Caution! Home buyers! Possible price correction coming to Phoenix! (employment, income)

[Tall Traveler]

Originally Posted by Potential_Landlord

I'm skeptical for a big RE downturn. The FED is massively and rapidly increasing money supply like I've never seen it. Seriously, this dwarfs anything before both in terms of quantity and speed. Don't fight the FED. The China experience also points to a rapid recovery once the economy is reopened. Economic low in May/June then rapid recovery. Also, look who's leading the stock market recovery... home builders.

Yep, add very low mortgage interest rates and the lowered Covid-19 cases due to hot weather and we may see prices sharply up.

[Prickly Pear]

JP Morgan Chase announces they’d no longer offer mortgages unless one had 20% down and at least 700 credit score.

[asufan]

Originally Posted by Prickly Pear

JP Morgan Chase announces they’d no longer offer mortgages unless one had 20% down and at least 700 credit score.

No they still offer the 3% down DreaMaker Mortgage.

[Katera]

Originally Posted by DatBoiLavoi

I spoke with my neighbor a few days ago. Both him and his wife lost their jobs and are now looking at forbearance with their morgage. Unfortunately a lot of people seem to think that the payments will be added to the end of the loan when in reality banks will want all missed payments at the end of the forbearance period.

In other words we won't see the full effects in the real estate market for many months. I'm guessing by August we will have 9-10 months of supply if the economy stays shut down.

For anyone that has to buy now, all I can say is stay away from non bank lenders (Loan Depot, Quicken Loans, PennyMac etc..).

Another topic less talked about are how pensions will be affected by this. Most were already in bad shape before the coronavirus. I would think with the market under pressure and rates back near zero that some pensions will default.

Wife and I just sold our house in Texas and will finally be getting out of this nightmare weather state...but that is a different topic.

We are moving to Phoenix and decided very definitively to lease for a year. Not only will it allow us to get to know the area, but I am convinced that if we don't open up this economy soon, that by August/Sept the housing market is going to implode. I am looking at 20% drops. Why? Simply because if you do not have a job, savings will eventually run out and you will default on your house. It's not really more complicated than that. I am not surprised that prices have not started falling yet. We are only a month into this. But 6 months from now? Oh yeah....there will be a correction and our hope is to be sitting on the sidelines with cash waiting to pounce. Will it happen? Dunno, but I think it is a reasonable bet.

[Tall Traveler]

Originally Posted by Katera

Wife and I just sold our house in Texas and will finally be getting out of this nightmare weather state...but that is a different topic.

We are moving to Phoenix and decided very definitively to lease for a year. Not only will it allow us to get to know the area, but I am convinced that if we don't open up this economy soon, that by August/Sept the housing market is going to implode. I am looking at 20% drops. Why? Simply because if you do not have a job, savings will eventually run out and you will default on your house. It's not really more complicated than that. I am not surprised that prices have not started falling yet. We are only a month into this. But 6 months from now? Oh yeah....there will be a correction and our hope is to be sitting on the sidelines with cash waiting to pounce. Will it happen? Dunno, but I think it is a reasonable bet.

I think your strategy is good but I think the odds of it happening that way are pretty low for the following reasons:
- Inventory is very low
- Demand is till strong
- It's unlikely the virus will keep the economy down that long (it could, I just don't think it's very likely)
- Mortgage rates very low
- People in high cost areas will seek lower cost places

[Maroon197]

This forum is straight up bizarro world right now. It’s like phx posters are completely detached from reality. 22 million unemployment claims in a month. That’s so unprecedented it’s almost incomprehensible. And people are acting like everything is just going to instantly go back to normal as soon as social distancing measures are lifted. Yeah, ok. Sure thing.

[AZPam]

Originally Posted by Tall Traveler

I think your strategy is good but I think the odds of it happening that way are pretty low for the following reasons:
- Inventory is very low
- Demand is till strong
- It's unlikely the virus will keep the economy down that long (it could, I just don't think it's very likely)
- Mortgage rates very low
- People in high cost areas will seek lower cost places

Add in the fact that the majority of homeowners now have equity in their homes and won't need to do short sales

[MN-Born-n-Raised]

Originally Posted by Maroon197

This forum is straight up bizarro world right now. It’s like phx posters are completely detached from reality. 22 million unemployment claims in a month. That’s so unprecedented it’s almost incomprehensible. And people are acting like everything is just going to instantly go back to normal as soon as social distancing measures are lifted. Yeah, ok. Sure thing.

No chance it is going to go back to normal right away! That doesn't mean that the economy will crumble. Because if RE crumbles, so will everything else. In other words, it's too early to tell what will happen. Maybe the downside is it drops for a few months. Or credit gets tightened. Or the values drop 5% or 10% or 0% (it just stops rising). If sh*t really does hit the fan, maybe down 30% or 50%. But can we agree currently, no one knows? Well, other than it's not going back to normal right away.

I wouldn't even want to guess. But no chance I'd be buying right now. The upside of buying now is housing might go up a few percent in the next year. The downside... Well, use your imagination. -5%, -10, -20, -30, -40%. So based off of cost-benifit-analysis alone, buying a new place might not be the best math. Now I flated the idea of selling my house a month ago (I winter here). The math is the same ( but a PITA to sell + selling expenses). But honestly, I view it like a stock. It will eventually go back up and I don't want to play the game.

[Katera]

Originally Posted by Tall Traveler

I think your strategy is good but I think the odds of it happening that way are pretty low for the following reasons:
- Inventory is very low
- Demand is till strong
- It's unlikely the virus will keep the economy down that long (it could, I just don't think it's very likely)
- Mortgage rates very low
- People in high cost areas will seek lower cost places

Yup inventory is relatively low but mostly because sellers have decided not to list in the middle of a pandemic. They are hoping it will be over soon.


Demand is still strong: We are only a month into this for real and most of those house closings started before the poop really hit the fan a few weeks ago. 6 months from now I believe it will look vastly different.


Unlikely the virus will keep the economy down? I disagree. 22 million people filed for unemployment. That is shocking even compared to the 2008 recession. How you could think that many people (it will be pushing 30 mil by next Thursday when the new numbers come out) will all just "get rehired" is fantasy thinking. The virus will not have a vaccine for 18 months at least and will not have studied therapeutic treatment for at least another 6 months. We will see a round two this fall which will further degrade job re-activation.


Mortage rates are low. Yep, and if you keep your job, can put 20% down and have no fear then today is a great montage rate time to buy. How many people are going to buy now based on the mortgage rate is debatable but you make a fair point.


People in high cost areas.....This is your best point. We are/have been getting CREAMED in Texas with Property taxes and Property insurance. In Phoenix we will save 75% on property taxes and almost 60% on homeowners insurance the second we buy there. So yes, Phoenix is a very reasonable place to live and we are thrilled to be moving there.

Thank you for posting your thoughts and feel free to chime back in any time.

[Tall Traveler]

Originally Posted by Katera

Yup inventory is relatively low but mostly because sellers have decided not to list in the middle of a pandemic. They are hoping it will be over soon.


Demand is still strong: We are only a month into this for real and most of those house closings started before the poop really hit the fan a few weeks ago. 6 months from now I believe it will look vastly different.


Unlikely the virus will keep the economy down? I disagree. 22 million people filed for unemployment. That is shocking even compared to the 2008 recession. How you could think that many people (it will be pushing 30 mil by next Thursday when the new numbers come out) will all just "get rehired" is fantasy thinking. The virus will not have a vaccine for 18 months at least and will not have studied therapeutic treatment for at least another 6 months. We will see a round two this fall which will further degrade job re-activation.


Mortage rates are low. Yep, and if you keep your job, can put 20% down and have no fear then today is a great montage rate time to buy. How many people are going to buy now based on the mortgage rate is debatable but you make a fair point.


People in high cost areas.....This is your best point. We are/have been getting CREAMED in Texas with Property taxes and Property insurance. In Phoenix we will save 75% on property taxes and almost 60% on homeowners insurance the second we buy there. So yes, Phoenix is a very reasonable place to live and we are thrilled to be moving there.

Thank you for posting your thoughts and feel free to chime back in any time.

Yeah I agree the big X-factor is how long the economy will take to get going again. For sure travel, hospitality and oil and gas will be down until we get a vaccine or treatment that lowers significantly the death number for people getting the virus. I've heard a variety of treatment options are indicating potential for success with drugs that are approved already for different applications. The fact that the market is back above $24K tells me a lot of people with big money think we are on our way to getting it back. Also an X-factor are studies indicating 50-80 times more people have had the virus than currently believed but they have had a mild case of it, when a good testing mechanism is found and confirms it, people will return to their normal lives.

I lived 10 years in Texas so very familiar with their high property tax and property insurance rates compared to Arizona.