Has the bottom hit? (Phoenix, Glendale: rental, insurance, condo)

[musicforme]

What predictions do y'all have for pricing in the next six months? Do you think it will level off and stay about the same, or continue to go down? We're looking at the North Phoenix area (near I-17 and Carefree Highway).

My wife and I would move to AZ today if we could, but we're expecting our second child in mid April and can't list our house in Texas until our future child is old enough to travel.

[Howard Roark]

This real estate bubble (price increases in houses) has been unprecedented. Not even the Florida land boom in 1926 surpassed this. This one was also nationwide.

The nature of bubbles is that when they burst, prices of that item undershoot the mean. The Case Shiller index is about 130 for Phoenix. There was a time in the 90s when the index was 90. I figure the index will reach down to 80 or lower at the lowest point.

In my home town of Fresno, California for example, there is a house at the corner about 300 yards from my late parent's house. In 1993 it was sold for $58,000. In 2000 it was sold for $62,000. Lsst Fall it was sold for $93,000. Today it is for sale for $69,000. Its Zillow peak value in 2006 was $200,000.

Granted, Fresno has nothing going for it to have prices more than double and the valuations are coming down fast. They are getting to be near the 2000 level but I think they will drop more.

Phoenix has a lot going for it. Its size and diversity of economy. But there are still a lot of houses out for inventory. Add to that many unemployed people moving in with other family members and you have a glut of rentals on the market.

My own apartment rent price for 2 bedrooms 2 bath dropped from $950 to $750. It's a quiet gated community in Ahwatukee. Bad news for homeowners. Rents fallling further mean that house prices have to follow to compete for buyers.

Originally Posted by smarty

Wow! You sure bottom is 2012 not 2010, 2011 or 2013? Is there a quarter which you are predicting bottom? What level is the bottom (back to 1992 level or 1982 level)?

IF 2012 is bottom, 10 years of flat... would be 2022... start boom in 2021... Peak in 2025 again? Bust... in 2027?

[Ponderosa]

Originally Posted by musicforme

What predictions do y'all have for pricing in the next six months? Do you think it will level off and stay about the same, or continue to go down? We're looking at the North Phoenix area (near I-17 and Carefree Highway).

My wife and I would move to AZ today if we could, but we're expecting our second child in mid April and can't list our house in Texas until our future child is old enough to travel.

Prices will be slightly higher than they are now.

[ArizonaBear]

My G/F and I were looking at some older single family houses near Broadway/Mesa Drive in Mesa a couple of days ago: several of them were under $60K---------a far cry from Zillow's ca. $130K+ values. Most of them were fixer uppers, but still............. Maybe $20K tops would suffice to put those places back in A-OK shape.

[Perkinst]

The bottom hits in Dec.2009. Then home prices begin to stable. Investors are wating for the LOWEST prices to start buying.

[Captain Bill]

Originally Posted by Perkinst

The bottom hits in Dec.2009. Then home prices begin to stable. Investors are wating for the LOWEST prices to start buying.

No one will know when the lowest prices are here until they are gone.

The investors have been very active in buying for quite some time. It's the general public that is trying to wait and find the bottom.

The investors have also been instrumental in getting the neighborhoods back in shape by buying homes, fixing them up and selling them to people who want move-in ready homes.

They are responsible for a large amount of homes being purchased in the Phoenix area. I'm an investor and I attend two large investor meetings each month, and have a very good handle on what is happening in the Greater Phoenix market. I have purchased 10 properties in the past year, fixed and resold most of them, and kept a couple to rent.

There are many rentals that can be bought with positive cash flow today. If I had the cash I'd be looking to buy and hold 30 to 40 rental properties today.

Usually, I don't do any forecasting, but based on what I've been seeing for the past year, I'm going to make a prediction.

I expect to see the bottom no later than the end of 2010. Much will depend on the effect of the stimulus package. At some point after the bottom, I expect to see a faster increase in prices than some here are expecting.

Many people are beginning to realize that the prices have over corrected and are much lower than the cost to build. Many houses are selling for less than the cost of land they sit on.

Prices are driven by fear and greed and right now fear is driving the market.

People are listening to the news, that only points out the negative, and that only helps to decrease the confidence level and keeps buyers on the fence. The ones who listen to the negative and have no idea of what is actually happening in the market place in their county, city, town, and local market, will be the last to realize that there are changes happening in the market.


Once the market turns around and people realize that they missed the bottom, greed will again take over because these people who have missed the bottom will be worried that they'll be left behind. So they'll begin buying. We won't see the rapid increase like we had recently, but we will see a higher than expected increase.

• Granted, there are many people who are out of a job.
• However, there are many others who still have their job and still spending.
• Lenders have tightened their lending.
• However, people with good credit and a good down paymen are not having a problem getting a mortgage at excellent interest rates.,
• People are still moving to Phoenix, and they will continue to move here because of the weather, the sports, and lower cost of living.
• Some people are leaving Phoenix
• However, Phoenix will continue to grow.

[Howard Roark]

Originally Posted by Captain Bill

No one will know when the lowest prices are here until they are gone.

The investors have been very active in buying for quite some time.

Yeah, investors have been active since 2002, driving up housing prices to more than double. They are still too high (prices). Option ARM resets and ALT-A resets are keeping the smart money out until the peak is over (2009 through 2011).

[olegk]

Thomas Jefferson said in 1802:

'I believe that banking institutions are
more dangerous to our
liberties than standing armies.
If the American people ever allow
private banks to control the issue of their currency,
first by inflation, then by deflation, the banks and corporations that will
grow up around the banks will deprive the people of all property until
their children wake-up homeless
on the continent their fathers
conquered.'

I have been watching Phoenix market for last 6 month (not long, obviously).
Plan to buy a house eventually.
Here are my predictions..
Still see price decline. In Jan almost for all properties (foreclosure and bank owned of course) I was watching banks cut the prices by 20%.
Some of them went to contract…. So, something eventually sells.. No much though.
Considering “Hope” bias and the stupid homebuyers’ bailout package coming down the pipe (or shoveled into our throats) I would expect some price stabilization next 3-4 month. When “Hope” exhausts itself we shall see another dip for 10-15% by end of the year. Personally I don’t see any single sign for the market improvement. Economy going to toilet, “the risqué package” is not going to bring any relieve immediately. If Feds saying that unemployment is not going to improve this year, it means at least two years down the road.

Originally Posted by markas214

Ah but I lost ZERO in both my IRA and 401k. I invested very, very, very conservatively following the dot com bust. Zero loss!! In fact I'm up about 3% last year. On the other hand I sold a house in '02 I purchased in '97 for a profit of 20 %, bought my current home with a substantial down payment and live in a non bubble area.

Was I a financial genius? No. I just learned following the bust of '01 that the system is a rigged game set up for the benefit of those who control it. The house was a matter of needing something bigger and getting lucky. Comps are selling for around 60-80% more than what I paid. The safest place some say is in physical gold. I have mine in FDIC insured accounts. I am by no means wealthy but I still have everything plus a reasonable amount of interest in all my accounts. Most of my friends are down pretty substantially.

I will repeat my best advice. Put your money in a federally insured account. Do not trust Wall Street. The system is a joke. These financial geniuses bankrupted the world and walked away with billions. They win either way. In fact there is incentive to fail as their losses get covered, socialized, while the profits are private.

My point for the bump of this thread should serve as a warning. I have a very negative outlook for the future. More-so now than six months ago. It is now quite apparent that even our worse case scenarios based on our experiences are irrelevant in relation to the degree of this financial failure. I have been reading some interesting papers on the capitalist system as it emerged from Britain 400 or 500 years ago. People long ago predicted the system would eventually come to complete failure due to the power of bankers and their ability to create money and debt. How an unregulated system would game the financial markets and reap disproportionate amounts of the income gained by increased productivity. Read the comments section of Calculated Risk Blog. There are always great links to obscure economists. It is amazing how our most visible experts have been so wrong while these unknowns have been so prescient.

Finally, I will never say don't buy a house. Use your judgement and get your best deal. Buy a dwelling that suits your shelter needs. Buy what you can afford. Don't max out your credit. Financial security is better than having expensive "things" that depreciate and wear out. We have not hit bottom in the housing market. $20/ft2 is a real possibility in Maricopa. Scottsdale may yet see most properties fall well bellow $100/ft2. Who knows. One thing for sure. Prices are only going in one direction. It's not up.

[markas214]

Originally Posted by aaron kristen

The USA will pull down those around itself. Like an elephant rolling over, many will suffer.
While our manufacturing sector is struggling, we are in good shape. OUr petroleum industry is suffering due to low prices, but i can assure you, the USA needs our oil and natural gas. Little known fact, our little province of saskatchewan, sells you americans more oil than Kuwait!
Oh, and by the way, our financial industry is suffering, but will never, EVER see the demise like those in the USA have.
We had this little thing called standards for loan qualifications. Something crazy like HAVING A JOB, HAVING A REAL PAYCHEQUE and VERY FEW interest only loans. Damn those rules otherwise we'd be in the freefall as you are!

I agree and should not have included Canada. Smart banking regulations have been proven to work by our northeren neighbors. There won't be the real estate purchases from Canadians as had been as they conserve cash but Canada is in better shape than most economies.

[markas214]

Originally Posted by smarty

Wow! You sure bottom is 2012 not 2010, 2011 or 2013? Is there a quarter which you are predicting bottom? What level is the bottom (back to 1992 level or 1982 level)?

IF 2012 is bottom, 10 years of flat... would be 2022... start boom in 2021... Peak in 2025 again? Bust... in 2027?

He's just putiing forward his best guess. At least he's not calling bottom now as some are doing. It's so obvious that we are in terrible condition with our economy and financial system. Calling bottom now ignores reality.