Where do you think housing prices are going? (Phoenix, Chandler: low income, short sale)

[azriverfan.]

Originally Posted by azjack

I just do not see pricing power available to members of the building trade. I have definitely not been looking to construct a house (and I believe everything that you posted is accurate about your search), but the overall labor prices are still declining in this sector and others. I do think that buying a used house is the way to go if one is determined to buy something.

Builders are still building houses at 1970s levels (plenty of houses were built then too), so they have not ceased construction. If the AZ price correction turns into a genuine price crash (which is what government and central bank intervention has delayed/mitigated), then the remaining activity will essentially stop for a bit.

Also, I would be shocked not to see further price declines in the value of the finished lot that you are seeking, as well as the value of raw land. Since land is usually a significant part of housing cost, this is important. In outer suburbia, the large builders have been abandoning their state trust land purchases. The state then found no willing buyers at their reserve prices for much of this "returned" land. I guess that the state could hold out until 2014 or whatever, but it appears that they will need the cash long before that. More centrally located land will always be higher in value, but still must compete with the vast supply of less centrally located land at some level.

I agree with everything you are saying. It doesn't make sense. Trust me, it was a little irritating and shocking to discover this because my friend who built a home in the same area spent 600K back in 2001 and to build the same model now would be double that. I was hoping the cost to build would drop considerably and it hasn't thus far. Maybe it will in the next year or so

[sh9730]

Most here know that I am not as much a doom and gloomer on housing as some here...I think we have stabilized at the low end, and for a myriad of reasons things could spike upwards at any time, though I think it will be highly unlikely we get near the peak values for some time to come.

However, azriver/azjack, you are sorta talking about apples and oranges - building a CUSTOM style home on a SINGLE lot, is much more costly than assembly tract home building on a per sq ft basis. First, the laborers are typically less skilled/experienced, and there is just the mere economy of scale that comes into play as with all manufacturing. $200.00 per sq ft still seems a little high, but not too bad depending on the type of amenities/materials you are asking for. My information is that the "average" tract home in the current market runs about $100.00 per sq ft including land acquistion/permitting costs etc.

Still, alot of houses selling for alot less than that out here in the exurbs though!

[azjack]

"However, azriver/azjack, you are sorta talking about apples and oranges - building a CUSTOM style home on a SINGLE lot, is much more costly than assembly tract home building on a per sq ft basis. First, the laborers are typically less skilled/experienced, and there is just the mere economy of scale that comes into play as with all manufacturing."

Excellent point. They share some characteristics in terms of labor and materials, but they are definitely different things.

I really am curious about how the state trust land parcels influence future house prices in the Phoenix area, especially in outer suburbia/exurbia. I mean, our state government is beyond broke. They are going to have fire-sale this land, I am guessing. I mean some tax hikes and spending cuts are also in our future, but holding onto the land indefinitely like some delusional seller while raising taxes is something that most voters would be displeased with. I think that money goes directly to school funding, which has taken a hit as tax revenue declined.

[sendit2me]

Just go to your county assessor's website for information regarding property values... who are you going to believe-- a
deceitful real estate broker/agent or a government agency? Hmmm... lesser of two evils? The Maricopa county assessor is
showing a decline in housing/property values through 2011.
Don't believe it? Mod Cut: No links with less than 10 posts. Assessor - Residential Parcel Information

[gtbguy]

Originally Posted by Howard Roark

Down.

Reasons: Shadow inventory will come on the market sooner or later. Banks holding homes will be pressured by their shareholders sooner or later to dump the houses they are sitting on. Alt ARMs and Option ARM resets peak in 2011 and are higher than 2010, which are higher than 2009. Delinquencies in mortgage payments keep growing. Unemployment rate will be higher than average for at least the next five years. Interest rates are bottomed and will go up. The higher they go, the less incentive to buy. There will be more rentals in the Phoenix market when the banks dump their shadow inventory.

The macro fundamentals point to lower RE prices this year, even lower RE prices in 2011, and even lower prices in 2012.

Been hearing this for two years now. The banks are controlling the market and putting out homes out at a very slow rate to keep the market from tanking.

[gtbguy]

Originally Posted by Ponderosa

That's my point. You won't see new homes at these pricing levels in any appreciable numbers. I work on the infrastructure side and it simply can't be done. Commodity (materiel) pricing is not local. Asphalt is 400/ton these days - higher than its ever been and twice what it was in 05. It takes a lot of asphalt to build a subdivision. Steel, copper, concrete - nothing has gone down much from a couple years ago in this global economy. Fuel costs are down, but, save for the spike last year, at record levels. Energy costs for moving water around have never been higher and there is no end in sight. Overhead costs are rising, labor is going up with the loss of the illegals.

As you say, an alternative to more expensive homes would be cheaper homes. But you are not going to do that with a single family suburban model. We could squeeze our standard SFR lot to 4500 sf, I guess, like in Seattle. More patio homes, duplexes etc. Not sure how that would go over. Maybe corralles will get his dream - high rise housing infill. But I doubt it. I think that once the job market picks up, the buyers will come and sweep up the foreclosures - the rate of new foreclosures will decline - and the median price will jump rather dramatically as they disappear and then continue to move at the rate of wages for the longer term. My calcs put that at about 40% over 2009 median by 2015. That's my story and I'm stickin to it.

I think you're right on the numbers.

[Zathras]

Originally Posted by gtbguy

Been hearing this for two years now. The banks are controlling the market and putting out homes out at a very slow rate to keep the market from tanking.

Right- but that also means that the bleed off of excess inventory will be stretched out over years. I think we're in for a long very slow recovery. I still see houses that we're looking at falling in price, although it does seem to be at a slower pace than last fall when we started looking.

I'm afraid I am with Howard on this one. It will be a long slow L-shaped recovery. I hope I'm wrong and prices start heading upwards in the next year or two, but I'm not counting on it.

[AzScorpion12]

Originally Posted by Zathras

Right- but that also means that the bleed off of excess inventory will be stretched out over years. I think we're in for a long very slow recovery. I still see houses that we're looking at falling in price, although it does seem to be at a slower pace than last fall when we started looking.

I'm afraid I am with Howard on this one. It will be a long slow L-shaped recovery. I hope I'm wrong and prices start heading upwards in the next year or two, but I'm not counting on it.

I think you're right with your first assumption that it's going to take many years if it recovers at all. There's too many people still going into foreclosure everyday along with those who are able to pay for their mortgages but are walking away because they're underwater.

Add to that the unemployment numbers are still raising( you have to look at the REAL numbers,not the fabricated one's they want you to believe!) and don't forget the dollar devaluation too.

The Hard Truth About Residential Real Estate | Oil Price.com

[rjrcm]

Originally Posted by sendit2me

Just go to your county assessor's website for information regarding property values... who are you going to believe-- a
deceitful real estate broker/agent or a government agency? Hmmm... lesser of two evils? The Maricopa county assessor is
showing a decline in housing/property values through 2011.
Don't believe it? Mod Cut: No links with less than 10 posts. Assessor - Residential Parcel Information

Umm, the 2011 property valuation is not a prediction of values in 2011. That value was determined in January of 2010 based on assessed property values at that time. That valuation will be used to determine your 2011 property tax bill. That is a big reason for not using tax valuations for determining current market value. You should look at recent comparable home sales instead. A deceitful agent can help you with that .

[gtbguy]

Originally Posted by Zathras

Right- but that also means that the bleed off of excess inventory will be stretched out over years. I think we're in for a long very slow recovery. I still see houses that we're looking at falling in price, although it does seem to be at a slower pace than last fall when we started looking.

I'm afraid I am with Howard on this one. It will be a long slow L-shaped recovery. I hope I'm wrong and prices start heading upwards in the next year or two, but I'm not counting on it.

Boy, what I wouldn't do to see a crystal ball on this one. There is a side that tells me the market will start to head on up, and there is also the side that says this will be a long drawn out recovery. I think the latter is more like reality. Then again, the market always seems to prove me wrong in that we could see a faster recovery. If so, I don't expect to see double digit % price increases but something much less. The only comment I can make is now is a real good time to buy something and should be for the next couple of years.