Someone please explain the appeal of Phoenix... (Tucson, Glendale: loans, relocation)

[Hyperion623]

Hi, Steve:

I'm not offended . . . just exceptionally amused, as the people who live on the Eastern Shore of Mobile Bay also characterize Mobile's citizens as "rednecks." I was quite impressed with your dead-on characterization.

As a native Southerner, I thought my region had cornered the market on snobbism until I moved to "North" Scottsdale, where I bought (quite by fool's luck) a nice townhouse in one of those cookie-cutter suburban enclaves of homes that exist between Pima and Scottsdale Road.

There were some aspects of living there that I enjoyed, but when I found myself working three jobs just to pay my mortgage payment, as well as the monthly and quarterly HOA fees to keep up the golf course I couldn't play on, I decided it was time to give up the "dream" that the realtors sold me on.

I do miss the sunsets, but I also remember the nights when I couldn't walk outside because the temperature was still 100 degrees. I do miss the McDowell Mountains, and I remember the "blooming desert" after a winter when it rained more than two times the whole season.

I remember one night (after I'd lived there for two years) I was awakened by the tapping of rain on my windows, and I laugh now at how I almost broke my neck running downstairs so I could dance like a nutcase in this unexpected shower.

But now . . . well, it's true that you can't go home again. In another five years I'll move again and settle down permanently, but I'm wiser about the marketing techniques used to sell a region, so I'm doing more research online and traveling quite a bit more to different parts of the country to find that elusive place that will be a perfect fit for me.

[loose cannon]

I got on a Phoenix kick back in the early 90's when this sales/production company I worked for sent a bunch of us out there. I never was a huge traveler so it was a great experience and I always thought I would live there. I left that comapny a few years later. A fellow friend also took to the area and went to ASU. I visited numerous times over the years and was pretty dead on about eventually moving there. Well, over time things happened here in PA and I kind of got settled in. My friend was back in the area but he really wanted to move again. His enthusiasm for Phoenix kind of dropped. In the meantime I traveled all over the US getting a more mature feeling for things and I suggested moving to Austin. We were going to do that but then he suggested giving Tucson a try. Somewhere along the line he regained contact with an old Phoenix friend and I agreed that since we both have some kind of history there we may as well go back. What happened was that I became very unsure of myself when I was out there and ended up flaking out. I just was'nt into it at all anymore. So, I came back which probably was not a good decison. Im so tired of PA. I hate cold weather. All in all though I know Phoenix is no longer the answer. Im going back to the original plan of Austin TX. I think I'll be happy there. Im a music fan. There's tons of culture and the people in Austin are mostly liberal. Im kind of a moderate politically but I would rather hang out with liberals rather than stuck up boring conservatives. The weather is decent. There is somewhat of a winter but it is fairly mild. I think I prefer an area that is not too extreme on the cold or hot side.

[steve22]

Hyperion,

I agree that there are certain elements of living in Phoenix that I will miss; I admit, the desert really is beautiful, if you can get out and enjoy it. And one thing Phoenix does offer is very convenient, easy access to natural parks and preserves, with abundant hiking & biking trails at paces like South Mountain and Piestewa Park, like oases right in the middle of the sprawling megalopolis, as well as the McDowell Preserve and other terrific areas out on the ouskirts. But that's been offset recently by the influx of so many teeming hordes of people, which has made those areas very crowded on weekends & during peak seasons in the fall and spring. It's almost impossible to enjoy them anymore without having to battle massive crowds; if you want to hike Camelback, anymore you have to wait on the order of a half-hour or more during OFF-Peak times just to get a parking spot. Also, of course, there's the downside that you can't enjoy the outdoors for half the year due to the brutal heat. There was just an article in the AZ Republic last weekend reporting that this June was the hottest on record in the valley. They predicted before this summer that the heat island had finally grown so expansive, it's likely that this summer will be the first ever recorded 24-hour period here in which the temperature never drops below 100 degrees.

Austin is a terrific place; one of those very cultural, friendly, clean, safe college cities which, not unlike Ann Arbor, Madison, Boulder, Charlottesville VA, Columbia MO, etc. that you just never hear a bad word said about. If you believe the rumors, however, Austin is supposedly the next "big thing" in real estate in the booming southwest, along with Santa Fe, NM. These are the places that the real estate investor locusts are swarming to next, where they'll undoubtedly create the huge boom-and-bust tidal wave that has already ravaged places like Las Vegas and Phoenix, leaving in their wake a once-nice city that's been transformed into a sprawl-eroded suburban wasteland with higher crime and a lower overall quality of life. Wait and watch- in 10 years, Austin will more than likely be twice its current size, and have twice its current social problems to go along with it.

[brian_2]

Phoenix - no way Jose, as the saying goes. Phoenix has its moments, (emphasis on the word moments), but the negatives overwhelm the positives. But please dare to differ Phoenician defenders of heat, sprawl and traffic.

Santa Fe. I was just there visiting. It is already well underway on to its path of sprawl land. The Plaza area and the direct radius surrounding it are tourist driven foodie and shopping places. I liked the imprompt Mexican music group at the farmers market near the railyard area, and there's an undeniable charm here and there in SF such as the aforementioned - but go outside more and it is buildout and the usual tract/strip stores and gas stations like everywhere else (where most people live). The prices for new townhomes and fixer single family casas/casitas/whatever are nothing to smile about. IMO, if access to good shopping and the connections of urban living are paramount over traffic and sprawl, you've already accepted your fate, go PHX/SF/etc. - if you can do w/o TJ's and IKEA and traffic drives you nuts, and you won't freak out if you can't get sashimi - go rural to central/northern AZ or elsewhere in NM.

[Dwayne Pipe]

Originally Posted by steve22

Well, you're going to have to work REALLY hard if you move here to shield yourself from those people.. they're absolutely everywhere, one of the big reasons that I find it difficult to live here.

You people need a dose of reality. You all ought to be forced to spend a year in New York City, or Northern NJ.

I spend a good bit of time in Phoenix, and you're right - there is a bit of materialism. But it's not as "in your face" as what I've seen in LA or NYC. Also, the people are, by and large, POLITE. How would you like for your kids to grow up in Northern New Jersey ("North Joisey"), where sarcasm and insults are the local pastime?

Summer heat aside, Phoenix is far better than the northeast or the West Coast as a place to live. Are the people as down to earth as I've met in the mid-west? Nope. But then again, they aren't pasty from being indoors 7 months a year, either!

Phoenix is a fine, prosperous place with perfect weather half the year. Heck, it's a resort town - people don't flock to Bismarck, ND in the winters. And Boston, DC, Philadelphia, Detroit, etc etc all have declining populations. All those people relocating to Phoenix must have SOME reason.

Originally Posted by SpeedyAZ

How do you figure? Homes aren't depreciating, the sale of them is just slowing. It wasn't a "falsely inflated market", it was supply and demand at the time.

Study real estate cycles in this country for the past 100 years and tell me you still feel that way. The end of the cycle starts with inventory building but sales volumes and prices staying stable, then inventory continues to build, volumes decline but prices stay stable (i.e., sellers refuse to "give in" to a declining market so there are fewer sales), and then, finally, since some peope HAVE to sell (relocation, divorce, etc) and since the last few sales sets the market price no matter how low the volume, prices plunge.

I think those of you who've spent a lot of years in Phoenix may not have seen this before, since this was your first big "up" cycle. Those of us who've spent a lot of years in the Northeast cities (Boston, NYC, DC, Philadelphia all got CRUSHED in the last real estate cycle that ended in the early 1990s), and also California, should be able to recognize an impending decline. Read Yale Economist Prof. Shiller's "Irrational Exuberance" (2nd edition) for an excellent empirical analysis of real estate cycles.

The last "national" real estate cycle ended in the early 90's, and LA and NYC were hit the hardest. This cycle will end in a year or so, and Phoenix, Las Vegas, and Miami will be among the hardest hit.

As for the comment "it wasn't falsely inflated", that depends on the level of speculative buying. I'm not sure how many flippers you've had in your market; Vegas and Miami are full of them. I suspect you've had your share.

[Dwayne Pipe]

Originally Posted by Hyperion623

There were some aspects of living there that I enjoyed, but when I found myself working three jobs just to pay my mortgage payment, as well as the monthly and quarterly HOA fees to keep up the golf course I couldn't play on, I decided it was time to give up the "dream" that the realtors sold me on.

.... but I'm wiser about the marketing techniques used to sell a region

Realtors who sell people into homes they financially shouldn't be in are called "realtwhores"...

Originally Posted by steve22

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.

Spot on, Steve. Historically, real estate in even the most sought after areas - beachfront property, Manhattan condos, etc - has historically appreciated at an average rate of 7-8% per year. When price appreciation gets ahead of itself, it usually regresses back to the mean rate of appreciation. So, if real estate has appreciated 15-25% in some years...it means you can expect a few negative years to balance out the equation. The same thing happened with tech stocks a few years ago. For 100 years, stocks appreciated at 11% a year, on avg. Then in 1999-2000 we had 25% appreciation p.a. And naive people said "Oh, it's DIFFERENT this time...it's just gonna keep going up and up forever" (just as they now say about real estate). And of course, the Nasdaq declined 80% in the next few years, as rates of appreciation regresses to the historical mean.

The same will happen with real estate in Phoenix and some other places; you're looking at a 30% decline by 2010. IMO.

[steve22]

I agree, Dwayne. I would also add that, considering that Phoenix is so spread out and populated by commuters, that there's no long-term sustainable local water supply, and with global warming compounding our ever-worsening "heat island" problem, Phoenix is about a decade out from becoming completely unlivable. With skyrocketing energy costs and vanishing water, once peak oil prices hit, it will become prohibitively expensive for middle-class wage earners to live here. And when that happens, the valley will become a dust bowl & real estate will tank. 30% is a reasonable guess, but I'd predict closer to 50%. I think 2010's maybe a little soon for that crisis to hit, but it'll happen eventually, and sooner rather than later. The fallout from what I would categorize as unconscionably irresponsible and short-sighted urban planning in this hostile environment is inevitable, and it will be devastating when it hits.

[Dwayne Pipe]

Originally Posted by steve22

I agree, Dwayne. I would also add that, considering that Phoenix is so spread out and populated by commuters, that there's no long-term sustainable local water supply, and with global warming compounding our ever-worsening "heat island" problem, Phoenix is about a decade out from becoming completely unlivable. With skyrocketing energy costs and vanishing water, once peak oil prices hit, it will become prohibitively expensive for middle-class wage earners to live here. And when that happens, the valley will become a dust bowl & real estate will tank. 30% is a reasonable guess, but I'd predict closer to 50%. I think 2010's maybe a little soon for that crisis to hit, but it'll happen eventually, and sooner rather than later. The fallout from what I would categorize as unconscionably irresponsible and short-sighted urban planning in this hostile environment is inevitable, and it will be devastating when it hits.

We're really talking about two different things. The decline in prices I am predicting is a cyclical market correction that happens whenever any market (stocks, bonds, real estate, commodities) experiences appreciation far in excess of it's historical trend rates. What you're predicting is far more systemic and catastrophic! Not having spent much time in PHX, I can't speak to those larger, environmental issues.

[a1m1700]

Originally Posted by doublet

I currently live in Charlotte NC, and we love it here! Unfortunately, we have to relocate to Surprise AZ for a 2-4 year stint for my husband's work. I cannot tell you what a HUGE and painful sacrifice it is for me to leave here. Both my husband and I grew up in the Harrisburg PA suburbs, and we lived in Albuquerque NM for 2 years before coming to NC. I have to say, it really feels like home to us here.

Charlotte is a city of 1 million or so with a VERY diverse population: white (of course), black, hispanic, native american, eastern indian. A lot of cultural events, with an emphasis on the performing and visual arts. Lots of professional sporting events including basketball, hockey, football, baseball, NASCAR, and soon a whitewater rafting center. Lots of rural area surrounding, so there are some good farmer's markets and organic food markets.

Charlotte has an awesome library and park system, and a plan enacted to preserve green space throughout the city. They've added bike lanes, and are TRYING to improve mass transit with HOV lanes, bus lanes and light rail system. It's debatable how well all that is really helping to cut down on traffic congestion. People love their cars here, too.

I have to admit the school system stinks. Not underfunded, but TERRIBLE mismanagement of funds. There are some Montessori (arts-based and not), International Baccalaureate, Latin schools and other alternative schools that are part of the public school system. And we have school choice (top 3 picks lottery style) as well as neighborhood schooling.

NC is a Red State, with mostly republican congress members, and Charlotte has its share of good ol' boy mentality and a generous sprinkling of rednecks. But beautiful beaches are only 4 hours away, the Appalachian Mnts only 2 hours, and all the beautiful seasons represented, including cool winters with very little snow.

I'm so sad to be leaving. But I hope this helps you out. Charlotte is a big city without the overwhelming big-city feel, and there are lots of other good choices to live in NC. Best of luck!!

Oh you are moving from Charlotte we are on our way to Charlotte from Az. We visited and bought a house. I'm not sure if you will like Surprise it will be a big adjustment for you. Az schools are not good either.

[steve22]

Originally Posted by Dwayne Pipe

We're really talking about two different things. The decline in prices I am predicting is a cyclical market correction that happens whenever any market (stocks, bonds, real estate, commodities) experiences appreciation far in excess of it's historical trend rates. What you're predicting is far more systemic and catastrophic! Not having spent much time in PHX, I can't speak to those larger, environmental issues.

Dwayne, the main factor which is and will likely continue to shelter Phoenix from the cyclical corrective drop that you're predicting is, in a word, demand. The economy here is strong and figures to continue to be for the foreseeable future, fueled by job growth, which continues to perpetuate the demographic shift in this country of the population from the northeast to the south and west. As long as that continues, and "experts" predict that it will into the next decade (they're predicting that Phoenix's population will crack the 6 million barrier within 5-10 years), then demand will continue to be strong and thus buoy the housing market.

The real threat, from my perspective, is that this really is not a sustainable community on many levels for the future, and eventually the unchecked sprawl and population growth will effectively cripple it- along with many other southwestern communities which rely on the CO river for water, including Vegas . With the dawn of the era of the automobile and the advent of air-conditioning in the '50's, it became a great blueprint for living in a previously hostile environment. But that was back when there were only about 300,000 people here. This area was never meant to support so many people, and there isn't the infrastructure or the resources to support the kind of population growth it's sustaining forever. The problem is that now, it's too late to stop it or slow it down. We're on a countdown to self-destruction here, and I'm afraid it's not long before it happens.

Actually, it's already happening in certain areas on the outskirts. A year ago, Pinal County was the hottest new growth area in the state. Cookie-cutter neighborhoods were going up all over the place, and investors were snapping them up almost as soon as ground was broken. But reality hit like a sledgehammer when- surprise- the new residents of those neighborhoods discovered that the commute in gridlocked traffic was too long, gas prices shot up, and the lack of any nearby water or power supply made utility costs exorbitantly expensive. People found that it was a place they just simply could not live.

Now, in some of those neighborhoods, every single house is on the selling block as people try desperately to get out of there, and they're taking huge losses on houses that they invested in. I'd predict that as energy & gas costs continue to rise, traffic gets worse, temps continue to trend upward, and water becomes more scarce, the problem will track inward to Phoenix's suburbs, then into the city itself. And one day, this community's fragile eco-structure will simply implode on itself. Whether that's more likely to happen before a ecomomic slowdown, I'm not sure; but someday, mark my words, it will.