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The problem with you and Captain Bill's approach is you are applying anecdotal evidence to contradict a much larger statistical average.
My anecdotal discussion was in keeping with Boompa's mention about condo's. I happen to believe that the condo market has declined much further than it should have; and that one day it will bounce back up. The two that I bought (and the one I just offered on) were bought below the 1986 prices. It had nothing to do with any statistical average.
Perhaps you would like to show the statistical average that you feel I was contradicting.
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You are also trying to make generalized statements about an entire market based on a subset of a housing demographic. I too recently bought an investment property in Gilbert. I paid less than 150K for this home, and yes iin that particular range, it was very competitive. I am also looking to purchase a large luxury home for myself. There is a plethora of homes in this range that are continuing to drop in price. And honestly for homes over 300K, homes prices are continuing to drop in price and I would not try to claim this is a sellers market because in a true sellers market, the seller is not having to drastically reduce the price of their home to create demand.
There has not been a claim that all price ranges are equal. I've posted the charts before, showing the inventory on all price ranges. Below is a current one. The overall inventory for Phoenix had declined to 2.9 months. During the last month, as it slowed up, the overall inventory increased to 3.2 months. The inventory for most of the price ranges have crept up. See the chart below courtesy ofCromford Report.
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And I also remember realtors on this forum encouraging buying activity in 2008 by making similar claims of reduced inventory and that it would lead to increased demand and prices later which never manifested as claimed.
The inventory WAS DECLINING, and the SALES WERE INCREASING.
And just like others in the industry, I was surprised that prices didn't recover quicker.
The prices declined much further than they should have. However, I was putting my money where my mouth was and buying and rehabbing. And I was not surreptitiously sending PM's to people telling them to ignore someone because they are a Realtor; like someone I know did.
And if you'll look at the inventory history:
Feb 2008 the Metro inventory peaked at 20 months and began declining rapidly.
With a few gyrations, the inventory kept declining to the present level of 3 months.
Look at the number of sales history:
Jan 2008 the number of sales per month bottomed at 2,863, and began increasing to a record number of 10,520 in June 2011.
Prices lag supply and demand. The price lag here has been longer than would be expected, and it now appears it's because of the majority of buyers are investors and they're buying more on the low price end.
The general public still hasn't started buying.
However, the median price, which OldTrader is referring to has been flat, in a $108-$115 range since Dec 2010. Yet he continues to compare months in 2010 when we had the surge upwards to 2011, when all that happened was the prices went up during the tax incentive and dropped back down when the incentive went away.
But look what happened when the public jumped in during early 2010.
Prices shot up.
What do you think will happen when the public jumps back in???
Your answer here:
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Unfortunately, I have yet to read anything to dispute anything Oldtimer has said. So in short, no one is stupid. It depends entirely on the type of home you are seeking. For some homes, you really should invest now. However, it is stupid to make generalized statements about the housing market based on the competition you faced to buy your sub 150K home.
That's because you're too intent on trying to prove that someone else is wrong instead of reading and understanding the information that's provided.
The fact that foreclosure notices are down is a very important factor in understanding what may happen to inventory soon.
The fact that foreclosure sales are also down is another very important factor for inventory
The fact that the REO inventory has been declining weekly is another very important factor which ties into the previous two factors.
Within a couple months the total REO inventory (listed and unlisted) declined from 19,000 to 15,000 units.
However, the median price, which OldTrader is referring to has been flat, in a $108-$115 range since Dec 2010. Yet he continues to compare months in 2010 when we had the surge upwards to 2011, when all that happened was the prices went up during the tax incentive and dropped back down when the incentive went away.
We agree. It seems that some people are cherry picking statistics.
About 2/3rd of all home sales Phoenix Area are short sales and foreclosures.
Somewhere between 40% and 45% of all sales are made to investors.
There are a lot of adjustable rate mortgages, becoming due to be redone in 2011. When owners realize that they can't re-do the mortgages as the homes are so far underwater, it is expected that a lot of these will end up increasing the number of foreclosures available.
Obama has let it known, he is getting ready to propose, instead of selling government owned homes they be put up for rent. If this happens, it will have the potential of the supply of rentals exceed the market for rentals, which can drive the investors out of the market real quick.
If the investors are driven from the market with them already buying nearly half of all homes, this can increase the supply, and at the same time reduce the demand, quickly lengthen time on the market which in turn will have a tendency to drive prices down again.
Until the economy turns around, we cannot expect the personal use home buyers to be heavily back into the market.
In 2004, I had a debate with an Economist customer of mine that housing (especially in the sand states) were WAY over priced. I presented my hypothesis using common sense and he countered it with graphs and logic. I would have never predicted a 50% drop but I did see a drop coming. He didn't. This specific Economist was as high up in this mess as you can imagine. He is on a 1st name basis with people like Barny Frank and Alan Greenspan. I'm not going to mention his name or where he now works but let's just say he gets paid to model what was going to happen (I know some of these mover and shakers because of a business that I own which has nothing to do with economics nor the government).
In 2008 and 2009, I was beating the drum that housing was not out of the woods in AZ. It was seemingly obvious to ME that it wasn't over. I also posted my thoughts in a couple hundred posts. I have also said that homes in MN are still dropping and I strongly predict they will continue for the next year. Intellectually speaking, I know I should have sold my MN home last year as well as this spring. But I don't make all of my decisions based off of ROI.
That being said, IF the economy doesn't go into a 2nd deep recession, I don't predict we will ever see prices return to March of 2011 in the lower price range homes. I don't care if the unemployment stays at 9% for the rest of my life. AZ is a desirable housing market for all kinds of reasons and it is now ubber affordable. If I was in the market today and I could wait, I'd delay buying until December(ish) of 2011. But if you want a specific style of home inside of a neighborhood that you really want, then I'd pull the trigger without hesitation.
There are all kinds of trends that are showing we are at least 1/2 way though this mess. Even though I was joking, there certainly are things that can push us lower including a European collapse, a nuclear war in the middle east, as well as a pandemic. But my broader point was meant to illustrate that most of these fears that people point out never happen and somehow the world continues to spin.
At the end of the day I'm making money in real real estate as a "hobbyist". I've amassed a small fortune (to my standards) in real estate because I have a knack for "reading the tea leaves". Those AZ tea leaves are telling me that if we do not enter into another recession, the worst has past. If we do enter into another mild recession then it might go back to the record lows and people will have another chance to capture a steal without multiple bids.
So in the end I can see situations where housing goes up or down. Yet some people can only see situations where it drops and will ignore positive signs. Shy of a melt down, I'm going to make money even if it goes down. And it if does melt down, I paid cash for it and it isn't going to bankrupt me. That's how a lot of those 50% cash buyers are reading this. To me, they are logical but others might not see it the same way. Risk : reward. I see more reward than risk and I have mitigated my risks other than the big ones that I don't have control over.
About 2/3rd of all home sales Phoenix Area are short sales and foreclosures.
Somewhere between 40% and 45% of all sales are made to investors.
There are a lot of adjustable rate mortgages, becoming due to be redone in 2011. When owners realize that they can't re-do the mortgages as the homes are so far underwater, it is expected that a lot of these will end up increasing the number of foreclosures available.
Obama has let it known, he is getting ready to propose, instead of selling government owned homes they be put up for rent. If this happens, it will have the potential of the supply of rentals exceed the market for rentals, which can drive the investors out of the market real quick.
If the investors are driven from the market with them already buying nearly half of all homes, this can increase the supply, and at the same time reduce the demand, quickly lengthen time on the market which in turn will have a tendency to drive prices down again.
Current option arm statistics are really thin - If you've got current data, I'd love to see it - the most credible information I've seen is very old, as of 2009, 50%+ of those loans were already in default. The charts from 2008 showed a massive wall of recasts hitting right about now and continuing into next year - but that wall won't hit now if those homes are/were already foreclosed - and the people with those loans were 50%+ underwater in 2009 - Arizona is one of the easiest and least painful states to duck out of a mortgage that isn't favorable - assuming these people are still hanging on... here ....is a very big assumption indeed.
As for "driving investors out of the market", I can only ask... how? 40-50% of these investors paid cash for their properties, and the ones who financed their investments were financing at 50-70%+ off of "bubble" prices with REAL downpayments (20%+ down)..
rents could fall by 50%+ and the payments would still get made... if rents fall that far, there really isn't any point in "investing" in anything but survival supplies.
We're already at 20%+ real unemployment - are you predicting that jumps another 10%?
So in the end I can see situations where housing goes up or down. Yet some people can only see situations where it drops and will ignore positive signs. Shy of a melt down, I'm going to make money even if it goes down. And it if does melt down, I paid cash for it and it isn't going to bankrupt me. That's how a lot of those 50% cash buyers are reading this. To me, they are logical but others might not see it the same way. Risk : reward. I see more reward than risk and I have mitigated my risks other than the big ones that I don't have control over.
Most of the investors I'm working with are looking 5 to 10 years down the road. Some are paying cash and others are financing. And they realize that the market can still go down in price. But they also understand at what price level they're buying today, and they feel that prices at this 2001 level (and below) are a pretty good bargain.
One person bought some homes in 2006 and is under water on them. His strategy is not to do a strategic walk, but to buy more at this price level so he can average down. He's looking at a10-15 year time frame.
Not everyone who is underwater is going to walk away, as OldTrader seems to suggest. I'm underwater on my primary residence, but own my investment homes outright. I have no intention of walking away from my home because, like housing has done since I've been living, it will continue to go through cycles.
However, if Saturn and the other three horsemen cause the wall to come tumbling down, I could walk away and live in one of the homes that I own outright.
We will continue to see short sales, and foreclosures because people will have to relocate for various reasons and they will need to either short sale, or let it foreclose.
However, the rate in Phoenix is declining, and I don't see it increasing, because many of the people who are underwater don't have any plans on short selling or walking away. Many are like me; they plan to ride it out.
Saw this article (near bottom) which indicated that foreclosures in Arizona now account for 57 percent of sales in the latest quarter, up 16 percent from the same quarter a year ago. Not sure exactly how to interpret that, but it is interesting.
Many of us were saying these things for the past year but maybe you guys will listen if two prominent university real estate professors say the same thing. Many of the points we've been stating were reiterated by these professors. They quote Jay Butler, professor emeritus at the W.P. Carey School of Business at Arizona State University and Marshall Vest, economist at the Eller College of Management at the University of Arizona. No, we were not realtor bashing, we were just telling you the truth.
Important quotes and points from this article that many of us on City Data have been stating for the past year.
(1) Housing prices won't increase until foreclosures are absorbed "There won't be a turnaround in the trend until the "fundamentals" of the housing market get better. That starts with trying to absorb the excess supply of homes." - Marshall Vest
(2) Home sales involve mostly inexpensive homes right now "The only thing that's being sold right now are investment properties: rentals and cheap properties,that just keeps the lid on any appreciation (and) keeps on forcing prices down even further,And there's no pent-up demand at the moment for a move-up market so there's nothing to accelerate any appreciation." -Jay Butler
(3) The number of foreclosures may be decreasing but there are still a significant number of foreclosures still left on the market. "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
(4) The job market influences housing prices and our job market has a ways to go before we see significant improvement.
Butler said prices will not pick up until other elements of the economy recover, including the job market. "And that is the big unknown," Butler said. "We are not getting job growth," he explained. "Even people who have jobs don't get income growth."
Many of us were saying these things for the past year but maybe you guys will listen if two prominent university real estate professors say the same thing.
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. 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.
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??
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.
The guy who gets it right nearly all the time is Mike Orr. INHO, he is the real Valley expert.
"Butler said prices will not pick up until other elements of the economy recover, including the job market." "And that is the big unknown," Butler said. "We are not getting job growth," he explained. "Even people who have jobs don't get income growth."
Apparently Mr. Butler has not been keeping up with the job reports:
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)
Hotels are being built, several new ones in Gilbert
Builders are building more homes today, in Gilbert and Mesa that I'm familiar with
The MD Anderson Cancer Treatment Center will have it's grand opening this month
There will be more jobs created around MD Anderson and Banner Gateway
The Mesa Airport is building a new terminal on the north side of the airport to accommodate the huge complex on the General Motors Proving Grounds
Mr. Butler is often quoted, but he is also often wrong.
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Butler said one reason prices continue to plummet relates to what people are buying. "The only thing that's being sold right now are investment properties: rentals and cheap properties," he said.
That is not correct.
Prices are NOT plummeting. The Metro Area prices have been FLAT since Dec 2011.
The City of Phoenix prices have increased from $60,000 in May 2009 to $85,000 today.
See the Metro chart below and the Phoenix chart courtesy of The Cromford Report
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"The only thing that's being sold right now are investment properties: rentals and cheap properties," he said.
Of course that is NOT correct. The charts I've shown from the Cromford Report show homes in all price ranges being sold, and the inventory declining in all price ranges. My investor clients have been buying in the 100-150 range. My first time home buyers in the up to $200 range, and others in higher ranges up to above 1 mil.
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"We have a high proportion of distressed sales in the market," he said. "That's going to continue to put downward pressure on prices."
And Vest said 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."
Today we have 67.2 % distressed sales. That is a high proportion.
However, the decline in foreclosure numbers is more than "a bit".
The information I have from the Cromford Report, which is the most reliable source of information and statistical data for the Phoenix area, does not support Mr. Butler's statement.
REO's 19,100 in May, declined to 15125 today.
Pending Foreclosures 35,000 in Dec 2010 has declined to 21,000 today.
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And Butler said all the negative news about the national debt and other issues has knocked the wind out of consumer confidence.
I also asked the question: What do you think will happen when the public jumps back in???
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"The environment for the housing market really has to improve before the housing market even begins to improve," he said.
The environment for the housing market has been improving.
Jobs have been added
Jobs continue to be added
People are still relocating here
People are still buying vacation homes in "all price ranges"
Investors are still buying strong. (They are buying the lower price range, and as I said before, that is one of the reasons the home prices are being held flat)
People all over the world recognize the bargain prices Phoenix has.
Our median price is lower than it was in 2001
We are having record numbers of sales, despite the number of negative articles.
They will slow down during the slow season, but they are likely to pick back up at the beginning of the year.
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Jay Butler said: . . .2006 will likely end up more like 2002, the last year before the market started its hyper upward climb. (Jay Butler, Director of the Arizona Real Estate Center at ASU)
During that time Mike Orr of the Cromford Report was saying that the supply was increasing, while sales were declining, and that a price decline has to follow.
Mike Orr was correct.
Mr. Butler was not correct; possibly he was not watching the trends.
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Here's what Mike Orr had to say this June 2011: "...After a bump upwards between mid April and mid May, average sales price per sq. ft. is back down a little at the beginning of June. Although we are still some 2% to 3% above the market bottom in January and February this year, in most places prices have not yet responded to the huge changes in supply and demand. Why not? Please refer to what happened in 2005, but with everything upside down. The rules of supply and demand have not been lifted. Of course, you don't have to believe me, but please don't say I didn't warn you.
The statistical information I post on C-D is from the Cromford Report, and is factual.
Much of the information on some of these press articles is conjecture with no supporting data.
Every reader should study and understand the information that is in the press or on C-D. And especially use caution when reading articles that only offer conjecture with no supporting data.
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It seems that some people are cherry picking statistics.
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. 
So I still can disagree with some of his predictions knowing that his words are not gospel.
