"Valley Home Sales Surge 70%" (Phoenix: mortgage, broker, unemployment)
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I would not buy any real estate until interest rates go up above 8% again, because I'm a cash buyer. 5% rates are too low. 70% ownership rates of houses are too high. I am looking for an undershoot. The bubble has yet to burst and the cycle to high interest rates will return and finish off the burst.
I'm a cash buyer as well. I don't need a home in Phoenix till my youngest graduates in a couple of years. I'll buy something if the price is right but probably not till spring.
Nothing says rates will go to 8% in the near future (5 years). There are 2005 build homes (with a missing kitchens and lights) for $45 / sq foot. If you have a 8% interest rate constraint on buying, it could mean that inflation takes off and home prices increase. Think Stagflation. So how are you ahead???
Minnesota,
During the late 1970s there was both stagflation and high interest rates, double digit.
Every market bubble, whether stock dot coms, RE, and every market low is cyclic. I will re-emphasize the word CYCLIC!!!!! This goes for interest rates. Rates will go up again. It is NEVER different this time. If you believe so, I have a bridge to sell you.
Last edited by Howard Roark; 12-26-2009 at 08:57 AM..
Reason: fix spelling
And Ponderosa was right, over Phoenixxx, about median prices, inventory, and sales. The averages posted by Phoenixxx are not accurate and/or manipulated especially if those averages where for homes sold, the inventory, or overall market value (much of which does not add up.)
Hi All!
What an interesting thread this has become. It forced me to stop lurking and make my first post. I am employed by a market research firm outside of the Valley and we maintain a subscription to ARMLS for our relocation division. I am able to confirm the statistics posted by Phoenixxx as valid. We consider this information superior to other sources since other sites are operating off county recordings and lag behind.
When trying to investigate opportunities for our clients, we use both the median and the average. In a very stable market, these figures are usually very close. In a case where the median is being reported as much higher than the average, it is understood as an instable market that will be adjusting itself in one direction or another. The 2 figures are seeking an equilibrium. The lower average means the median is lopsided and there are large clusters of similar priced homes with gaps between the extremes. Upon closer scrutiny, you can see the trend has been downward and not upward. If we used the higher median information and disregarded the average just to make something look good to our clients, we would have lawsuits on our hands.
To further illustrate, consider a perfect set of numbers like 1-10 where every number is represented. The average is 5.5 when added/divided by 10 and the median is also 5.5. However I have to point out, one person is supplying a median price from a 3rd party public source, while another is providing an average from a different but more reliable source. These 2 figures are apples and oranges.
When you apply for a bank loan, they want your average monthly income and not your median. This means to add all 12 months of the year together and divide by 12. If you are trying to make financial decisions about your own business, you also use averages. Median usually works best when working with something like age. No one is forced to only display or view only one or the other, but when you see a person trying to make a case with median prices alone, or sales volume alone, while erasing average prices, a red flag should go up.
Hope this helps you all! Good luck and maybe I will see you around in the future.
I like post #13 too by Phoenixxx which says the same thing as Katryn did in post #25. He did his homework too an posted it for all to see. I also like the post by the marketing research firm. They are all great posts.
In Post #13, The paragraph about the valley needing the pressure to be forced into a new direction completely nails the source of my frustration. If home sales rebound without good reason, our economy is still going to be ruled by the whims of the buyers and investors that come and go as they please. I am looking for stability and not empty and temporary good news.
I have no desire to see our city crumble. Don't you understand I own a home here, and want to move? When a thread is opened up under the guise of Valley Home Sales Surge 70%, it appears to be good news, but when you read further into the article its not good news for sellers, but is great news for buyers. I understand the rapid acceleration of home sales may be viewed as getting us closer to the end faster but its hard for me to see it as anything other than a K-mart "blue-light special".
Does anyone realize that persistent lower home values year after year creates less tax revenue for the city? How long can this go on before taxes have to be raised? When they are raised they are just paying for the mess we are in and not providing us with anything of value. Higher taxes here will be used to subsidize the mistakes of the city and not for useful services.
I have been emailed the report showing ARMLS stats and it shows Days on Market as well, that information should be included on the stats posted in the forum too. The interesting thing is that while home prices dropped huge the time on the market is nearly the same. When prices are rolling downhill its usually better to jump ship earlier. There is always the temptation that things could turn at any moment, so you hang on.
Once the information is available that the consequence of waiting was actually negative to your bottom line, I can't understand how a homeowner can say they prefer this time to an earlier time when things were selling for MORE in the same amount of time. I'm pretty sure the post preferring last Xmas to this Xmas was written by someone in Casa Grande which is a little more removed from the wild fluctuations of the valley... so maybe for him, its a different story.
I consider prices more important than volume. What that old saying? Quality not Quantity? Every prior year was better than now. I'm in so deep now that my only choice is to wait it out, but if I jumped ship in one of the earlier "worst" years, I would have come out far ahead.
Quote:
Originally Posted by Howard Roark
KatrynS, in Post #25 you are spot on! You really did your homework. Your father has decades experience in real estate and that is what trumps the starry-eyed one-statistic blurb that will only trap a bunch more knifecatchers.
I'm not knocking Phoenix. I'm knocking cheerleading that does not account for economic fundamentals at the macro level.
I think a fundamental factor in the overall Phoenix housing market is supply. A significant % of the houses in the greater Phx area which we are seeing on the market today are/were investors, spec builds, second homes, etc. There is a LOT of inventory out there. Until the population catches up with the housing I think there will be a constant downward effect on pricing.
We've been following (daily) a group of about 50 homes for about 3 months. These are in the 400k-800k range. The prices are dropping, and more have appeared than have dropped off in the time we've been watching.
I'm particularly worried about the effect of the much-rumored shadow inventory over the next 12-24 months. I just think there is not only a lot of inventory on the market, but a lot more coming onto the market.
But, all that said, I am still buying, because we want to move to the area and we want to move in 2010. I know the property I buy may drop in value a bit more after we buy it, but we're looking for something permanent, not to flip in 5 years.
What you guys need in Phx is a few thousand folks like me.
I think a fundamental factor in the overall Phoenix housing market is supply. A significant % of the houses in the greater Phx area which we are seeing on the market today are/were investors, spec builds, second homes, etc. There is a LOT of inventory out there. Until the population catches up with the housing I think there will be a constant downward effect on pricing.
We've been following (daily) a group of about 50 homes for about 3 months. These are in the 400k-800k range. The prices are dropping, and more have appeared than have dropped off in the time we've been watching.
I'm particularly worried about the effect of the much-rumored shadow inventory over the next 12-24 months. I just think there is not only a lot of inventory on the market, but a lot more coming onto the market.
But, all that said, I am still buying, because we want to move to the area and we want to move in 2010. I know the property I buy may drop in value a bit more after we buy it, but we're looking for something permanent, not to flip in 5 years.
What you guys need in Phx is a few thousand folks like me.
Trust me.... There are a lots of people like you who recently bought all those houses in last eight months or so. Most of them just don't post it here like some did. I do believe the upper end of the market $250+ still having some downwards pressure, and those condos, as well as houses that are consider in bad neighborhoods/cities. And perhaps the commercials.
Besides all those mentioned above Phoenix in general was passed the bottom point which was last April-May.
I keep hearing there are huge shadow inventory of houses for almost a year now and it didn't happen..... So when ?????
Also people keep talking about million of AMR will reset next year and on , and on but what they don't know is that 52% of those loans are located in California alone.
If insurance companies paying out twice the amount you paid for your home recently in case if it needs to be reconstructed then you know your house is way under value.
It has been very frustrating. If a house is in good condition (just needs painting and minor fix ups) the prices are high (350 to 399). I think for 2,300 SQ ft, that is still high, even though it is Tempe or West Chandler bordering Tempe. Anything that needs work is in such horrible shape that it would take a few months of renovation to just be able to move in.
That market isn't tight, it's just that the homeowners in that region are in no hurry to sell. The residents in that area are fairly well off and their homes dropped in value by 200K or more. So unlike other areas in which the home owners were financially strapped and forced to sell, the wealthy people in the South Tempe and West Chandler area took their homes off the market. You might think 350 to 399 is a lot for a 2300 SQ foot home but if those owners paid 450-500K for those homes (which many did), they aren't going to sell for much less than that.
LOL, a link verifying your information would be helpful, but I have to question it's accuracy because you list the "average" price of a "city of Phoenix" home in 2006 at $304,465 when it was actually $242,615...the same is true for the other "average" home prices you listed; here is a verifiable table:
His information included the median values not the mean or average values. Do you understand the difference between those two values? The average is not as accurate because if one home sells for 2 million and 9 others sell for 100K, the average will be higher than the median which is why the median value is preferred when doing a statistical analysis. Based on my research, I can also confirm the comments posted by Phoenixxx, SolarPicasso and CMIST. I can assure you I'm not him. I saw this thread and had to sign up because there are misleading articles and comments. There are a lot of realtors on city data and in the market that are trying to stir up activity by suggesting the market has bottomed. They do this by publishing articles like this that show that sales have increased despite the fact that median home prices continue to fall. They will also show decreased inventory which could mean that sellers are taking their homes off the market until they feel the market has bottomed. I don't think the market is close to bottoming out. If I'm a buyer, I would wait. MONEY published an article stating the market wouldn't bottom in Arizona until the third quarter of 2010.
His information included the median values not the mean or average values. Do you understand the difference between those two values? The average is not as accurate because if one home sells for 2 million and 9 others sell for 100K, the average will be higher than the median which is why the median value is preferred when doing a statistical analysis. Based on my research, I can also confirm the comments posted by Phoenixxx, SolarPicasso and CMIST. I can assure you I'm not him. I saw this thread and had to sign up because there are misleading articles and comments. There are a lot of realtors on city data and in the market that are trying to stir up activity by suggesting the market has bottomed. They do this by publishing articles like this that show that sales have increased despite the fact that median home prices continue to fall. They will also show decreased inventory which could mean that sellers are taking their homes off the market until they feel the market has bottomed. I don't think the market is close to bottoming out. If I'm a buyer, I would wait. MONEY published an article stating the market wouldn't bottom in Arizona until the third quarter of 2010.
I thought Phxxx said he was using average values and offered an argument of why they were better than medians. It is really irrelevant in any case. Neither mean nor median is "better". Both are parameters of central tendency of data and a researcher might choose one or the other to illustrate central tendency. Or a researcher or a realtor or a housing bear might select one or the other to mislead. Without additional parametric data to describe the distribution, both mean and median are pretty worthless for inference.
I disagree with the OP's approach. He or she pasted an article and tried to draw conclusions from it. You cannot draw conclusions based on an increased number of home sales. As Phoenixxx and others correctly pointed out, if your decline was sharp then your recovery will similarly be sharp. And sales will naturally increase as housing prices continue to decrease as the median decreased in the last month. I like to make decisions based on facts and not headlines. If I'm a buyer, there is no way I'm rushing to buy a home as I have yet to see any conclusive evidence that states the housing market has bottomed out.
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