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Does this mean the overall housing market is improving or is a sign the metro area is morphing into a proportionately greater number of lower income owners purchasing cheaper homes?
I don't think we're talking lower income, especially in the $100-$150 range because there are a lot of cash deals. Now whether those are individuals picking up retirement homes, or landlords, it's tough to say.
To me, an old chartist at heart, the type of action over the last say 4 months is real basing action (unlike NAR's Yun calling a bottom every year since 08) because we have some people trying to test the higher prices and seeing some success. Now whether it holds or not after the muck has been cleaned up is the real test.
Does this mean the overall housing market is improving or is a sign the metro area is morphing into a proportionately greater number of lower income owners purchasing cheaper homes?
I think it means a couple of things. People don't want to buy when they think the market is going to fall some more. The perception is that the bottom is in for homes below $200K and therefore sales are brisk. There is a lot of pent-up demand and rational fear that prices are going to rise. There are some mixed signals on the more expensive properties but they are selling.
Most of the people I know had their income reduced. So by definition, they are lower income in comparison to 2006. The standard of living went down for most people with higher paying jobs like engineering, medicine (pending), IT, software development, business owners, etc. This paradigm shift in overall wages will help motivate people to live within their means. I personally could have spent a couple hundred grand more on a 2nd home but with the massive US debt , I didn't feel comfortable. Therefore, I'm cautious about how much of a home that I wanted to buy. Even with the 3.25% mortgage rates, many people are buying a smaller home and not remotely pushing their limits. It was my goal to live under my means with I think is more common than most people realize. I call this our "good enough" phase and I see it on many peoples buying decision; even higherend consumers.
Additionally as Ponderosa mentioned, the 2nd home buyers like myself are gobbling up the more reasonably priced homes. While AZ was always a 2nd home destination state, I'll bet the percentage of 2nd home owners have gone up considerably.
Oh I agree. I keep tabs on my "nabe" on internet. A house I liked that is Mediterranean style (but did not like only because the next door house is two stories) was bought for $225k last August and they are asking $339k. There are games going on in my area. I'm not taking the bait.
This real estate bubble is not at the bottom yet. Jobs are coming back but wages are still low. I'm expected to work extra hours for free and I'm a consultant (paid by the hour). This is going on all over the place. The income is not anywhere to support the glut of decent homes, which cost at least $225k.
I'm going to predict that the $225K home that you were watching will sell for a lot more than $225K. Probably not $339K. If it sells for a good deal more, why didn't you buy it and make a profit? I can predict this without seeing it because I get the feeling that you are a frugal guy and located a great deal in this current market. Meanwhile, you could have missed the "bottom" in that $225K price range and you have more years of renting ahead of you while you hope it returns.
That being said, do us a favor and let us know the MLS #. It will be fun to watch. You were talking about your wage pressures, let's see how the people who bought that home that you liked actually profited. Remember, that could have been in your pocket (not theirs).
To your 2nd point. We strongly agree that their are wage pressures going on in most sections of this job market. A $250K (3.5%) loan the principal and interest is $1435. PITI might be $1750. That's not a lot of money for many dual income families. When the economy was flying high, that was a $550K home at 5.5% interest rate or $3956 PLUS taxes and insurance or $4500 a month. As you see, even $1750 a month feels very affordable for a lot of families. My point being that even WITH wage pressures, the overall house payment plummeted from 2006 because of lower property taxes, lower interest rates and the lower amount that was borrowed. And I'm assuming the minimum amount of equity. You are not alone with your values of putting down a lot of money for a home.
In summary, I think you are under estimating the wealth of a lot of people and what they can afford.
To me, an old chartist at heart, the type of action over the last say 4 months is real basing action (unlike NAR's Yun calling a bottom every year since 08) because we have some people trying to test the higher prices and seeing some success. Now whether it holds or not after the muck has been cleaned up is the real test.
Lawrence Yun is Baghdad Bob's reincarnation. "There are no American tanks in... [enter your place where American tanks just rolled through]"
But I agree - if you put an RSI indicator, for example, to the Phoenix RE market chart, you see positive divergence between the lows in 2009 and last year. Taken together with massive public bearishness, this looks like the real deal.
Originally Posted by Howard Roark Oh I agree. I keep tabs on my "nabe" on internet. A house I liked that is Mediterranean style (but did not like only because the next door house is two stories) was bought for $225k last August and they are asking $339k. There are games going on in my area. I'm not taking the bait.
This real estate bubble is not at the bottom yet. Jobs are coming back but wages are still low. I'm expected to work extra hours for free and I'm a consultant (paid by the hour). This is going on all over the place. The income is not anywhere to support the glut of decent homes, which cost at least $225k.
Howard, unless you post the mls number or address of the house, so we can see the size, amenities, features and condition of the home to compare with comps, then the example means nothing.
What someone paid for a home in the past cannot be used to determine current market value.
The "real estate bubble" may not be at the bottom yet, but it sure has it's head above water, and a 16.8% increase from last year is not too shabby.
Of course, we know from your statements that you don't want to be a homeowner anyway. Nothing wrong with that if it fits your life style, and apparently it does.
I can buy a $225k today with cash but I mostly work outside of Phoenix and am home only 30 or 40 days a year. I prefer to keep a 1,000 square foot apartment vacant and have maintenance come in and keep things well while I'm gone than to have a vacant 1,500 square foot home where something can go wrong and won't be fixed while I'm gone. And I cannot sublet it. My tax break forbids me to sublet a house.
It's frustrating because I have a high net worth and have to live in an apartment complex with section 8 neighbors in Phoenix as well as the city I work in. I rented from a small landlord years ago and the swamp cooler would break down on a Friday but the landlord and her son would typically be gone for the weekend and I had to suffer with 95+ indoor temps all weekend. Hence my aversion to renting a SFH.
I have dreams of enjoying my money. But too busy to enjoy.
Quote:
Originally Posted by MN-Born-n-Raised
I'm going to predict that the $225K home that you were watching will sell for a lot more than $225K. Probably not $339K. If it sells for a good deal more, why didn't you buy it and make a profit? I can predict this without seeing it because I get the feeling that you are a frugal guy and located a great deal in this current market. Meanwhile, you could have missed the "bottom" in that $225K price range and you have more years of renting ahead of you while you hope it returns.
That being said, do us a favor and let us know the MLS #. It will be fun to watch. You were talking about your wage pressures, let's see how the people who bought that home that you liked actually profited. Remember, that could have been in your pocket (not theirs).
To your 2nd point. We strongly agree that their are wage pressures going on in most sections of this job market. A $250K (3.5%) loan the principal and interest is $1435. PITI might be $1750. That's not a lot of money for many dual income families. When the economy was flying high, that was a $550K home at 5.5% interest rate or $3956 PLUS taxes and insurance or $4500 a month. As you see, even $1750 a month feels very affordable for a lot of families. My point being that even WITH wage pressures, the overall house payment plummeted from 2006 because of lower property taxes, lower interest rates and the lower amount that was borrowed. And I'm assuming the minimum amount of equity. You are not alone with your values of putting down a lot of money for a home.
In summary, I think you are under estimating the wealth of a lot of people and what they can afford.
Hmm...I looked on my Zillow app just now and it is completely gone. It's in the Ahwatukee area. Here is one in the same neighborhood sold for $203,500 in September 2011 and for sale for $238,900:
3506 E Rockledge RD in zip 85044. My Zillow app does not show the MLS listing. But anyway it's one of the houses in my area where people bought last Summer or Fall and are trying to flip them for higher prices.
Quote:
Originally Posted by Captain Bill
Howard, unless you post the mls number or address of the house, so we can see the size, amenities, features and condition of the home to compare with comps, then the example means nothing.
What someone paid for a home in the past cannot be used to determine current market value.
The "real estate bubble" may not be at the bottom yet, but it sure has it's head above water, and a 16.8% increase from last year is not too shabby.
Of course, we know from your statements that you don't want to be a homeowner anyway. Nothing wrong with that if it fits your life style, and apparently it does.
Hmm...I looked on my Zillow app just now and it is completely gone. It's in the Ahwatukee area. Here is one in the same neighborhood sold for $203,500 in September 2011 and for sale for $238,900:
3506 E Rockledge RD in zip 85044. My Zillow app does not show the MLS listing. But anyway it's one of the houses in my area where people bought last Summer or Fall and are trying to flip them for higher prices.
Maybe somebody else can chime in on this but I find Zillow is literally months behind. I remember following several properties and not just in Phoenix. After the realtor confirmed that a property was already sold I would still see the property listed on Zillow for about 3 more months..
This real estate bubble is not at the bottom yet. Jobs are coming back but wages are still low. I'm expected to work extra hours for free and I'm a consultant (paid by the hour). This is going on all over the place. The income is not anywhere to support the glut of decent homes, which cost at least $225k.
What I find interesting and not just in the USA is that depending on the city you can have many drivers which have way more influence than income. Let me give you an example. Calgary vs Vancouver. Calgary is the oil capital of Canada...at least all the headquarters like BP, Shell, Conoco etc reside. There are over 100 oil and gas companies in this city. The incomes are by far the highest in Canada here. It's not uncommon for kids straight out of university to get a job starting at 75k and couples in their early 30s to make 300k annual salary. The really succesful energy traders sometimes can retire when they hit 30. The average home is about 470k. You might think "wow, that's still quite high" until you meet Vancouver. The salaries are literally about 30-50% lower yet the average house is about 800k. The driver is that Vanouver has the most mild climate in all of Canada and the Chinese are buying up housing there too to get their citizenship (at least that is one reason). The joke is "if you have to work, you can't afford to live in Vancouver". Makes no sense from an economic perspective. However, the Chinese are driving it up and there is nothing anyone can do about it there.
The realtors in Phoenix can already tell you this but Phoenix is no longer just an American city. People all over the world are coming to buy houses. The stories of buyers from China that buy 50 houses and pay cash are true. Now that Phoenix is starting to turn the corner all my friends that doubted me are all asking me how to buy in Phoenix. This includes Doctors, Directors, and VPs. Funny how people don't like buying when things are cheap but all jump in on the way up. Many of these people have net worths in the millions and no mortgage debt. In Canada when you are used to paying 500-800k for a house, a payment on a 150k home feels like a car payment. So while housing seems like it's expensive to the locals it's not to anyone else. This is exactly what has happened to Vancouver as well. Kids growing up there can't afford to live there but that doesn't stop absurd outside investment.
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I can predict this without seeing it because I get the feeling that you are a frugal guy and located a great deal in this current market. Meanwhile, you could have missed the "bottom" in that $225K price range and you have more years of renting ahead of you while you hope it returns. 
As you see, even $1750 a month feels very affordable for a lot of families. My point being that even WITH wage pressures, the overall house payment plummeted from 2006 because of lower property taxes, lower interest rates and the lower amount that was borrowed. And I'm assuming the minimum amount of equity. You are not alone with your values of putting down a lot of money for a home.
Good thing you didn't buy it!
