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Old 03-28-2017, 12:51 PM
 
4 posts, read 9,477 times
Reputation: 26

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With my 35 years as a real estate professional, I've consistently, successfully identified a bubble when I see one. Virtually ALL indications, as of the date of this post point toward a Prescŏtt area bubble. Prices have, or are on the verge of surpassing the peak prices of the last historic crash. Buyers, appraisers and lenders seem to be completely oblivious to this fact, and or suffer short term memory loss. Now is really NOT the time to buy. Sellers on the other hand, this is your golden opportunity.
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Old 03-28-2017, 01:14 PM
 
Location: Telecommutes from Northern AZ
1,204 posts, read 1,956,884 times
Reputation: 1823
Agree the systemic problems that created the 2007 crash were not really addressed and a new bubble is being blown.

But if you are a Californian paying cash for your home paying too much doesn't really matter. You've got to burn that cash or pay capital gains. Crash and burns don't really count because you have already ridden the bubbles successfully in California. Your modest former home due to federal policies and geopolitical factors bloomed to be a very good investment...at the expense of others.

That magic 2.2 ratio doesn't apply here...unless you are a family or someone growing up here. Then the 2.2 ratio kicks your arse right out the door to make room for the grey hordes.

Well, unless you want to live in a manufactured home in Chino or somewhere...or the son or daughter of the local heffes...then things are peachy keen...

So please continue to come. Build your dream homes, f__k the deer and Javelina that used to trounce through your yard. Buy your new SUV and keep the few cruddy restaurants in business here and Costco / Trader Joes humming along...

No I'm not bitter... Another AZ town succumbs, for some. You recently retiring Cali folk enjoy. It is a nice area.

Last edited by infocyde; 03-28-2017 at 01:30 PM..
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Old 03-28-2017, 01:15 PM
 
Location: Chandler, AZ
4,054 posts, read 5,070,679 times
Reputation: 6120
Or...is it the number of people coming into retirement age in more expensive markets cashing out and retiring in Prescott with more than enough cash to pay top dollar for a "last house"? I was speaking with a relative in CA and they just assumed that a $500k house was average/below average everywhere.
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Old 03-28-2017, 01:44 PM
 
Location: Prescott Valley, AZ
1,929 posts, read 5,880,875 times
Reputation: 1496
Quote:
Originally Posted by 15FaradCap View Post
With my 35 years as a real estate professional, I've consistently, successfully identified a bubble when I see one. Virtually ALL indications, as of the date of this post point toward a Prescŏtt area bubble. Prices have, or are on the verge of surpassing the peak prices of the last historic crash. Buyers, appraisers and lenders seem to be completely oblivious to this fact, and or suffer short term memory loss. Now is really NOT the time to buy. Sellers on the other hand, this is your golden opportunity.
I disagree with your assessment for two reasons:

1) In the 2006 bubble, loans had been given to people who could not afford the loans and who had no proof of ability to pay the mortgage payment. Consequently, a significant portion of renters (and upsizing home owners) bought homes that they could not afford. That left the previously rented homes vacant and depressed the value of the rental market. Investors who were relying on rental income to pay their mortgages, could no longer pay their mortgages. Consequently, tenants lost their new homes to foreclosure, and landlords lost their existing homes to foreclosure.

2) In the 2006 bubble, 'investors' were buying homes solely to flip them. There was nobody living in the homes that were being purchased. The homes were merely purchased, held for a few months, and then sold at a higher price. When the prices began to drop, all of these 'investors' were left high and dry and lost their homes to foreclosure.

In the current market, 1) you cannot buy a house without proving that you have the income to pay the mortgage, and 2) nearly every purchased home is occupied by either the owner or a tenant. The rental market is still extremely strong.

So, barring a sudden, significant loss of employment or retirement income of a large portion of the local population, I do not see the market crashing anytime soon.
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Old 03-28-2017, 09:02 PM
 
Location: Arizona
7,453 posts, read 4,275,737 times
Reputation: 6098
Quote:
Originally Posted by BriansPerspective View Post
I disagree with your assessment for two reasons:

1) In the 2006 bubble, loans had been given to people who could not afford the loans and who had no proof of ability to pay the mortgage payment. Consequently, a significant portion of renters (and upsizing home owners) bought homes that they could not afford. That left the previously rented homes vacant and depressed the value of the rental market. Investors who were relying on rental income to pay their mortgages, could no longer pay their mortgages. Consequently, tenants lost their new homes to foreclosure, and landlords lost their existing homes to foreclosure.

2) In the 2006 bubble, 'investors' were buying homes solely to flip them. There was nobody living in the homes that were being purchased. The homes were merely purchased, held for a few months, and then sold at a higher price. When the prices began to drop, all of these 'investors' were left high and dry and lost their homes to foreclosure.

In the current market, 1) you cannot buy a house without proving that you have the income to pay the mortgage, and 2) nearly every purchased home is occupied by either the owner or a tenant. The rental market is still extremely strong.

So, barring a sudden, significant loss of employment or retirement income of a large portion of the local population, I do not see the market crashing anytime soon.
I think you've nailed it!

As for us (wife and I) we never looked at our home as a bank or investment. It's a place to live and call home. What the housing market does or doesn't do doesn't concern us as we have no intention of moving again.

We had a good realtor who told us what we could realistically get for our home and sold the home within 3 months. It was enough to buy a nicer home out here and cover the moving costs. I'd say that we did pretty good. At least for us getting the hell out of New York was our number one priority regardless of market conditions. I think that's how people should look at it if they can't stand where they live and really want to move. Working from home we had the opportunity to live anywhere in the country. Arizona is more compatible with our way of thinking politically and better suits our lifestyle. That's why we chose to live here.

There's nothing like living in Arizona! It's freakin' awesome! After 7 years we couldn't imagine or have any desire to live anywhere else. We are proud of our adopted state and proud to call it home. Our only regret is not being born here. Unfortunately that's something that no one has any control over.

Last edited by Ex New Yorker; 03-28-2017 at 09:26 PM..
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Old 03-28-2017, 10:09 PM
 
402 posts, read 604,648 times
Reputation: 532
Prices have been nuts for a couple years that ive been looking. Just a popular area. The situation isnt similar to the crash.
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Old 03-29-2017, 01:30 PM
 
Location: Arizona
1,665 posts, read 2,927,526 times
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Land is still pretty cheap so you can build your own custom home for a reasonable price if you want.
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Old 03-29-2017, 02:42 PM
 
402 posts, read 604,648 times
Reputation: 532
Quote:
Originally Posted by autism360 View Post
Land is still pretty cheap so you can build your own custom home for a reasonable price if you want.
Yup buying land and building seems to come out ahead. Assuming you dont want a palace. Most people seem to not want the hassle tho.
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Old 03-29-2017, 03:22 PM
 
5 posts, read 6,757 times
Reputation: 10
Quote:
Originally Posted by BriansPerspective View Post
I disagree with your assessment for two reasons:

1) In the 2006 bubble, loans had been given to people who could not afford the loans and who had no proof of ability to pay the mortgage payment. Consequently, a significant portion of renters (and upsizing home owners) bought homes that they could not afford. That left the previously rented homes vacant and depressed the value of the rental market. Investors who were relying on rental income to pay their mortgages, could no longer pay their mortgages. Consequently, tenants lost their new homes to foreclosure, and landlords lost their existing homes to foreclosure.

2) In the 2006 bubble, 'investors' were buying homes solely to flip them. There was nobody living in the homes that were being purchased. The homes were merely purchased, held for a few months, and then sold at a higher price. When the prices began to drop, all of these 'investors' were left high and dry and lost their homes to foreclosure.

In the current market, 1) you cannot buy a house without proving that you have the income to pay the mortgage, and 2) nearly every purchased home is occupied by either the owner or a tenant. The rental market is still extremely strong.

So, barring a sudden, significant loss of employment or retirement income of a large portion of the local population, I do not see the market crashing anytime soon.

What do you think about about purchasing without a down? Stable above average income (and track record), and good credit.
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Old 03-30-2017, 11:19 AM
 
Location: Prescott Valley, AZ
1,929 posts, read 5,880,875 times
Reputation: 1496
Quote:
Originally Posted by Prescottlocal View Post
What do you think about about purchasing without a down? Stable above average income (and track record), and good credit.
I'm personally not a fan, but that is what some people choose. The only no-money down loans are VA and USDA. USDA can only be used in rural areas - not in Prescott or Prescott Valley.

My issue with no-money down is that you need cash reserves to be a home owner. As a renter, if something breaks, you call the landlord and the landlord pays to fix it. As a home owner, if something breaks, then you need to have money to fix it. You also need money to maintain the property to keep it from degrading over time - painting, roofing, landscaping, etc. If someone cannot save money for a down payment and they have no cash reserves, then they are less likely to be able to handle the monetary stresses of owning and maintaining a property.

As a side note, many people that get a VA loan will have plenty of cash reserves, but simply choose to use a VA loan for other reasons (e.g., a lower interest rate).
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