Housing market reflects positives, an article from The Arizona Republic (Phoenix: rent, credit)

[Steadykat]

Phoenix Metro/Maricopa-Pinal Counties:

Date foreclosures/pre-foreclosures
Nov 2006 913/6,764
July 2007 7,753/7,324
July 2008 25,868/19,763


http://bubbletracking.blogspot.com/2...1_archive.html

Question:
If Arizona (Phoenix) prices weren't that high then why are so many people unable to keep up with their payments?

IMHO: House prices will continue to drop until they hit the point where individuals will be able to afford to purchase them based on old-style lending practices. That means a minimum 10% down-payment and Banks using the outdated "notion" of a purchase price that doesn't exceed 3-3 1/2 times your yearly income and a detailed verification of said income.

That means no more loans on $350,000.00+ properties for individuals earning minimum wage (or less).

[LordBalfor]

Originally Posted by Steadykat

Phoenix Metro/Maricopa-Pinal Counties:

Date foreclosures pre-foreclosures
Nov 2006 913/6,764
July 2007 7,753/7,324
July 2008 25,868/19,763


Bubble Markets Inventory Tracking: July 2008

Question:
If Arizona prices weren't that high then why are so many people unable to keep up with their payments?.

Because folks were being qualified who were not really qualified to begin with. Some of these folks were just plain stupid, others were misled by shady lending practices brought about the situation where loans were quickly made and then even more quickly sold (so the lenders didn't really care if folks would be able to make the payments down the road since that would be "somebody else's problem"). This resulted in prices going up too high too fast (but still, less than many other areas of the country). When that situation is corrected (as some signs indicate may be getting close to happening) then prices will stablize and start to climb again.

Ken

[CouponJack]

Originally Posted by LordBalfor

This resulted in prices going up too high too fast (but still, less than many other areas of the country). When that situation is corrected (as some signs indicate may be getting close to happening) then prices will stablize and start to climb again.

Ken

Bingo, and that's the definition of a bubble.....my whole point....prices will come down closer to historicals...

the home price of Hawaii has nothing to do w/this...again, when the avg home was $150K in '01 and rose 125%, something went terribly wrong...

You stated what I was trying to explain to you...

[borborygmi]

Originally Posted by LordBalfor

Maybe, but I'm certainly not making up the numbers about Arizona being the 2nd fastest growing state. People ARE coming in and more people means more pressure on housing, infrastructure, whatever. If people are leaving the state/city/whatever you can expect prices to have a distinct downward pressure. If folks are coming in then you can expect the opposite to be the case. It's a matter of supply and demand. If you overbuild (as has happened) then the pressure is eased, but if folks continue to come in then that surplus will at some point be used up - and once that happens then prices will begin to climb again.

Will they climb at the rate they did?
Almost certainly not.
But as long as folks continue to come, prices WILL at some point start to climb. I don't profess to know when that point is - though it sounds like it may be getting close - but basing future expectations on historical norms is only going to be accurate IF the future conditions mimic the historical ones, and the baby boomer retirement is an unprecedently large one that has really just started so historical norms are at the very least at bit suspect.

Ken

Right, I know AZ is growing- that's not really my point. My point is that even though the state's population is going up, the current state of the credit and banking industries is going to remove a huge chunk of potential buyers from the market. Families and young working folks earning middle-class incomes who are already overleveraged and maxed out on credit- i.e., a huge percentage of would-be buyers- are likely going to be by and large frozen out of the market.

The population of well-heeled, well-invested baby boomer retirees with full equity in their previous homes and enough saved capital to avoid having to leverage much, if any, of the cost of their new homes constitutes a pretty tiny percentage of the market, even in popular retirement destinations like the southwest. It's not enough to buoy the entire market.

[AngelAl]

Originally Posted by Steadykat

Phoenix Metro/Maricopa-Pinal Counties:

Date foreclosures/pre-foreclosures
Nov 2006 913/6,764
July 2007 7,753/7,324
July 2008 25,868/19,763


Bubble Markets Inventory Tracking: July 2008

Question:
If Arizona (Phoenix) prices weren't that high then why are so many people unable to keep up with their payments?

Ignorance and ARMS.

Originally Posted by Steadykat

IMHO: House prices will continue to drop until they hit the point where individuals will be able to afford to purchase them based on old-style lending practices.

They have hit that point in many areas of the state. 1800 SF homes for $100k. Lock a 30-yr fixed now and your payments are lower than or equal to rents.

[shiphead]

i have a question for all you folks. What's the point of an adjustable mortgage rate when average rates were at 6-7%?

Weren't the 70's up to 11%?

[CouponJack]

Originally Posted by w1ngzer0

i have a question for all you folks. What's the point of an adjustable mortgage rate when average rates were at 6-7%?

Weren't the 70's up to 11%?

3 years ago, many people never thought things would get to this point. Many people thought home values would keep rising. So, they figured that shaving off a 1/2 a point on the interest rate (thus saving a $100 or so a month) basically was "risk free"....

now you see what has happened...

[azjack]

Anyone who is extremely confident that Arizona house prices will not continue to decline in value (and even rise) in the next few years should buy one (or more). You may want to wait, as the rate of price decline is still increasing.

I mean, when the rate of price decline is not even leveling off, you can not expect even a dead cat bounce. How one gets the notion that even modest appreciation is around the corner is beyond me.

There are very sound reasons for this decline: ample supply of houses from overbuilding and record foreclosures, ever-tightening lending standards, high fuel costs in the exurbs, and recession-based job losses. Finally, there is a simple lack of desire to purchase declining assets.

Preserving and adding to savings, cutting expenses, and hunkering down is the best way to maintain financial security in the coming years. Can that be done with a mortgage? Yes, but it is harder, especially when the house debt creates inflexibility in your life due to the fact that the house has declined in value.

[gregandvicky]

Granted only a snapshot and monthly figures, but not very encouraging. Maybe some of the inventory will get absorbed.

Arizona ranks second in July foreclosure fillings - Phoenix Business Journal:

Pinal County home sales on the rise, 40 percent represent foreclosures - Phoenix Business Journal:

[markas214]

40% of sales foreclosures. How many of those will be flipped back onto the market? My guess is a lot. As the saying goes "got popcorn?". 2008 is not the year of home price stability in Arizona. Retirees will not drive prices beyond what income earners can afford. Way to much land left.
In the northeast there is a lot less room for building. We here are doing better than most as our prices rose but nowhere near the west's.
If Phoenix is so desirable to retirees why were prices there always way below the national average? The low prices due to lots of new building competition had just as much drawing power as the warm climate. The bubble resulted from speculators pure and simple. It's over. The crash still is happening. Slower in some areas but they'll catch up. If you put 20% down be prepared to see your equity disappear in a year or two. Put less down and you'll likely soon be upside down. Of course if you actually plan to live in a house for several years as people used to do more often than not you will eventually sell for more than you owe.