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I looked it up and a lot of Gen X'rs want to live the active lifestyle and/or someplace affordable with jobs. The trend according to the articles I read, X'rs were moving to places like Idaho or Colorado for the outdoor activities. Or moving to places in Texas for the combined weather, cost of living and job opportunities.
Recently moved down to Oro Valley north of Tucson after living in downtown Phoenix for a bit. What I see when I meet my trail running and hiking groups is people that retired to the mountains at 60, then move to Tucson because the altitude and weather in places like Bend or Colorado got to them by the time they are 70. These retirees are very active, a few of them are still doing 10 minute miles with us up and down hills at the local trails. One of my running partners is 78, looks 62 and can run marathons easily.
I am an agent. I am not predicting anything. No one can. I have an opinion based off of studying under some top statisticians. We are nowhere near a bubble. We are still rising in prices/values. Demand is still there. Inventory is still low with no sign of where it will increase from. And as of a few days ago, due to a down economy the interest rates will not be going up or rising to a level that affects all that much. 2007-to 20whatever were an anomaly. That type of drop hadn't really occurred since The Depression. Real estate is cyclical so what goes up must go down-what we go down by and when are unknowns. But not anytime in the immediate future are we going down.
I also question if pockets/areas can sustain the pricing. We have been staring at >2200 square foot condos in Tempe and Scottsdale near Tempe. Anything ideal is >>$700K+. I prefer something a little bigger and those are north of $1M. Personally, I am going to wait for a recession before I buy but I am trying to understand what areas are acceptable. My house might soften $20K or even $40K. I bet the $1M spots are going to be a struggle to sell; especially newer builds. But like AZJoeD said, my crystal ball is also broken. But I'm allergic to losing $$. Spending $1M on a condo in PHX seems like a pretty good way of being stuck in a home hard to sell. Unless you want to give it away.
I'd be curious how many people buying >>$750K condos can actually afford them. i.e., who can stroke a check for one if they wanted to. Because if your neighbors are leveraged, that's not a good thing for resale if crap hits the fan. It's why the bubble popped so loud in the outer burbs. Nearly everyone was deep under water. After it popped, about half of the deal buyers paid cash. So that helped stabilize the heavily leveraged buyers plus a lot of 2011-205 buyers have plenty of equity. But the luxury condo builds are newer and people are buying at the top of the market.
I just read that PHX wide, sales are down 14% from this time last year. But for whatever reason, not a lot of people are listing and that is keeping the supply tight at about 2.5 months (sellers market). If people smell the hot market subsiding, I can picture a correction coming as people (especially investors) run for the doors and decide to sell at the top.
I have my bag of popcorn popped and I'm ready to watch what happens. IMO, the housing market needs to cool down a lot. A recession is always coming; even when orange skinned people are in office. I hope if comes before Donald exists the Oval. If not, everyone is going to be hearing how much of a "genius he was" for decades to come. So bring on a recession soon. He will blame the Fed and "the witch hunt". When in reality, most of the gains have been related to a massive pent-up demand after the great recession. So even with a "communist" in power like Bernie, the economy would be on fire. I digress..
I like the analysis. The recession of 2002 drove me out of AZ. I had to move to FL for a new job. I tried my best to stay out west and interviewed in CA, AZ, NM, CO. It all failed. I had to move east.
But I am back in the region for the "Conference of Champions" (as Bill Walton asserts) and have a great job in Chandler. I would like to buy a home. I have good credit and am in position to do so. But I know of the recessions since the early 70s - there has been one about every ten years. I graduated into the 1991 recession. The recession of 2001-2002 drove me to FL. The recession of 2009 kept me in FL.
I get the impression another recession is coming in the near future. It feels like we are overdue for another one. But it may not be as bad as 2008 unless there is some unusual set of circumstances.
However, a recession is a "buyer's market" for homes as I understand it. But it's lame for job hunters - especially recent college graduates. When Is the Next Recession? Survey of Economists Predicts 2021 | Money
I like the analysis. The recession of 2002 drove me out of AZ. I had to move to FL for a new job. I tried my best to stay out west and interviewed in CA, AZ, NM, CO. It all failed. I had to move east.
But I am back in the region for the "Conference of Champions" (as Bill Walton asserts) and have a great job in Chandler. I would like to buy a home. I have good credit and am in position to do so. But I know of the recessions since the early 70s - there has been one about every ten years. I graduated into the 1991 recession. The recession of 2001-2002 drove me to FL. The recession of 2009 kept me in FL.
I get the impression another recession is coming in the near future. It feels like we are overdue for another one. But it may not be as bad as 2008 unless there is some unusual set of circumstances.
However, a recession is a "buyer's market" for homes as I understand it. But it's lame for job hunters - especially recent college graduates. When Is the Next Recession? Survey of Economists Predicts 2021 | Money
I would use the rule of 5 years, if you think it's likely you will stay where you are for 5 years or more, then you're better off buying because the cost to sell/resell are normally offset by the appreciation....unless you're in an unusually high market value point (then wait for the drop) or low value point, don't wait the 5 years.
I bought 2 houses in the Phoenix area for investments in 2011 because of the low value at the time and then another in 2013 for wife and I to use as a winter home.
In my opinion, Phoenix is still a bargain and not in a bubble....but that's mostly a WAG.
Now Seattle area where we are, that's a housing bubble.
I think there is a lot of recency bias at work here. Folks, the last (great) recession was a big aberration. That's not coming back for at least a generation, more like 40 years. The next recessions will be garden variety. Does the Phoenix RE market sink in garden variety recessions? Maybe, maybe not and if at all up to 10% or so? I wonder if someone has statistics. To time a 10% discount of an event that nobody can time (least of all economists) and prices may run up multiple time the future unknown decline... This is an exercise in futility. If you intent to stay and your job is secure then buy asap.
I can't recall how many times a housing decline was predicted in the last years. About as many as interest rate increases. Yeah, that worked really well. We will also need another phase of FOMO - fear of missing out ahead of any future downturn. A phase when people become convinced that it's now "safe" to enter the housing market and they fear being left behind if they don't buy NOW. Still not seeing anything like it. Then we need to see a big expansion of inventory and doubling of energy prices within 12 months. Then a spike in unemployment. So there's really nothing in sight. Nothing at all. My experience is that all the people who hesitate to buy now will do so once we enter the FOMO phase in the housing market and then be confronted by a subsequent if minor decline. That's just how markets and human psychology work. Rinse repeat. Seen it over and over again.
I like the analysis. The recession of 2002 drove me out of AZ. I had to move to FL for a new job. I tried my best to stay out west and interviewed in CA, AZ, NM, CO. It all failed. I had to move east.
But I am back in the region for the "Conference of Champions" (as Bill Walton asserts) and have a great job in Chandler. I would like to buy a home. I have good credit and am in position to do so. But I know of the recessions since the early 70s - there has been one about every ten years. I graduated into the 1991 recession. The recession of 2001-2002 drove me to FL. The recession of 2009 kept me in FL.
I get the impression another recession is coming in the near future. It feels like we are overdue for another one. But it may not be as bad as 2008 unless there is some unusual set of circumstances.
However, a recession is a "buyer's market" for homes as I understand it. But it's lame for job hunters - especially recent college graduates. When Is the Next Recession? Survey of Economists Predicts 2021 | Money
News broke out that the yield curve is inverted. Usually it means that a recession follows suit within a year or two. I don't know how this would affect home prices in AZ but I feel like the coastal cities in CA will get hammered. (not as bad as 2008 but those places are in a bubble) If prices are low enough, I may move back to CA.
News broke out that the yield curve is inverted. Usually it means that a recession follows suit within a year or two. I don't know how this would affect home prices in AZ but I feel like the coastal cities in CA will get hammered. (not as bad as 2008 but those places are in a bubble) If prices are low enough, I may move back to CA.
Yep. That's the cycle. If CA gets hammered, I'd assume their thirst for PHX homes might subside. Do I think we are going to see 20% price cuts? Nope. But 10%, why not. Especially on the higher end price points. 10% off of $700K is substantial.
I've been in the hunt for a property (in research mode). I've been all over the Valley. Fountain Hills, North Scottsdale, Peoria, Gilbert, Chandler. I've been staring at the premium properties. I'll say with confidence that even with low inventories, homes are taking some price cuts to get them sold. The sky isn't falling. But I'm not going to personally buy now. I'm going to wait for the recession.
I've lived in Arizona a long time, but also have lived all over California (traffic traffic traffic - why I got out of silicon valley, SoCal many years ago and now only go back to visit - and each visit reminds me why I left), have family up & down the west coast, as well as the mid-west. I also travel regularly, flew about 100 flights last year in/out of Sky Harbor to a variety of places.
My analysis of Phoenix: this is the biggest small town in the west coast, and it's about to blow up as a desirable place to live and work over the next 5-10 years.
On my many flights in / our of Phoenix, I talk to fellow passengers and find out a significant portion of them are relocating to Phoenix (retirement, job transfer, working remotely in Phoenix, school, etc). The reasons are similar: weather, cost of living, taxes, and proximity to other major west coast cities (Vegas, SoCal, NorCal, etc).
Portland, Seattle, Denver, and even Vegas (Henderson) & SLC have seen major booms due to jobs, escaping Californians, legalization of marijuana, etc. They all have their pros and cons, but they all are land-locked or development locked, and prices of homes continue to rise. Phoenix is really the only major west coast city without the huge rise unlike most of those other cities, and yet has a major airport and decent weather most of the year that many other metropolitan areas do not have.
More and more workers are able to work remotely and that is going to allow them to drive up prices in Phoenix as a cheap place to live. I work remotely when not traveling, and I love working in Phoenix due to the weather, outdoor opportunities, and easy access to a major Southwest / American hub to fly non-stop to most places.
I see the over-priced homes in California, Portland, Seattle and am shocked what we can get for so much less in Phoenix. Either those other places need to crash hard, or Phoenix prices need to go up to reach some decent equilibrium. I don't see those other places crashing hard due to them being land-locked, so Phoenix prices will need to go up, imho.
I've been studying the Phoenix real estate market for years and I truly believe we are so lucky to live in such an amazing place with such low cost of living. I've always been afraid Phoenix will be "found out" and it will explode. I believe this will happen as the other major cities have had huge increase in prices. Phoenix is the last haven for affordability in the west, and people who value a nice and affordable place to raise a family will discover Phoenix is the place that can't be beat.
I believe those of you on the sidelines in Phoenix will lose out on major price increase over the next 5-10 years as you seek justification as to why not to buy. It's always easy to wring your hands in worry about real estate, but Phoenix, as far as I can see, has mostly upside vs downside.
The only thing that worries me is the job market nationwide as well as Phoenix, but it's not as much of a worry as Grand Canyon University has exploded in size, as well as Mid-western university, which not only bring in a huge group of talented students / future employees, but also future residents who will want to make Phoenix their long term homes (after seeing cost of living elsewhere and weather elsewhere). The trend of more employees working remotely helps Phoenix more than the other cities as well. To me it's more clear than anything else I've seen in years...Phoenix metro area is set to explode in economy, real estate growth, and more educated populace.
PS - Texas is also mentioned as a competitive place to Phoenix...but prices have risen a lot in Texas, weather is not as nice, property taxes are much higher (but no state income tax), so really Phoenix is the last refugee for people looking for a nice place to live without being far away from the west coast.
Last edited by life_explorer; 03-25-2019 at 01:14 PM..
News broke out that the yield curve is inverted. Usually it means that a recession follows suit within a year or two. I don't know how this would affect home prices in AZ but I feel like the coastal cities in CA will get hammered. (not as bad as 2008 but those places are in a bubble) If prices are low enough, I may move back to CA.
Did anyone see Janet Yellen's (Former Fed Chairman) explanation of the current bond yields?
Quote:
“My own answer is no, I don’t see it as a signal of recession,” Yellen says. Yellen also says she doesn’t see a recession as “particularly likely” though she stresses that the U.S. economy is indeed slowing.
As a lifelong resident of Arizona, I'd love to be able to buy a place one day. I have moved nearly every year since I graduated high school (sometimes even two to three times a year) and I would die to be in something more permanent. Preferably a condo or townhouse in a central location. Right now I'm renting a SFH here in north Tempe (near ASU campus) and I don't see rents going down in my vicinity. I see way too many ads for houses with 0% down or 3.5% down, not even necessarily first time buyers. Most of these are for SFHs out in the boonies like San Tan Valley/Florence and Maricopa, Buckeye, something I personally would never consider due to their location. Would rather be in something smaller and more central, and less land because frankly I have no interest in yard work. But these ads do concern me, what do they mean? I can't see how selling SFHs to buyers with a minimum of 500 credit score with 0% down is a good idea in the long run.
Despite having a good credit, and a bit of savings, I don't think I'd qualify for a decent condo right now on the FHA (I've been working for less than two years, so I think I need more savings). I'd love to stay in the ASU campus area, as Tempe has grown on me quite a bit, but I will have to wait til some kind of housing bubble pop in order to get in. As a public sector employee, I think my job is fairly stable too, but housing prices seem absurd to me when I look online. I have a couple coworkers in the same boat as me, yet they are looking at buying right now, but I plan on waiting a couple more years. Most people I know are waiting for the inevitable pop.
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