Phoenix housing won't return to pre-boom until 2015 - article (Mesa: sales, foreclosures)

[azriverfan.]

In the Arizona Republic, an article reported Phoenix's housing recovery will remain slow until enough new jobs are created to attract tens of thousands of new residents annually to the region again, economic-growth experts said at Urban Land Institute Arizona's annual forecast conference on Thursday. So much for being a "seller's market"




Phoenix-area housing recovery pushed back again as jobs lag, foreclosures mount

[HX_Guy]

Do they mean return to the pre-boom prices or to the number of houses sold?

I would be shocked if they return to pre-boom prices in only 4 years from now. I don't even see it happening in 10 years from now.

[azriverfan.]

Originally Posted by HX_Guy

Do they mean return to the pre-boom prices or to the number of houses sold?

I would be shocked if they return to pre-boom prices in only 4 years from now. I don't even see it happening in 10 years from now.

Pre-boom prices! I agree. Last year the conference predicted 2014 and pushed it to 2015 this year. Also, they estimate home prices will begin rising by 5 to 7% starting in 2012. I don't definitely don't see that happening. They did state that housing prices wouldn't increase this year.

[Ritchie_az]

Originally Posted by azriverfan.

In the Arizona Republic, an article reported Phoenix's housing recovery will remain slow until enough new jobs are created to attract tens of thousands of new residents annually to the region again, economic-growth experts said at Urban Land Institute Arizona's annual forecast conference on Thursday. So much for being a "seller's market"


Phoenix-area housing recovery pushed back again as jobs lag, foreclosures mount

Jobs are coming and have been coming. Over 30,000 net job growth for Phoenix metro over the last 18 months places Phoenix near the top for job growth in America. That certainly helps.
It also seems like we are getting a larger-than-usual over 55 crowd purchasing homes. Maybe it's just my imagination, but that's what it seems.
I think the 2015 prediction is pessimistic, but with their initial 2012 prediction most likely being wrong, I can see why they're now playing it "safe".

[HX_Guy]

Originally Posted by azriverfan.

Pre-boom prices! I agree. Last year the conference predicted 2014 and pushed it to 2015 this year. Also, they estimate home prices will begin rising by 5 to 7% starting in 2012. I don't definitely don't see that happening. They did state that housing prices wouldn't increase this year.

You know, I just realized it's talking about PRE-boom prices, I thought it said to boom time prices.

Pre-boom prices maybe. Our house was $350,000 at the height of the boom and now it's worth around $165,000. What was it pre-boom? I'm not sure...$200,000 maybe? $225,000? If the value increases by 5% per year from now, it would be worth $210,000 in 5 years, I guess that could happen.

[MAtheBanker]

2015? That's not that far off. I can wait. I'm not going anywhere.

[Captain Bill]

I read the article and think it's a good one.

Phoenix is adding jobs; not at a breath taking rate, but they are being added. What is not considered here is that at these low prices, investors are coming in strong, as well as many first time home buyers. There are also many people here renting and waiting for their homes to sell in the spring in northern states. (pent up demand)

Things to take into consideration:

• How many jobs will be created by the new MD Anderson Cancer Center in Gilbert and the ancillary businesses that will develop?
• How many jobs will be created by the new Mesa Airport Terminal construction,
• Construction for the loop off 202 going by the new terminal over to Ironwood, and
• Construction of the huge development of the Convention center, championship golf course, and business and housing complex in the General Motors Proving Grounds?
• What about the jobs by some of the companies that are coming into Chandler?
• And we shouldn't forget the influx of people moving to Phoenix just for the weather; and
• Snowbirds from all the northern states and Canada.

We have now made a double dip, where we have dipped below the low established in April 2009.

Much of the reason is because of the government housing that's been put back on the market.

However, each time the prices become lower, it triggers another buy-price-point for investors, snowbirds, and others who want to buy in AZ.

So I'll continue to keep my eye on the supply and demand because I know prices will lag behind, but will follow. The Cromford Market Index is now at 110 and climbing (with 100 being a balanced market) I'm anxious to see the January results at the end of the month.

Kaufmann said the region's home prices won't rebound even to 2003's pre-boom level until 2015. The area's housing boom ran from 2004 to early 2007, when homes prices shot up 50 percent.
The median price of an existing Valley home is now $114,000. In 2003, the median was $155,000, according to Arizona State University's realty-studies group.

Let's look at the math from the numbers that article published:

$155,000 pre-boom level in 2003
$114,000 current level
$41,000 Increase

41,000/114,000 = 36% price increase by 2015 (4 full years from now)

And what will interest rates be in 2015?

For an investor that's a no-brainer.

$114,000 purchase price
$22,000 investment (down payment/equity)

$41,000 Equity in 2015

That's a 19,000 capital gain in 4 years on a $22,000 cash investment.
If my math is correct then that is a 21.6 % gain per year on the cash investment. Feel free to correct any mistake I've made in math.

That's why people from all over the country, who recognize the cheap prices here, are coming in and buying up the properties.

This is a lot different from the 2005 speculator frenzy buying in an appreciating market hoping for a quick flip profit. In my opinion, this amounts to buying when there's blood in the streets and holding for a long term capital gain.

[Sco]

Originally Posted by Captain Bill

I read the article and think it's a good one.

Phoenix is adding jobs; not at a breath taking rate, but they are being added. What is not considered here is that at these low prices, investors are coming in strong, as well as many first time home buyers. There are also many people here renting and waiting for their homes to sell in the spring in northern states. (pent up demand)

Things to take into consideration:

• How many jobs will be created by the new MD Anderson Cancer Center in Gilbert and the ancillary businesses that will develop?
• How many jobs will be created by the new Mesa Airport Terminal construction,
• Construction for the loop off 202 going by the new terminal over to Ironwood, and
• Construction of the huge development of the Convention center, championship golf course, and business and housing complex in the General Motors Proving Grounds?
• What about the jobs by some of the companies that are coming into Chandler?
• And we shouldn't forget the influx of people moving to Phoenix just for the weather; and
• Snowbirds from all the northern states and Canada.

We have now made a double dip, where we have dipped below the low established in April 2009.

Much of the reason is because of the government housing that's been put back on the market.

However, each time the prices become lower, it triggers another buy-price-point for investors, snowbirds, and others who want to buy in AZ.

So I'll continue to keep my eye on the supply and demand because I know prices will lag behind, but will follow. The Cromford Market Index is now at 110 and climbing (with 100 being a balanced market) I'm anxious to see the January results at the end of the month.

Let's look at the math from the numbers that article published:

$155,000 pre-boom level in 2003
$114,000 current level
$41,000 Increase

41,000/114,000 = 36% price increase by 2015 (4 full years from now)

And what will interest rates be in 2015?

For an investor that's a no-brainer.

$114,000 purchase price
$22,000 investment (down payment/equity)

$41,000 Equity in 2015

That's a 19,000 capital gain in 4 years on a $22,000 cash investment.
If my math is correct then that is a 21.6 % gain per year on the cash investment. Feel free to correct any mistake I've made in math.

That's why people from all over the country, who recognize the cheap prices here, are coming in and buying up the properties.

This is a lot different from the 2005 speculator frenzy buying in an appreciating market hoping for a quick flip profit. In my opinion, this amounts to buying when there's blood in the streets and holding for a long term capital gain.

Well, let's see. You left out closing costs and sales commissions on both sides of the transaction, holding costs for a 4 year period like utilities, taxes and maintenance. You left out any kind of budget for repairs. And you also made no mention of the capital gains tax that would take away at least 15% of your profits.

If you factor in all of the costs that you conveniently chose to ignore than your hypothetical $19,000 profit very quickly transforms into maybe breakeven or a small loss.

However, I am sure that as a realtor you will still assure me that it is a no-brainer time to buy, right?

[tolovefromANFIELD]

That is all Phoenix needs, more "investors" buying up properties and turning them into rentals, more than likely. Let me put it in perspective. In a normal market, 11% of all properties in the country are investor purchases. In the Phoenix metro, during the height of boom it was almost quadruple that, and that is conservative, since many of the occupancy figures were derived from loan application occupancy disclosure, and occupancy fraud was one of the top schemes out there. I am not sure on the figures in the past couple of years, but maybe Captain Bill can tell us what percentage of purchases were non-owner occupied. Now I know many of those so-called investors in 2005-2006 drank way too much late night infomercial cool-aid, but Phoenix market needs stability, rather than speculation.

[Ritchie_az]

Originally Posted by tolovefromANFIELD

That is all Phoenix needs, more "investors" buying up properties and turning them into rentals, more than likely. Let me put it in perspective. In a normal market, 11% of all properties in the country are investor purchases. In the Phoenix metro, during the height of boom it was almost quadruple that, and that is conservative, since many of the occupancy figures were derived from loan application occupancy disclosure, and occupancy fraud was one of the top schemes out there. I am not sure on the figures in the past couple of years, but maybe Captain Bill can tell us what percentage of purchases were non-owner occupied. Now I know many of those so-called investors in 2005-2006 drank way too much late night infomercial cool-aid, but Phoenix market needs stability, rather than speculation.

While I believe investors (poor ones, I guess) share a large part of the blame for the housing crash, I believe they also deserve some credit for helping buy up all the foreclosures and keeping the bottom of the market from being even lower.