Will Phoenix Housing Price continue to drop? (Parks: foreclose, rentals)
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"In November 2007 my buyer client bought a waterfront home on Val Vista Lakes for $1.2 mil cash. The value today is less than $1 mil. Last evening we were discussing it and he said that he isn't concerned because he never plans to sell it and he knows the market will turn around again."
I think that people warning against buying houses in the declining Phoenix market are more concerned about the 99% of people who do not have $1 million-plus in cash to pay for a house. Someone in that position can afford to lose hundreds of thousands of dollars. Most Arizonans can not absorb a six-figure hit.
I think that people warning against buying houses in the declining Phoenix market are more concerned about the 99% of people who do not have $1 million-plus in cash to pay for a house. Someone in that position can afford to lose hundreds of thousands of dollars. Most Arizonans can not absorb a six-figure hit.
Six figure? As of late: I cannot afford a $1,000 hit---------things are getting that bad.
All Im saying is many people bought homes in 2005-2007 are still very happy they did. Do they wish the value was still in their home as before? Probably...but would they have made a different decision if they could see the future? Some would of course, but some would still buy as they are more concerned about a place to raise their family with stability...even if the asset is worth zero in the end.
So only homeowners can "raise their family with stability" correct?
I guess I'd better break the news to my family now.
Let's see... we're renting a very nice SFR, in a great neighborhood, within easy walking distance of one of the top elementary schools in the state.
There's no way we could buy the house we're renting at current market value and stay anywhere near sane price to income ratios (and we have solid income, excellent credit, and a substantial downpayment saved up)
However, we can make our monthly rent/insurance payment and stay well within fiscally conservative guidelines. I suppose we could buy a much lesser house now... and watch the price continue to drop. not sure why we would want to do that though?
Tell me again how that building equity thing works in a declining market.
Meanwhile the owner of the house we're renting; who was transferred just a few years after buying his dream home, and couldn't bear to "give the place away" in this down market (translation: sell at current market value) pays the mortgage, property taxes, insurance, special school assessments, HOA dues, monthly pest control, gardening, pool service, and takes care of any maintenance issues that come up.
I happen to know said owner is slightly in the red every month, and he bought in 2004. Can you imagine if he had bought in 2005-2007?
Tell me again who is providing stability for their family and who isn't? Or is financial stability not important, and we're talking about the emotional "I own it, I can paint it any color I want" thing here?
Personally I think this housing downturn might actually become severe enough that people will be more diligent about running rent vs own calculations and base their decisions on sound financial considerations instead of on emotion. IMO we're not there yet.
That was not my point. Yes, of course renting can make perfect sense in many situtations, especially if the financial investment aspects of home ownership are high on your priority list. If that is the case, then yes renting can make more financial sense right now (though that can and has been debated ad nauseum here). OTher reasons renting might make sense is job relocation possibilities, the need to upsize or downsize housing soon (before the market makes any significant changes), etc...
However, I specifically said that some people, even well informed people, decide that they do not have a desire to risk the need to move by renting. As a renter you know, not everything is in your control?! The owner may sell the house from under you at any time (lease restrictions not withstanding) and you need to move. This can uproot schooling, work, and other family related issues. Also, there is no gurantee that rent will not be raised at any time. Yes, I understand that market forces control this, but one of the most important reasons I did recently buy was because it was very important for me to KNOW what my maximum housing costs will be, for the next 30 years if neccessary. Also, some people really want to make the home they live in "personal" which is not always possible by renting.
So, again, what Im saying is that there will ALWAYS be people buying in ANY market conditions, good, bad, leveled off - for the NON FINANCIAL reasons that people want to own homes. Many people make this decision knowing full well it MIGHT not be a wise financial choice for the short term. And back to the other part of my post, for those people who HAVE made this decision, if they feel the services of an honest realtor is required, more power to them.
I guess I'm just baffled by people making what is likely the largest single purchase they will ever make without taking a serious look at all the financial ramifications.
Of course given the extent of the fallout we're seeing from people being ridiculously overextended... whether it be because of 0% financing deals, liar loans, risky ARM's, heloc abuse, credit card abuse, etc. I'm not sure why I'm surprised at all. Obviously plenty of people do make big financial decisions for non financial reasons.
I am offended by the attitude that homeowners are somehow providing more stability for their families than renters though.
FWIW, we can make any decorative changes we want as long as everything is back to neutral when we move out. In this age of HGTV, I assume most owners will return their lovingly decorated houses to neutral as well, at least if they want to sell for top dollar. I know we did.
Could our landlord raise our rent or ask us to move? Sure, it's possible. Here's the reality in this market though: our landlord was so worried we'd move out when our lease went month to month, he offered us a rent reduction to stay.
Besides, what are the most recent figures for how often the average family moves? Every 5-7 years IIRC.
As crazy as this economy is right now, who is in a better position to relocate if there is a job loss, better opportunity elsewhere, etc? I'd say advantage goes to the renter.
"As a renter you know, not everything is in your control?! The owner may sell the house from under you at any time (lease restrictions not withstanding) and you need to move. This can uproot schooling, work, and other family related issues."
This is 100% false. Someone selling a house does not extinguish an existing lease in any manner.
A foreclosure would, but by regularly checking county records, one would have at least 3-4 months advance notice that this is going to occur.
With some due diligence, renting makes far more sense than buying a declining Phoenix house now, and you should not make up things to back up your position.
With some due diligence, renting makes far more sense than buying a declining Phoenix house now, and you should not make up things to back up your position.
This is especially true in my case. For those of you thinking of buying now, please read:
I am renting a very nice 2500 sq./ft. house near Carefree Hwy. and I-17 for $1450 a month. When we signed the lease in February, the house was also for sale for $389k. I think it would take close to a 40% down payment to have a mortgage payment of only $1450. Now there are several bank-owned houses on my street. One that is identical to mine was recently listed by a realtor for $275k. Had I bought the house I'm now renting, I'd have had to come up with about $160k to get in, would still have the same monthly payment AND my house would be worth more than $100k less than I paid for it.
Azjack - guess my grammar was poor here - I was actually trying to say that a lease WOULD protect the renter somewhat - but even with that leases have end dates - usually not more than a year (yes, yes most of them can be renewed most of the time - I get it). Some of us like to think more forward than that time frame without worry of those possibilities. Of course that could mean a significant financial risk if our situation suddenly changes (renting allows more flexibility when the unexpected life changes occur), but some here act like those that weigh those factors and still buy are dumb because they make a different CHOICE based on their personal needs.
As for the rest of the argument - I ve voiced my views - that is what makes this country great - those that think one thing is a better choice than another at any particular point in time - can make that choice!
My thoughts are no better or less important than another's here.
Again, I agree an argument can be made for renting now, but so can an argument for buying. Its personal choice!
"Azjack - guess my grammar was poor here - I was actually trying to say that a lease WOULD protect the renter somewhat"
A person with a property lease is not protected somewhat. He is in possession of that property as long as he upholds his end of the contract.
Quote:
"but even with that leases have end dates"
I am pretty sure that everyone already knew that a lease for a time period would include the time period in it.
Quote:
"usually not more than a year (yes, yes most of them can be renewed most of the time - I get it). Some of us like to think more forward than that time frame without worry of those possibilities."
Then sign a two year lease. Or a three year lease. I am sure that most landlords would be thrilled. Personally, a year at a time makes the most sense to me. With all of the vacants/foreclosures, neighborhoods can change dramatically.
Quote:
"Of course that could mean a significant financial risk if our situation suddenly changes (renting allows more flexibility when the unexpected life changes occur), but some here act like those that weigh those factors and still buy are dumb because they make a different CHOICE based on their personal needs."
Those unexpected changes really are not so unexpected. Nevertheless, when you buy a house that is declining in value, unloading it becomes an extremely difficult task.
Azjack. Im done. Dont want to get into it with you....I ve made my points. Agree or disagree, your choice.
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