Epicenter of Housing Crisis (Phoenix, Miami: loan, new house, unemployment)

[azriverfan.]

Originally Posted by MN-Born-n-Raised

Prominent professors shouldn't be quoted saying "right now it sucks". I'm sorry but that statement lacks class. One small correction: Butler is a former professor at ASU. While were are shooting for accurate information, would you like me to dig out some quotes from the professor from 2006-2009??? You will see the prominent professor gets it wrong all-to-often.

Yes, that makes sense, let's discount the fact that he led ASU's real estate education program for years because he used the word "sucks". Furthermore, he retired in July so I fail to see how that is relevant. Did his knowledge of the real estate industry exponentially drop in two months? And professors do not lose their title because they retired. And please dig up those quotes from 2006-2009 in which he was wrong because he has been right thus far unlike some of our esteemed colleague on this forum. Can we also similarly post failed predictions by forum members? (don't worry kimbalette, i won't do so)

So I still can disagree with some of his predictions knowing that his words are not gospel. It's worth reading his opinion but based off of history, nothing says he will be right.

Again we will gladly await those failed predictions of his. And while his word may not be gospel, I think I will take the word of the former director of real estate studies at ASU over real estate investors on this forum.

Independent of those details, the author in your link article forgot to mention that there was record Valley home sales in June, YOY foreclosures are down by nearly 40% as well as the Valley lead the country in inventory reduction (30%). So why wasn't the author / article balanced??

Actually there are two authors and one of them in fact addresses this very thing you stated. "We have a high proportion of distressed sales in the market...That's going to continue to put downward pressure on prices."
While the number of homes being sold in foreclosure - and at foreclosure prices - is declining a bit, "there seems to be a lot of houses still in the pipeline. -

-Marshall Vest

I'm on the record back in June saying that this fall will AGAIN drop in price for seasonal reasons and that articles are going to come out talking about how soft it is bla bla bla. My advice would be to wait until December to recess because the prices will be softer this December than they are this August. Psst. It happens every year.

You were also on record claiming this was a sellers market which it isn't since by definition it means increased supply exceeds demand resulting in higher prices which hasn't been the case. http://www.redfin.com/definition/sellers-market. Prices have fallen and continue to do so. Sellers are being forced to lower prices to create demand since supply exceeds demand. http://www.redfin.com/definition/buyers-market And you didn't state anything people didn't already know since it's well documented that home sales increase in June because families tend to buy homes prior to the start of the next school year among other reasons. However, we were simply not buying the hype implying the bottom of the market was reached either

The guy who gets it right nearly all the time is Mike Orr. INHO, he is the real Valley expert.

Why because he agrees with you?

[Captain Bill]

But those delayed foreclosures are expected to start reappearing soon. Butler said an increase in foreclosures is virtually certain early in 2011, for that reason and others.
Arizona sets another foreclosure record in 2010 - KTAR.com

Mr Butler got it wrong. Foreclosures have decreased.
I have a lot of respect for his knowledge, but he obviously is not perfect in his predictions.

"And that is the big unknown," Butler said. "We are not getting job growth,"

Mr Butler got it wrong.
Phoenix 4th From the Top in Job Growth (http://www.myfoxphoenix.com/dpp/news/local/phoenix/phoenix-us-economy-apx-2-2-2011 - broken link)

Per Elliott Pollack, who runs an economic and real estate consulting firm in Scottsdale.

"...By the time the housing market is back to normal, which I think is 2014 or '15, ... housing prices I think have to go up 60 percent from where they are today,'' Pollack said. ``Now, that 60 percent from where they are today, as outrageous as that sounds, still leaves you 30 percent below the peak. So if you bought in 2005-2006, and you had a large mortgage, you're still underwater, you're still not moving, or you're sending your keys back to the bank.''

Arizona sets another foreclosure record in 2010 - KTAR.com

Is Pollack right or wrong in his prediction? Apparently there are a lot of real estate investors who think he's right.

As Mike Orr would say: Stay Tuned

And as Captain Bill would say:
The Trend is Your Friend.
Keep Watching the Trends.


We're at the end of the buying season, and sales are naturally declining.

My prediction, and I may be wrong, is that in January 2012 sales will pick back up again. If the public begins to gain confidence and starts buying along with the investors, we should see some price increases in 2011.

[MN-Born-n-Raised]

azriverfan. I've read countless Mike Orr RE market reports. That is why I waited to buy in early 2011. He was right and it fell some more. The bottom line is Mike is balanced and he presents the whole story. That's why people have to pay for his advice. Don't take my word for it, read it. If you like, DM me and I will send you some of his analysis. It contains the good, the bad, and the ugly (a.k.a. balanced).

I've also been on record and said that the ARMLS models are a joke. My December 2010 predictions were spot on in that the bottom wasn't going to fall out of the market. In June while record sales were going on, I said it prices were going to drop again this fall. Gee. It looks as though I am right again. Here is the difference: Jay talks about the RE market while I make money in the RE market. That's why I don't respect most economists especially professors. They are in the academia world for a reason.

The article that you linked isn't balanced. I suspect that the author cherry picked Jay's words. IF Jay forgot to mention some of the positive market conditions that happened this Spring then he isn't as prominent as you would like to think.

[Potential_Landlord]

Originally Posted by MN-Born-n-Raised

I've also been on record and said that the ARMLS models are a joke. My December 2010 predictions were spot on in that the bottom wasn't going to fall out of the market. In June while record sales were going on, I said it prices were going to drop again this fall. Gee. It looks as though I am right again. Here is the difference: Jay talks about the RE market while I make money in the RE market. That's why I don't respect most economists especially professors. They are in the academia world for a reason.

MN-Born-n-Raised: Do you think it will go down much this fall before it goes up again? Does the Orr report say anything about next year?
And yes, never trust the academia with any kind of forecasts. They are just projecting the last five years' average into the future. There is no professor good at timing the stock market nor at predicting the economy. But they are very good at explaing the past behavior and why they knew everything in hindsight. For real forecasts you have to learn yourself or go to private parties.

Thanks, PL

[Discovery1]

I was thinking the same thing myself and this is my 2 cents.... If Europe getting worse which will effect our financial institutions . Therefore, will directly translate to our economy going downward then all bets are off...MN should be correct with Phoenix housing going down this Fall.

One thing to keep in mind is that inventory is shrinking everyday for some time now which translated to new housing that are feeding to the market with higher asking price these days.

Area with HIGH inventory might see things slow a little this coming winter. But i strongly believe we will not see prices drop to level past Fall again unless...... See the above.

Bouncing the bottom for another year ? Yes
Breaking the new low? NO

Just watch the financial market closely because it will tell us what going forwards.

[MN-Born-n-Raised]

Originally Posted by Potential_Landlord

MN-Born-n-Raised: Do you think it will go down much this fall before it goes up again? Does the Orr report say anything about next year?
And yes, never trust the academia with any kind of forecasts. They are just projecting the last five years' average into the future. There is no professor good at timing the stock market nor at predicting the economy. But they are very good at explaing the past behavior and why they knew everything in hindsight. For real forecasts you have to learn yourself or go to private parties.

Thanks, PL

Here is my gut feel.

The Valley RE sales turned on hard this Spring with record sales. 30% of the inventory got mopped up. No one predicted it. With the volatility of the market, I predict a percentage of people are going to sit on the side lines. I also expected that articles like this would come out talking about a softening market and ignore that this happens every year. That will make some people think twice about buying. So I suspect this October and November will not be as soft as 2010 but the demand will drop off more than the optimists expect.

If I was trying to time a deal, I would watch the inventory grow / replenish this fall and pay close attention to consumer confidence. I would not buy now unless you got an incredible deal. Fall demand is on your side and confidence has been shook up little. Great deals are currently hard to find right now. Wait till fall and re-assess.

[Captain Bill]

The Cromford Report posts a large number of statistics from which individual subscribers can use to make their own forecasts.

Some of the data points point to weakness, while others point to strength. As I reported on another post, there are arguments to be made on either side of whether the prices will increase or decrease.

In addition to their statistical data, they do a monthly and semi-monthly commentary report, offering their opinion on the market and a forecast of of projected sales price per square foot for the following month.

I post some of their charts on occasion because they permit that with credits. Their written reports are very informative, but I would not post those because that could get into a copyright violation by giving away too much of their information that is subscription based.

Something that they mention, and many who are familiar with the Phoenix area already know, is that in the summer, our sales are mostly at the lower price ranges. Most of the luxury and vacation home buyers are not here during the summer. They have the luxury (pun intended) of spending summers in cooler places. Therefore, the average pricing in Phoenix will show lower between June and September. As summer ends, the luxury and vacation buyers return and begin buying again.

They do feel that the average price per square foot for mid September will be about 1.1 percent lower than mid August. But remember, that is the Metro area overall average price per square foot.

Different cities, zip codes, communities, price ranges, may produce different price/sf results, either up or down.

[jimj]

After buying a REO for the first time in our history and after looking at many others I'd agree with you Capt. about the better deal being the conventional sale. You really don't know what you're getting with a REO, even with us lucking out and that this house was not trashed there were many unseen things that needed to be fixed or replaced not to mention the whole paint job inside and you certainly are NOT going to get much if anything out of the bank on a REO.
If I could have gotten a "normal" sale close to what I paid for this REO I would've taken it.

[mjd2k]

Hmmm.... I am swayed by comments from each side. Reading on CD is part of my due diligence so I do consider most comments.

However, in the 7 months I have been watching CD, everyone has been very wrong and everyone has occasionaly been correct.

I spent 2 years trying to buy the perfect place but eventually settled for less. There was lots out there, its just that I wanted the perfect place but so did everyone else.

There was a rush to buy because only a few perfect places came up and I should have gone more hard core

But prices are actually lower in most cases so there was no rush to buy.

If anyone actually had complete confidence they were right, they would take advanatage of the market in a big way. Not with a flipper here or there. At some point, both sides will be correct.

Either way, I want to hear both sides. Keep it your opinions coming please.

[jimj]

In the end for us it was a great time to buy. Did the REO market go down a bit since we bought? Yep it did but I kind of expected that. I also feel timing the bottom is for suckers and fools. It doesn't work in the stock market (for most) and it ain't going to work here.
I'm in a newer house that we paid $47 a sqft for and it's replacement cost is about $110 sqft. Eventually it will get closer to it's replacement cost, it pretty much has to since cost of raw materials are not going down. The only item that can go down by more than just a normal fluctuation is labor costs so I'd expect a bump to it's worth of at least the raw costs when most of the REO inventory is spoken for.
When this happens I think it's reasonable to expect it to recover to somewhere around $80 a sqft depending on raw material costs at that time.
If China keeps sucking up concrete,lumber etc like they were then raw costs could even go up more, $90 a yard concrete was not all that long ago.
When you couple insanely low interest rates (that HAVE to go up eventually), houses below replacement costs and the inventory it's a great time to buy IF you need/want to buy.
It's a lousy time if you don't need to buy or if you think you'll make a quick flip for a bundle.
Just my uneducated,non professional,no doctorate degree consumer viewpoints.