Phoenix MLS Predicting Lowest Median September Price in Nine Years (2015, lease)

[Ritchie_az]

The sky is falling! The sky is falling!

[Howard Roark]

I don't think anyone's hoping for violence and anarchy on these threads. I certainly am not. I am looking for sanity and affordability of real estate. The real tests are that the price of a house should be two and a half times your income to afford a 30 year mortgage and that house prices (PITI, and Maintenance) must be cheaper than renting, amenity for amenity. The new critieria is your career. Will it last 30 years? Will Chindia keep grabbing our higher paid jobs? I just happen to have the opinion that houses are overvalued compared to incomes in Phoenix still - particularly with salaries being cut.

[Pirate0202]

Certainly prices in some areas of SoCal are Waaaaaay over 2 and 1/2 times the average income. I think the average income in Hermosa Beach is $120,000 and the average home price is $1.2 Million! I think right now a lot of the desirable areas of the country are still overpriced, Phoenix included, but all those areas are coming down little by little.

A home is known to be any individual's largest investment, that's fact. Making money on real estate is very American!

My apologies to everyone else, but I just want to add something to zippyman. Your grandmother isn't having financial problems because of unscrupulous bankers or people who made money from real estate. It's because GM continued to make cars for decades that were inferior to those from Japan and Germany, and now Korea. GM did not deserve our taxpayer's helping hand. Finally the free market system is allowed to work as it should.

[Zippyman]

Originally Posted by Pirate0202

A home is known to be any individual's largest investment, that's fact. Making money on real estate is very American!

My apologies to everyone else, but I just want to add something to zippyman. Your grandmother isn't having financial problems because of unscrupulous bankers or people who made money from real estate. It's because GM continued to make cars for decades that were inferior to those from Japan and Germany, and now Korea. GM did not deserve our taxpayer's helping hand. Finally the free market system is allowed to work as it should.

You obviously don't know what you're talking about, but feel free to have another glass of "kool-aid".

I don't know what business you're in, but feel free to name ANY business that can survive an instant 40% decrease in sales. That's what happened when leasing went away, and the banks started hoarding their reserves to stay afloat by denying borrowers with good credit car loans. They did that because they were losing their behinds on bad real estate loans.

So yes - deny it if want, but that is what happened, and it had nothing to do with the incompetent management at GM.

Everyone was screaming "free-market" when GM was on the ropes, but the least productive and lowest quality workers on the planet earth (The Wall-Street Bankers) emerged from this mess with their bonuses intact.

[Zippyman]

Originally Posted by Howard Roark

I don't think anyone's hoping for violence and anarchy on these threads. I certainly am not. I am looking for sanity and affordability of real estate. The real tests are that the price of a house should be two and a half times your income to afford a 30 year mortgage and that house prices (PITI, and Maintenance) must be cheaper than renting, amenity for amenity. The new critieria is your career. Will it last 30 years? Will Chindia keep grabbing our higher paid jobs? I just happen to have the opinion that houses are overvalued compared to incomes in Phoenix still - particularly with salaries being cut.

According to this forum's sponsor page:

Estimated median household income in 2008: $50,140

2.5 x 50k income - $125k.

According to the article cited, median home pricing is hovering around $120-130k.

What, exactly are you looking for the median to be?

Where is that "sanity and affordability" number you long for?

$110k?
$90k?
$50k?

And of course, don't forget that every $10k drop involves more people losing their jobs, walking away, etc.

People who lose jobs also get a major cut in their income tax bill...it's about 100% reduced!

You can buy a really spiffy house in Detroit for $50k... but there isn't much of a city around it anymore.

[Howard Roark]

Zippy,

Since 2008 a lot of Phoenicians have certainly lost their jobs. I lost overtime - no more since 2008. That is similar to a wage cut. Lots of other people have had salary cuts in the Phoenix area since 2008. $40k to $45k may be more like it.

[Ponderosa]

Originally Posted by Howard Roark

Zippy,

Since 2008 a lot of Phoenicians have certainly lost their jobs. I lost overtime - no more since 2008. That is similar to a wage cut. Lots of other people have had salary cuts in the Phoenix area since 2008. $40k to $45k may be more like it.

Then you are averaging in unemployed, welfare recipients, pensioners, etc. You have to look at the income of potential buyers. In the burbs where the houses are being built, the median household income is around 60-90 K.

Bottom line is that together with low interest rates and low-down FHA financing, the affordability index in PHX has NEVER been better. Folks today can afford homes that my generation could only dream of at their age. People are foregoing purchases not because they can't afford them or because they can't get loans. They are behaving predictably in a deflationary environment. They either fear or expect prices to fall more. Some are also uncertain about their own financial futures as well. Affordability is not a problem right now.

[las vegas drunk]

Originally Posted by Zippyman

According to this forum's sponsor page:

Estimated median household income in 2008: $50,140

2.5 x 50k income - $125k.

According to the article cited, median home pricing is hovering around $120-130k.

What, exactly are you looking for the median to be?

Where is that "sanity and affordability" number you long for?

$110k?
$90k?
$50k?

And of course, don't forget that every $10k drop involves more people losing their jobs, walking away, etc.

People who lose jobs also get a major cut in their income tax bill...it's about 100% reduced!

You can buy a really spiffy house in Detroit for $50k... but there isn't much of a city around it anymore.

Remember, there is also a lot of good that happens in a falling housing market. Lower property taxes is one of them for current house owners, and lower purchase prices for buyers. You make it sound like it is all bad.

[Zippyman]

Originally Posted by las vegas drunk

Remember, there is also a lot of good that happens in a falling housing market. Lower property taxes is one of them for current house owners, and lower purchase prices for buyers. You make it sound like it is all bad.

Property taxes don't necessarily go down in Phoenix - the taxable value goes down, but the millage rate is often increased, so the net effect is a nothingburger.

And if property tax collections actually did go down, what happens to city services and school employees?

Are less cops and teachers a good thing?

Seriously - I personally dislike cops with too much time on their hands, and I don't have any kids - so it really makes no difference to me... but is that what you look for in a city?

[MN-Born-n-Raised]

Originally Posted by Ponderosa

It's not confirmed. The OP misread or misrepresented the story in his glee. (you will recognize that he comes around every time some housing statistic tilts to doom). He is looking to buy so has a dog in the fight. Prices are still above the 4/09 on median home prices and are projected, based on preliminary sales data, to dip near that level in Sep before recovering again in Oct. That is what the article really says.

As I have mentioned last year, when the price of an average $130K AZ home drops by $6K, my two home in MN drops $50K. So no. I'm not "hoping" for things to get worse. I am looking to buy so I've been researching it and reading (and reading) wondering if I have to move quickly. I've concluded that I don't have to.

Last year, I made a prediction based off of common sense that we have had a paradigm shift in our economy and things are not going back to normal. Unemployment will be this way for the foreseeable future and wages WILL be down on average for the rest of my lifetime. You had several posts like this:

Originally Posted by Ponderosa

...Prices are going to recover amazingly in the next five years - median sales price in PHX up 60-150% or even more from bottom depending on location. There is going to be a new "bubble" - not as big as the last but more persistent. You guys will all be kicking yourself.

Year one of your 5 year prediction is over and I am not still not kicking myself. Our 2009 mini run-up has deflated after the tax credit and we are back to ground zero (April 2009 prices). More creative tax credits will again restart the rise of pricing (Obamba WILL try to something to help) but they will have the same result as this $8K credit.

Last year, Moody's predicted a large drop in the AZ marketplace by late 2010. I debated on the magnitude of that drop but people laughed. Maybe he missed that bigger drop and it will be in early 2011. But he was spot on that post tax credit, high unemployment and additional foreclosures would push pricing down more. That seemed like common sense to me.

So my post was nothing more than a reminder that I unfortunately was right. I don't see year 2 of your 5 year "60-150% recovery" going so well either.

So Ponderosa, do you care to re-forecast? How is August 2010 to August 2011 looking for the Phoenix marketplace??? I say we have more to go.