoenix and close to 40 million people, many of whom are looking to get out (at an increasing pace) to escape the high costs and taxes. Seattle, too, and Denver, have gotten out of hand and are way more expensive relative to Phoenix. That's helping to drive much of the out of state in-migration to Phoenix. Also keep in mind that pricing is still not at the peak of the last cycle over 10 years ago. Even further away when you take into account account inflation. Phoenix still has a lot of room to run before it becomes truly unaffordable, and unlike in your oil analogy, people can always choose to drive less or use alternative means of transport, but they will always need somewhere to live. Demographic, migration, and economic trends ALL favor us right now. This is the crux of why I'm still bullish on Phoenix. But yes, you're right, there is always the caveat of IF something major breaks in the economy....
I hear what you are saying. There are other areas around the country that are more expensive which minimizes the magnitude of a possible real estate bubble pop. I think the PHX area is becoming more industry diverse as well. My perception is we are attracting a better caliber of person that has more education. Relaying on retirees, housing and tourism makes for abrupt stops when a recession hits. I lived in the Twin Cities all of my life and with many recessions that have happened in the past, I didn't feel or notice a thing!
So my gut tells me we are still in pretty good shape. Where we differ is on real estate appreciation. You think it is a given. I don't. It depends on how deep the recession is. The wild card has always been the national debt and eventually servicing that. We are up another $2T on Trumps watch. I thought cutting taxes supposedly was going to pay down the debt? Trump Says He'll Start Paying Down the Debt. Here
Quote:
Originally Posted by ShampooBanana
FYI, I prognosticate on and analyze this type of stuff for a living so have access to more sources of data on it that most people could ever dream of. It's my weird idea of "fun"!
Back in the day when I was researching property, I too had some rather good sources. Think of the who's in the know (a couple were my customers). The decision makers. I'll P.M. you some interesting details. But he was wrong. I never reminded him of it as it was bad for business.
I'm all with ShampooBanana - no recession in sight, no downturn in RE market. Incidentally, the Mountain Region (to which AZ belongs) in the FHFA report shows strongest price increases at 8.5% annually vs. 5.7% nationwide average. 5.7% increase is still far away from any losses.
Is this 100k increase net? Or does nobody ever leave? Maybe this is a popular adage-my MIL once said people come to Phoenix for the warmth and then don't leave because their brains get fried.(It was possibly more eloquent)
Growth numbers are net always. The state has grown buy roughly 100-120k a year for the last 5 or 6 years with no sign of that ending. 75% of that growth goes right into metro Phoenix, the other 20 % goes to Tucson and the remaining 5% goes to the various smaller towns and cities in the state
I hear what you are saying. There are other areas around the country that are more expensive which minimizes the magnitude of a possible real estate bubble pop. I think the PHX area is becoming more industry diverse as well. My perception is we are attracting a better caliber of person that has more education. Relaying on retirees, housing and tourism makes for abrupt stops when a recession hits. I lived in the Twin Cities all of my life and with many recessions that have happened in the past, I didn't feel or notice a thing!
So my gut tells me we are still in pretty good shape. Where we differ is on real estate appreciation. You think it is a given. I don't. It depends on how deep the recession is. The wild card has always been the national debt and eventually servicing that. We are up another $2T on Trumps watch. I thought cutting taxes supposedly was going to pay down the debt? Trump Says He'll Start Paying Down the Debt. Here
Back in the day when I was researching property, I too had some rather good sources. Think of the who's in the know (a couple were my customers). The decision makers. I'll P.M. you some interesting details. But he was wrong. I never reminded him of it as it was bad for business.
I would agree with that assessment, Ironically the 08 housing bust was likely the best thing to happen in the long run for our state, it forced us to diversify out of Housing, Retirees, vacationers and agriculture/resources into a more varied economy.
Our fastest growth industries are now Tech and Finance which have "high wage" jobs relatively, but we have done this while still growing our older economic sectors and having massive industrial/logistics gains to support low-middle income people as well as higher income people.
Phoenix (and the state by extension) is in a great spot of solid and sustainable growth unlike what we have historically seen.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Pigs get fat, hogs get slaughtered. So far, that hasn't happened. But over heated markets (PHX?) have a way of slowing faster than expected. Time will tell.
I'm not calling it a "bubble" rather, a possible correction in certain areas of the market. 
: 
