Buyers market.... really? (home, buying, utilities)

[markas214]

This can only get worse before it gets better. How many sales are falling through due to an inability to obtain financing? It's impossible to predict when prices will begin rising but until the financial markets stabilize we won't see a stable real estate market. It took years for things to get this screwed up and will take years to return to normal. Prices will return to the income/rental to cost historical ratios whether throughrising wages (yeah that'll happen), inflation or further price drops. Trying to put a nominal figure on future prices is impossible. When houses become affordable then prices will start to appreciate again. Perhaps people eventually remember that a house is a place to live not a retirement fund.

[Captain Bill]

Originally Posted by twiggy

I would like to know this too? I also am noticing that prices are falling below what pre-boom prices were. It seems in Chandler the prices have fallen back to about 1999 or so in years of what they were selling for then. How is the market correcting itself when it's going below the correction? I'm just trying to understand this and you seem like you might be able to help me out.
Thanks

Here are the average prices of all Sold homes in Chandler
2008 $293k
2007 $353
2006 $347
2005 $309
2004 $216

So the average price in Chandler doday is just below the 2005 mark, probably around October 2004. (Remember this is the average of all homes)

Since I'm going to Chandler this morning to show some under 200k homes, I ran those numbers also.

Average Sold prices of homes in Chandler under $200k
2008 $165k
2007 $167k
2006 $168
2005 $159
2004 $151

In this under 200k price range we're back to around 2006

In another post in this thread I attached a pdf file that shows the Chandler stats. I'm not sure which post it was. But on that pdf spread sheet, you'll see that Chandler, in June, had it's inventory drop below 6 months to a 5.56 months supply. Six months supply is a balanced market.

Also, the Pending to Sold ratio is 1.29.
A ratio of 1 is a stable market
A ratio of less than one is a lagging market
A ratio of greater than one is a market with momentum.

The homes in 85249 zip code show about the same numbers.

Regarding Pending sales falling out of escrow.

Many of them do and we watch that. The Pending Sales each month is a good indicator of what the market will do next month.

As an example, in Chandler in June there were 333 Solds.
The Pending Sales were 431. Because the Pending Sales are greater than the Solds, the ratio is 1.29 indicating that the market is gaining momentum.

We know that some of the Pendings will drop out. However, with the Pendings exceeding the Solds, then can expect that the Solds for the following month will at least equal the Solds of this month and possibly exceed that amount.

In general, Chandler was doing well in June, and has been improving all year.

However, many of the sales are bank owned and short sales in the lower price ranges. The higher price ranges are not doing as well. And because of the bank sales the prices are still declining. At some point, as this inventory supply keeps decreasing, I would expect that the prices will also level off because we will have more demand than supply. I don't know when that will be.

The 40% drop in new home sales YOY that was posted is nationwide. We have to remember that the nation wide numbers are not representative of what is happening in any one state, or Metropolitan area or even a city or community. We should remember that builders have cut back drastically so a drop in new home sales is not representative of the total market.

While it's good to look at the overall national market, it is very important, whether one is a buyer or seller, to study the local market down to the micro level.

I asked the questions about how the ArizonaBear forecast was arrived at because I seriously want to know. What do you see that tells you that prices will stabilize in 6 months, and how will we recognize the bottom?

On other threads there are people who are making dire predictions of years before a bottom. They expound at great length on theories that are beyond my comprehension.

I'm a supply and demand man. It's that simple for me. If there are too many houses for sale and not enough buyers, I believe the prices will decline. if there are too few houses for sale and a lot of buyers, then I believe buyers will bid the prices up.

The stats all year in this area have shown decline inventory consistantly through June, and we now see multiple bids on houses that are priced right and in good condition. However, we still see declining prices because of the bank owned competition, and we don't know how many will continue to come out and affect the supply.

That's one reason why it's so difficult for me to make a forecast, even when I'm seeing a great change in the market momentum. And it's why I like to hear others reasoning for a forecast.

[Vinny536]

Originally Posted by markas214

This can only get worse before it gets better. How many sales are falling through due to an inability to obtain financing?

I would love to see real statistics about this. Especially since I know a few people with sub 600 fico scores that just bough houses. I haven't heard of one case of people not buying a home because they couldn't get financed since this "tighter lending criteria" crap starting hitting the news.

I want to know how many people who are trying to buy houses they can afford are being turned down.

[silvermountain]

Personally I have seen two houses that I put offers on go to higher bidders, only to be back on the market in a week or two, when we asked the agent what happened the response was "Buyer couldn't get financed"

[sheena]

Originally Posted by thegirlinaz

Well we made an offer on a bank owned home... and it got accepted! Hopefully all goes well with appraisal, inspection, etc.

That is awesome! Keep us posted........I'll keep my fingers crossed that all goes well.

[sheena]

Originally Posted by silvermountain

Personally I have seen two houses that I put offers on go to higher bidders, only to be back on the market in a week or two, when we asked the agent what happened the response was "Buyer couldn't get financed"

I don't even know why anyone would waste their time writing an offer without an LSR these days.

[ArizonaBear]

Originally Posted by 61scout80

I would love to see real statistics about this. Especially since I know a few people with sub 600 fico scores that just bough houses. I haven't heard of one case of people not buying a home because they couldn't get financed since this "tighter lending criteria" crap starting hitting the news.

I want to know how many people who are trying to buy houses they can afford are being turned down.

My FICO is just under 700 but my debt to income ratio precludes me from buying anything at the moment.

[blueeyz911]

Originally Posted by thegirlinaz

Well we made an offer on a bank owned home... and it got accepted! Hopefully all goes well with appraisal, inspection, etc.

Congratulations and good luck.

[MotleyCrew]

Originally Posted by 61scout80

I would love to see real statistics about this. Especially since I know a few people with sub 600 fico scores that just bough houses. I haven't heard of one case of people not buying a home because they couldn't get financed since this "tighter lending criteria" crap starting hitting the news.

I want to know how many people who are trying to buy houses they can afford are being turned down.

I asked our teller at WAMU yesterday if they were still doing home loans and she said yes, but they are really getting tight. "They require 50% equity in the home and a stellular credit score in order to get approval." I about choked. 50%? So who knows where this will end up.

[Vinny536]

Originally Posted by ArizonaBear

My FICO is just under 700 but my debt to income ratio precludes me from buying anything at the moment.

Well, I don't mean this to sound offensive, but it seams at the moment you wouldn't be approved because you couldn't reasonably afford the payment. If you would have been approved before this mess it shows exactly why we are here.

Originally Posted by MotleyCrew

I asked our teller at WAMU yesterday if they were still doing home loans and she said yes, but they are really getting tight. "They require 50% equity in the home and a stellular credit score in order to get approval." I about choked. 50%? So who knows where this will end up.

It will end when the publicly traded banks start catching static from the stock holders because they have unreasonably high criteria. They'll need to eventually start recouping their loses from all the foreclosed homes.

From your description, and in my opinion they have had a knee jerk reaction to the foreclosure mess and now have cut out a lot of their potential income. They closed the gate after the cash cows left, now they are going to need to look for more cash cows to offset their losses. That 50% crap won't last long, unless they are aiming to be completely out of mortgages.


Except for MotleyCrew's example i have heard nothing but a return to sanity when it comes to current lending practices.