Honestly, when will the Phoenix real estate market bottom out? (Mesa: coupons, loft)
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Although I am a Realtor, I do not see things through rose colored glasses - here's my take - Scottsdale, PV, Carefree, Cave Creek and Fountain Hills, as well as NE Phoenix have pretty much seen the worst of it with prices now holding fairly steady - the rest of the valley, where the majority of the inventory is, will continue to decline through 09. The trouble is that you cannot treat the entire valley as one market - it is really several or more markets and the lack of new building and lower inventory in the better areas is helping those areas to hold steady. Surprise, in particular, will take the brunt of it due to the huge number of investors that got stuck with homes they could not sell.
In bound migration continues to the Valley and the economy is still doing well - in fact Phoenix is now number four in the country for new home sales - and that is during the trough of the market. The valley remains a good long term bet. The fact that many owners used their homes as ATM cards, together with investors, created this blip and when it passes we will see slow appreciation resume.
Prices for million dollar homes and up have not taken a hit at all. The middle market (400-600) is where it really sucks to be for the time being. The low end is also taking a hard shot, but things are moving faster at the low end due to a huge number of buyers coming off the sidelines, and the large number of forclosure and short sales.
Good luck
Add in the Arcadia section of Phoenix (24th ST/Camelback) as well as N Tempe (near ASU) and you pretty much nailed it.
Although I am a Realtor, I do not see things through rose colored glasses - here's my take - Scottsdale, PV, Carefree, Cave Creek and Fountain Hills, as well as NE Phoenix have pretty much seen the worst of it with prices now holding fairly steady - the rest of the valley, where the majority of the inventory is, will continue to decline through 09. The trouble is that you cannot treat the entire valley as one market - it is really several or more markets and the lack of new building and lower inventory in the better areas is helping those areas to hold steady. Surprise, in particular, will take the brunt of it due to the huge number of investors that got stuck with homes they could not sell.
In bound migration continues to the Valley and the economy is still doing well - in fact Phoenix is now number four in the country for new home sales - and that is during the trough of the market. The valley remains a good long term bet. The fact that many owners used their homes as ATM cards, together with investors, created this blip and when it passes we will see slow appreciation resume.
Prices for million dollar homes and up have not taken a hit at all. The middle market (400-600) is where it really sucks to be for the time being. The low end is also taking a hard shot, but things are moving faster at the low end due to a huge number of buyers coming off the sidelines, and the large number of forclosure and short sales.
Good luck
I have to say that I very much doubt the worst is over for the Valley. Remember that the peak of the huge inflation in home prices occurred almost exactly two years ago. That means that anyone who bought at the peak of the boom, or thereafter for about the next year, and used an ARM or other creative lending scheme to get into an overpriced home that they probably shouldn't have qualified for, has not yet seen those ARM's adjust. Once that happens, over about the next year, there will be a whole bunch of people who will suddenly find themselves unable to cover their higher mortgage payments. When that happens, the market will become super-saturated with people trying to sell in order to avoid foreclosure. Most people who are able to sell in that situation, with the values having gone down, would end up short-selling. That will drive prices further south, and with the inevitable jump in foreclosures, things are bound to get worse- much worse. Ask a realtor's opinion, and it's impossible not to get an unbiased, accurate forecast, IMO.
I am also curious of Steve's background. You lived here? Did someone hurt you? You got fired? Lost all your money in real estate? I am not being nasty, quite the contrary, I feel badly that you dislike this state to the point you keep lurking in the background grumbling. I am happy you love Chicago. I have seen some very charming suburbs on HGTV lately on House Hunters. I have to admit, I think I would love living just outside the city. The neighborhoods remind me of the ones I lived in when younger. The snow there and our winters keeps me here.
I am tired of the predictions on when the markets are going to pick up. We have lived through several recessions and have seen the real estate market remain flat in one area for over 15 years. That was a loooong wait. The upswing happened overnight and we were not even looking. I am going to stop reading the articles and listening to the "talking heads" and ignore it for awhile.
I am also curious of Steve's background. You lived here? Did someone hurt you? You got fired? Lost all your money in real estate? I am not being nasty, quite the contrary, I feel badly that you dislike this state to the point you keep lurking in the background grumbling. I am happy you love Chicago. I have seen some very charming suburbs on HGTV lately on House Hunters. I have to admit, I think I would love living just outside the city. The neighborhoods remind me of the ones I lived in when younger. The snow there and our winters keeps me here.
I think you're confusing me with Steve-O. We are not the same person. I do not, nor have I ever, lived in Chicago. I have visited there quite a bit, however, and I really do like it there, it's a great city. I grew up in Michigan and basically, if you wanted to go to a "nice" big city nearby, you either went to Chicago or Toronto. You can't really go wrong with either one. Detroit never really counted. I appreciate nice, vibrant cities, and I really don't like Phoenix. Go figure. No, I'm not a bitter person, no, I didn't get fired; I'm an educated professional and I make a very nice living. I was one of the lucky few who bought in Phoenix before the huge run-up in prices, I sold it the beginning of this year before I moved and made a nice profit. I actually am quite happy where I am right now, back in Colorado where I lived before I moved to Phoenix.
Ther reason I come back here to post is really two-fold: one, the Colorado post is flat-out BORING. No one has anything much of interest to say about it, and there isn't this polar divide over there. It's hard to find anything to dislike about the place, other then the xenophobic hippies who feel they're entitled to the place and resent anyone else moving in. That, and it's kind of expensive. But you pay for what you get. But honestly, there just isn't anything on that forum that anyone ever posts that I feel strongly enough about to join in. Which brings me to my second reason for staying around here: I enjoy debating these topics. Heck, I enjoy debates, period. They're fun. I like to think of myself as a ray of truth among so many who just blow sunshine (literally) up people's rears about Phoenix. When I initially moved to Phoenix, I tried to like it, but within a few weeks, I was scratching my head, going WTF is wrong with this place? Is everyone here on meth, or did their brains just fry from the heat? Seriously, there are just so many problems. And it's getting worse all the time. If I can save just one person from making the same mistake I did, then I feel like something of a good samaritan.
But anyway, regarding my last post, that has absolutely nothing to do with disliking Phoenix one way or another. Consult any financial guru, and they'll tell you that the subprime mortgage industry put a lot of folks into homes that they normally could not have afforded a few years ago. Hey, don't ask an expert, just read the news or the WSJ sometime. During the housing boom that happened in Phoenix, these creative subprime loans were extremely popular in the Valley. ARMs typically reset their interest rates in 2 years. So, doing the math, there's going to be a lot of people who are going to see their mortgage payments get substantially higher very soon in Phoenix. What's happened there up to this point is only the tip of the iceberg. I say this because the very same thing already has happened in Denver. Denver had a huge housing boom back in about '03-'04, when the home prices there skyrocketed, & a lot of people who were less than qualified bought using subprime loans. Then those people with ARMs saw their rates adjust upward a few years later. Not surprisingly, then, Denver had one of the highest foreclosure rates in the country in '06. So I would say that in all likelihood, the Valley's next. And any local realtor telling you that "the worst is behind us" is at best clueless, at worst blatantly lying for their own sake.
Just as an addendum to my post about the market still having a way to go before it hits bottom, anyone who doesn't believe me should read this article, which was just in the AZ Republic today:
Many sellers slash prices to sell homes (broken link)
Just as an addendum to my post about the market still having a way to go before it hits bottom, anyone who doesn't believe me should read this article, which was just in the AZ Republic today:
Many sellers slash prices to sell homes (broken link)
All these troubles seem to amount to people who don't know much about homeownership. Most of the foreclosures are due to people using 100% financing and making interest only payments. These people are NOT homeowners! Even if the market had kept accelerating, they wouldn't have had the resources to refinance. I'm tired of seeing all the blame being put on the mortgage industry also. We are all accustomed to shady car salesman and I don't see major news coverage on how they get people into new cars they can't afford. Where is any of the responsibility of these people that got themselves into this mess? Apparently, the gvmt is supposed to bail them out and there is no repercussions to them since they have no credit to begin with. They don't care about just walking away. Have they tried to cut expenses elsewhere in order to afford their higher payment?
As for today's article, why would you be upgrading from a 1589 sq ft house to a 4000 sq ft house in this market. What is with the bigger is better mentality? When I bought my first home, I struggled to save a 20% down payment. I then didn't listen to the mortgage brokers who tried to tell me to spend 150K on a home. I KNEW I could not afford those payments with my lifestyle. Am I dying breed of homeowner who looks at my home as a place to live and not a quick rich scheme? I have never used my home as an ATM and don't understand the mentality of living beyond your means.
Last but not least, I don't think prices are going to necessarily hit rock bottom. Even according to the article, there are areas still appreciating. My area is still doing well and I haven't seen any foreclosures. The media needs to stop portraying it as a "Phoenix" problem. It is limited to select areas, mostly new home subdivisions. There are still many wonderful mature areas that are a great buy right now. You have to look at the prices that people having trouble bought into the market at. Banks are not going to want to go way lower then the balance on the mortgage. People with room to slash prices are the ones who bought prior to '03.
All these troubles seem to amount to people who don't know much about homeownership. Most of the foreclosures are due to people using 100% financing and making interest only payments. These people are NOT homeowners! Even if the market had kept accelerating, they wouldn't have had the resources to refinance. I'm tired of seeing all the blame being put on the mortgage industry also. We are all accustomed to shady car salesman and I don't see major news coverage on how they get people into new cars they can't afford. Where is any of the responsibility of these people that got themselves into this mess? Apparently, the gvmt is supposed to bail them out and there is no repercussions to them since they have no credit to begin with. They don't care about just walking away. Have they tried to cut expenses elsewhere in order to afford their higher payment?
As for today's article, why would you be upgrading from a 1589 sq ft house to a 4000 sq ft house in this market. What is with the bigger is better mentality? When I bought my first home, I struggled to save a 20% down payment. I then didn't listen to the mortgage brokers who tried to tell me to spend 150K on a home. I KNEW I could not afford those payments with my lifestyle. Am I dying breed of homeowner who looks at my home as a place to live and not a quick rich scheme? I have never used my home as an ATM and don't understand the mentality of living beyond your means.
Last but not least, I don't think prices are going to necessarily hit rock bottom. Even according to the article, there are areas still appreciating. My area is still doing well and I haven't seen any foreclosures. The media needs to stop portraying it as a "Phoenix" problem. It is limited to select areas, mostly new home subdivisions. There are still many wonderful mature areas that are a great buy right now. You have to look at the prices that people having trouble bought into the market at. Banks are not going to want to go way lower then the balance on the mortgage. People with room to slash prices are the ones who bought prior to '03.
azsundevil, I completely agree that you as a prospective homeowner have to take responsibility and be financially literate before taking that plunge. And using your home as a money machine, as many people did during the housing boom a few years back, is moronic. I don't feel that it should be the government's responsibility to bail people out for their own stupidity. Investing in anything, including a home, is a risk. When you remove the risk, you diminish accountability. The entire U.S. has become a society of coddled babies, who expect the government to take care of them and who are either too lazy, too clueless, or lack the moral upbringing to assume responsibility for their own actions. It's a great country, don't get me wrong; but it's become entirely too easy to place blame anywhere but on oneself. Bottom line: in this country, you can always make it someone else's fault (just find a lawyer somewhere, and he/she will take care of that for you), and since that's easier than owning up to your own mistakes, that's what people tend to do. A friend of mine put it a great way: everyone in this country has a sense of their rights, but very few have a sense of their responsibilities. I thought that was right on. As you can tell, I'm no liberal in this regard. But I digress, that's off topic.
The bottom line in this mess is, that when people who took out ARMs are faced with suddenly higher payments that they can't make and have to short-sell or slash prices to sell their homes quickly, the end result is that all home prices in the area fall. And if people can't sell quickly enough- reality is that, even in a good market, most who face foreclosure won't be able to in time to save themselves- and the foreclosure rates do go up, that drags the overall market values down even further. The estimates in some cases in this report are misleading, particularly in the areas still reporting appreciation. In areas you see which are still gaining value, if you look closely, usually it's because they've built new homes or subdivisions in the area that jack up the overall price average. It doesn't mean the average joe living in an older home in the area is still seeing his home value rise.
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Pride in homeownership
