Honestly, when will the Phoenix real estate market bottom out? (Scottsdale: lease, new home)

[joninaz]

Despite the national blues, it still seems the prices are around $450-500/SF in nothing special areas of Los Angeles. The San Diego & Bay Area prices are the same or higher. And they've got no more room to build.

While there's some serious money in CA, there's also a huge number of people with good jobs/incomes who want to buy - but they're not even close to making enough. Dumpy, little places in Santa Monica start at 800K, despite the slump. I've got friends in CA who are Doctors and lawyers and are hard pressed to buy even blah condos in o.k. areas. I'm not bagging on CA. Most of my family live there, so do many friends, but it's simply a very expensive place and not getting cheaper. Meanwhile PHX is fast becoming an CA-like city, closer to LA and Diego than San Fran, but at 1/2 to 1/3 the cost in terms of housing.

If that price ratio stays the same, PHX will keep growing fast. We're going through a market correction due to absurd lending and casino mentality, but the fundamentals remain the same. Demand greatly outstrips supply in CA and we (and Vegas) are the next closest options for those wanting to stay in this neck of the woods.

[azsundevil]

Originally Posted by joninaz

Despite the national blues, it still seems the prices are around $450-500/SF in nothing special areas of Los Angeles. The San Diego & Bay Area prices are the same or higher. And they've got no more room to build.

While there's some serious money in CA, there's also a huge number of people with good jobs/incomes who want to buy - but they're not even close to making enough. Dumpy, little places in Santa Monica start at 800K, despite the slump. I've got friends in CA who are Doctors and lawyers and are hard pressed to buy even blah condos in o.k. areas. I'm not bagging on CA. Most of my family live there, so do many friends, but it's simply a very expensive place and not getting cheaper. Meanwhile PHX is fast becoming an CA-like city, closer to LA and Diego than San Fran, but at 1/2 to 1/3 the cost in terms of housing.

If that price ratio stays the same, PHX will keep growing fast. We're going through a market correction due to absurd lending and casino mentality, but the fundamentals remain the same. Demand greatly outstrips supply in CA and we (and Vegas) are the next closest options for those wanting to stay in this neck of the woods.

I just read somewhere that people from CA prefer Phx to Vegas so that is good news for our housing market.

[azsundevil]

Originally Posted by steve22

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.

Maybe I am wrong but the older areas I see appreciating, such as the Historic Districts, Biltmore, North Central Phx, and Arcadia, don't have any new homes except for the loft projects but I think that is a completely different target market. I think these areas will continue to appreciate as gas becomes more expensive and people desire a more central location. Even though prices can be high in these areas, to CA people they seem cheap.

[joninaz]

Originally Posted by azsundevil

I just read somewhere that people from CA prefer Phx to Vegas so that is good news for our housing market.

I once considered moving there but thought I'd burn out on the scene after a while. Vegas is a little too centric on one industry and all that which comes with it (good and bad). The residents avoid the strip like the plague, and rightly so. Who wants to hang out with the obese Springer-reject extended family from Tulsa, whooping it up in their NASCAR tank tops, acid wash shorts, 37 oz. plastic Eiffel Tower drinks and a fistful of coupons? I'm not bagging on Vegas folks... we share many similarities. Desert scenery, lake fun, hiking, etc. They simply must cater to an endless stream of people looking for that promised magic. With that comes extremes... awesome resorts, world class chefs, the best sports bars/books one could imagine, etc. But that also comes with a lot of bad.

I've also heard Vegas is near build-out due to their being surrounded by Federal land. That's not to say they are about to stop expanding. They'll just go up instead of out. Look for more high end, high rise buildings. Not so sure about single family homes.

[sheena]

Originally Posted by azsundevil

I just read somewhere that people from CA prefer Phx to Vegas so that is good news for our housing market.

I think people prefer anywhere to Vegas. I spent a year there and went running back to Phoenix.

[azsundevil]

Does anyone know how to find out foreclosures by area? It seems the Republic always reports on the housing market in a general "Phx metro area" sort of way. In SF, the Chronicle posts the foreclosures by each area specifically down to the zip code. According to their data, the housing woes seem to be hitting three places: new subdivisions, entry level priced subdivisions, and also, those where the majoity of new homebuyers were minorities. I would be curious to see the data for the Phx area. Also, since I can look at the home sales by zip code in AZ, I was suprised to see Vistancia and a few other nice master planned communities still seem to be doing well in sales...over 150 sales in the past month. Seems to me the housing slump may then only be related to certain areas

[az1969]

It was of decreases in specific zip codes.

[steve22]

Originally Posted by azsundevil

Maybe I am wrong but the older areas I see appreciating, such as the Historic Districts, Biltmore, North Central Phx, and Arcadia, don't have any new homes except for the loft projects but I think that is a completely different target market. I think these areas will continue to appreciate as gas becomes more expensive and people desire a more central location. Even though prices can be high in these areas, to CA people they seem cheap.

Well, that's assuming that this new downtown revitalization actually brings with it some jobs. The problem is that, as it is now, downtown Phoenix doesn't employ too many people relative to Maricopa County as a whole, and thus isn't really a "central" location for most professional young people. Statistically, the majority of the Valley's educated workforce & corporate positions are in the East Valley. Which means that Tempe, Mesa and Scottsdale are presently closer to work for most of the types who might be interested in urban living. Having once lived and worked in central Phoenix, based on my experience the target demographic for neighborhoods like Biltmore, Willo, Encanto, etc. are professional and corporate folks employed at the hospitals & financial firms which are located in or near downtown. Those places won't probably lose nearly as much value as the areas located further outward, but they'll still likely be affected by the whole area's market trend in the future, whatever that may be.

[Captain Bill]

Originally Posted by steve22

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)

This is the typical "sensationalism" reporting used by the media to get people to read their articles. They telephone a lot of people, and edit what they want out of what the people say. Then they slant it to the point they want to make in the article.

The use of the word "slash" is inflamatory. Why don't they say that "Some sellers have reduced their prices to sell their home faster". They don't because that would not incite people to read the article.

They state that a woman accepted $25,000 less than her original asking price after remodeling a bathroom, upgrading the swimming pool, adding a $7000 hot tub and a $2000 shed. The article doesn't point out several things:

1. What was her asking price? Was it overpriced to begin with? Was it based on the 2006 market pricing? This is October 2007 and anyone trying to sell their home for an inflated 2005 price is not going to sell it.

2. Her home probably didn't sell originally because the home needed cleaning up, repair and redecorating. Buyers in today's market don't want to move in and fix up a home, unless they are investors buying at a discount.

3. When you upgrade a swimming pool, in most areas, you will not get your money back.

4. Adding a $7000 hot tub was a complete waste of money in trying to get the home sold.

5. Adding a $2000 shed was a waste of money in trying to get the home sold.

Fixing a home up makes sense when you are doing cosmetic redecorating so that the home shows good. Upgrading swimming pools, adding the hot tub and shed and things like that usually do not help.

There is an exception. If one lives in certain upscale neighborhoods where "everyone" has a pool, and there is no clubhouse with a pool that people use, your house will not sell unless you add an expensive pool. You won't get all the money back that was spent on the pool, but your house will sell.

Here is another misleading statement by the articles author:

"Their tactics weren't extraordinary in the ongoing housing downturn, where prices are falling by double-digit percentages in some cases."

Now if you weren't frightened about his article title, then that statement should do the trick. First of all, the tactics of the lady he mentioned were faulty. Next he is implying that prices are continuing to fall by double-digit percentages. So listen to him and wait another month and a home could be down another 10-20 percent. Wait two months and maybe down 40%. This type of non-specific misleading reporting is irresponsible to say the least.

To give the author some credit he does give an example of where the Browns' had listed their home too high and it didn't sell and he had to chase the market down. He said that had he listened to his agent he would have sold it earlier at a better price.

Also, there is the example that while he received less for his home, he also paid less for his new home. So it was a win/win situation.

Instead of taking the slant of the article and making it educational, like informing people on what they should do and should not do in remodeling for sale, and that one should price their home at the "current market value" as determined by the recent "sold" comps, and that if you want to sell now and move up, you will sell cheaper and buy cheaper also.

But no, the article was mean to be "sensational" by using "slash" prices, and "double digit" drops, and it doing so, it was completely misleading and presented a false impression.

Because of that type of sensationsalism reporting, many people who read that article overlook the fact that it is misleading, and they misinterpret the examples that are given. So they are left with the impression that the sky is falling, which unfortunately is the slant of the article. That is exactly what the author wants readers to come away from his article with.

Bill

[James Brown]

very soon i hope