Phoenix Real Estate Market Keeps Tanking (Mesa, Scottsdale: neighborhoods, option to buy, tenants)

[Captain Bill]

Originally Posted by whodiman

This is an interesting point. These big institutions could saturate the rental market for sure. However, in the meantime active listings have now dropped below 14,000. Holy crapolly!! At a certain point when the prices become desirable the institutions will probably start selling their rental inventory..just not sure what that magic price is.

And that 14,000 is for all type homes. For single family residences there are only 11,083 Active listings (excluding AWC)

For the past 30 days, the average sales price/sf increased by 8.68%.

The fastest increase during the bubble era was 7.47% in February 2005.

The questions are:

• How long will this keep up?
• How far will the prices trickle up into the higher ranges?
• How long will it take the public to see the current rate of increase?

The 8.69% above is a Monthly Appreciation rate, which is more volatile than the Annual Appreciation rate.

The chart below, courtesy of the Cromford Report, shows the Annual Appreciation Rate by "List Price Range"

[Captain Bill]

Originally Posted by SOON2BNSURPRISE

How will the Bank of America program affect the market? They have a pilot program that will allow former owners to rent there homes for up to 5 years at or below the current rental market rate.

Grijalva Hails Bank of America Program to Keep Families Facing Foreclosure in Homes as Renters

It is a pilot program using a total of 1,000 homes in Arizona, Nevada and New York. They will expand it only if it proves to be more profitable (or less costly) to them.

Alternative to Foreclosure Tested - WSJ.com

[jdahunt]

Captain...I am definately seeing some up ticking in price and less availability.....will be interesting come next week......will be on the ground looking in 5 days.

[Captain Bill]

Originally Posted by jdahunt

Captain...I am definately seeing some up ticking in price and less availability.....will be interesting come next week......will be on the ground looking in 5 days.

Good luck to you. I hope you find something quickly.

[azriverfan.]

Originally Posted by whodiman

This is an interesting point. These big institutions could saturate the rental market for sure. However, in the meantime active listings have now dropped below 14,000. Holy crapolly!!

What do you mean could? It's already happening. Most of these buyers are investors. The rental market is saturated. The good news is it's a great time to be a renter. There are a lot of deals out there as investors are trying to offset the cost of their investment. And for many people, renting is probably your best hope as you won't be able to buy a decent home in a nice area under 200K because you can't compete with the investors.

[themudpuppy]

Another 30+ homes on my possibilities list went pending or AWC overnight.

And what's with all the sudden "temporarily off the market" status changes in the lower priced homes today? They're listing them at a low price one day and taking them off the market a few days later. Anyone know what that's all about?

[Howard Roark]

Originally Posted by azriverfan.

What do you mean could? It's already happening. Most of these buyers are investors. The rental market is saturated. The good news is it's a great time to be a renter. There are a lot of deals out there as investors are trying to offset the cost of their investment. And for many people, renting is probably your best hope as you won't be able to buy a decent home in a nice area under 200K because you can't compete with the investors.

Thanks AzRiver. No skin in the game on your part means an honest post. Come January 2013 when the Phoenix defense giants lose their contracts. Lots of defense workers will start defaulting on their mortgages. This will greatly affect Luke AFB, General Dynamics, Boeing, Rockwell, Lockheed, and so forth. The congressional committee has not decided on the $1.2 trillion cuts last Fall, so the DOD is going to have to cut $500 billion in spending next winter. It will be significant in all the cities with big defense jobs and the unseen larger amount of small defense companies.

[azriverfan.]

Originally Posted by Howard Roark

Thanks AzRiver. No skin in the game on your part means an honest post. Come January 2013 when the Phoenix defense giants lose their contracts. Lots of defense workers will start defaulting on their mortgages. This will greatly affect Luke AFB, General Dynamics, Boeing, Rockwell, Lockheed, and so forth. The congressional committee has not decided on the $1.2 trillion cuts last Fall, so the DOD is going to have to cut $500 billion in spending next winter. It will be significant in all the cities with big defense jobs and the unseen larger amount of small defense companies.

The scary thing is the investors this time around are the real deal. Most of these investors are corporations with millions that are buying multiple properties all over the country with cash. This isn't like the early 2000's in which you had regular folks playing investor and getting loans to buy investment properties.

[ReadyFreddy]

What difference does it make who the investors are? The houses need sold, they're buying them. What's scary about corporations? I think I'd rather have a corp. landlord.

And since when is it a terrific market to be a renter? Last week, renters were still paying significantly more per month than homeowners, on average. My landlord friends don't seem to be experiencing any new pressures.

[Home Addict]

Originally Posted by azriverfan.

The scary thing is the investors this time around are the real deal. Most of these investors are corporations with millions that are buying multiple properties all over the country with cash. This isn't like the early 2000's in which you had regular folks playing investor and getting loans to buy investment properties.

You make a very important point, AZRiverfan. The new investors are paying with cash. That is significant because if housing drop, they could potentially lose their entire investments.

Unlike the regular folks who borrowed and lost, the investors couldn't walk away this time. (Well... they could but they don't lose the 3% down or 10% down only...) They likely would hang on if they can't sell these homes and make a profit, which means the low-end market will not be saturated with these homes in the future.