Caution! Home buyers! Possible price correction coming to Phoenix! (Scottsdale: credit score, home sales)

[JohnZ963]

I strongly suspect that the majority of the recent unemployment is in lower-paying retail, restaurant, hospitality, and similar positions. These people weren't in a position to buy a house before this mess anyway and were probably living paycheck-to-paycheck. Professionals who can afford $300k+ houses aren't getting laid off en masse currently. There is still a huge pent-up demand of people who wish to relocate here either for retirement or because of the increase in WFH jobs and wanting to live in a lower cost of living area.

[MN-Born-n-Raised]

Originally Posted by JohnZ963

I strongly suspect that the majority of the recent unemployment is in lower-paying retail, restaurant, hospitality, and similar positions. These people weren't in a position to buy a house before this mess anyway and were probably living paycheck-to-paycheck. Professionals who can afford $300k+ houses aren't getting laid off en masse currently. There is still a huge pent-up demand of people who wish to relocate here either for retirement or because of the increase in WFH jobs and wanting to live in a lower cost of living area.

True. But the folks in upper management are getting hammered as well as the owners. I'm hearing a trend about now.... Customers are telling me that "wage cut" rumors are going on. I just got off the phone with an engineer from Philips. The entire company should get a "shaving". Cut, paste, repeat. A certain amount of people are going to be staying put or refusing to "upgrade". 1000% chance this will have an impact on real estate even more. The only debate is how much. It's going to be interesting.

[stub303]

Phoenix will be an interesting market to follow through this crisis. The California > AZ migration has been mind blowing the past few years and this may increase exponentially as AZ is extremely affordable for those in all income groups. Those who can no longer sustain in expensive CA may use this as the final straw to escape and move to the valley for cheaper housing. Housing costs in AZ are no longer tied to local wages as the market is attractive to those who can maintain employment remotely.

[Tall Traveler]

Originally Posted by stub303

Phoenix will be an interesting market to follow through this crisis. The California > AZ migration has been mind blowing the past few years and this may increase exponentially as AZ is extremely affordable for those in all income groups. Those who can no longer sustain in expensive CA may use this as the final straw to escape and move to the valley for cheaper housing. Housing costs in AZ are no longer tied to local wages as the market is attractive to those who can maintain employment remotely.

This will continue and probably accelerate due to California is set up to run at very high cost per person in housing costs, taxes, cost of goods and services with a severely limited income base for the next few years many will opt to go to Arizona, Vegas, Idaho, etc.

Additionally if the heat kills/slows the virus spread, and Phoenix just hit its lowest daily infection numbers since last month, the high heat will make Phoenix to those vulnerable to the virus that much more desirable.

[ajonesaz]

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.

But almost all of those are not from a poor economy. A lot of them are just retail/hospitality furloughs. Once the stores open back up, they will be employed again. For sure we won't be going back to record unemployment, but it will improve quickly.

Travel and hospitality is the only sector with a big question mark.

[49erfan916]

For the people who dont think we will see a price correction in Phoenix is in denial IMO. JP morgan chase basically restricted capital (mortgage borrowers) for the vast majority of people and I think other banks will follow their lead very soon.

Unemployment is very high but that number is skewed due to furloughed employees.

I have seen numerous properties have a price reduction for the month of April; which is the most prosperous time for real estate to inflate their prices. From my listings from the MLS, about 4/10 properties have witnessed a price reduction. This number is staggering compared to last year.

In a way, I hope I am wrong because I do have property in Phoenix. However, if values drop fall low enough, I will buy some more investment properties. Phoenix is a hot market but don't estimate people fears about this virus.

[AndroidAZ]

If there is a price correction, it will be for most goods / services. I'm not sure why people are singling out real estate as if it's anything special.

This is an economic shock to the entire economy, not just real estate. If real estate falls, unless you're holding cash, chances are you won't be able to buy a ton of real estate anyway as your income / assets will be reduced as well.

Nonetheless, I think real estate is more fundamental and important than other assets at this time, such as cars, gadgets, etc. We need a place to live at home and work, especially during this social distancing event.

This economic disruption is not singling out residential real estate and leaving everything else intact. In fact, commercial real estate will probably suffer more and employers shift to work at home models in greater numbers.

This downturn will not hit residential real estate the hardest unlike the last recession. Seems like a lot of people still are operating on the last recession model. Sure real estate values may fall, so will everything else worthy of discussion.

[Maroon197]

Originally Posted by ajonesaz

But almost all of those are not from a poor economy. A lot of them are just retail/hospitality furloughs. Once the stores open back up, they will be employed again. For sure we won't be going back to record unemployment, but it will improve quickly.

Travel and hospitality is the only sector with a big question mark.

Not from a poor economy? There is basically no economy right now. And it’s a fantasy to imagine that all those jobs are just going to magically come back. Businesses are going to fold in untold numbers, and even after restrictions are lifted people are still going to be considerably more reluctant to go out and utilize services than they were before. If the governor opened up arizona tomorrow, would you pack into a baseball stadium, go to a concert, get a massage, go to the gym or bowling to use shared equipment, crowd into a restaurant, or just casually browse at the mall? Some would, but most wouldn't even consider it. Even one sector of the economy taking a hit impacts all the others.

[Tall Traveler]

Originally Posted by 49erfan916

For the people who dont think we will see a price correction in Phoenix is in denial IMO. JP morgan chase basically restricted capital (mortgage borrowers) for the vast majority of people and I think other banks will follow their lead very soon.

Unemployment is very high but that number is skewed due to furloughed employees.

I have seen numerous properties have a price reduction for the month of April; which is the most prosperous time for real estate to inflate their prices. From my listings from the MLS, about 4/10 properties have witnessed a price reduction. This number is staggering compared to last year.

In a way, I hope I am wrong because I do have property in Phoenix. However, if values drop fall low enough, I will buy some more investment properties. Phoenix is a hot market but don't estimate people fears about this virus.

Based on an assumption that no significant event reducing fear occurs, you would be correct. Another possibility is the virus is no more lethal than the flu if recent reports from California and Connecticut taken indicating that 50-85 times more people have had it, in which case, the virus will fizzle out. Another possibility is that the heat kills the virus in which case, demand would drive the prices up in Phoenix.

[jd433]

I hate waiting for the crash to come. It's like a hammer is about to fall but you dont know when.
In the mean time you dont know weather to buy or sell. Perhaps selling is the better financial decision right now. Yes, sell before prices go lower. But then you have to rent. Then you have to wait possibly for a couple years for the bottom before you can buy again. But then what if you are wrong?