Caution! Home buyers! Possible price correction coming to Phoenix! (Mesa: renter, house insurance)

[autism360]

The poll questions are biased so you cannot choose any option that suggests no price correction to the downside.
There will be no price correction on the downside as long as there remains a severe shortage of homes because home builders are unwilling at this point in time to build the amount of homes needed to even come close to the number needed for new home buyers and people moving here from other states[mod cut - keep political commentary out].

[Mike from back east]

Originally Posted by Hal Roach

...In early 2008, I recall an analyst from now defunct Washington Mutual saying it was a small sliver of the sub prime market, specifically, 10% of 7%, and there would not be a crash. ....

I recall watching Fox Business News one day and Professor Robert Shiller (of Case-Shiller Index fame) was on the show with Ben Stein and some jackal from Fox was hosting. Stein kept insisting that "sub-prime is just a blip, just a blip" while Shiller tried to school him a bit. Stein wasn't buying and the jackal from Fox was sneering at Shiller. You can't get much better advice than that given by one of Shiller's caliber, I was furious at how he was treated on that show, and that was the last time I tuned into FBN. That was some blip.....

[Mike from back east]

Originally Posted by autism360

The poll questions are biased so you cannot choose any option that suggests no price correction to the downside. ... [/color].

That's a problem with a lot of polls, here and elsewhere. If it's early enough a mod can adjust the questions to try and get balance, neutrality and a level playing field; I've done it a few times in some of my forums.

[ShampooBanana]

Originally Posted by autism360

The poll questions are biased so you cannot choose any option that suggests no price correction to the downside.
There will be no price correction on the downside as long as there remains a severe shortage of homes because home builders are unwilling at this point in time to build the amount of homes needed to even come close to the number needed for new home buyers and people moving here from other states[mod cut - keep political commentary out].

Oh, the homebuilders are VERY willing to build more homes (more homes = more revenue = more profit). It's just that they literally CAN'T. The decimation of the construction labor market, high land and materials prices, needless municipal and state regulations and impact fees, and lack of readily available land in which to build in many markets without huge lead times thanks to said regulations makes it nearly impossible in many markets to build what needs to be built at a price that is affordable to many. Not to mention many of the homebuilders that existed before went out of business or were bought up by bigger builders because of the crash. Land developers, too.

It's a tough business, with profit margins not quite as high as you might think, and the builders that are left are trying their damndest to grow as much as they can because they all believe the economy will remain strong and demand is there. Actually being able to do it is different matter. This is spoken as someone who personally knows every big builder in town and speaks to their leadership on a regular basis. Trust me, they are ALL trying to grow but they have some pretty big hurdles to overcome.

[Mike from back east]

Not to mention water issues and water law in the western USA.

[ShampooBanana]

Originally Posted by Mike from back east

Not to mention water issues and water law in the western USA.

Definitely a factor down in Pinal county where you are seeing a lot of the new housing growth/demand.

[DatBoiLavoi]

Your right about water is a major issue in Pinal county. I believe many parts of the county rely on ground water which isn't sustainable long term. While the area has lots of undeveloped land, the county and cities within it have made poor choices. Not much in the way of corporate employment, modern industry, or nightlife, terribly managed private utilities, underdeveloped infrastructure (they desperately need freeways), and unicorporated areas (San tan valley).

With these issues I don't think Pinal county will have much of an impact on normalizing Phoenix home prices. Most citizens who work in Phoenix won't be considering Pinal when looking for a home unless they are retired or seeking more of a rural community.

In my mind, the demand supply mismatch is one that can be solved economically. Things like Quicken Loans 1% down loans should be done away with. Investment property loan requirements should be increased. Lots of homes are rentals or sitting empty, mainly due to investors seeking a return from rent or to flip. As these investors can't get a return they seek from the market, they instead turn to becoming land Lords or house flippers. This could be solved by raising rates (best solution but won't happen with federal debt levels) or limiting sfh from being rented out (not ideal either).

Home prices compared to median household income is not looking good either. Long term prices will have to fall in line with wages. I think in the short term migrants from HCOL states can fill in some of this gap but that will eventually fade. The housing shortage we're seeing now reminds me of 2005 when there was a house buying mania. I think this scenario is different. In 2007, the housing market caused the recession. This time it will most likely be a recession that causes housing to correct (not as much much as the previous housing crash). I think most of the blame can be placed on keeping rates artificially low for so long.

[wilberry]

" Home prices compared to median household income is not looking good either. Long term prices will have to fall in line with wages."
I work in the Subsurface Utility engineering consulting field and I travel all over the Phoenix metro area I do a lot of Pre-Construction work . I see huge subdivisions being built in Queen Creek , Smaller developments filling in unused land , Taylor Morrison , Christopher Todd developments and Apts going up all over. I also see Apt rents skyrocketing , Home prices rising and I wonder how much longer can the average person afford to buy or rent when not much is being built in the affordable range. If you go to the outskirts of Buckeye or Queen Creek Pinal county the prices get a bit lower. Low rates was a good Idea but builders make more if they continue to build on high end so they continue to do so. However I have started to see a few small properties with small homes filling in lots in Glendale. Northern Ridge Estates , 83 rd and Glendale starting at $ 269 K 3 bd 2 bth 1500 sq Ft , Not bad ! 20 K down , $ 1400 a month except it can be down wind of the Dairy Farm near by ......hmmm.....meanwhile a 2bd 2 th apt continues to to go 1200-1300-1400 and rising looks like We are becoming Colorado

[freestoneangler]

"Possible Price Correction for Phoenix Market" can be applied nationally. For the most part, housing prices have risen everywhere since the last crash. For those selling and buying, this discussion is somewhat moot presuming they are selling and buying within a short time period and in similar markets. For first time buyers, I agree that certain markets have once again reached all time highs (Seattle, SF, etc.) and, based on market history seem ripe for a larger downward adjustment when it eventually happens. If your plans to stay in the home are short term, then buying now definitely incurs risk - particularly in overinflated areas. Our plans to buy in SCG will be for the long haul (possibly our last home purchase). So for us the challenge is to pay FMV or a little less if possible.

[spoonman1]

Housing is still too “cheap” here compared to LA, SD, Denver, Seattle, Dallas, etc. Pricing is definitely not inflated in comparison.