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Valid point. We do have to hope that some of the other market forces like people starting to buy because of better job growth, worry that interest rates will rise (not saying this WILL happen anytime soon - just the worry that it might), etc. will work FASTER than the trickling out of whatever REO inventory there is...therefore getting prices to rise enough, combined with people to make payments (thereby reducing negative equity), to stop the cycle.
I understand that is asking something that is by no means a given.
Captain Bill any forecasts or observations about commercial prices?
It seems like sf prices are somewhat stabilizing, but it also seems like there is a lot of inventory still, maybe even slightly increasing. Speaking of east valley/east Phoenix here. Do you have any opinions on the commercial side?
Captain Bill any forecasts or observations about commercial prices?
It seems like sf prices are somewhat stabilizing, but it also seems like there is a lot of inventory still, maybe even slightly increasing. Speaking of east valley/east Phoenix here. Do you have any opinions on the commercial side?
The inventory is in the higher price ranges. There is a shortage in the lower ranges, below $400k.
I don't keep up with the commercial market. However, it does appear that we don't have as many vacant office buildings as we had in the past, so hopefully that's improving also.
My concern here is that you don't need 40% or more of homes out there to be foreclosures to depress prices. You just need a steady supply in any given price range. It seems that will be the problem for some time. Yes, fewer foreclosures, but enough tricking onto the market that prices can never gain much traction. If prices can't rise, then people remain underwater and can't sell. So they go to short sales and foreclosures. The vicious cycle continues.
I agree this is one of the most important factors for the supply side of RE - how many more distressed properties enter the market. If you look at C.B.'s stats showing a decrease of delingent loans from 14.9% in 8/2009 to 10.1% now, then we are about half way to the "normal" level of ~5%. And that in less than 2 years. Obviously, it is never sure if the trend persists at the same rate in the future, but if it does, we would be to a "normal" state of RE market in Arizona in less than two years from the supply side. That would be much much faster than predicted by the media and tons of "experts".
The other side of the equation, demand, should be bolstered by procrastinators and shocked sideliners combined with great affordability. Therefore I conclude the next upswing is more rapid than most people believe.
Again, this shows to me the people of Arizona have great spirit and show it to the negative nellies big time... again. To go through such a bad crisis as we have since 2007-2009 or so and then work through the mess in just a few years is very impressing. Now all that remains is to finally find the Lost Dutchman mine.
Again, this shows to me the people of Arizona have great spirit and show it to the negative nellies big time... again. To go through such a bad crisis as we have since 2007-2009 or so and then work through the mess in just a few years is very impressing. Now all that remains is to finally find the Lost Dutchman mine.
Those that bought near or at the bottom despite the doom and gloom predictions may have done just that (fingers crossed). At the worst we got a real cheap mortgage on our place to live!
The other factor, of course, is greed. When prices are going up, people are motivated by greed to buy. This is because they see in the national media how prices are increasing quickly and they decide to rush in to keep from getting left out. It's the national media that can cause that frenzy; not any one poster on a forum.
Greed was a factor in the mid 2000s during the "boom" ... however, at that time, banks made it too easy for people to obtain home loans. ARMs were freely given to those with poor to mediocre credit ratings. And then, of course, you had the ones who accepted these sub prime loans at the terms provided to them without fully understanding the details. They had no business getting these mortgages, but they did, many of whom defaulted, and that became the foundation for the collapse.
I actually WANT to see home prices return to 2005/2006 levels (and above), but not on the basis of what happened in 2005/2006. Demand for homes will increase once the local economy starts adding jobs ... not low paying or service level jobs, but competitive positions with higher wages. We can no longer rely on snowbirds, or weather/climate as a chief economic indicator. Sunshine doesn't bring in the high wage jobs, Fortune 500 firms, or entrepreneurs. We need skilled, educated, and people with a purpose to move here and stimulate the economy & home sales.
...We can no longer rely on snowbirds, or weather/climate as a chief economic indicator. Sunshine doesn't bring in the high wage jobs, Fortune 500 firms, or entrepreneurs. We need skilled, educated, and people with a purpose to move here and stimulate the economy & home sales.
I'm very sure that you will get the same results if you spent $8K versus $30K on the same group of students so I am not advocating spending for the sake of spending. there is a TON of wasteful spending in areas like NY where they hire babysitters called psychologists and other massive overhead. But $3800 per kid in AZ is WAY too low. I'm not looking to get off course here but there are a lot of people like me that would not raise their children in the 49th spending ranked state. No way no how.
If the goal is to attract higher tech jobs, you have to attract people who place a high value on education. I would have moved out of MN long ago if it weren't for the plethora of high tech jobs and outstanding K-12 education. Those two points are related to one another.
So if housing prices are attached to high wage jobs, you have to easily attract the people who demand a certain caliber of K-12 level of education. If not, you are forced to design an economy around housing, tourism, retirement or cheap(er) labor.
I think everyone understood that inexpensive homes were deals even 2 years ago and the competition for those homes were stiff even back then. .
That's not how I saw it. Competition was not stiff two years ago in Phoenix for ANY property. That's because inventory was ballooning at all price points.
Quote:
Originally Posted by azriverfan.
I agree with you and this sense of urgency is nothing new. They were trying to create this same sense of urgency during the real estate bust. Case in point, this is what one realtor on this forum stated in 2007:
I sure the heck had a sense of urgency! I specifically bought early last year before the "bottom" came in so that I had inventory to pick from. If you like, I can DM you some proof. The same floor plan home that I bought sold inside of a week went up over 30% from where I bought at in early 2011 (same neighborhood too). Good thing I didn't listen to the naysayers or I'd be out $60K or I'd have a much smaller home for the same price.
I have always believed that when the real bottom came in such an undervalued market like Pheonix, prices were going to go up quickly and then stabilize. It's not done stabilizing. That is because the pent-up demand had made the market a small selling frenzy. That frenzy is happening right now.
If someone has a home on the market in Chandler for instance and it isn't selling, something is wrong with it OR it is overpriced for the market. They don't need to blame it on hype.
Re: sense of urgency not being something new. I disagree again. The Cromford report which is THE most accurate pulse on this Phoenix market was not predicting prices to rise from 2008-2010. Yet people (for whatever reason) were suspicious of this report. As I said, the frenzy is not over and the Cromford report is predicting prices to rise on these undervalued homes. Interest rates are also darn low right now. People have two options, assume there isn't a sense of urgency and just wait (and therefore assume the Cromford's predictions are wrong) OR make buy now while they know that they can get 3.25% interest rates and an inexpensive home. SO to be clear, I think there is a sense of urgency right now to buy in Phoenix. If my kids were in the market, I'd be telling them to buy NOW!
In case you decide to quote this in 2-3 years, don't forget this part. In a year or two, nothing says the market cannot tank again. My gut feelings can only look out 6 months and right now, things are looking like it's going up another 10%. Again, we are not going to go to 2006 anytime soon. I can see another 10-15% bump and then it bounce again.
That's not how I saw it. Competition was not stiff two years ago in Phoenix for ANY property. That's because inventory was ballooning at all price points.
I sure the heck had a sense of urgency! I specifically bought early last year before the "bottom" came in so that I had inventory to pick from. If you like, I can DM you some proof. The same floor plan home that I bought sold inside of a week went up over 30% from where I bought at in early 2011 (same neighborhood too). Good thing I didn't listen to the naysayers or I'd be out $60K or I'd have a much smaller home for the same price.
I have always believed that when the real bottom came in such an undervalued market like Pheonix, prices were going to go up quickly and then stabilize. It's not done stabilizing. That is because the pent-up demand had made the market a small selling frenzy. That frenzy is happening right now.
If someone has a home on the market in Chandler for instance and it isn't selling, something is wrong with it OR it is overpriced for the market. They don't need to blame it on hype.
Re: sense of urgency not being something new. I disagree again. The Cromford report which is THE most accurate pulse on this Phoenix market was not predicting prices to rise from 2008-2010. Yet people (for whatever reason) were suspicious of this report. As I said, the frenzy is not over and the Cromford report is predicting prices to rise on these undervalued homes. Interest rates are also darn low right now. People have two options, assume there isn't a sense of urgency and just wait (and therefore assume the Cromford's predictions are wrong) OR make buy now while they know that they can get 3.25% interest rates and an inexpensive home. SO to be clear, I think there is a sense of urgency right now to buy in Phoenix. If my kids were in the market, I'd be telling them to buy NOW!
In case you decide to quote this in 2-3 years, don't forget this part. In a year or two, nothing says the market cannot tank again. My gut feelings can only look out 6 months and right now, things are looking like it's going up another 10%. Again, we are not going to go to 2006 anytime soon. I can see another 10-15% bump and then it bounce again.
...The Cromford report which is THE most accurate pulse on this Phoenix market was not predicting prices to rise from 2008-2010. Yet people (for whatever reason) were suspicious of this report. As I said, the frenzy is not over and the Cromford report is predicting prices to rise on these undervalued...
I bolded THE most accurate in your post because that is extremely important. Some have criticized the Cromford Report as being biased because they have, or had, an interest in investing. Obviously they didn't know what they were talking about, and had never seen the data or commentary inside their web site.
Cromford Report is probably not a good description of their service. It isn't just a report; it is a web site source with tons of statistics and data compiled in charts and graphs, with many interactive graphs, that covers just about every real estate statistic one could imagine - and more - for the Phoenix Metro area; and updated regularly, some on a daily basis. This is their sole business. This is what they do. They don't just compile statistics as a small part of another business; and they take pains to make sure their information is accurate.
It's easy to find inaccurate reports. Just look at some of the reports printed by companies in the national media.
Here are a couple of examples of inaccurate reporting as mentioned by Mike Orr in a recent commentary on the Cromford Report:
1....Foreclosure and REO inventory counts are normally reported for Single Family Residential.
If they include vacant land, mobile homes, condo's, multi-family, commercial, agricultural, etc, then it should be stated that the numbers are for all these types.
In 2011 there were 62,856 foreclosure notices on parcels in Maricopa Co.
47,273 were Single Family Residences.
Those who reported 62,856 foreclosure notices and did not state that they included All Types, actually overstated the foreclosures by around 33%.
2....Some sources will count Parcels instead of Notices
That exaggerates the count because there may be one Notice to an owner of many parcels. One example was an owner who received one Notice that covered all 513 of his vacant lots.
If the source reported it as one Notice covering 513 parcels, that would be ok, but it was reported as 513 separate foreclosures.
3....Many times a home is sitting on more than one parcel.
If a home is sitting on the boundary of 2 parcels it should be counted as 1 foreclosure, not 2, as many sources will report.
4....Many sources apparently do not double check their data so there will be a lot of duplicated entries.
5....There are sources that count a Trustee Sale when it happens, and then count the Trustee Deed when it is recorded.
That results in 2 foreclosures being reported, when there was only 1.
6...This is a good one: There are times when a lender issues a Foreclosure Notice several times for the same property.
Most other sources will count each one of those Notices. The Cromford Report only counts it as one because, obviously, there will only be 1 Trustee Sale for this 1 property.
8...Most sources will have a good record when a property becomes an REO. However, they are very slow at recording the sold REO's.
This results in the data showing more REO's that there actually are.
The Green area is the number of homes sold to 3rd parties at the Trustee Sale
The Red area is the number of homes reverting back to the bank as REO's.
Note that the total number of Trustee Deeds is declining, and also the number of parcels reverting back to the bank as REO's is declining as more parcels are being sold to 3rd parties at Trustee Sale.
TOTAL REO COUNT
7,886All REO Properties as of March 6, 2012, Down from over 19,000 in May 2011.
1,488 All Type REO Properties Active on the MLS
2,481 All Type REO Properties Pending on the MLS
1,196 Single Family Residence REO's Active on the MLS
2,110 Single Family Residence REO's Pending on the MLS
About 3,900 REO's of all types are unlisted. Many are in the process of being listed, which takes a couple months, and some appear to be held back for some reason.
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I specifically bought early last year before the "bottom" came in so that I had inventory to pick from. If you like, I can DM you some proof. 
The same floor plan home that I bought sold inside of a week went up over 30% from where I bought at in early 2011 (same neighborhood too). Good thing I didn't listen to the naysayers or I'd be out $60K or I'd have a much smaller home for the same price. 
As I said, the frenzy is not over and the Cromford report is predicting prices to rise on these undervalued homes. Interest rates are also darn low right now. People have two options, assume there isn't a sense of urgency and just wait (and therefore assume the Cromford's predictions are wrong) OR make buy now while they know that they can get 3.25% interest rates and an inexpensive home. SO to be clear, I think there is a sense of urgency right now to buy in Phoenix. If my kids were in the market, I'd be telling them to buy NOW!
