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Old 01-13-2019, 12:08 PM
 
1 posts, read 5,452 times
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There was an article in the Republic today with real estate agents claiming that (at worst case), housing prices will flatline in the next year. They claimed (like others) that 2008-2011 was an anamoly and that prices won't fall again.

But with historically low mortgage rates for so long that are now rising, and a lot of people being locked into good rates, doesn't that dissuade folks from moving if they have to give up a (say) 4% mortgage for a 5 or 6+%? Interest rates were 18% in 1981.

Construction is finally matching pace with demand here (and spec building has taken off again). Realtors won't admit it, but there's already been a cooling in the market (as seen by the increase in price reductions and days on market). A lot of these residential developments will take a couple of years to complete.

Are increasing rates along with a potential oversupply of homes (and a lot of other factors like layoffs) going to lead to a housing crash? Do you really feel that homes here will never lose value again?

All of the prolonged quantitative easing to address the last recession has seemed to me to limit the tools available to lessen the impact of the next one.

I feel like even if real estate professionals knew a crash was coming, they wouldn't say so because people would then hold off on buying, the market would be flooded with people trying to bail, and the issue would just occur more vigorously.

Last edited by PJSzerz; 01-13-2019 at 12:20 PM..
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Old 01-13-2019, 01:09 PM
 
322 posts, read 240,336 times
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They've been predicting 2020 as the slowdown for awhile now. CA has slowed down, and I think homes will adjust down 5-10%. I don't think AZ will be hit as hard, as homes aren't over priced like CA. Plus with the current politics, cost of living & new retirees in CA, a lot are fleeing to other States (including AZ).

I think we'll see a slowdown, but nothing like 2008.
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Old 01-13-2019, 06:40 PM
 
Location: Scottsdale, AZ
2,150 posts, read 5,136,112 times
Reputation: 3303
I just bought a new crystal ball, but I haven't figured out how it works, yet. I will get back to you in about 1 year.
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Old 01-13-2019, 10:36 PM
 
42 posts, read 47,785 times
Reputation: 87
Quote:
Originally Posted by PJSzerz View Post
There was an article in the Republic today with real estate agents claiming that (at worst case), housing prices will flatline in the next year. They claimed (like others) that 2008-2011 was an anamoly and that prices won't fall again.

But with historically low mortgage rates for so long that are now rising, and a lot of people being locked into good rates, doesn't that dissuade folks from moving if they have to give up a (say) 4% mortgage for a 5 or 6+%? Interest rates were 18% in 1981.

Construction is finally matching pace with demand here (and spec building has taken off again). Realtors won't admit it, but there's already been a cooling in the market (as seen by the increase in price reductions and days on market). A lot of these residential developments will take a couple of years to complete.

Are increasing rates along with a potential oversupply of homes (and a lot of other factors like layoffs) going to lead to a housing crash? Do you really feel that homes here will never lose value again?

All of the prolonged quantitative easing to address the last recession has seemed to me to limit the tools available to lessen the impact of the next one.

I feel like even if real estate professionals knew a crash was coming, they wouldn't say so because people would then hold off on buying, the market would be flooded with people trying to bail, and the issue would just occur more vigorously.
The fact is housing prices are just now hitting the level they reached in 2008, demand is stronger and lending is more difficult.

We arent even close to the amount of perspective new builds that we had in the mid 2000's.

Generally speaking other than some sub-markets like San Francisco housing is NOT generally overvalued like it was 12 years ago.
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Old 01-13-2019, 11:09 PM
 
9,189 posts, read 16,535,224 times
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I wouldn’t say on a large scale, but I question whether downtown Phoenix north through uptown has the demand to sustain current prices, where $700k is needed to get anything with reasonable space for a family, or a couple that needs office space.
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Old 01-14-2019, 03:54 AM
 
Location: Phoenix
29,753 posts, read 18,615,199 times
Reputation: 25758
Quote:
Originally Posted by PJSzerz View Post
There was an article in the Republic today with real estate agents claiming that (at worst case), housing prices will flatline in the next year. They claimed (like others) that 2008-2011 was an anamoly and that prices won't fall again.

But with historically low mortgage rates for so long that are now rising, and a lot of people being locked into good rates, doesn't that dissuade folks from moving if they have to give up a (say) 4% mortgage for a 5 or 6+%? Interest rates were 18% in 1981.

Construction is finally matching pace with demand here (and spec building has taken off again). Realtors won't admit it, but there's already been a cooling in the market (as seen by the increase in price reductions and days on market). A lot of these residential developments will take a couple of years to complete.

Are increasing rates along with a potential oversupply of homes (and a lot of other factors like layoffs) going to lead to a housing crash? Do you really feel that homes here will never lose value again?

All of the prolonged quantitative easing to address the last recession has seemed to me to limit the tools available to lessen the impact of the next one.

I feel like even if real estate professionals knew a crash was coming, they wouldn't say so because people would then hold off on buying, the market would be flooded with people trying to bail, and the issue would just occur more vigorously.
I wouldn't consider real estate agents the most objective or knowledgeable about the factors affecting future housing prices though some would be good at it.

Interest rate will always be a factor on housing prices so if interest rates change dramatically, that will affect the housing prices and demand depending on which direction rates go.

Probably the most important factor is the overall economy. I think the odds of another crash like we had in 2007-2011 are very unlikely but you never know, those things are tough to predict.

I just don't see that Phoenix is anywhere close to a housing bubble like what occurred in 2008-2011. There aren't the number of houses under construction like 2007 and prices to income in Phoenix are considerably better than 2008 era.
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Old 01-14-2019, 04:19 AM
 
Location: 415->916->602
3,145 posts, read 2,631,798 times
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It's possible, especially if a recession hits. But CA will get hit the hardest.
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Old 01-14-2019, 05:44 AM
 
9,667 posts, read 11,023,841 times
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Quote:
Originally Posted by DetroitN8V View Post
I wouldn’t say on a large scale, but I question whether downtown Phoenix north through uptown has the demand to sustain current prices, where $700k is needed to get anything with reasonable space for a family, or a couple that needs office space.
I also question if pockets/areas can sustain the pricing. We have been staring at >2200 square foot condos in Tempe and Scottsdale near Tempe. Anything ideal is >>$700K+. I prefer something a little bigger and those are north of $1M. Personally, I am going to wait for a recession before I buy but I am trying to understand what areas are acceptable. My house might soften $20K or even $40K. I bet the $1M spots are going to be a struggle to sell; especially newer builds. But like AZJoeD said, my crystal ball is also broken. But I'm allergic to losing $$. Spending $1M on a condo in PHX seems like a pretty good way of being stuck in a home hard to sell. Unless you want to give it away.

I'd be curious how many people buying >>$750K condos can actually afford them. i.e., who can stroke a check for one if they wanted to. Because if your neighbors are leveraged, that's not a good thing for resale if crap hits the fan. It's why the bubble popped so loud in the outer burbs. Nearly everyone was deep under water. After it popped, about half of the deal buyers paid cash. So that helped stabilize the heavily leveraged buyers plus a lot of 2011-205 buyers have plenty of equity. But the luxury condo builds are newer and people are buying at the top of the market.

I just read that PHX wide, sales are down 14% from this time last year. But for whatever reason, not a lot of people are listing and that is keeping the supply tight at about 2.5 months (sellers market). If people smell the hot market subsiding, I can picture a correction coming as people (especially investors) run for the doors and decide to sell at the top.

I have my bag of popcorn popped and I'm ready to watch what happens. IMO, the housing market needs to cool down a lot. A recession is always coming; even when orange skinned people are in office. I hope if comes before Donald exists the Oval. If not, everyone is going to be hearing how much of a "genius he was" for decades to come. So bring on a recession soon. He will blame the Fed and "the witch hunt". When in reality, most of the gains have been related to a massive pent-up demand after the great recession. So even with a "communist" in power like Bernie, the economy would be on fire. I digress..
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Old 01-14-2019, 07:23 AM
 
17,262 posts, read 11,078,289 times
Reputation: 40501
Quote:
Originally Posted by dump1567 View Post
They've been predicting 2020 as the slowdown for awhile now. CA has slowed down, and I think homes will adjust down 5-10%. I don't think AZ will be hit as hard, as homes aren't over priced like CA. Plus with the current politics, cost of living & new retirees in CA, a lot are fleeing to other States (including AZ).

I think we'll see a slowdown, but nothing like 2008.
I don't know about that. My modest house in So Cal has consistently increased in value for the last 4-5 years at least at about 10-12 percent every year and predictions I see is for that to continue at least another 2-3 years if not longer. It increased close to 15 percent in 2018. There was no slow down. Maybe it's going to slow for multi million dollar houses on the coast, but not where I live.
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Old 01-14-2019, 07:41 AM
 
Location: Chandler, AZ
4,052 posts, read 5,063,928 times
Reputation: 6119
Honestly...and no one can really predict this...there are a number of factors that I see in the market today:

I feel like some mildly elevated values in the more desirable areas of the Valley, combined with Interest rates going up (and possibly going up again) is going to give people some pause and make some more calculated decisions.

Phoenix used to be more affordable than other major cities, maybe we still are but that "cost saving quotient" has narrowed in the past couple of years. A lot of moderates and conservatives saw AZ as an escape from the places they were from...this has changed as well and the Chicken Littles of the world will "predict" that we are going the way of CA.

AZ used to be, still is to some extent, a retiree haven but as the Boomers age and pass away (sorry...reality) I could see a glut in the market in the 55+ areas of the Valley. Gen Xers typically have a different view of where they want to retire and how they retire but time will tell. (Not to mention that we will probably have to keep working past Federal Retirement Age...but that is another discussion) Numbers may not bear this out right now but 5-10 years down the road?

Investors (i.e. flippers) like to get a margin on their investments, typically a 20-30% return on their costs. With fewer distressed homes on the market and those that are selling for higher prices due to conditions...it is harder for a flipper to make the margin they want. Investor/Landlords should still be okay as rents are still elevated and showing no signs of declining.

Do I think we are in for a "2008" crash? No. Is there going to be a slow down? Quite possibly bordering on a "Yes".
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