68% of home owners in metro Phoenix have negative equity (fit in, sale)

[khuntrevor]

Originally Posted by unit731

Many of these new wage earners make just above minimum wage and can never afford a home.

8 per hour would be just above minimum wage=16,640 per year. There are decent condos out there in the 20s, sometimes less. A person willing to get dirty could buy a SFR. Two of these earners would make 33,280 per year. They could get a very nice house for less than double their income---very conservative by most standards. So for these people, things have gotten a lot better. For people, who believed that their huge student loan would be the key to making 25 per hour, they have been in for a rude awakening. Choices and priorities have gotten people where they are.
http://www.realtor.com/realestateand...6_M19786-89561
This is a beautiful home in a great neighborhood, with excellent public schools, reasonable taxes, and a great lot. 49K.....I've never seen buying opportunities this good. What kind of income do you think it would take to get a loan on this house? I think you could get 800+ for rent.

[Captain Bill]

In discussing negative equity I think it's appropriate to discuss things that can help the market turn around and bring back some of that equity.

The commercial real estate market did not become the disaster that those who were selling weekend seminars at $20,000 per person on how to get rich quick buying distressed commercial property were touting.

Commercial activity has picked up, and of course some people are making a lot of money buying distressed commercial property but it was not the disaster that was predicted.

Last night I attended the Grand Opening of the Holiday Inn & Suites, just north of Sky Harbor on 44th St.

My Canadian friend, whom I sold a winter home to, across the lake from me, bought the hotel last year. I believe it was the Embassy Suites then, but he chose to sign on with Holiday Inn brand. Apparently it was in very bad condition when he bought it at a bargain price.

But the main point is that he created a lot of jobs by remodeling the entire hotel. He took a run down hotel and transformed it into a beauty. He provided work for a designer, architect, engineers, general contractor and subs, plus the entire hotel staff.

He had given me a tour of the rooms several weeks earlier and they really look good.

Councilman Michael Johnson was there and he said that at lot of things are happening along that 44th St corridor from the light rail to the airport where they plan to have a bus connection from light rail to the airport, and a baggage-check-in point along there. I haven't seen any of the general plan so I'm just repeating what he said.

However, it is projects like these that will help bring back construction and other jobs to the valley.

[Finger Laker]

the construction industry is leveling off .... but is still very battered

commercial lots are well overbuilt and residential is barely alive

there is some hope going forward for the next couple of years - but it remains very rough out there .... more firms hung on that maybe what was anticipated - but many are just skeletons of what they were

TI type work of this commercial space along with some new building that has been on hold for a few years will be key - to go with tribal building, federal projects, street/road and solar

[khuntrevor]

They used to refer to "the crane" as the State bird of Nevada, you don't see many of them here nowadays, either. I was Downtown last night for a concert, and walked home from Osborne/Central. I saw one small project on Central/Van Buren that looked like a Public Restroom project or something. Nothing else. If half of all retail space/outlets were eliminated today, the Public would hardly notice it. Sometimes I wonder if our city leaders have ever visited bustling cities in foreign countries and seen what brings about growth, development, and prosperity. Too many business models rely on basically extorting money from the consumer. Any high quality city has great street food--Phoenix has virtually none. Brown bagging a beer in Manhattan is very common, but it's really iffy here.

[_Charles_]

The idea that AZ's economy can remain dependant on real estate speculation is preposterous.
As a plan for the future that would no plan at all.

As another poster pointed out the job losses due to NAFTA have been massive - AZ lost more than 11 thousand jobs since NAFTA began and this will be made up by selling houses? LOL good grief.

In 1980 Motorola was AZ's largest private employer - now its WalMart. Yea!!! Quick everyone go buy a house!

[Finger Laker]

Originally Posted by _Charles_

In 1980 Motorola was AZ's largest private employer - now its WalMart.

Not for nothing, this line is always kind of dopey line

In 2010 on a global scale walmart did $408B worth of business and employeed $2.1M ........ they are a lot of peoples largest employer

The climate has changed a lot in the last 30 years on the service & shopping side - 1979 was the first year Walmart topped $1B in sales

There are also many non-service employers who employ more today in AZ than motorola did in 1980 .... the city has changed a lot as well

The main issue with Walmart being such a large employer is that they tend to let the local governments take care of their employees for them which can create a burdon

I wouldn't argue that there needs to be more jobs diversification here and there are many challenges to starting an economy for a relatively new city without many amazing location draws (port, oil & gas, etc)

However, talking about walmart doesn't really talk about the picture at all - it's a soundbyte and a relatively poor one

[Discovery1]

Originally Posted by azsundevil99

I left Phoenix and it was the best thing I could've done for my family and myself. I lost $200k in equity thanks to all the idiots who foreclosed and couldn't afford their home in the first place, but thankfully we have been able to regain some ground and move on. Good luck to those who have no alternative but to stay.

Remember, for every loser there will be a winner. It would be interesting to see Phoenix from this point on with less losers in the pool.

[slackjaw]

Depends where you live. Zillow only goes back 10 years, I suspect you went just a bit farther you might find Phoenix even value as well. If you had a 10% down payment it isn't unreasonable to not be upside down on your home.

[Finger Laker]

In many places it is

I actually did the math for my neighborhood and the only people who would be OK were the ones who bought new in 2001, had a full 20% downpayment and never touched their loan to refinance to a lower rate (not a cash out, just a pure rate change which would reset the amortization schedule) and they would be at about break even or within negotiating distance - if they paid lot premiums, put in a pool or did a variety of other things when built they'd still be upside down

given the drastic falls in home prices, the nature of amortization schedules and the overwhelming amount of homes built within the past decade many people are in bad shape - even if they didn't use their homes as an ATM, live beyond their means, etc

that's a large part of the reason why the percentage of homes underwater is so great and the amount of those that are vastly underwater is scary

[seattlecoming]

Originally Posted by Captain Bill

68% of homeowners may have negative equity, but 100% of the 68% are not going to shortsell their home.

Some will do strategic short sales, and some will do a short sale, some will go to foreclosures. But many others have no intention of selling.

My primary residence has negative equity, but I have no intention of selling it.

How many of them will put their home on the market is an unknown, but there are many, including me, who plan to stay put.

I meant to say short sale, I stand corrected. It still doesn't help my brother and his family who bought a home 7 years ago when everything seemed peachy-keen but are now feeling wedged between a rock and hard place. He and his wife made some not-so-stellar decisions but they're among the many people who did around that time. Many others have no intention of selling as you say, and that's because many people feel stuck and can't get out if they wanted to.