Housing market reflects positives, an article from The Arizona Republic

[dano]

Originally Posted by borborygmi

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.

Correctomundo,

Phoenix has been growing like crazy since the advent of air conditioning. Lower heeled new comers will simply have to rent appartments.

[joninaz]

Another problem locally and nationally - but have gotten a lot less attention - were the HELCO loans, which for many were/are worse than the ARMS or easy originals.

For a good amount of time, the mailbox was stuffed with companies offering lines of credit from 5K to 100K. Many sent checks, which upon cashing locked you into a loan. My main mortgage has never been too high or my rate above 6%, but I did push the budget a couple of times taking the easy cash. A lot of people went out and bought cars, vacations, toys, etc. I put a good sum into house projects, which in hindsight could have been doled out slower, but ultimately made the house a better one.

I'm a somewhat smart guy and can decipher a corporate earnings report in a few minutes, but I came very close to buying jet skis, a boat or some other toy(s) or trips thanks to the "easy" cash advances that everyone was offering. In short, it was really easy to go out and extend one's debt level (significantly) without really messing with one's original loan or rates. I think that put a lot of people on thin ice, just as much as others getting into homes that they couldn't afford. And the HELCOs helped a lot of people do that as well.