The blood is in the streets! Start buying NOW (Phoenix: real estate, homes)
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"The market once again has crashed. Sure, it may go a little lower and I am sure it will. But you've got to admit some of these prices are very well worth it and have become way undervalued."
I do not admit that any Phoenix area house prices are currently undervalued. With abundant land and triple digit temperatures a third of the year, house values have traditionally had a low ceiling here. The housing/lending bubble was an anomaly. Not only will the mania-induced rapid price spikes of the 2004-2005 period continue to disappear, but so will the more modest price increases of the 2000-2004 period (well in excess of CPI) that were created by the Federal Reserve's engineering of artifically low interest rates. And since these things tend to overshoot on the downside, we are nowhere near a price bottom in September 2008.
Prices will continue to decline until foreclosures return to their historical levels, as opposed to Maricopa/Pinal counties constantly setting new foreclosure records. That can only happen when the re-sets are completed and the full ramifications of this recession have played out.
I do not admit that any Phoenix area house prices are currently undervalued. With abundant land and triple digit temperatures a third of the year, house values have traditionally had a low ceiling here. The housing/lending bubble was an anomaly. Not only will the mania-induced rapid price spikes of the 2004-2005 period continue to disappear, but so will the more modest price increases of the 2000-2004 period (well in excess of CPI) that were created by the Federal Reserve's engineering of artifically low interest rates. And since these things tend to overshoot on the downside, we are nowhere near a price bottom in September 2008.
Prices will continue to decline until foreclosures return to their historical levels, as opposed to Maricopa/Pinal counties constantly setting new foreclosure records. That can only happen when the re-sets are completed and the full ramifications of this recession have played out.
In 1999 the median price for a home in the Phoenix area was $111,000
now it is 190,000. Are you telling me that you think homes will lose another 40% before this is over??? after we have already lost 25%? This sounds like another great depression. What about the replacement cost for a house. It is WAY,WAY WAY!!! more expensive to build a house right now than in 1999. Land is also more expensive. I can't see all gains since 1999 being wiped out. IMPOSSIBLE!!!
In 1999 the median price for a home in the Phoenix area was $111,000
now it is 190,000. Are you telling me that you think homes will lose another 40% before this is over??? after we have already lost 25%? This sounds like another great depression. What about the replacement cost for a house. It is WAY,WAY WAY!!! more expensive to build a house right now than in 1999. Land is also more expensive. I can't see all gains since 1999 being wiped out. IMPOSSIBLE!!!
The Phx area dropped 27% between July 2007 and July 2008 alone--------and, that is not counting the declines prior to the first date.
That is the whole point! Land is plentiful and its prices were inflated. Those prices have come down, but they will absolutely continue to decline in Arizona.
Quote:
"This sounds like another great depression."
Late '90s prices for houses equals an economic depression? Our country is certainly entering a severe recession, but where do you get the idea that houses should ever be anything other than a place to live? Buying a house correctly allows one to fix their housing costs to a degree (taxes, insurance, and repairs will still vary). But why do you think a ranch house built in 1998 should be worth more after ten years of use? The only reason would be land scarcity/higher cost, and land prices simply do not have price support levels to support any of that "appreciation." There is no scarcity of land in Arizona, and it is being priced accordingly.
Quote:
"What about the replacement cost for a house"
With the current oversupply, replacement costs are largely irrelevant.
In future years, builders still in business will have dramatically lower land costs, and that is the largest expense. Builders can not force the market to overpay for houses that they build. They either build to sell at market price on the cheaper land with higher petroleum prices, etc., or they go out of business.
Another consideration is the fact that mortgage loans are harder to qualify for so fewer buyers will be in the market which will decrease home values.
If anyone thinks the Phoenix area is short on land, go to the Buckeye area. Some of those subdivisions are surrounded by so much land it is easy to miss the current tracts full of houses. The east side is low on usable land, so those areas will have a better chance of appreciation, especially Scottsdale.
Why Buckeye is being built out the way it is is weird to me, and I have no idea why the homes are out in the middle of nowhere. My guess is that the tracts of land were cheap, so builders decided to build and let the infrastructure follow.
I was just browsing realtor.com and noticed that prices in Phoenix have reached all time lows in some locations. Especially in Maryvale and west Phoenix.
I saw homes from $45,000 that at the peak sold for $185,000. These places are going to bounce back easily within the next 5 years. I remember when these homes were selling for $175,000 and sold in a day!
Even before the housing boom they were not this cheap. I would definitely say to buy homes like these now. They will increase in value probably double in the next 5 years. Also what about the newer built stuff in Buckeye and Queen Creek that is now starting at 70k!! WOW!!! These used to be 200k homes.
I wonder if anyone has seen that what this is right now is FREE MONEY in the streets.
Your not a home flipper trying to start another panic buying spree are you?
A quick search on the ARMLS found 62 single homes for under 50K starting at 29K. That by no way signals bottom to me but there are areas that are close if not there. Bottoms do stay around for a while though so there is no hurry to jump in as today's deals are where the bottom will eventually be found. All listings will eventually be falling to that price range. The "deals" will set the comps. Buyers won't want to pay over the lowest comps and lenders will be reluctant to lend above that without a big down payment. For those who claim even a $45,000 house can't drop another 40% check out this listing MLS Number: 2938483 :
I'd like to see an example of a $45k house that used to be $185k.
Well. . . . it's not exactly the same. . . but. . . I'm living in a (current market value) 180,000 house that I purchased for just under 50,000. . . yes, it was a bank forclosure, and I was more than a "little bit" lucky, too. . . house was basically sound, with only minor improvements needed, located in a really good neighborhood, etc. So, I think, for those who are considering buying now, and can do that safely in their financial situation, maybe it IS TIME to start looking around. Prices are unlikely to drop much more. . . just be careful about the neighborhood and the structural soundness of the place. . . .
"I saw homes from $45,000 that at the peak sold for $185,000. These places are going to bounce back easily within the next 5 years. I remember when these homes were selling for $175,000 and sold in a day! "
I remember when Cisco Systems (CSCO) was selling for $80/share in 2000. Good company, but apparently it was overvalued. Sometimes that happens.
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1999 Median home prices
