Someone please explain the appeal of Phoenix... (Tucson, Scottsdale: relocation, real estate)

[steve22]

"The median price of a used home peaked last year at $263,000 in September. If prices fall 10 percent this year, as analysts predict, the median price of an existing Valley home would dip to around $238,000."

- copied from the story below in the AZ Republic:
http://www.azcentral.com/business/articles/0618marketbottom0618.html (broken link)


Here Speedy, feel free to read the article. Home prices in Phoenix are falling, in some areas by as much as 20%. This is because of said excess supply, and the fact that greedy realtors inflated the market price of homes over the past year so that they looked like they were worth more than they actually are. People ended up buying homes for more than they were worth. No market sees home prices appreciate as fast as they did in the Valley from '05-'06- I don't care if it's beachfront property in Hawaii.

So while homes may not be depreciating, the overall market value of homes is coming down to where it should have been all along- thousands below the inflated highs driven up by the buying frenzy last year.


So, what I mean by "perceived equity" is the idea that if you buy your house for a certain amount, and then due to rapid appreciation of the market you think that your house a year later is worth 30% more than that, you might be tempted to take out a home equity loan based on the idea that you can sell your house for multiple thousands more than what you paid for it- even if you're still just paying off your principle and haven't owned the house long enough to have any actual equity in it. Perceived equity is the idea that if you paid X for your house and now think it's worth X + Y based on market increases, then Y is your equity- even if it's only speculative.

Now, imagine if someone takes out a home equity loan based on that speculative equity, only to find out that his home isn't worth X + Y, it's actually worth less than X. That person's now in a heap of trouble financially. Lots of people did just that, and are now getting bitten by this trap. Whoever the so-called "experts" are predict that foreclosures in the valley could shoot through the roof in the upcoming year, and this is a big reason why.

[brian_2]

Being in the right place at the right time has a lot to do with it. Or how about the cliche, "Timing is everything." Too bad you can't predict the future. When the Cali areospace & military industry tanked, home prices fell in those areas. When IBM left Kingston, NY home prices fell. Even with a modest dip, Phoenix homeowners who bought in 2000/2001 aren't hurting. My youngest brother bought a Ahwatukee 4/2 in mid-2001 for 225K and now it's appraising around 475K, even with the softening area market. Hardly a bad deal for such a short period of time - sure beats having sat out the market with CD's, and/or a broad based index fund for that same period of time - but that wouldn't always be the case, will it? "Past results do not guarantee future returns.." - blah blah.

[steve22]

If you bought in 2000-01, then you're sitting pretty. Growth in the market from that point to the huge boom last year was real; homes bought here 5-6 years ago are obviously worth a lot more now. The people who are going to have a problem are those who bought recently, within the past year or so, during the huge boom that caused bidding wars & inflated market prices of homes beyond what they were actually worth. Many of those people, if they are trying now or need to sell their homes soon, are going to face the prospect of actually losing money on their homes- having to bring money to closings if and when they sell. Which is no given, considering the glut of homes on the market right now.

[Rastaman74]

I moved to Scottsdale (city adjacent to PHX) in 1989 with my family during the summer before my freshman year of high school. We moved from Tacoma, Washington because my folks were sick of the cloudy skies and rain and wanted to live in a better climate. I am now 31 years-old, married and raising an eight-year-old daughter. I cannot stand this place any longer. My wife and I have planned on moving back to WA someday, but have now decided to move to Payson to try and escape from this hellhole this year.

Years ago, I started telling people that Phoenix would become just like Los Angeles. Guess what? It is Los Angeles now, except much hotter and there's no ocean nearby. Every day on the news, we have at least one homicide and one deadly car accident. The connection of all of the east and west valley cities makes it feel as if there is just one humungous city and I hate that feeling. Pollution is god-awful and we now have the nation's rudest and most insane drivers. I dread driving anywhere now. Just a few weeks ago, a family of four was killed when an ******* ran into their mini-van that was stopped at a traffic light near an off ramp of the 101 freeway in Scottsdale. They were on their way to church and they were killed by this man driving an absurd speed on a street with a 30 mph limit. This really shook me up because this could've been my wife or our whole family as we travel on that freeway and that particulr bi-road almost daily.

As my post title says, I am one of the lucky ones. By this, I mean that my wife, daughter and I live in a nice neighborhood of Scottsdale, as my folks built a guest house for us on their property four years ago. This was the only way we could afford to live in a safe neighborhood because my wife and I gross only about 58K and we could not afford even a 2 bedroom condo anywhere in Scottsdale, including less desirable parts.

I have been working at our family business in an area of Scottsdale called Scottsdale Ranch. In the parking lot where our office is located, I see extremely rich people pampering themselves. I see their Benzes, Bentleys and Beemers. If it's a new car, they've got it. I see them chatting on their blue tooth cell phones, sipping lattes at Starbucks. These are disgustingly rich people. There are many trophy wives and just so many people who don't seem to work. I'm sure many of them have inherited wealth. Materialism and possessions are their driving forces. They are always in a hurry, assertive and rude as hell. Just last week, I almost got hit by a little pricness ***** in her Mini Cooper flying through the parking lot at about 40 mph. I was walking in a cross walk on my my way to the mailbox and and she nearly hit me. This just epitomizes what I'm talking about with regards to their drving habits snd lack of concern for others.

[Rastaman74]

Okay this rant is getting a little too sporadic, so let me now just focus on a few key points about why I can't wait to leave the Phoenix area:

Traffic: I've heard Southern Californians tell me that these drivers here scare the hell out of them and that's saying something.

Pollution: Nation's 5th largest city, little rain and no green= major pollution!

Rudeness: People are disposable here. People don't think twice about treating others like **** because they know that they likely won't see that person again. I am blown away by how these affluent, assertive types in Scottsdale treat cashiers, tellers, etc.

Crime/ demographics: You gotta be loaded to live somewhere safe. There is a huge problem here with illegal immigrants. Neighborhoods are going down hill in so many places. Anywhere in the Phoenix area where there's affordable real estate is going to have major riff raff around..crime..social tension, etc.

The heat: I think it's progressively gotten hotter here since I moved here in '89. Now, when I walk accross the parking lot by our office in the mid day sun, the bottom of my eyes sting from the immense heat that radiates off the concrete. It's disgusting and it makes the road ragers even more prone to act out when it's so **** hot. I am convinced that if my wife and I spent the rest of our years here, we'd both inevitably get skin cancer. No doubt. May through the end of September is super hot and each year of this stretch is getting harder and harder to endure.

The mix of people: The Hispanic poplulation is booming and caucasians will soon be the minority here. There is a large amount of friction related to this by people fed up with the illegal immigration issues. There are many whites that support the minutemen efforts at our borders and those that would call themselves rednecks who aren't exactly crazy about the changing demographics. There are also are many racists who depise Hispanics. There are all the makings here for race riots and Martin Luther King Day has now become a day for blacks and Latinos to congregate and protest. Also, there recently was a huge gathering of protesters related to the country's proposal for immigrations laws. This event erupted into several minor riots.

The schools: The AZ Department of Education (ADE) has done a miserable job of preparing to meet the needs of the booming Hispanic Englisg Language Learners population. They have been fined by the US DOE for these transgressions and are now trying to fix this huge problem. Overall, the school systems suck. The spending per pupil here has been in the bottom 10 nationwide for the last 20 years. Many of the school districts have been poorly run (I am an educator so I know). The best district that serves Phoenix is the Paradise Valley Unified School District, bar none. The way they appropriate funds for teacher training and the supports they provide, create happier teachers and keep good teachers from leaving.

Housing: As I said earlier, real estate just went through the roof in 2005. So many investors from in and out of state bought investment properties, that rentals flooded the market. Furthermore, the rich used the newly found equity to snatch up weekend and summer homes in northern Arizona. This has caused huge problems for the working class in these towns because there in little affordable real estate to be found. The only reason, we were able to buy a home in Payson, AZ is because the market has plateaued for now and we saved $40K for a down payment over the last 5 years.

Final word: I am thrilled to be moving to Payson, a small town of about 20,000 residents. It still gets near 100 degrees on a hot summer day, but unlike the valley, it cools down rapidly starting at about 3pm and usually dips down to under 60 degrees on summer nights. It's a slower pace of life. People take the time to get to know you and they look out for each other. People don't drive like maniacs and crime is ultra-low. I realize that small town life isn't for everyone but I can't wait to leave the Phoenix area. I cannot recommend this city to anyone wanting to move from out-of-state.

[SpeedyAZ]

I have been working at our family business in an area of Scottsdale called Scottsdale Ranch.

My parents live in Scottsdale Ranch in the area called "The Estates". They have a beautiful home right on Lake Serena, but they migrate back to Iowa in the summertime for 4 months.

I love the area, different strokes...

[Hyperion623]

Steve:

After reading your post, I'm mildly amused at your characterization of Mobilians if they were to win the lottery and move to Scottsdale.

I'm a native of South Alabama (specifically the Eastern Shore, which is across the bay from Mobile), and I DID move to Scottsdale, where I lived from 2000 - 2005.

I couldn't wait to leave . . . and I did last summer after having taught high school in SUSD for five long years. The pay is low, the overcrowding in the public schools is abysmal, the emphasis on style over substance is disgusting, and the lack of "roots" among the general populace is saddening.

I could go on at length about the rudeness, insane drivers on the 101, skyrocketing real estate prices, the heat, lack of culture, etc.

Just suffice it to say that this Alabama native had sense enough to relocate to a place where I am far more content and am earning a living wage that enabled me to buy a house without sacrificing everything to afford it.

[shannon94]

Actually Phoenix is turning into a housing bubble just like California and Florida
The sales are slowing because people are smart enough not to buy now. I agree with Steve. I moved away from beautiful San Diego for the same reason.
Supply and demand? Blame it on the realtors telling people who aren't financially minded that it's there last chance. Also blame low interest rates coupled with creative financing.

[shannon94]

Originally Posted by steve22

If you bought in 2000-01, then you're sitting pretty. Growth in the market from that point to the huge boom last year was real; homes bought here 5-6 years ago are obviously worth a lot more now. The people who are going to have a problem are those who bought recently, within the past year or so, during the huge boom that caused bidding wars & inflated market prices of homes beyond what they were actually worth. Many of those people, if they are trying now or need to sell their homes soon, are going to face the prospect of actually losing money on their homes- having to bring money to closings if and when they sell. Which is no given, considering the glut of homes on the market right now.

And what about those people who took those teaser rate loans? Oh boy it's going to be bad!!

[steve22]

Hyperion623-

Hey, sorry if I offended you. It's not terribly P.C. to characterize a random southern city as being populated predominantly by rednecks, which was really the gist of the point I was attempting to make. I do have to say that I've been to Mobile once, and wasn't terribly impressed... which is probably why it came immediately to mind. How about Pikeville, Kentucky, as an example instead?