Phoenix Real Estate Market Keeps Tanking (contractor, closing, expense)

[Captain Bill]

Originally Posted by azriverfan.

I think all of us have been right and wrong with regard to past predictions. It really doesn't matter what anyone said. We should all celebrate and embrace that the economy is moving forward and the market is improving. All of us want that.

Predictions are one thing, and it's ok for anyone to be right or wrong, and for the prediction or data to be challenged, with data supporting the challenge. However, attacks on the credibility of others, because their position, or data, is different from that of the reader, is an entirely different matter. Therefore, it really does matter what people have said.

Several people have made some very cruel and unjustified attacks on others in an attempt to discredit them, instead of using data to disprove them.

When people attack the messenger, they should understand that those words do matter.

[Captain Bill]

Originally Posted by actinic

Bad news: Arizona just stole the title from Nevada as the state with the nation's highest foreclosure rate.

Good news: It's getting better, from terrible to just bad.

Foreclosure Trends | Q1 2012 and March 2012 Foreclosure Report -- RealtyTrac

It's understandable how one can read those reports and get the impression that AZ is in a bad way. The media also picks up on that, without questioning the data or understanding how it's compiled, and propagates it to the public.

However, as Mike Orr has pointed out, the Realty Trac information is misleading because of the double and triple counting of foreclosure notices.

Orr points out in a recent article that it takes longer for a state with judicial foreclosure to get a house foreclosed. Therefore their recorded number of foreclosures will be lower than that of a state like AZ that has non judicial foreclosure laws and it will take them longer to recover because of the continuing foreclosures at that slow rate.

Consequently, as Orr says, the better measure of how a state is affected by the housing crisis is to determine the percentage of loans that are in some state of delinquency.

Information on homes that are delinquent but have not received a NOTS, is available on CoreLogic and Lender Processing Services. While a delinquent loan does not mean that each delinquent owner will continue the delinquency, it does give a somewhat truer picture of the actual "shadow inventory". (The other part of the "shadow inventory" is the bank owned homes that are held back from the market. We know that in Phoenix Metro there are around 2,000 of those homes.)

The numbers below are from Loan Processing Services for Feb 2012. They show the percentage of delinquent loans that have not received the Notice of Trustee Sale (NOTS):

1. Mississippi - 13.5%
2. Georgia - 10.8%
3. Nevada - 10.5%
4. Alabama - 10.1%
5. Louisiana - 9.7%
6. Tennessee -9.7%
7. Maryland - 9.5%
8. Arkansas - 9.2%
9. West Virginia - 8.9%
10. Rhode Island - 8.7%
11. Ohio - 8.7%
12. Indiana - 8.5%
13. Michigan - 8.4%
14. New Jersey - 8.4%
15. Florida - 8.0%
16. North Carolina - 8.0%
17. Delaware - 8.0%
18. Washington - 7.9%
19. South Carolina - 7.9%
20. Pennsylvania - 7.8%
21. Texas - 7.8%
22. Missouri - 7.6%
23. Kentucky - 7.5%
24. Massachusetts - 7.4%
25. New York - 7.4%
26. Illinois - 7.2%
27. Oklahoma - 7.0%
28. Maine - 6.9%
29. Connecticut - 6.9%
30. California - 6.9%
31. District of Columbia - 6.6%
32. New Hampshire - 6.6%
33. Arizona - 6.6%

Arizona is the most improved state over the last 2 years. In Feb 2010 we were number 4 with 12.4%.

Orr said, "...the states with low percentages and with a strong downward trend are likely to be the first markets to recover..."

[whodiman]

I guess people who argue for the shadow inventory this can be the "temporary" number although shrinking.

Originally Posted by Captain Bill

It's understandable how one can read those reports and get the impression that AZ is in a bad way. The media also picks up on that, without questioning the data or understanding how it's compiled, and propagates it to the public.

However, as Mike Orr has pointed out, the Realty Trac information is misleading because of the double and triple counting of foreclosure notices.

Orr points out in a recent article that it takes longer for a state with judicial foreclosure to get a house foreclosed. Therefore their recorded number of foreclosures will be lower than that of a state like AZ that has non judicial foreclosure laws and it will take them longer to recover because of the continuing foreclosures at that slow rate.

Consequently, as Orr says, the better measure of how a state is affected by the housing crisis is to determine the percentage of loans that are in some state of delinquency.

Information on homes that are delinquent but have not received a NOTS, is available on CoreLogic and Lender Processing Services. While a delinquent loan does not mean that each delinquent owner will continue the delinquency, it does give a somewhat truer picture of the actual "shadow inventory". (The other part of the "shadow inventory" is the bank owned homes that are held back from the market. We know that in Phoenix Metro there are around 2,000 of those homes.)

The numbers below are from Loan Processing Services for Feb 2012. They show the percentage of delinquent loans that have not received the Notice of Trustee Sale (NOTS):

1. Mississippi - 13.5%
2. Georgia - 10.8%
3. Nevada - 10.5%
4. Alabama - 10.1%
5. Louisiana - 9.7%
6. Tennessee -9.7%
7. Maryland - 9.5%
8. Arkansas - 9.2%
9. West Virginia - 8.9%
10. Rhode Island - 8.7%
11. Ohio - 8.7%
12. Indiana - 8.5%
13. Michigan - 8.4%
14. New Jersey - 8.4%
15. Florida - 8.0%
16. North Carolina - 8.0%
17. Delaware - 8.0%
18. Washington - 7.9%
19. South Carolina - 7.9%
20. Pennsylvania - 7.8%
21. Texas - 7.8%
22. Missouri - 7.6%
23. Kentucky - 7.5%
24. Massachusetts - 7.4%
25. New York - 7.4%
26. Illinois - 7.2%
27. Oklahoma - 7.0%
28. Maine - 6.9%
29. Connecticut - 6.9%
30. California - 6.9%
31. District of Columbia - 6.6%
32. New Hampshire - 6.6%
33. Arizona - 6.6%

Arizona is the most improved state over the last 2 years. In Feb 2010 we were number 4 with 12.4%.

Orr said, "...the states with low percentages and with a strong downward trend are likely to be the first markets to recover..."

[actinic]

Originally Posted by MN-Born-n-Raised

If I remember correctly, you predicted the Phoenix housing market was going to tank some more. Back in mid September, I think you predicted "foreclosure fillings would increase substantially." How's that prediction coming along?

Pretty good, thanks. Filings were up (since the post) in November and February and it's still early in the ball game.

Here's an article about the foreclosure flood ready to burst ... it won't be pretty.

Foreclosure Flood Ready to Burst - UPI.com

[actinic]

No other predictions?

[Howard Roark]

People say what they want on the Phoenix real estate market. The macro economics is mostly left out of all the predictions by the real estate industry when it comes to any particular city, including Phoenix.

1. Jobs - Are there going to be jobs lasting as long as the mortgage in Phoenix?
1.a. If they last as long as the mortgage will those Phoenix salaries last as long as the mortgage?

2. Taxes: The unfunded liabilities is in the tens of trillions of dollars. Taxes are going up in 2013 as the Bush tax cuts expire. More taxes, less to spend on housing.

3. Defense spending cuts. $500 billion more cuts to be announced January 2013 will affect Boeing, GD, Honeywell, Lockheed, Raytheon, all the big name firms paying good $. The 500 laid off at GD a year ago was to prepare for the $487 billion cuts already announced. Thousands of contractors already were cut in the Phoenix area but that is never announced. Myself, I have to work outside of Phoenix and travel back home on weekends.

4. Decline in marriage. More singles. No reason to have a lot of empty space and pay the extra money on utilities to heat / cool the unused space.

[ReadyFreddy]

4. Decline in marriage. More singles. No reason to have a lot of empty space and pay the extra money on utilities to heat / cool the unused space.

Maybe smaller homes are needed but more of them are needed.

Similarly, less defense spending could mean more spending on other industries, ones with more growth prospects.

[whodiman]

Being bearish in the real estate market is so much easier than being bearish in the stock market. When people are bearish in the stock market I tell them to put their money where their mouth is and short the market and that ends the conversation in a hurry (this was back in 2009 not now). There is no easy way to do this in real estate so the bears can make their predictions without putting their money where their mouth is and can't be blamed for continually being bearish. Had they been shorting the market since September they would have already received a huge margin call and be way underwater on their position.

[Captain Bill]

Originally Posted by actinic

Pretty good, thanks. Filings were up (since the post) in November and February and it's still early in the ball game.

Here's an article about the foreclosure flood ready to burst ... it won't be pretty.

Foreclosure Flood Ready to Burst - UPI.com

Headlines designed to get readers attention can be misleading. Reading through the article provides positive information on the Arizona market.

Snippets from that article, that do not go along with the headline:

...Twenty non-judicial states registered year-over-year decreases in foreclosure activity, led by Arkansas, with a 79 percent drop, and Nevada, with a 62 percent drop. Recent legislation or court cases have disrupted the normal foreclosure process in both these states. Other non-judicial states with substantial year-over-year decreases in foreclosure activity included Washington (down 55 percent), Arizona (down 41 percent), Texas (down 31 percent), and California (down 21 percent).

Meanwhile foreclosure activity increased in states that primarily use the judicial foreclosure process. These 26 states combined accounted for 243,074 properties with foreclosure filings during the quarter, an increase of 8 percent from the previous quarter and an increase of 10 percent from the first quarter of 2011.

...One in every 106 Arizona housing units had a foreclosure filing in the first quarter, the nation's third highest state foreclosure rate. Arizona foreclosure activity during the quarter was down 4 percent from the previous quarter and was down 41 percent from the first quarter of 2011...

[Ponderosa]

AZ can not continue to recover in isolation from the rest of the US. Here is an article out today that suggests that the recovery is, in fact, more broad-based than just locally. Seeing this kind of reporting in the national news is a real change from the doom and gloom that has dominated for the past few years.

News Headlines