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I think the mistake you're making is that the 2008 data is from march while the rest of the data is end-of-year results. I don't believe inventory numbers are seasonally adjusted, so that's not a fair comparison.
My 2008 data for Phoenix is from April 30. When I'm looking at trends, I have to look at what is happening in the present. By year end 2008 the trend can be quite different, in either direction, but I need to know what's happening now, and why, so I can form my own opinion of what may happen in the future so I can share that knowledge with my clients to help them make the right decision for their particular needs.
I also think it's significant, and should not be overlooked, that the inventory of all housing in Phoenix went from 19 months supply in December to 8 months on April 30. I don't know if that trend will continue. I'll know in early June because I get the Broker Metrics statistics just a couple days after the end of the month.
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Originally Posted by KCfromNC
Actually, the stories from areas where sales have picked up show that the increased sales are from bank owned properties. I don't think those are the cream of the crop, just the cheapest.
You're correct in that the majority of sales in the Phoenix are are short sales and REO's. However, many of these homes are cream of the crop. And many of the homes that are competing with the distressed market are cream of the crop. It makes sense that a buyer is not only going to look for the best price, but also the best house. So the best houses area always going to be sold first.
I physically preview many homes each week in my community and around the east valley. I show a lot of these homes to clients. In these previews I'm looking for good properties for both my regular buyers and my investor clients, so I know what's out there and what is being sold.
Many of these REO's are in as good or better condition as some of the regular sales. Some are worse and the price reflects that. But many of them are great homes with only a dead yard from being vacant.
The REO that I recently bought was an REO, built in 2004 and was a cream of the crop property. It only needed yard work and cleaning up inside due to being vacant. We painted inside to change the colors and make it fresh looking.
Most of the short sales still have the owners living in them and are cared for.
The best homes are being purchased by those that are buying now. The buyers are looking for the best home at the best price, and that's what they're buying.
A short sale that my client has an offer on is one of the cream homes in the community. The only issue is that the owner likes vines and the home has vines on the side that have grown partially onto the tile roof. The present owner likes it because it keeps the house cooler. My client doesn't like it so he'll remove the vines. The owners are living in the house, really love it, and are taking care of it.
My 2008 data for Phoenix is from April 30. When I'm looking at trends, I have to look at what is happening in the present.
My point with the chart is that while the author of the article we're discussing made a huge deal about possible trends in new home inventory, the existing home inventory swamps it. They didn't even discuss what's going on in the much larger existing home market, and yet was able to confidently predict a bottom and that the crisis was over. Add to that the fact that they are relying on their predictions about market behavior over the next two years to call a bottom today, and I'm going to continue to say that this piece is worthless at best. It did get some agents excited, though.
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I also think it's significant, and should not be overlooked, that the inventory of all housing in Phoenix went from 19 months supply in December to 8 months on April 30. I don't know if that trend will continue. I'll know in early June because I get the Broker Metrics statistics just a couple days after the end of the month.
How does it the inventory look compared to 2007's numbers? Still a bit higher, from the data I've seen.
In any case, don't let the spring bounce distract you from the fact that there's 8 months of inventory in your area, and that to a first order approximation, only foreclosures are selling. Sure, it's better than having no market for houses at all (which is what a 19 month backlog of inventory would indicate), but it's hardly a return to a healthy market.
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You're correct in that the majority of sales in the Phoenix are are short sales and REO's. However, many of these homes are cream of the crop. And many of the homes that are competing with the distressed market are cream of the crop. It makes sense that a buyer is not only going to look for the best price, but also the best house. So the best houses area always going to be sold first.
What are your area's ratio of REO vs non-REO sales? What's the rate that REO properties are coming on the market compared to how quickly they are selling? These are questions that would indicate that the market is returning to normal behavior and might indicate a bottom. Saying that "most of the homes sales are of distressed properties, but trust me, they're really nice foreclosures" doesn't help determine anything about the health of the market. In fact, if there's enough normal people with nice to above-average homes being foreclosed on to supply houses for your entire market, I'd think that would be a bad sign.
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The best homes are being purchased by those that are buying now. The buyers are looking for the best home at the best price, and that's what they're buying.
Isn't this always true in any market, buyers, neutral or sellers? I don't see how that has anything to do with the original discussion, which is when is the bottom in the housing market. Discussing if waiting until the bottom has been hit is a good idea is a different topic entirely. But this does sound suspiciously similar to "buy now or be priced out forever" arguments used by agents during the bubble, except now its "buy now or there will be no good houses left". Somehow I'm not exactly worried about that. You can afford to make a lot of improvements to a less than perfect home if you wait out enough 2% monthly price drops.
Quote from KC: What are your area's ratio of REO vs non-REO sales? What's the rate that REO properties are coming on the market compared to how quickly they are selling?
You can do your own research, I'm not doing it for you.
So housing is fairly priced when investors can find someone else to pay their mortgage? I disagree. One should be a homeowner, not a slave to a landlord.
Some people own, and others rent - for whatever reason. Why wouldn't you want tenants to pay your mortgage, if it works for them? I'm not sure what the problem is. Sounds like you're not an investor.
You can do your own research, I'm not doing it for you.
Typical - claim that things are picking up based on one or two limited data points and then become unwilling to discuss the rest of the data because it doesn't fit your agenda. Sounds a lot like the article I was talking about.
Typical - claim that things are picking up based on one or two limited data points and then become unwilling to discuss the rest of the data because it doesn't fit your agenda. Sounds a lot like the article I was talking about.
I have no agenda other than to post information to share with others on the forum, who may be interested. And as I said, readers can use the information in any way that they wish.
It seems that your agenda is simply to attempt to discredit anyone who posts or writes any article that doesn't fit your agenda. Your technique of attacking what they did not write, in order to detract from the facts that they published is a lame one that any reasonable reader on the formum can see through.
So if you want any data that isn't published, get it yourself and write your own article.
by KC
Isn't this always true in any market, buyers, neutral or sellers? I don't see how that has anything to do with the original discussion, which is when is the bottom in the housing market. Discussing if waiting until the bottom has been hit is a good idea is a different topic entirely. But this does sound suspiciously similar to "buy now or be priced out forever" arguments used by agents during the bubble, except now its "buy now or there will be no good houses left". Somehow I'm not exactly worried about that. You can afford to make a lot of improvements to a less than perfect home if you wait out enough 2% monthly price drops.
Maybe you should read the OP again. The OP attacked realtors in his post, accusing them of causing the housing proplem What does his attack on Realtors have to do with his question "When will housing bottom".
To try and pigeon hole the discussion is unreasonable for a number of reasons, including that the OP was all over the map in his post.
During the boom, realtors were not having to use slogans like you are describing. The buyers were coming out of the woodwork begging them to find a house. Realtors were having to find sellers willing to accept offers they couldn't refuse from buyers who didn't want to be "left out". That was buyer -would-be-investor greed and had nothing to do with realtors.
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by KC ..."except now its "buy now or there will be no good houses left"...
Since you put that phrase in quotes, I want to make it very clear that those are your words. They are not mine.
I have never said that people should buy now. I have, in fact, told some people they should not buy now. Whether one should buy now or in the future depends entirely on their circumstances. If, in talking with a client I see that it would not be in their best interest to buy now, or sell now, I will tell them that, and I have.
If they take my advice, then it has cost me an immediate commission, but I will have provided what I believe to be the best advice for my client, and it will come back to me many times over ,because that client will know that I'm trustworthy and will refer me to their friends.
My position, since you didn't seem to understand it, is that a bottom will be extemely difficult to determine. The answer to the specific question of the OP, is that no one knows when the bottom will come. Of course, he really wasn't looking for an answer because he gave his own formula for when the bottom will come.
Just as the top didn't come overnight, neither will the bottom. There were signs that the top was near which a few people saw and heeded. As I mentioned before, they left money on the table by selling early. Those who held out until the last minute and never saw the signs got hurt.
The bottom will not be much different. There will be signs and most people will not see them. Some will see them and ignore them. A few will recognize them they will begin buying. They will have the cream of the crop choices. They will pay more for the properties than if they buy at the bottom, but then again, how will they know the bottom has been reached until the prices have risen again? And if the price passes the the price where they could have bought, and the choices are no longer there, then what have they gained by waiting?
I believe this is information that people should know. The more information they have, the better buying decisions they can make.
From your statements I gather that you are renting now and waiting until you feel the bottom has been reached, and then will buy. That's good for you, and I hope you find that great buy at the bottom, if you catch it. And of course being a renter, then your agenda certainly is to do everything you can to make home prices decline to where you want them.
But that's not going to happen. You cannot make the market move one way or the other. Attempting to discredit realtors is not going to move the market for you. Attempting to discredit authors of articles is not going to more the market for you.
Good luck in your bottom fishing strategy. I hope it works for you.
by KC
Isn't this always true in any market, buyers, neutral or sellers? I don't see how that has anything to do with the original discussion, which is when is the bottom in the housing market. Discussing if waiting until the bottom has been hit is a good idea is a different topic entirely. But this does sound suspiciously similar to "buy now or be priced out forever" arguments used by agents during the bubble, except now its "buy now or there will be no good houses left". Somehow I'm not exactly worried about that. You can afford to make a lot of improvements to a less than perfect home if you wait out enough 2% monthly price drops.
Maybe you should read the OP again. The OP attacked realtors in his post, accusing them of causing the housing proplem What does his attack on Realtors have to do with his question "When will housing bottom".
To try and pigeon hole the discussion is unreasonable for a number of reasons, including that the OP was all over the map in his post.
During the boom, realtors were not having to use slogans like you are describing. The buyers were coming out of the woodwork begging them to find a house. Realtors were having to find sellers willing to accept offers they couldn't refuse from buyers who didn't want to be "left out". That was buyer -would-be-investor greed and had nothing to do with realtors.
Quote:
by KC ..."except now its "buy now or there will be no good houses left"...
Since you put that phrase in quotes, I want to make it very clear that those are your words. They are not mine.
I have never said that people should buy now. I have, in fact, told some people they should not buy now. Whether one should buy now or in the future depends entirely on their circumstances. If, in talking with a client I see that it would not be in their best interest to buy now, or sell now, I will tell them that, and I have.
If they take my advice, then it has cost me an immediate commission, but I will have provided what I believe to be the best advice for my client, and it will come back to me many times over ,because that client will know that I'm trustworthy and will refer me to their friends.
My position, since you didn't seem to understand it, is that a bottom will be extemely difficult to determine. The answer to the specific question of the OP, is that no one knows when the bottom will come. Of course, he really wasn't looking for an answer because he gave his own formula for when the bottom will come.
Just as the top didn't come overnight, neither will the bottom. There were signs that the top was near which a few people saw and heeded. As I mentioned before, they left money on the table by selling early. Those who held out until the last minute and never saw the signs got hurt.
The bottom will not be much different. There will be signs and most people will not see them. Some will see them and ignore them. A few will recognize them they will begin buying. They will have the cream of the crop choices. They will pay more for the properties than if they buy at the bottom, but then again, how will they know the bottom has been reached until the prices have risen again? And if the price passes the the price where they could have bought, and the choices are no longer there, then what have they gained by waiting?
I believe this is information that people should know. The more information they have, the better buying decisions they can make.
From your statements I gather that you are renting now and waiting until you feel the bottom has been reached, and then will buy. That's good for you, and I hope you find that great buy at the bottom, if you catch it. And of course being a renter, then your agenda certainly is to do everything you can to make home prices decline to where you want them.
But that's not going to happen. You cannot make the market move one way or the other. Attempting to discredit realtors is not going to move the market for you. Attempting to discredit authors of articles is not going to move the market for you.
Good luck in your bottom fishing strategy. I hope it works for you.
I think this is it. 2008 will be the year of the bottom. With a new president comming into office and a lot of the foreclosures behind us I think that by 2009 the market will stabilize. We may not see appreciation until we hit 2010 but as far as how low will it go I think that over the next year you will be in the bottom with perhaps the absolute bottom being this December and January. If you are holding out for the great depression I think that you will be dissapointed. The real problem right now is with the lending institutions. Once they bounce back and start lending again I think you will see a rebound because in some areas the prices have fallen a little too far and they are acually becomming undervalued again. To point out specific areas I would have to show you some of the outlying suburbs of the big metro areas.
For instance around Riverside,Ca in Moreno valley there are actually newer built homes for under 125k. Around Phoenix in Surprise, Buckeye, Maricopa, Queen Creek there are actually newer homes for less than 100k. You can't even build a new home for that price. If you bought one of these the payment would only be like $800 a Month. Someone working for minimum wage could afford this by themselves. Also look at Texas. In the Houston area there are newer built homes for as little as 65k around Cypress-Fairbanks!! I am talking NEWER BUILT!!
This crash is not worse than the one that hit California in the early 90's it's just that this time it is Nationwide.
I guess I am going to have to set most of you realtors straight. Most in your profession are idiots with far less market and business knowledge than investors such as myself. I simply use realtors to close deals as I identify the properties and secure the financing. Mr. Hoffman and some others on here are the exception and I have found them to be well versed on their markets and economics and business in general.
Realtors did not cause this bubble. Speculation did but realtors certainly helped feed the speculation. The NAR has been totally discredited and even many realtors on this forum do not support the opinions of Mr. Yun. Greed is perhaps the biggest culprit of this current housing correction we are experiencing. I don't see a housing depression or retuns to 2.5 - 3 times income for housing prices, perhaps 4 and 5 or 6 on the coasts.
Bottom will come at different times in different markets just as the peak.
Once inventories start to decline and sales pick up we may have a bottom with regards to sales. That could happen later this year. Prices will maybe stop falling 6 months after sales start to rise, so spring 2009 we might see a bottom in prices, maybe later depending inventories.
The time to get into short sales and foreclosures will be in my opinion before spring 2009. One of my realtors (I have 4, each with different specialties) believes the time to buy foreclosures will be this fall. I will certainly be looking this fall but see myself buying anything else until 2009 unless the right fire sale comes along.
Either way, this housing correction is good and should clean out unhealthy inventory levels as well as realtors who should have never gotten into RE.
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2008 The year of the bottom in Real estate
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