In 2022, Zillow Predicts That Phoenix housing market will climb ANOTHER 20%?! (Mesa: for rent, insurance)

[john3232]

Originally Posted by dontbelievehim

Furnished downtown Fresno condo is selling for 320k. Might be worth a plane trip to see it, John.
Pool, spa, and tennis court included.
500-600k likely price near downtown Phoenix.
Looks like a low hassle rental.

Just passing this to you cause it seems like up your alley

Link


https://www.zillow.com/homedetails/2...18763430_zpid/

Lovely location but I think I'll pass. No more out of state rentals for me.
https://crimegrade.org/safest-places...esno-ca-metro/

[dontbelievehim]

Originally Posted by john3232

Lovely location but I think I'll pass. No more out of state rentals for me.
https://crimegrade.org/safest-places...esno-ca-metro/

Area isn't gentrified, but something is coming around the corner that will help gentrify it quickly.



Ttyl, john

[john3232]

Originally Posted by pathrunner

I can understand that he had sun hitting glass dead on in the afternoon (luckily I didn't) but couldn't he at least keep his A/C at 80-85? That's what I did while working in Phoenix during the day. I'm sure things like thermal room darkening curtains were used or at least suggested? Etc.? Just curious. And granted, I had a condo that was 750 sq ft.

He would set the thermostat to 86-87 when he left home in the morning. He'd return at 4-4:30 and the setting sun would be hitting the house. It wouldn't cool to 77 until the sun went down. The temp outside was 110-115 everyday that summer. He complained his electric bill too high.

I know the house very well because my mother lived there for five years before I rented it to this fellow. The AC unit was three years old at the time he moved in. Nothing wrong with it. Set it to 77 in the morning and the house stayed at 77. That summer I had three different AC vendors inspect the unit. All the AC was in good working order. The tenant and I also inspected the AC duct for leaks. There was nothing of note. The thermostat was changed out twice thinking it might be faulty. In the end nothing. The renter continued to be upset because the house wouldn't cool down to 76-77 and stop cycling until after 7 pm.

Now.. what I like about the AZ rental law is when a lease agreement ends... it ends. Unlike SF where a rental agreement is required by law to automatically rolls over to month to month when it expires.

After nine months I wanted this man out so I explained to him (and the other tenant who was his friend) I wouldn't be renewing their lease. That I was thinking about selling.

Once they left I put in a couple and haven't had a complaint about the AC. However, I did install sun screens before the new tenants moved in. Both work from home so I'll assume AC runs at a set temperature throughout the day.

[pathrunner]

Thanks for that explanation. That makes a lot of sense. You did everything you could. It's good that the tenant moved on. One wonders if they have any complaints about their later and/or current residence.

One thing I noticed was that if I set my thermostat at 82 the bill would be "reasonable." If I lowered it to 80 or 78 there was a significant change. Luckily I was ground floor with tree shade and late afternoon building shade to the west. That made a big difference.

[john3232]

Originally Posted by dontbelievehim

Area isn't gentrified, but something is coming around the corner that will help gentrify it quickly.

Ttyl, john

*shrugs* Maybe, maybe not.

[Ponderosa]

Originally Posted by john3232

He would set the thermostat to 86-87 when he left home in the morning. He'd return at 4-4:30 and the setting sun would be hitting the house. It wouldn't cool to 77 until the sun went down. The temp outside was 110-115 everyday that summer. He complained his electric bill too high.

I know the house very well because my mother lived there for five years before I rented it to this fellow. The AC unit was three years old at the time he moved in. Nothing wrong with it. Set it to 77 in the morning and the house stayed at 77. That summer I had three different AC vendors inspect the unit. All the AC was in good working order. The tenant and I also inspected the AC duct for leaks. There was nothing of note. The thermostat was changed out twice thinking it might be faulty. In the end nothing. The renter continued to be upset because the house wouldn't cool down to 76-77 and stop cycling until after 7 pm.

Now.. what I like about the AZ rental law is when a lease agreement ends... it ends. Unlike SF where a rental agreement is required by law to automatically rolls over to month to month when it expires.

After nine months I wanted this man out so I explained to him (and the other tenant who was his friend) I wouldn't be renewing their lease. That I was thinking about selling.

Once they left I put in a couple and haven't had a complaint about the AC. However, I did install sun screens before the new tenants moved in. Both work from home so I'll assume AC runs at a set temperature throughout the day.

Your anecdote shows the fallacy in raising the temp when you leave the house. During the absence it is not only the air that warms but every solid object in the interior space. The thermal mass of all that must be cooled as well when you return. In other words, all the walls, the furniture, the dishes - you name it - must be brought down to the return home temperature. All this has to happen at the same time that the sun is still beating down outside and heat is still radiating into the home. I'm frankly surprised your tenant was able to get it down 10 degrees before midnight. 1-2 degrees per hour is good performance under these conditions.

[MN-Born-n-Raised]

From May 15th until May 22nd, PHX MLS inventory rose by 11%. Or putting it another way, inventory is UP by 84% from just a year ago. Note: inventory is still WAY down as compared to 2018. But the inventory is increasing FAST.

As a side note, April 2022 housing starts are at an all-time record high. I mean, what can go wrong? https://www.calculatedriskblog.com/2...me-record.html

There is a storm brewing as we speak. The only question that remains is how bad will the storm be?
I don't have the answer. But it's going to get interesting. Personally, I would not be buying any home for a couple of months. YMMV. But if you are looking for a home in the > $400K price point in the PHX metro, they are still flying off the shelves. $1M-$1.5M demand has been hit the hardest.

[Potential_Landlord]

Originally Posted by MN-Born-n-Raised

From May 15th until May 22nd, PHX MLS inventory rose by 11%. Or putting it another way, inventory is UP by 84% from just a year ago. Note: inventory is still WAY down as compared to 2018. But the inventory is increasing FAST.

As a side note, April 2022 housing starts are at an all-time record high. I mean, what can go wrong? https://www.calculatedriskblog.com/2...me-record.html

There is a storm brewing as we speak. The only question that remains is how bad will the storm be?
I don't have the answer. But it's going to get interesting. Personally, I would not be buying any home for a couple of months. YMMV. But if you are looking for a home in the > $400K price point in the PHX metro, they are still flying off the shelves. $1M-$1.5M demand has been hit the hardest.

As usual MN is on top of the trends. I agree 100 and would caution that the trends in RE turn very slowly. For example, IR are coming down as I thought. AND the most gullible aka subprime borrowers have not been drawn in and fleeced yet - our nation's lenders will try this trick really hard before they throw in the towel and wash their hands off of anything. I still see a top closer to 2024 and a low around 2028.

[john3232]

Originally Posted by MN-Born-n-Raised

From May 15th until May 22nd, PHX MLS inventory rose by 11%. Or putting it another way, inventory is UP by 84% from just a year ago. Note: inventory is still WAY down as compared to 2018. But the inventory is increasing FAST.

As a side note, April 2022 housing starts are at an all-time record high. I mean, what can go wrong? https://www.calculatedriskblog.com/2...me-record.html

There is a storm brewing as we speak. The only question that remains is how bad will the storm be?
I don't have the answer. But it's going to get interesting. Personally, I would not be buying any home for a couple of months. YMMV. But if you are looking for a home in the > $400K price point in the PHX metro, they are still flying off the shelves. $1M-$1.5M demand has been hit the hardest.

Nor do I. But we'll find out see enough esp. if the inventory continues to climb. One key point in AZ is a non-recourse state meaning you can walk away from a mortgage. Unlike say in Cal. where a lender can come after you.

In the Phx metro (2007-2009) once homeowners found themselves underwater and financially drowning they walked away. Others did a "*short-sale." I bought such a home from a couple who bought in 2007 and did a shot-sale in 2010. They sold their home for 100k less than what they paid for it. But I don't see a repeat of 2006-2010 happening at this point or anything even close

But I suspect the current administration will do what it can to prop up the housing market. Yet, will this work? Or simply delay and possibly make worse a housing crash? Inquiring minds what to know.

Both political parties have a keen interest in keeping homeowners happy. Nobody regardless of political affiliation wants to see their house value drop.

From 2022
Fannie Mae and Freddie Mac finally eased the two biggest COVID-19 era loan obstacles of the past two years, opening the floodgates for countless self-employed borrowers who were denied loans in the past.
https://www.ocregister.com/2022/02/0...yed-borrowers/


From 2021
Biden administration suspends limits on mortgages secured by second homes and investment properties
https://www.inman.com/2021/09/15/reg...e-and-freddie/


A Blast from the past 1999
Fannie Mae Moves to Loosen Home Loan Credit Rules
https://www.latimes.com/archives/la-...374-story.html




*A short sale is the sale of a real estate property for which the lender is willing to accept less than the amount still owed on the mortgage. For a sale to be considered a short sale, these two things must be true: The homeowner must be so far behind on payments that they can't catch up. The housing market must have gone down so much that the house is worth less than the remaining balance on the mortgage.
https://www.google.com/search?q=shor...hrome&ie=UTF-8

[MN-Born-n-Raised]

Perception will help shape reality. FOMO generated an incredible sense of urgency which drove part of this irrational PHX housing market. Cheap money was the catalyst that drove our strong appreciation (people buy payments). And fast appreciation drove investors to buy homes based on ROI versus their actual comps. Even the mom-and-pop AirBnB/VRBO type buyers care about ROI versus a place to live. I'm still getting calls to sell my home that I sold a couple of years back. So investors have money burning a hole in their pocket.

IMO, all investors combined are the reason why PHX area is red hot. If you have a slew of people looking at ROI and you are competing against an ROI buyer, you are not going to get a deal. In fact, Tina from the Cromford report was quoted in Time as follows:

For Tina Tamboer, who analyzes real estate data for investors for the Cromford Report, this real estate market is nothing new. “We’ve seen many perfect storms,” she says. “This actually isn’t that unusual for us. Maybe not the prices being as high, but we’ve been through bidding wars very similar to these back in 2012.” While she sees “all kinds of players in our marketplace right now,” Tamboer says there are three main types of investor who are driving demand in Phoenix and jostling out the locals by offering higher prices, incentives for sellers and all cash deals.
There are the so-called I-Buyers—businesses like Offerpad or Opendoor that buy homes without the seller having to go to any of the trouble of showings or listings, and then resell them. There are both private equity and public funds, such as Invitation Homes, that buy homes and rent them out, and there are those buying homes for tourists. “That’s your Airbnb and your VRBO type investor,” says Tamboer. “Those homes actually are pulled completely out of supply, not available for anyone to live in, only available for tourists. That causes everything else to go up in the surrounding areas as well.”

Read https://time.com/6170497/phoenix-fas...g-home-prices/

In summary, whatever happens in the PHX RE market will now depend on the investor. If they stop buying, inventory will swell. If they gobble up the "deals" with a small price drop, well the "crash" will be a nothing burger. But if they quickly bail, IMO, all Hell will break loose.
Inventory began to swell last June. And the investors stepped in and mopped it up further driving another massive surge in pricing. In short, cheap money plus investors == the PHX overheated market.

I'm not selling. But if I only cared about ROI, I would have bailed it a few months ago. I had that same decision back in 2006 here in MN. No way was I going to go rent for x amount of years and uproot our teenage kids. That cost me $300K. I remember telling my wife that I wish I had the courage to do so. And not selling was going to cost us a bundle. I have that same feeling as we speak. But I positively LOVE our new neighborhood. I just cannot sell. Life isn't only about money. So I am staying put.