Phoenix Real Estate Bubble For Dummies (Maricopa: short sales, real estate market, apartment)

[Rpn0728]

I lived in Ahwatukee for three years in the mid 90's. Since then I've been in Nebraska, and am now considering a second home, condo, or apartment in the Phoenix area. Some of my friends have already done so, and like to say "they're giving them away". I've been reading this forum a lot recently and have learned a lot. But for someone like me who has been away for awhile, it's really hard to understand and comprehend what has happened to the Phoenix area real estate market over the past years.

Can anyone recommend a link, an article, a specific website, that you feel really explains what happened, what is still happening, the timing, why it happened, how things are going to recover, how all this has affected neighborhoods, who's moving in, who's moving out, etc. I'll keep reading, because I really feel like I need to understand it better.

For example, Bristol Palin buys a house at a bargain price in Maricopa. That gets a lot of press and from a distance presents a pleasant picture of Maricopa. On the other hand, no offense to Ms. Palin, she is a 20 year old unwed mother. A neighborhood full of 20 year old home owners is great for the 20 year olds, I guess, but maybe not for everyone.

I'm getting the impression that these apparent bargain outlying areas are going to be filled with renters, or those who can only afford a house that is selling at half or less of what it was a few years ago,

Thanks for your help.

[HonestOne1]

Here, lemme sum it up.

Someone decided that home ownership was good for America, so they loosened the mortgage lending standards to the point where if you were poorer than a church mouse and dumber than a 2x4 you could still buy a house.

So suddenly you had a bunch of 2x4's owning a bunch of 2x4's and when the music stopped those who purchased between 2005 and 2007 were completely screwed. Now they are walking away, thereby screwing their neighbors, tax payers, and the entire rest of America.

Now ignore everything I just said and go ask a realtor if now is a great time to buy.

[Boompa]

The outer suburbs, east and west valley and the far north were built at the height of the market and up to 1/3 of the homes were sold to speculators. When the Real estates ran out of qualified buyers they tried unqualified but that didn't work. Soon the houses were selling below construction cost and developers were walking away, Maricopa being one of those places. It is far from the city near the Harrahs Casino. People who were upside down then started dumping properties and the market hit bottom. There are still more houses than buyers so I wouldn't look for any upturn. These Short Sales are a racket though, they drive up the price once you have bid doubling in price

[khuntrevor]

I think the detail to look at on the Palin purchase is the fact that it was basically a flip. She still got a decent deal, but the people that sold to her may have made a pretty easy 30K+ off of her. I used www.ziprealty.com and a "paperless" agent. I just paid 18,500 for a very small house on 7200 SF. The assessor says it is 32,500 for 2011, and probably will be less for 2012. I did do a search of a vacant lot that is only 6800 SF, located about 140 feet from my property. It is assessed at 59,000 and owned by New Yorkers. If you have cash and are persistent, you can score big.

[gtbguy]

Originally Posted by khuntrevor

If you have cash and are persistent, you can score big.

No doubt cash is KING right now. The deals out there now are fastastic.

[Ritchie_az]

Seems like there have been a number of threads recently on this or similar topic. Perhaps the "Search" feature at the top of the page will help... just use caution, for every post with great information it seems there's one full of nonsense.

As for myself, I purchased about a year-and-a-half ago in what one might consider an "outlying area" for slightly less then what the house was originally purchased for in 2001. Based on what the same and similar floor plans have sold for in my area, it looks like my house has gone up in value by a couple thousand.
Still, I don't consider the house an investment, but a home.

[Zippyman]

Originally Posted by Rpn0728

I lived in Ahwatukee for three years in the mid 90's. Since then I've been in Nebraska, and am now considering a second home, condo, or apartment in the Phoenix area. Some of my friends have already done so, and like to say "they're giving them away". I've been reading this forum a lot recently and have learned a lot. But for someone like me who has been away for awhile, it's really hard to understand and comprehend what has happened to the Phoenix area real estate market over the past years.

Can anyone recommend a link, an article, a specific website, that you feel really explains what happened, what is still happening, the timing, why it happened, how things are going to recover, how all this has affected neighborhoods, who's moving in, who's moving out, etc. I'll keep reading, because I really feel like I need to understand it better.

For example, Bristol Palin buys a house at a bargain price in Maricopa. That gets a lot of press and from a distance presents a pleasant picture of Maricopa. On the other hand, no offense to Ms. Palin, she is a 20 year old unwed mother. A neighborhood full of 20 year old home owners is great for the 20 year olds, I guess, but maybe not for everyone.

I'm getting the impression that these apparent bargain outlying areas are going to be filled with renters, or those who can only afford a house that is selling at half or less of what it was a few years ago,

Thanks for your help.

Actually, to me, the real "bargains" are not in the far-distant towns, but in the metro areas of the well-established cities of the valley. If/when gas goes to $5-6 gallon, having a bus stop nearby, or living within a short commute to work will be an almost incalculable benefit, and I believe long-term appreciation follows. If you can work from home, living in the way-out lands is a great deal, otherwise it becomes a false value proposition.

Over the past couple of years, the "big 3" reduced their capacity to build cars by nearly 50%. That can only mean higher prices for cars, even though no one has noticed yet due to the economy. The nations that control our fuel supply have shown no mercy, even in the worst economic times for at least 30 years - when things begin to "pick up", I personally foresee them jumping on our necks with higher fuel prices. Even at $4 a gallon, an 80-mile roundtrip commute (which wasn't uncommon in the valley) could end up costing you more than your "bargain" house payment, when you figure in the true replacement cost of your automobile every few years & your fuel costs.

I believe the 2011 IRS mileage table shows 51 cents/mile, which - if accurate, means that an 80 mile commute costs $40, or $200/week, or $800/month! - and that's assuming the price of cars & gas don't go up... I want no part of that assumption...

[AZJoeD]

While I agree with Zippy on this one, people do not figure the cost of living out in these far edge communities. They only look at the purchase price of the home. However, you mentioned that this would be a "second home",so it may not be an issue

While it may be attractive to find a low cost property out on the edge of town you have to decide what type of activities you enjoy. Make sure there is enough amenities to keep you happy (I don't mean Taco Bell and Wal-Mart) so you are not driving 50 miles every time you want to do something.

As for the condo idea, I like them as second homes because you can lock and leave. The issue with "second home" condos is financing, difficult to obtain at best. If you have cash, no problem. The important thing is to do your research and buy into a well run smaller complex that has the amenities you need. You may have to pay a few thousand more, but you will have a nice place to visit when you come to the valley.

[Rpn0728]

Thanks for all the opinions so far.

Just to clarify- when I say second home what i really mean is a place to escape the Nebraska winter for periods of time. I own my own business in Nebraska and have been trying to position myself to be able to get away from it more than I have previously. That would just make me a Snowbird, I guess. I'm not looking to buy a house and flip it, although it seems like if you had the money and a little knowledge that could probably be done.

I tend to agree with those who have basically said spend a little more money and get in closer to the city. I'm an old ASU graduate, onetime Ahwatukee (Mountain Park Ranch) resident, and several time visitor to the area over a few decades of time. All that said, I guess I consider myself an East Valley guy.

I'm looking forward to being in the area in early March, and I'm fascinated by what has happened in the Valley. I know a lot of people have been hurt financially, and I certainly have sympathy for that.

Two of my acquaintances have recently bought houses in Maricopa, one a permanent residence and one a second home. I'm anxious to see what they are like. For me, I think Maricopa is too far away. That city (or town) didn't even exist when I last lived in Arizona. Amazing.

[khuntrevor]

You reminded me of another common mistake.........Judging a place by how it is in March, which is usually quite nice. Picture what if will be like, when it is 45 degrees hotter outside, and you're already wearing shorts. And that reminds me of another common mistake...and that is for folks from super high cost of living places like LA, the Bay, Seattle, etc...come here and pay too much because it is so much cheaper, than their home areas........they just sign (seen the Canadians do this)--just make sure you look at the comps and allow for things like new HVAC.