Housing Prices (Phoenix, Congress: rental market, loans, how much)
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Location: In a city within a state where politicians come to get their PHDs in Corruption
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Quote:
Originally Posted by azriverfan.
Let's remember, this is a forum that has kept track of people's comments and predictions for years. If people want to do a search on some of the predictions that some of the realtors have said here, they can do so. I've been reading this forum since 2007 and was active since 2008. I have followed some of the realtors on this forum and their claims. From what I've read, these realtors have manipulated data to create a sense of urgency. I will explain how they do this below.
The mantra has been the same regardless of the form that it's given in. They will acknowledge the facts regarding the current market but then will indicate supply of homes is falling implying that you need to buy now because this dwindling supply won't be reflected in the numbers until later. Sound familiar? They've been giving this line for the past 3 years and I have the quotes and URL's to prove it. They cover themselves by saying they aren't telling you to go out and buy a home. They just say they are providing data. They will say their data is accurate which it is. However, what they don't tell you is how they selected certain data and excluded others to provide the impression they wanted. Case in point, in the past, they would discuss declining inventory but wouldn't acknowledge shadow inventory or the fact that many more foreclosures were about to be released onto the market. And that is exactly what happened in the past.
It would be one thing, if these realtors made these claims now. It would be one thing if this was the first time they said this. I would probably listen as well. However, when you've been reading this forum for the past 4 years and every year, they've made these claims, any reasonable person is going to be skeptical and question their motives. If that makes me a bad person so be it. I also feel like I have a responsibility to protect consumers on this forum and ask them to question advice before accepting it freely.
Let's go back to the surgeon example. A surgeon or any physician would tell you to get a second and third opinion if you had questioned a procedure and provide you with their contact information. How many realtors would tell you to seek the services of another realtor or adviser if you didn't believe them AND provide their contact information? Furthermore, performing a surgery when it is unnecessary carries risks and most surgeons would not place themselves in that situation for fear of being sued and risking a patient's health. What does a realtor risk by getting their client to purchase a home for more than what they could have paid? So you can't compare the two because they are entirely different fields.
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How many realtors would tell you to seek the services of another realtor or adviser if you didn't believe them AND provide their contact information? ..
... What does a realtor risk by getting their client to purchase a home for more than what they could have paid?
I would like to respond to this portion of the post because it does relate to housing prices.
Part of a Realtors job is to advise and consult with the client on the current market condition and help the client find the home that the buyer wants to purchase. The Realtor, using his/her market knowledge and skills will provide comparable information and recommend a price range and negotiation strategy based on what is happening in the current market.
If the agent knows there is or will be multiple offers then the offer strategy will be different from the situation where a home may be over priced with no competition.
A Realtors negotiation skills are very important and the better the agent can negotiate a good price (in the current market) the happier the client will be.
No Realtor wants a client to pay more for a home than it's worth. That's a myth perpetuated by those who don't understand the real estate business, and think the agent is looking only at the commission. The fact is that there is usually a 300-400 dollar difference in a commission.
If an agent in fact does purposely have a buyer over pay, the buyer will eventually discover that, and the bad press will damage the agent. On the other hand, a very happy client will refer the agent; and referrals from satisfied clients are the life blood of the agent.
It is not common in the real estate industry for agents to refer clients to another agent for second opinions, due to the law of Agency. People who are not real estate professionals should constrain themselves from offering advice for an action they are not qualified to advise on.
When a person calls an agent, the agent is required to determine if the person is working with another agent. If they are, then that agent cannot interfere with that Agency, and is supposed to tell the person to ask the questions to his/her Realtor. (There are exceptions which are not in the scope of this discussion)
When a person chooses a Realtor, they have usually interviewed others before choosing one. I believe Mn-born-n-raised interviewed 20 Realtors. If they don't believe what an agent is telling them, it is very easy and common place for them to drop that agent and go to another one very quickly.
Certainly if during the process a client feels the agent is going to push them into paying more for a home than they should, then they should fire that Realtor and find another one.
But prior to making an offer on a home, the agent is required to provide the comparable prices of Sold homes, and Active homes in the area so as to help guide the client in the offer structure.
Today's market is very competitive, with many homes getting multiple offers and selling above list price. The agent needs to advise the clients of this and depending on how badly the client wants a particular house, offer guidance accordingly. However, the final decision on what to pay for a home rests with the Buyer.
The question was asked: "Forgetting the irrational and unrealistic prices at the peak of the market - is $90-$110 the kid of fire-sale, rock-bottom, once-in-a-lifetime price opportunity that should have me rushing to buy right now?"
My answer is no. IMHO, there is positively no reason to rush-out and buy something today. While most neighborhoods have stabilized and some have gone back up over the past few months, we are in the peak buying season. IMHO, the demand will again soften like it does every year giving people ammunition to say "see, I knew it was going to soften" and they probably will be correct.
So why are "investors" buying?? Some people are fixing them and "flipping" while others are buying and renting for a positive cash flow. Some people are going to make money while others will lose thousands because they are not calculating the ROI correctly. today a real estate "investor" is a loosely defined label.
Since no one can time things perfectly, you still can make money every month if you rent and know what you are doing so time is on your side. But. Rent could go down. Probably not but it could. Yes. There are risks.
While there is not a rule that says the home values will come up closer to rebuild costs, many people believe in this logic. I happen to be one of them. It could take 5 or more years for this to happen. It might take 10 years or even 3 years. NO ONE KNOWS!
There is a lot of downward pricing pressure. Low appraisals, banks that really don't want to borrow money and therefore are attaching higher standards (who could blame them), people trapped in their houses who are upside down, high unemployment, loads of people with damaged credit, others who don't think the bottom is in and are sitting on the sidelines etc etc. But with all of that said (like it or not) the price HAS stabilized and is going up in some parts of the Valley.
Considering all of the things going against the market in Phoenix, it's amazing that the prices have stabilized and are actually rising. I know. Some communities have TON's of empty homes. I don't know what will happen to those disconnected towns or undesirable neighborhoods. Time will tell.
Like I have said before, I have a customer that is a Sr Economist that gets paid to model this market for risk (as well as the entire country). He said in January, "bottom" is June. He is THE God of experts. But wait. When I talked with him in 2005 he said the country could only correct 10%. In 2007, he said in a year or so the bottom would be in. Well. THE expert was wrong because that was what is crystal ball told him. But THE expert believed passionately in what he said. I happened to disagree with him but I never ever saw a 50% drop.
So if a realtor on this board got it wrong, that doesn't mean he cannot be trusted or that he intentionally manipulated his words. It was his personal belief. He could not have known that unemployment would rise, the national debt would explode to $14 Trillion, people would strategically default by the tens of thousands etc.
No one (and I mean no one) can accurately predict what is going to happen. We can debate on the probability of it going up or down but IF you get it right there was still a lot of luck involved.
Location: In a city within a state where politicians come to get their PHDs in Corruption
2,907 posts, read 2,073,972 times
Reputation: 4478
No one (and I mean no one) can accurately predict what is going to happen. We can debate on the probability of it going up or down but IF you get it right there was still a lot of luck involved.[/quote]
Not true. And I don't need a realtor or a bean counter economist with his fancy statistical modeling to tell me that.
I believe Charles stated it the best. Until jobs come back and strategic defaults have gone into history books, upward pricing pressure shall be non existent. It is very simple and easy to predict, at least short term.
Not true. And I don't need a realtor or a bean counter economist with his fancy statistical modeling to tell me that.
I believe Charles stated it the best. Until jobs come back and strategic defaults have gone into history books, upward pricing pressure shall be non existent. It is very simple and easy to predict, at least short term.
Your last point might be the best one - notice of defaults have went down in Phoenix. Step one is the notice of default, without that, there isn't a foreclosure looming.
The first wave of foreclosures was the liar-loans & Starbucks Barrista "land barons" buying overpriced houses with exploding loans. Those guys are pretty much gone now.
Round two was those in vulnerable industries (housing, banking, automotive, etc) that lost their jobs or had significant income cuts due to the music stopping. Many of those people have run out their 99 weeks and gave up their houses, or will do so shortly.
The rate of job loss has slowed in Phoenix, and more importantly, those with jobs are coming to realize that if they could have been eliminated by their employers they would have.
It isn't all sunshine & roses, but it's not time to stock up on MRE's & bullets either.
If you want to wait for 5% unemployment & an article in the repugnant to tell you it's time to buy a house, that's fine - but don't expect to get a "deal"...
Location: In a city within a state where politicians come to get their PHDs in Corruption
2,907 posts, read 2,073,972 times
Reputation: 4478
Quote:
Originally Posted by Zippyman
Your last point might be the best one - notice of defaults have went down in Phoenix. Step one is the notice of default, without that, there isn't a foreclosure looming.
The first wave of foreclosures was the liar-loans & Starbucks Barrista "land barons" buying overpriced houses with exploding loans. Those guys are pretty much gone now.
Round two was those in vulnerable industries (housing, banking, automotive, etc) that lost their jobs or had significant income cuts due to the music stopping. Many of those people have run out their 99 weeks and gave up their houses, or will do so shortly.
The rate of job loss has slowed in Phoenix, and more importantly, those with jobs are coming to realize that if they could have been eliminated by their employers they would have.
It isn't all sunshine & roses, but it's not time to stock up on MRE's & bullets either.
If you want to wait for 5% unemployment & an article in the repugnant to tell you it's time to buy a house, that's fine - but don't expect to get a "deal"...
What is a deal to a retiree from Canada, Europe or Midwest is not a deal to an average person who wants to buy a house and live in it long term.
Person who does a strategic default these days is someone who is employed, has money in the bank but simply looks at his/her numbers and realizes that it will take years, decades to recoup the losses and decides to mail in the keys. This is particularly popular in Arizona because it is a non-recourse state. It is very hard to quantify this group, but they are becoming bigger and bigger slice of the foreclosure pile.
When an item, any item is in short supply and high demand, that item's price goes up. Right? MacroEcon 101. There is a conundrum in Phoenix housing market though right now. Short supply, high demand, yet flat prices. What gives? Well it is either an artificially low supply or demand or both. I would say both. Demand is mostly driven by speculators and retirees, while the supply is suppressed by banks holding on the properties. There are currently roughly 100,000 vacant housing units in Phoenix metro. What would happen if they all went up for sale tomorrow? How about half of them? Quarter of them?
Not true. And I don't need a realtor or a bean counter economist with his fancy statistical modeling to tell me that.
I believe Charles stated it the best. Until jobs come back and strategic defaults have gone into history books, upward pricing pressure shall be non existent. It is very simple and easy to predict, at least short term.
Really?? Did you predict the government was going to issue a rebate in April of 2009??? When they did, what happened to the housing values???
And then it droped 15% from there. Of course it was predictable. It simply pulled demand forward. Again artificially inflated.
Respectfully speaking, it's not that simple. There is a reason for the saying "hindsight is 20-20". You are speaking in hindsight so you can explain that it was "simple pulling the demand forward". Yep, you have that 20-20 vision. But there were multi billions of dollars waged that said if the momentum can stop and some supply got mopped up, then several years of pent-up demand could be unleashed and the bottom could be realized. That was the theory and it was supported by some smart people that are "experts". Again, those experts were wrong. The other camp said let it fall. But laws that allow people to default can be a game changer as well. So I didn't personally see the logic. I know I have posts back in 2009 that said that. But there was several months in mid 2010 I thought I missed the "bottom". But when June of 2010 came all of sudden I regained that is was going to drop. In hindsight, I was right but it was an educated guess.
Logic would also tell us that the prices should rise about $8K (the cost of the rebate) when the tax incentive was unleashed. But they went up over $20K.
I guess my point is we cannot predict QE2, nor unemployment rates, earthquakes, uprising in the middle easts causing gas to rise, etc. All of these variable shake consumer confidence as well as dozens of other variables. The bottom line is we are in volatile times.
Saying all of this, I had my street smart gut feelings that there was still more depreciation to go in April of 2009 and that the bleeding wasn't done for most of 2010. I also thought MN was going to drop a lot as well. But now we are in the hairy part of the prediction cycle and things are less obvous. To me anyways.
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