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I see all kinds of speculation about which way the market will go. I honestly have no idea, but sure hope it stabilizes soon. The goal for me though, in coming to Phoenix, is not to make money on a home, I just want to live there.
The "better" dirt will have more desirable views and shorter commutes to popular attractions like the airport, your job, etc. Being in a nice area with a nice view that is central will be premium pricing (think South Scottsdale).
When I mean "full" I am talking about a specific town or area. Goodyear (for example) is considered "full" inside of the beltway when their is no more land there. Hence, the land went up in value. As growth pushes outward, people will pay more for the land that is developed in the center of town and buy existing to get closer to wherever they want to be.
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You hit the nail on the head, partly. There are two reasons I would pay more for an older neighborhood/home.
I want privacy, and a sense of 'space'. Older neighborhoods tend to have larger lots compared to newer neighborhoods. I don't crave maximum square footage, I desire a home that is not bulging over the edges of the lot - well set back, surrounded by space. Think: Paradise Valley.
I also want to live in an 'established' neighborhood - I want to see 'relaxed' palm trees, established landscaping, big cactuses, and a host of nearby services (shops/restaurants). I would pay top dollar to live on (eg) Hayden in Scottsdale (south of Shea), for intangible reasons. I can drive north on Scottsdale Rd to the newer developments, and sure, they are nice, but - they were clearly built 'yesterday' and don't have the same feeling (or amenities/infrastructure). I would pay top dollar to live in a home in Paradise Valley. Schools, crime statistics, proximity to jobs, etc all add to the appeal of certain established neighborhoods.
Since I can't afford to buy a big home in these areas (I'm looking for a second home here), I'm buying a condo in Scottsdale - paying more for a condo than many are paying for big homes in the valley.
Back home in the Bay Area (CA), I live in a town that commands a premium compared to adjacent towns - and that's because we have established oak trees, a thriving downtown restaurant / shopping scene, etc.
It seems like Phoenix is a bit lucky in that much of the landscaping seems highly transportable - seems like you can bring in established Saguaros, Palm Trees, etc and they survive. Back in the bay area, you can't transplant the mature trees that make all the difference to a neighborhood. Sadly, you can't 'invent' a good school, or a good downtown restaurant scene (though Kierland is trying, and 'Market St' up at DC Ranch is making a concerted effort).
bek its not a recession its not a recovery, its a permanent contraction. the american economy shrunk 10% the jobs are not coming back. people will stop buying they wll stop debting.
they are slow but not stupid. houses will go down more. colleges are selling worthless degrees no refund or exchanges. stay out of debt, debt is not meaningless, reaganomics lied.
debt is slavery.
I've read every single post in this thread (took me several days, which is why I'm coming late to the party!). Different people have such different perspectives depending on their circumstances, it's almost impossible to have a rational discussion about the topic.
Anyone who was a first-time buyer in the past 5 years is probably considering that home ownership is a bust, and can't comprehend why anyone else would buy or be optimistic. I, on the other hand, bought my last home (Bay Area, CA) back in 94, and stayed put in the market during the frenzy (watched my $400k home appreciate to $1.2M, and now fall to $800k - still a 100% gain over what I paid).
What I see in Phoenix is tremendous opportunity. I'm looking to buy a condo for $150k - one that sold for $300k 3 years ago and is now a short-sale. Sure it could go down in value, though other units are on the market for $200k+ and there are sales in the $180k range, so I don't feel worried.
I think a first-time buyer who has the down payment (the new, realistic down payments that banks should have been looking for all along - 20-30%) and a reasonably predictable job should be giving serious consideration to buying at this time. But only if you find something you like, and, you are willing to stay put for 5 years or so.
bek its not a recession its not a recovery, its a permanent contraction. the american economy shrunk 10% the jobs are not coming back. people will stop buying they wll stop debting.
they are slow but not stupid. houses will go down more. colleges are selling worthless degrees no refund or exchanges. stay out of debt, debt is not meaningless, reaganomics lied.
debt is slavery.
I positively agree that what we are experiencing is a permanent paradigm shift; I predict when the dust settles, our standard of living will not return to even the pre-boom era.
The rest of your cryptic message is too confusing to comment on.
I've read every single post in this thread (took me several days, which is why I'm coming late to the party!). Different people have such different perspectives depending on their circumstances, it's almost impossible to have a rational discussion about the topic.
Anyone who was a first-time buyer in the past 5 years is probably considering that home ownership is a bust, and can't comprehend why anyone else would buy or be optimistic. I, on the other hand, bought my last home (Bay Area, CA) back in 94, and stayed put in the market during the frenzy (watched my $400k home appreciate to $1.2M, and now fall to $800k - still a 100% gain over what I paid).
What I see in Phoenix is tremendous opportunity. I'm looking to buy a condo for $150k - one that sold for $300k 3 years ago and is now a short-sale. Sure it could go down in value, though other units are on the market for $200k+ and there are sales in the $180k range, so I don't feel worried.
I think a first-time buyer who has the down payment (the new, realistic down payments that banks should have been looking for all along - 20-30%) and a reasonably predictable job should be giving serious consideration to buying at this time. But only if you find something you like, and, you are willing to stay put for 5 years or so.
I'm not sure why, but it seems the condo market is having a tougher time than the single family home market. If I was looking at a condo, I'd be waiting for one of those $300K condos ($500K during peak) to drop further. Maybe in the $225K range as a steal. I don't know that market as well as you but it seems to me that expensive condo's in today's down market will go down further as predicted by everyone.
If you find a $150K condo in Scottsdale that works (and others are selling for $180K) you have bought yourself some breathing room in case it drops further.
A condo/loft in a high rise is more conducive to my lifestyle, I work out of town a lot and I prefer the higher deterrance features of a guarded/gated high rise building. But HOA fees are still outrageous.
My own budget for a loft is 1/6 of my net worth for the entire payoff. For now, that does not buy me what I want in an area I want. So I wait.
I agree the central area of Phoenix along the light rail and into old Scottsdale, are preferable. I like quick access to the airport and am a frequent flier. Want to point out that Ahwatukee to the airport is pretty quick, as it's I-10 and the 143 freeways mostly. It takes me 21 minutes to get from the rental car facility to Ahwatukee by I-10. So I think you should consider Ahwatukee as a quick drive to the airport like the central Phoenix areas. I'm getting to like Ahwatukee more and more. It's a clean area (still). I am making an effort of going to as many fine restaurants in the Ahwatukee area as I can. I like fine foods. and great service. This weekend I went to Roy's Hawaiian Fusion for the fourth time, but this was my first time at any Arizona Roy's.
True, but a home purchase is a lousy investment. So lousy, that I don't consider real estate a contender as an asset class. Only the real estate shills will tell you that your house is an investment. Case-Shilller studies over several decades of 20 metro areas showed that houses, at best, appreciate 1% above the inflation rate. Inflation typically runs 3%. Index stock funds typically return 9%, which is 5% more than what house values return. Moreover, you can dollar cost average into a low expense stock index fund, but you cannot dollar cost average into your house. If you think a house is an inflation hedge, you are better off buying gold bullion every month over 30 years than paying PITI - because of dollar cost averaging. You gotta time it your house purchase. At best, wait until rents cost more than mortgages.
OTOH, if you realistically assume a house is NOT an investment, you are better off budgeting a tiny part of your net worth into your PITI or home purchase. My own rule of thumb is never to put more than 1/6 of my net worth into real estate. If you found your dream home and realistically assume the neighborhood can go downhill in fifteen years with a zoning law change (happened to my parents' home in California), but you are okay with it, then buy.
Be realistic. Don't listen to a realtor. They profit when you buy.
Quote:
Originally Posted by sh9730
I am not trying to suggest there are not challenges, WHEN THE MAIN POINT OF HOME PURCHASE IS INVESTMENT!
True, but a home purchase is a lousy investment. So lousy, that I don't consider real estate a contender as an asset class. Only the real estate shills will tell you that your house is an investment. Case-Shilller studies over several decades of 20 metro areas showed that houses, at best, appreciate 1% above the inflation rate. Inflation typically runs 3%. Index stock funds typically return 9%, which is 5% more than what house values return. Moreover, you can dollar cost average into a low expense stock index fund, but you cannot dollar cost average into your house. If you think a house is an inflation hedge, you are better off buying gold bullion every month over 30 years than paying PITI - because of dollar cost averaging. You gotta time it your house purchase. At best, wait until rents cost more than mortgages.
OTOH, if you realistically assume a house is NOT an investment, you are better off budgeting a tiny part of your net worth into your PITI or home purchase. My own rule of thumb is never to put more than 1/6 of my net worth into real estate. If you found your dream home and realistically assume the neighborhood can go downhill in fifteen years with a zoning law change (happened to my parents' home in California), but you are okay with it, then buy.
Be realistic. Don't listen to a realtor. They profit when you buy.
I buy properties that I can rent out by the week or month (and I find the renters). So not all "investors" get the same return. In the end I have toys that pay a return. Right now, it's depreciating and tough to sell. But I am still getting rental revenue which is a great shelter.
But just buying a 2nd home to go to as an "investment" (in 2009) is not so bright IMHO.
... Case-Shilller studies over several decades of 20 metro areas showed that houses, at best, appreciate 1% above the inflation rate. Inflation typically runs 3%. Index stock funds typically return 9%, which is 5% more than what house values return.
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But isn't one of the major differences the fact that you are leveraging your money with real estate? If you buy a $200k property with 20% down, that's a $40k investment. If the property appreciates 4%, that's a gain of $8k. $8k return on a $40k investment represents a 20% ROI. THAT is the 'magic' of real estate, in my book. Sure, you pay interest on the money you borrow, but I've found that, over time, especially with the mortgage interest tax deduction, I'm paying less for my home (PITI) than I would pay rent. I've been in my home in CA for ~14 years; it's a 3,000 sq. ft. beautiful home on .5 acre of land. My mortgage is a pittance (under $2k/month). Similar homes are renting for $3,000/month.
I'll admit that I have been phenomenally lucky with real-estate, buying into SF in 84 when the boom was in its infancy. This was not by any great design, just 'jumped in'. I remember, when I bought that first condo in SF for $115k in 84, people told me a) condos are a bad investment, and b) SF was overpriced ... I ended up selling that one 2 years later for a modest gain (about $150k) and bought a better one for $165k; that appreciated in 2 years to over $250k. Then I bought another condo, then sold and moved out to the burbs and got the $400k house I referred to above, which peaked in value at $1.2M and is now at about $800k.
As I said above, anyone trying to do this in the past 5 years has likely been burned badly. Real Estate is not for the faint of heart. I could not believe the market 5 years ago and simply stayed out of it because it scared me; I'm glad I did! But I think now is indeed a good time to buy.
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