Phoenix Real Estate Market Keeps Tanking (Glendale, Surprise: wage, to live, appraisals)

[Skywayy2001]

Originally Posted by ReadyFreddy

I think a lot of homeowners are still not only in the dark about the small bit of recovery but about the depth of the fall. So the listing agents might find people saying, "What do you mean, 'I could list my house now for $220k'? I bought it in 2004 for $250! Hardly good news and incentive to sell!"

And this is very important because what you might see is just a paralyzed market soon. Not enough foreclosures/short sales to keep the market moving at a "normal" rate, and not enough people with enough equity to make it worth selling. So what if you can sell your home for $20k more than when you bought it in the early 2000's. After the 6% to the realtors, and the lack of inventory out there when looking to buy (and chances are most people don't have significant savings to make much of an upgrade in price point), what's the point.

[Ponderosa]

Originally Posted by Skywayy2001

And this is very important because what you might see is just a paralyzed market soon. Not enough foreclosures/short sales to keep the market moving at a "normal" rate, and not enough people with enough equity to make it worth selling. So what if you can sell your home for $20k more than when you bought it in the early 2000's. After the 6% to the realtors, and the lack of inventory out there when looking to buy (and chances are most people don't have significant savings to make much of an upgrade in price point), what's the point.

I don't buy that. "Paralyzed market" appears to be a term of denial of the supply/demand axiom for housing doomers (now that "shadow inventory" is losing its luster). If prices are insufficient to encourage sales and demand continues, prices go up until people sell. Simple as that. It is the exact reverse of what we have been seeing where sellers were forced to drop prices to attract a buyer. Affordability is not much of a constraint ATM. Tight credit is, but expect that to loosen. Demand for secondary mortgage products is on the increase once again.

[Captain Bill]

Originally Posted by ReadyFreddy

I think a lot of homeowners are still not only in the dark about the small bit of recovery but about the depth of the fall. So the listing agents might find people saying, "What do you mean, 'I could list my house now for $220k'? I bought it in 2004 for $250! Hardly good news and incentive to sell!"

You may be correct, however, I don't see how they can not know how much things fell given the amount of media coverage about that.

[Skywayy2001]

Originally Posted by Ponderosa

I don't buy that. "Paralyzed market" appears to be a term of denial of the supply/demand axiom for housing doomers (now that "shadow inventory" is losing its luster). If prices are insufficient to encourage sales and demand continues, prices go up until people sell. Simple as that. It is the exact reverse of what we have been seeing where sellers were forced to drop prices to attract a buyer. Affordability is not much of a constraint ATM. Tight credit is, but expect that to loosen. Demand for secondary mortgage products is on the increase once again.

Good point but you're going to need significant price increases to enable people who held onto their homes (whose who bought b/w 2002-2008)...and that's a lot of people...to enable them to afford the 6% realty fees in selling and actually upgrade to another home. There's going to be a lag and you're seeing it right now with not enough people listing their traditional home for sale because there is no point to putting it on the market (not enough equity). In short, there are very few move-up buyers in this market.

[Ponderosa]

Originally Posted by Skywayy2001

Good point but you're going to need significant price increases to enable people who held onto their homes (whose who bought b/w 2002-2008)...and that's a lot of people...to enable them to afford the 6% realty fees in selling and actually upgrade to another home. There's going to be a lag and you're seeing it right now with not enough people listing their traditional home for sale because there is no point to putting it on the market (not enough equity). In short, there are very few move-up buyers in this market.

We've been here before like after Resolution Trust. There are market abberations both falling and recovering. It will work itself out. There will be sellers at various price points. Not all homes were bought during the boom and not all homes bought since then were at grossly inflated values. Warnings of "paralysis" is more of Chicken Little. Near record sales with a strong recovery in traditional sales in the Phoenix area is hardly evidence of a paralysis. I will believe it when I see it.

[Captain Bill]

In addition, there are people who need sell their homes to relocate, or for other reasons, and they understand that they probably will not get what they paid for the home. However, many of them will be buying elsewhere at today's depressed prices. So for them it's a trade off.

Same with a move up buyer. Let's say someone has a $400k home and wants to move up to a $1mil home because their employment position has increased so they can afford that, and want to have more of a showcase to entertain business guests. That's a natural. They may take a small loss on the $400k home, but they'll get a bargain on the $1mil home.

[khuntrevor]

Originally Posted by Captain Bill

In addition, there are people who need sell their homes to relocate, or for other reasons, and they understand that they probably will not get what they paid for the home. However, many of them will be buying elsewhere at today's depressed prices. So for them it's a trade off.

Same with a move up buyer. Let's say someone has a $400k home and wants to move up to a $1mil home because their employment position has increased so they can afford that, and want to have more of a showcase to entertain business guests. That's a natural. They may take a small loss on the $400k home, but they'll get a bargain on the $1mil home.

there will always be people, who have to sell. you may see more corporations covering the shortage on company moves. Divorce rates remain high.

[AZPam]

I received a very interesting email from Security Title today. It is a 1 month comparison for April 2011 and 2012.

Active Listings for April 1, 2012 - 14,137
Active Listings for April 1, 2011 - 30,158

2012 Regular listings 11,608 or 82%
2011 Regular listings 17,396 or 58%

2012 Distressed listing 2,529 with Short sales 1,267 or 9%, REO 1,262 9%
2011 Distressed listing 12,762 w/ Short sales 7,450 or 25%, REO 5,312 18%

2012 Closed listing 8,865
2011 Closed listing 9,933

2012 Pending listings 19,744
2011 Pending listings 20,148

[Captain Bill]

Originally Posted by khuntrevor

there will always be people, who have to sell. you may see more corporations covering the shortage on company moves. Divorce rates remain high.

Those are good points

[ReadyFreddy]

I theorize that people having zero or neg. house equity is contributing to the divorce rate. The less assets you share, the easier it is to walk away. If you're starting over from scratch and all anyway, y'know?