Would you buy now - Gilbert (Phoenix, Scottsdale: foreclosure, rentals, mortgages)

[Axiom]

Originally Posted by WASHINGTON DC HOME SELLER

Based on reading the responses as to whether to buy or not, America is seriously in trouble. It scares me to think that we have become so naive that MOST AMERICAN'S cannot tell the difference between MARKET FUNDAMENTALS and CREDIT EXPANSION.

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Do you remember the old HOUSING INCOME FORMULA? THREE TIMES YOUR INCOME AND 20% DOWN!!!

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Scary as it is, I actually agree with much of what DC posted.

The thing is, we were having a discussion about tightening credit standards and the merits of a return to financially responsible fundamentals in lending just a couple of weeks ago on another thread and the following was posted:

"Sorry, while lending standards have changed/tightened for some products, we can still do lots of aggressive lending. You shouldn't beleive everything (or hardly anything) you here from the biased mainstream media.
We are still doing lots of $0 down lending, high DTI lending, stated income/limited doc/no doc lending. I am closing a loan on Thursday that is a cash out refi, with stated income & stated assets, no verification of any kind on the employment on a 30 yr. 10/20 interest only fixed rate at 6.25% (1st 10 years interest only and amortizes over the last 20 years)."


As long as those trends are continuing, and it certainly sounds like they are, I'm not sure where we're headed?

I think another wild card may be the extent to which government gets involved in the credit/housing mess. You know they will, there has already been a huge shell game going on it an effort to make the economy look better than it is.

Personally I don't think government interference is going to alleviate housing problems, in fact IMO it will eventually make things worse - but it could very well drag out the process and help stabilize prices, at least tempoarily.

Again my opinion only, but the refusal to let this play out by Greenspan/Bernanke, congress, states, et al is going to end up biting us all in the butt big time.



I would only buy a house right now if I could qualify using the formula DC posted above (except I might drop the ratio to 2.5 times income) and I absolutely knew it was a long term purchase as a place to live and not an investment tool.
I would still have to think long and hard before I sunk my money into a house in this market though.

Anyway, I'm not sure where Gilbert is right now, but a 2006 CNNMoney article ranked Phoenix way up there as far as overvalued housing markets. (it only looked at the nation's 299 biggest RE markets - no analysis of individual cities within an area) It estimated values to be 35% higher than they should be. Doesn't sound like a great time to buy to me, even if prices have ticked down slightly in the last year or so.

I don't see 35% price drops across the board in the next year or so personally, but if things do level out to any kind of normalcy, even if it takes a long period of flattening prices waiting for wages to catch up (discounting DC's warning about jobs here - although I do think the concern is valid) the possibility of any downpayment evaporating and/or sellers needing to bring cash to the table to close a deal if they are forced to sell is very real. It's happening now.



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[burn2learn]

Thanks for all the replies. The house I sold in Gilbert was a modest home and went for 309999 (sold to an investor), it happens to be on the market right now for 229000. So I do see the 30% decline already. I hope it stabilizes out now. I do want to buy but would be disappointed to put down 20% and see if evaporate in further declines.

[sheena]

Originally Posted by burn2learn

Thanks for all the replies. The house I sold in Gilbert was a modest home and went for 309999 (sold to an investor), it happens to be on the market right now for 229000. So I do see the 30% decline already. I hope it stabilizes out now. I do want to buy but would be disappointed to put down 20% and see if evaporate in further declines.

I could have sold in 2005 for that price too. I ended up selling it for 279,900 in Feb 2007 giving away 8,000 in cash but as I check the market now I see the same houses as mine on the market for 230,000.

[RetiredCop]

My ex who lives in Scottsdale purchased a condo in early 2004 for 140,000. She had an opportunity to sell in in 2006 for 227,000 but opted not to. She eventually cashed out $60,000 in equity on this property to pay off some bills and do some remodeling. Fast forward to today. Currently, in the complex she resides there are 7 condos which are identical to hers. The avg. listing price on these condos is $180,000. One sold in Aug for $171,000. She is a P/T Real Estate agent and she is terrified that within the year these condos will be listing at about $160,000.

[MotleyCrew]

I think if we were buying today we would be just about nuts after listening to all the "experts" predicting next years prices. If you want a house, go buy a house. They will go up eventually. We are flat on our town home, but it is making a nice rental right now.

[Captain Bill]

Originally Posted by burn2learn

I lived in Gilbert and sold in 2005 and moved to the east coast. I'm coming back now and want to buy a new build in Gilbert. The market seems to be going down still. I really want new, should I expect increasing incentives or rising prices. Any info can help

The NAR expects the housing market to begin a turn around in 2008. However, the founder of Remax is not as optimistic as the NAR (National Association of Realtors). These people work with statistics which gives them a better sense of what the market is doing, and they use that for "trying" to forecast the market. That does not mean they will be right.

Don't pay attention to the media. They do "sensationalism reporting". They have to have a hook that sounds devestating, such as the "bubble is bursting". To use research statistics of the NAR, or Remax founder would be boring news so they won't report it.

We have close to a 16 month inventory in the valley, and I've seen some increase in buying in the Val Vista Lakes subdivision of Gilbert. I sold two homes here last week. One was a water front property listed at $1,325,000 and the other was not on the water, listed at $339,000. Both sold within a reasonable amount of their listed price and in a short period of time. This shows a little more activity.

It is risky to try and time any market, either at the top or at the bottom. If you are planning on being in your home for 5 of more years, then you should be ok buying now. If you need to sell within a year, or two, then I would not buy now. Think of a residence as a "long term" investment.

Prices have dropped a lot, and many sellers are beginning to hold the line now.

Bill

[aj661]

That people want to get the most house, car, or whatever for their money is a no-brainer. That being said, I find it amusing that everyone worries so much about this subject. What are you buying a house for? If it's to speculate on the market or just as a short term investment, you'd be better off putting your money somewhere else for now.

If you're buying it as a HOME, find the best house in the area you want and try to buy it at a reasonable price. Trying to time the market is just going to frustrate most people and if you pass on that 'special' house because you were waiting for the price to come down, you'll be kicking yourself in the butt later. If the prices continue to fall for another year or two, so what? I wouldn't buy any house I wasn't planning on living in for at least ten years and I challenge any of the "gurus" to tell me where the housing market will be in ten years. I know things happen and sometimes you have to sell sooner-I have twice myself. But it doesn't change my philosophy. Start thinking/planning long term, you'll lose a lot less sleep.

[Ponderosa]

Originally Posted by RetiredCop

My ex who lives in Scottsdale purchased a condo in early 2004 for 140,000. She had an opportunity to sell in in 2006 for 227,000 but opted not to. She eventually cashed out $60,000 in equity on this property to pay off some bills and do some remodeling. Fast forward to today. Currently, in the complex she resides there are 7 condos which are identical to hers. The avg. listing price on these condos is $180,000. One sold in Aug for $171,000. She is a P/T Real Estate agent and she is terrified that within the year these condos will be listing at about $160,000.

I don't see the problem unless she must sell soon. Her net position is roughly the same if she applied equity to debt reduction and asset improvement (remodeling), although the remodeling may not return what it cost. But unless one must sell or buy in this market, the prices are really irrelevant.

I agree with AJ661. There are good buys on homes right now. If you can find one, snatch it up, fix it up and live it up. Living for five years in a rental condo or in some crappy part of town because you fear (minimal) loss of equity in a long term investment is not rational. Barring a global economic meltdown, prices in the PHX area ten years from now will be substantially higher than they were at the peak of the housing bubble.

[RunningHooligan]

This is based on a rent vs. buy ratio, which is historically accurate. Sorry...but here in DC it's spot-on. And with your reports of 16+ month inventory, it's only a matter of time. But, FWIW...if you are planning on living somewhere for 10+ years...buy. Less than 5? RENT!!! Those tax breaks can't make up for -23% appreciation (no matter how hard the NAR tries to tell you)

25 real estate markets poised to fall - Phoenix (15) - FORTUNE

[Axiom]

Originally Posted by RunningHooligan

This is based on a rent vs. buy ratio, which is historically accurate. Sorry...but here in DC it's spot-on. And with your reports of 16+ month inventory, it's only a matter of time. But, FWIW...if you are planning on living somewhere for 10+ years...buy. Less than 5? RENT!!! Those tax breaks can't make up for -23% appreciation (no matter how hard the NAR tries to tell you)

25 real estate markets poised to fall - Phoenix (15) - FORTUNE

I was just going to post the same article.

And realize that the 23.5% decrease they're projecting over the next 5 years is from June 2007 prices.