In 2022, Zillow Predicts That Phoenix housing market will climb ANOTHER 20%?! (Mesa: Home Depot, school)

[Valley Native]

Originally Posted by sh9730

SO? Some people think recession is the end of the world - most are short lived and do exactly what is intended - cool things down for a short while and allows pricing to stabilize - it is VERY rare that recessions are deep economic catastrophes.

AND, housing prices have continued to increase (to keep this on topic) during recessions - especially given the still very real of underlying home shortages.

I am not saying there will be no softening in the market. I have posted in this thread already that I believe there WILL be stabilization - but I do NOT believe there will be any huge crash. ESPECIALLY if affordability stabilizes due to inflation coming back down.

This is not 2008 redux - it just isnt.

Here's something to keep in mind: the Phoenix market (and Arizona as a whole) tends to be more heavily affected by recessions because of our over dependency on real estate. The 2008 downturn really kicked us in the gut. Projects that were in the works prior to 2008 were delayed, or all together scrapped. This affected not only construction in the private sector, but the Legislature was forced to slash the state budget also. While that recession was short lived in other metros, our economy slumped a while longer, and so did our overall growth rate.

Originally Posted by jdahunt

When people ask me when they think things will get better....I laugh and say probably in the middle of Trumps 2nd term.

Wishful thinking. The current administration is horrible, but I doubt if the majority of Americans are going to vote for another Trump term. Get somebody with fresh ideas who appeals to the majority ... not just their party bases. But I guess that's wishful thinking on my part.

[MN-Born-n-Raised]

Originally Posted by jdahunt

As soon as we close on this condo we are listing another unit that we have in Sun City.....then we will wait and see what happens......I don't expect to buy again for at least 2 years, maybe more.

Why wait? The RE market is changing FAST!

Originally Posted by john3232

It's as if a bell went off and there has been a stampede to sell.

Yep! John, did you list any of your properties? If not, do you wish you would have?

[Ponderosa]

Housing is providing a glimpse of what deflation looks like and why it is so disastrous for an economy. The Great Depression was the classic example. In a deflationary economy consumers postpone purchases because they expect the price to be lower at a later point in time. Demand reduction does eventually drive the price lower confirming their expectation, and so they continue to defer. It is a self perpetuating spiral.

Everyone is focused on inflation right now. But deflation is actually in the works with the Fed's overreacting on rates and supply side issues (the real cause of inflation not wage price pressure) abating.

Anyway, a deflationary spiral in housing might be hard to stop especially in places like Phoenix that depend on newcomers.

[sh9730]

[quote=Valley Native;63749349]Here's something to keep in mind: the Phoenix market (and Arizona as a whole) tends to be more heavily affected by recessions because of our over dependency on real estate. The 2008 downturn really kicked us in the gut. Projects that were in the works prior to 2008 were delayed, or all together scrapped. This affected not only construction in the private sector, but the Legislature was forced to slash the state budget also. While that recession was short lived in other metros, our economy slumped a while longer, and so did our overall growth rate.


This is NOT 2008 I say again. That was fueled by MASSIVE overbuilding with sub standard quality mortgages and gambling in the larger market.

Today - there is a housing SHORTAGE. Builders are already slowing down pulling new permits in order to avoid going through what they did in 2008 and as a result that shortage will continue.

[KurtAZ]

Originally Posted by sh9730

This is NOT 2008 I say again. That was fueled by MASSIVE overbuilding with sub standard quality mortgages and gambling in the larger market.

Today - there is a housing SHORTAGE. Builders are already slowing down pulling new permits in order to avoid going through what they did in 2008 and as a result that shortage will continue.

Well...until the institutional buyers that purchased blocks of homes the past couple of years start dumping those back on the market.

[sh9730]

Originally Posted by KurtAZ

Well...until the institutional buyers that purchased blocks of homes the past couple of years start dumping those back on the market.

This aspect has been covered in this thread way back when. UNLESS these investors were in these homes for equity profit - I do not seem them being dumped in droves. Most of them are in it for cash flow - and right now there is not a lot better place for their capital to go!

People still need places to live and will continue to pay rent.

Now, many of the mom and pop investors who need the CASH for themselves - they may and likely are - selling now to take in profits - but even not all of them are dumping.

We ll see - and a STABILIZATION was needed - but I don't see a crash.

[MN-Born-n-Raised]

Originally Posted by sh9730

This aspect has been covered in this thread way back when.
We ll see - and a STABILIZATION was needed - but I don't see a crash.

Let's jot your predictions down. What's going to happen to the median price of a PHX home? Up, down, or sideways. And by home much? Give us a percentage.

[john3232]

Originally Posted by MN-Born-n-Raised

Why wait? The RE market is changing FAST!

Yep! John, did you list any of your properties? If not, do you wish you would have?

No. I manage the homes myself and the rental income is very good. I tend to doubt we'll see anything like the last housing crash. However, in the event there is an all-out free fall in home prices I have the cash to jump in.

When I'm 75 I think about selling but for now I'm good.

[john3232]

Originally Posted by sh9730

This aspect has been covered in this thread way back when. UNLESS these investors were in these homes for equity profit - I do not seem them being dumped in droves. Most of them are in it for cash flow - and right now there is not a lot better place for their capital to go!

People still need places to live and will continue to pay rent.

Now, many of the mom and pop investors who need the CASH for themselves - they may and likely are - selling now to take in profits - but even not all of them are dumping.

We ll see - and a STABILIZATION was needed - but I don't see a crash.

If a company like Invitation Homes had dumped 4k homes on the market this would have been reported. I suspect many sellers are mom/pop investors, flippers, those with a second, third home.

The question inquiring minds what to know is: Will the inventory continue to rise or will it suddenly slow down?

[MN-Born-n-Raised]

Originally Posted by Ponderosa

Housing is providing a glimpse of what deflation looks like and why it is so disastrous for an economy. The Great Depression was the classic example. In a deflationary economy consumers postpone purchases because they expect the price to be lower at a later point in time. Demand reduction does eventually drive the price lower confirming their expectation, and so they continue to defer. It is a self perpetuating spiral.

Everyone is focused on inflation right now. But deflation is actually in the works with the Fed's overreacting on rates and supply side issues (the real cause of inflation not wage price pressure) abating.

Anyway, a deflationary spiral in housing might be hard to stop especially in places like Phoenix that depend on newcomers.

I suppose anything can happen. We just need to paint some gloomy scenarios and get ourselves all lathered up. What happened is easy to explain. Supply chain issues (COVID, buyers spending money differently, governments giving away "free money") caused inflation. Super cheap money fueled it to another level. Specifically, housing got waaaaay out of hand as the FED's propped up the market by buying MBS long after they should have. The government finally had to react because of the war and the cost of fuel. Frankly, I think the FED's are incompetent fools! Those A-holes should have seen the writing on the wall. Ask any GD business person (and I have): not a damn one thought it was "transitionary"!

As a result, people were buying "cheap payments" for housing and that resulted in a home-buying frenzy (which skyrocketed labor and materials too). Now, the opposite is happening. The cost of money jumped in price and now the new perception is that housing prices are going to drop. And they will! It's highly improbable that a "deflationary spiral" is taking over. Rather, a correction that can be propped up (a floor) by reducing the interest rates back down.

I would be more pessimistic if we had a labor surplus. So long as people are feeling comfortable with having an income, a pending recession won't be a big deal. And so long as inflation is still happening (and it is), that's also going to have an artificial floor on how low PHX RE can go. YMMV. But I'm sleeping like a baby.

I'd be surprised if PHX RE dropped 20%. I'd also be surprised if it didn't drop 10%.