2023 Phoenix Area Home Prices (selling a home, wages, taxes)

[kell490]

How do you know 40% own their homes outright? Where are you getting that data from? Lot of people are retiring have lot of disposable income not much reason to save anymore. Would be interesting if anyone is capturing statistics on employment status vr annual spending.

[MN-Born-n-Raised]

Originally Posted by kell490

How do you know 40% own their homes outright? Where are you getting that data from? Lot of people are retiring have lot of disposable income not much reason to save anymore. Would be interesting if anyone is capturing statistics on employment status vr annual spending.

It really depends on the town. In Scottsdale it is 36% See https://www.towncharts.com/Arizona/H...%20the%20total. In our neighborhood, it's 60% full ownership. This doesn't include rentals or investments. That 36% is owner-occupied.

[Potential_Landlord]

Originally Posted by CTREInvestor

Overbuilding?

From an outsider considering Phoenix, housing prices of $400-$500/sf seem difficult to support, even with low taxes.

Most houses on Zillow seem to be house flippers. Renovating old houses is of course fine and dandy, but it's like hundreds upon hundreds of listings.

Talking about Scandinavia is crazy.

I'm looking to pay cash up to $800K, but a 1950s ranch house that is 1,600 square feet? Just doesn't make sense given household income and historical prices.

Overbuilding strictly only in MF. There is absolutely no sign of overbuilding in SFH here. If anything we are way low on SFH inventory (both new build and existing). Even in MF the overbuilding is just starting. Should only get problematic in a few years from now. However, apartment rent growth should disappoint going forward (supply-demand situation has shifted).

[YAZ]

An incredibly unscientific poll in my neighborhood suggests that folks here are selling because of death, divorce, & retirement (major change in lifestyle).

Retirees aren't downsizing in the traditional sense (finances), they're just not interested in yard work & pool maintenance.

Won't lie to ya, it's cooled off from a year ago....but no one's taking a bath when they sell around here.

[MN-Born-n-Raised]

Mortgage rates are up again and close to 8%. It will be interesting to see what's going to happen. With the normal PHX fall softening AND higher rates, I assume inventory has to go up. The question that remains is how much. It will be interesting to read what the Cromford report has to say.

The FED's are doing their best to slow the economy. https://www.cnbc.com/2023/10/03/mort...-8percent.html

[Ponderosa]

Originally Posted by YAZ

An incredibly unscientific poll in my neighborhood suggests that folks here are selling because of death, divorce, & retirement (major change in lifestyle).

Retirees aren't downsizing in the traditional sense (finances), they're just not interested in yard work & pool maintenance.

Won't lie to ya, it's cooled off from a year ago....but no one's taking a bath when they sell around here.

I've got a big yard and I am sick of yard work and maintaining a pool that we have not used in years. My neighborhood has turned from a peaceful "town in the country" as the developer called it to a congested madhouse that is hard to get to and hard to get out of. I'd happily downsize somewhere else. But my mortgage is at 2.75. I'm stuck.

[singlegirlinaz]

Originally Posted by Ponderosa

I've got a big yard and I am sick of yard work and maintaining a pool that we have not used in years. My neighborhood has turned from a peaceful "town in the country" as the developer called it to a congested madhouse that is hard to get to and hard to get out of. I'd happily downsize somewhere else. But my mortgage is at 2.75. I'm stuck.

Why couldn't you sell that house and downsize? Low mortgage rates aren't worth all the work and added stress you described.

I went condo because I don't need a house with a yard or extra rooms, and I swore off apartment renting.

[kell490]

Originally Posted by MN-Born-n-Raised

It really depends on the town. In Scottsdale it is 36% See https://www.towncharts.com/Arizona/H...%20the%20total. In our neighborhood, it's 60% full ownership. This doesn't include rentals or investments. That 36% is owner-occupied.

I suppose most of them sold a home and used that money to buy with cash didn't have to pay capital gains on a home they lived in for years. I doubt someone would pull bunch of money from a 401k to buy a home with cash pay all that tax. If they are getting a large monthly retirement check from a pension or other investments might as well just take out a mortgage not like they care about paying it off, they be long gone by then.

[MN-Born-n-Raised]

Originally Posted by kell490

I suppose most of them sold a home and used that money to buy with cash didn't have to pay capital gains on a home they lived in for years. I doubt someone would pull bunch of money from a 401k to buy a home with cash pay all that tax. If they are getting a large monthly retirement check from a pension or other investments might as well just take out a mortgage not like they care about paying it off, they be long gone by then.

In bold, very true. Because about 7% of the USA population are millionaires. Across the country, there are areas of wealth concentration. There are a bunch of spendy neighborhoods in Scottsdale that qualify.

It would be interesting to see the breakout of how old people are who own their home outright. I'm guessing it is heavily skewed towards >50 years old.

Back to the thread topic. In PHX metro, home values declined by $7K mostly from higher mortgages and the normal fall softening. i.e. supply is up.

Here is a good summary of where we are in Oct 2023 (They quote the Cromford report). More inventory is coming online. https://www.realestatechandler.com/market-data.php

"This is the most dismal table for sellers we have posted since November 10 last year. All 17 cities have seen their CMI drop over the last month, meaning that power is slipping away from sellers and moving towards buyers.

We do not have to look far to find the most obvious reason - mortgage interest rates. While most pundits predicted rates would fall in the second half of 2023, the shortage of buyers for bonds have caused yields to rise. The typical 30-year fixed mortgage rate is now around 7.7%, up from 7.3% a month ago. Understandably, buyers are far from enthusiastic about this and in some cases fail affordability tests they could once have passed easily.

13 out of 17 cities are still sellers markets (for now) with Buckeye, Goodyear, Queen Creek and Maricopa in the balanced zone. However these 4 cities are now below the 100 mark implying that buyers have a slight edge in negotiations. On the current trajectory, these 4 could all be confirmed as buyers' markets before the end of the month."

While the resale market is sucking wind, new home sales are UP: "The dollar volume for new homes is not only higher than every prior year, it is up a massive 11.5% from last year. Clearly, agents working for developers are not feeling the same challenges that the rest of the agent community is going through."

Big picture: "We can see that the market is becoming more favorable to buyers at an accelerating rate." Mostly because of interest rates. The experts who said the rates were going to come down at the end of the year were wrong. All that said, if people are counting on a crash because of higher interest rates, just remember, those rates could fall a lot with the FED's interjection if we have a recession. But surely, there will be PHX home price drops over the next several months. If I had a home that I needed to sell, I'd be dropping my price now to attract the eyes of a potential buyer. Definitely not holding strong on my price.

[KurtAZ]

Originally Posted by singlegirlinaz

Why couldn't you sell that house and downsize? Low mortgage rates aren't worth all the work and added stress you described.

I went condo because I don't need a house with a yard or extra rooms, and I swore off apartment renting.

Going from a 2.75% to a 7-8% adds substantial money to the monthly payment.

$400k @ 8% = $2935
$400k @ 2.75% = $1633

Primary reason that new home buyers are being seriously priced out of the market. 2021 you could have got into the same home that they are looking at now for $1300/mo LESS than what they are financing now. That is a whole other mortgage payment and you are only allowed to deduct up to $10k of interest on your taxes now.