Insiders: Do you think Phoenix housing Price will drop? (Chandler: 2014, rental market)

[MN-Born-n-Raised]

They might as well change their name to Case-Shiller-Zillow. 9.5% decline by year end. I'll give 5:1 odds that's not going to happen before year end. But you have to bet $100 so I can buy a decent steak dinner. I'm going to make another prediction: no one is going to take me up on that 5:1 offer. I'd be happy to pay out if I am wrong but Case-Shiller predictions are becoming the laughing stock of the RE industry. IMHO, they are treading on "idiot" status.

I'm going to stick with Mike Orr's models. He is the closest person to the Phoenix market. That being said, I can certainly see where the prices might drop 2-4% some time before year end because of an overheated market coupled with seasonal softening. Since last November, Surprise (where I bought) INCREASED $20 a square foot. The average price per square foot went from $61 to $81 or a 33% gain in 9 months. I bought at around $51 a square foot in early 2011. I ran with Mike Orr's unbiased advice and it paid off. Super Hint of the day: Read Mike Orr's advice. If I remember correctly, didn't Howard call for a market to crash for the past 2 years? He was using the same reasoning.

I say follow the interest rates. If 3.25% borrowing rates are the new norm, then housing will be subsidized by super cheap PAYMENTS. Because rates were cheap, I sold a $400K home in MN. I had over 30 showings with a few offers. I got a call from another agent telling me that their non-contingent client was willing to pay $7K more if my deal fell through. Homes went up 11% in June here in MN. Why? 3.25% interest rates!!!!!!!!!!! When interest rates go up a couple of percent, then housing will soften. If the massive debt drives up interest rates, that is when housing is going to soften a lot. If Europe's debt crisis destabilizes the economy and the interest rates go up, that is when housing will soften. Until then, RECORD LOW super cheap money is THE driving force of housing. It stopped the slide and created the "bottom". Then the sense of urgency set in and the rest is history.

We all know if unemployment goes up, less people will be able to buy houses and that will soften demand. But specifically in the Phoenix area, it is a 2nd home haven for a lot of people. My home that I just sold for around $400K in MN would be priced around $250K in Surprise. That's after a $20 a square foot increase in Surprise. My point in mentioning all of this is much of the valley is immune to those Honeywell or Boeing layoffs. People are rolling into town with money in their pocket selling their $400K MN homes and buying "cheap" $250K Phoenix homes for CASH.

There has always been a some gloom to worry about. Pick a year in history and I can tell you why the sky is going to fall. But so long as the interest rates hover around 3.25% for the balance of the year, the Case-Shiller prediction of 9.5% fall is positively idiotic.

[Sunni2012]

i think some of the housing is going to start to slow now. Like it was said almost all of the houses under 200k are gone. so that leaves all the 200k plus along with all the New builds now.. And with school now in session i cant see people moving there kids to new areas and pulling them out of school especially out of state...
also with the election year and now seeing gas prices and oil cost rise, doesnt look good..people mite start to Hold on to the $$..

[Potential_Landlord]

Originally Posted by MN-Born-n-Raised

They might as well change their name to Case-Shiller-Zillow. 9.5% decline by year end. I'll give 5:1 odds that's not going to happen before year end. But you have to bet $100 so I can buy a decent steak dinner. I'm going to make another prediction: no one is going to take me up on that 5:1 offer. I'd be happy to pay out if I am wrong but Case-Shiller predictions are becoming the laughing stock of the RE industry. IMHO, they are treading on "idiot" status.

Exactly - Case/Shiller are Abby Joseph Cohen of the 2010s. In the 1990s Abby was the perma-bull everybody was following blindly. Until she and all followers made a fool of themselves. That included me at the time - a lesson I had to learn.
In the 1990s the mood was optimistic and bullish everything and Abby just followed that. Now the mood is pessimistic and bearish everything and Case/Shiller follow this trend. As a forecaster, you make your money by telling everyone what they want to hear and not by telling what REALLY is going on. Eventually you make a clown of yourself, but a rich one at that. That's the way it is.

[Zippyman]

The ARMLS "Stat" reports provide some interesting data, based on pending contracts - the data and conclusions in those reports is far from exuberant, and some of it is quite surprising.

While most reports I've seen quote a blanket price per sq foot for homes in the valley, the stat report shows the "strata" of $per-sq/ft compared to the price level of the home. If you scroll through this month's report, on about page 8 there's a chart that shows that the average pending sub $50k home has a price per square foot of around $30. The average $50-$100k home has a per sq foot price of around $55, and the average $750k home is $250 sq ft.

You can see the reports at the armls website.

STAT Newsletter Library - ARMLS

You could really overpay if you believed the "bulk" data from the press and didn't look at the data in the price point you were buying at.

[jimj]

Originally Posted by Zippyman

The ARMLS "Stat" reports provide some interesting data, based on pending contracts - the data and conclusions in those reports is far from exuberant, and some of it is quite surprising.

While most reports I've seen quote a blanket price per sq foot for homes in the valley, the stat report shows the "strata" of $per-sq/ft compared to the price level of the home. If you scroll through this month's report, on about page 8 there's a chart that shows that the average pending sub $50k home has a price per square foot of around $30. The average $50-$100k home has a per sq foot price of around $55, and the average $750k home is $250 sq ft.

You can see the reports at the armls website.

STAT Newsletter Library - ARMLS

You could really overpay if you believed the "bulk" data from the press and didn't look at the data in the price point you were buying at.

Or the specific location you're interested in.

[dadof2divas]

I am watching new builds go up around $3-4K per week. Then couple that with new home builders taking a lottery it all reminds me of the 2006-07 only on a smaller scale. I agree Phoenix is a second home area for a lot of people. That is why the population jumps around 40% in the winter...the snow birds roll into town. Is it a gamble to purchase now yes, but it was also a gamble to purchase before. Renting is safe as well, but until the employment stabilizes things will continue to be shaky.

[MN-Born-n-Raised]

Originally Posted by dadof2divas

I am watching new builds go up around $3-4K per week. Then couple that with new home builders taking a lottery it all reminds me of the 2006-07 only on a smaller scale. I agree Phoenix is a second home area for a lot of people. That is why the population jumps around 40% in the winter...the snow birds roll into town. Is it a gamble to purchase now yes, but it was also a gamble to purchase before. Renting is safe as well, but until the employment stabilizes things will continue to be shaky.

Things have been shaky since 2007 or 5.5 years. I won't be surprised to see things "shaky" in another 10 years (it's easy to be "shaky" with $14 TRILLION in debt). In the mean time, prices could creep up another 25% in the next couple of years and still be WAY below 2006 hyper inflated pricing. Who says employment will EVER stabilize to what it was? I predict it will be this way forever (or maybe even worse). Think outsourcing.

I know this much. If I buy a home for $185K, (by definition) I cannot lose more than $185K. Now if I buy a $700K, I'm in a much more risky position if the economy falls apart. That is why I've sold one fairly expensive home and have plans on selling my expensive lake home in northern MN in the months to come and buying something much smaller and less expensive.

The new building lottery is happening because there is a labor shortage and a marketing tool. There is nothing to be alarmed about. They are no longer giving out crappy loans to just anyone with a pulse and "investors" are using there own cash versus the banks. Those people who could not read the real estate tea leaves got scared and the market UNDER shot. People waited too long and missed the bottom. Now some people are too scared to realize that building inflation always had to happen in Phoenix.

[Sunni2012]

I noticed some New home builders like Fulton, Beazer., raised there prices by about 4k. I'm pretty shocked to see them doing this as buying has slowed and coming into a stretch of time when sales slow down

[ShampooBanana]

Originally Posted by Sunni2012

I noticed some New home builders like Fulton, Beazer., raised there prices by about 4k. I'm pretty shocked to see them doing this as buying has slowed and coming into a stretch of time when sales slow down

Not sure what indication you are using that buying has slowed much. Houses are still getting multiple offers and traditional buyers are still competing with investors. The new home builders are simply responding to market demands. Also, we are not coming into a time when sales slow down. Summer slowdown is almost over and as autumn comes they will soon be picking up again.

[Pink Jazz]

Originally Posted by ShampooBanana

Not sure what indication you are using that buying has slowed much. Houses are still getting multiple offers and traditional buyers are still competing with investors. The new home builders are simply responding to market demands. Also, we are not coming into a time when sales slow down. Summer slowdown is almost over and as autumn comes they will soon be picking up again.

I agree with that statement fully. New home prices at Fulton Ranch in Chandler have skyrocketed, with the Shoreline series homes now starting from the $380Ks. Also, here in our community of Freeman Farms in Gilbert, at the time we bought here, the Mediterranean series were starting from the $190Ks while the the Caribbean series were starting from the $240Ks, with our particular floorplan (the Cayman) starting from the $260Ks. Fast forward to today, and now the Mediterranean series are starting from the $240Ks, while the Caribbean series are starting from the $280Ks, with our floorplan now starting from the $300Ks. Also, the new Oasis series (which are the successor of the Mediterranean series) are starting from the $260Ks, and I wouldn't be surprised if the future Peninsula series (successor of the Caribbean series) starts from at least $300K.

I really don't expect a drop in prices.