Wait at least one more year before purchasing house! (Phoenix: sales, foreclosures)

[azjack]

"Finally, if anything the forecasts have underestimated the size and pace of declines and those who have called a bottom or have believed prices were leveling off have been dead wrong since 2006.

I do not want to be the negativity man but as a buyer with cash and good credit I would rather wait than lose $60-80,000 the first year after I buy a house. Also every month I watch more and more houses that are pretty spectacular fall into my upper price range."

That is exactly why you have the cash for this future purchase.

The NAR and the AAR say now is the time to buy.

Of course, their principal representatives also declared that there was not a housing bubble, so there you go.

There are plenty of Arizona foreclosures in the pipeline.

[Captain Bill]

Originally Posted by azriverfan.

No offense Captain Bill but you are a Realtor. A realtor obviously doesn't want people to wait to buy homes. There is an obvious conflict of interest here. Wouldn't you be skeptical if you were in our position? I like your response above and I think you made some fair points. Good response

Yes I am a Realtor, and my primary business is investing: I buy and wholesale homes; buy and rehab and sell to retail; and buy to hold.




So where is the conflict of interest?

• I am not telling people that this is the time to buy.
• I have never said that
• I have repeatedly stated that everyone has to make the decision to buy (or sell) based on their personal needs, and in some cases I have told people they should wait
• Nothing in my post can be construed as a "Realtor sales pitch"

What I did was point out that the author of the article that someone posted was way off base. The median price in Phoenix was below his 2010 forecast number before the article was published.

The rest is factual statistics that I get from The Cromford Report and pass on to the forum for anyone who is interested.

If anyone is skeptical of my statistics then they should go and confirm them.

I was skeptical of that article so I went to confirm his numbers and found them to be all wrong.

I've pointed out the leading indicators that investors and others watch to signal changes in markets. I believe that anyone who is interested in trying to forecast the future should pay attention to those indicators.

I pointed out that the price top of around April 2006 was signaled in advance by about 12 months when the top of the supply/demand was reached in April 2005.

That makes logical sense. The under supply began to change to an over supply, and when there is an over supply, and people finally realize it, the prices decline. It's the law of supply and demand, so the reverse will happen at the bottom when we have an under supply.

We appear to have reached a bottom in supply now. For some months the supply has been declining. In the under 200k range it has dropped to around 4 months in most parts of the valley. If that holds up and/or continues to decline, then the prices will increase.

Most of the homes in that market are REO's and are being bought by first time home buyers and investors. The banks want to get as much money for their homes as possible, and they look closesly at the comps to price them. The average sale/list percentage is now at 94%, so their homes are selling on average very close to list price.

That shows up in the comps of the BPO's and banks will begin to price them accordingly.

As Markas pointed out, there is still a lot of negative news to come out. However, there is also a lot of work being done to counter the negative, so as to get the housing market and the overall economy back on track.

In an earlier post I stated that using the information that I have, I made the prediction (the first time I've done that) that the price bottom should happen by the end of 2010.

It appears to me that it will happen in the lower price range earlier than that because as new home buyers find a home in their range, they're buying them, and as we've seen, they have reduced the supply.

I'm thinking it will trickle up to the higher end homes.

Some people have lost a lot of money (on paper) in the stock market, and it will come back. Not everyone has lost half of their money, as the news would like to portray it. My stocks haven't lost half their value. On average they are down about 25%, and they'll come back. They always have.

As for the stock market, I will say that this is the time to buy; and I'm not a stock broker.

If a stock that I own has dropped 50% in value and the fundamentals haven't changed, then why wouldn't I want to take advantage of the fire sale and buy more?

[Howard Roark]

California speculators had a lot to do with RE bubbles in Phoenix and Las Vegas. High end luxury homes in Phoenix will eventually be pricier than homes within one mile of the Pacific Ocean where the industry is more varied, where there are better schools, and where the climate is the best.

When the Option ARM and Alt-A resets are finished in two or three years, California prices will be much lower. Logically this will drive Phoenix prices lower as California becomes cheaper to live in. Anyone who ignores this and buys now in Phoenix is a fool. Wait for 2012 before buying.

[markas214]

Originally Posted by Ponderosa

Barring some unforeseen economic collapse, home values in Phoenix metro "bottomed" around October of 2008. .

So all the data showing month to month declines of 3-4% each month since Oct '08 is wrong? Please cite one unbiased report to support your claim. Also you cannot exclude foreclosures from any calculations as they currently account for nearly 50% of sales and there are no signs of that changing any time soon.

[Ponderosa]

Originally Posted by markas214

So all the data showing month to month declines of 3-4% each month since Oct '08 is wrong? Please cite one unbiased report to support your claim. Also you cannot exclude foreclosures from any calculations as they currently account for nearly 50% of sales and there are no signs of that changing any time soon.

I am using zillow.com and my own properties as my gauge. I have two and both have held their value since October. I frequently visit model homes and there have been no downward price adjustments as was common last summer on new builds in months - possibly Oct but I can't say with certainty. Some have even gone up on the upgrades. I do not give two hoots about median home prices regardless of what you say. They make for good headlines but simply reflect how large the share of distressed low end sales are. A deeper analysis of the economic climate is needed to predict trends Your crystal ball is no clearer than mine. We will have to revisit in a year or so (if I am still on this board) to see if I was right. I think I am. (ps: I am not a realtor).

[azjack]

"So all the data showing month to month declines of 3-4% each month since Oct '08 is wrong? Please cite one unbiased report to support your claim. Also you cannot exclude foreclosures from any calculations as they currently account for nearly 50% of sales and there are no signs of that changing any time soon."

And as useful a tool as Zillow is for showing trends, its model ignores the low-priced REOs that comprise most sales now in southern Arizona. I find Zestimates all day long where the current "value" is twenty to thirty percent above the REO list prices for the same model. And I am not referring to trashed houses.

I am not sure what percentage decline is "too big to count" for Zillow, but it will often exclude the majority of recent sales in a foreclosure-heavy subdivision.


Quick quiz -

What month saw the highest number of trustee sale notices (prelude to a foreclosure) ever recorded with Maricopa County?

A) December 2005

B) June 2006

C) September 2008

D) March 2009



If you answered D, the month that ended two days ago, then you are correct.

[actinic]

Originally Posted by azjack

If you answered D, the month that ended two days ago, then you are correct.

And the unemployment rate jumped again.

Phoenix-Mesa-Scottsdale, AZ Economy at a Glance

No doubt we'll see new foreclosure records broken as the year progresses.

[Captain Bill]

Originally Posted by azjack

Quick quiz -

What month saw the highest number of trustee sale notices (prelude to a foreclosure) ever recorded with Maricopa County?

A) December 2005
B) June 2006
C) September 2008
D) March 2009

If you answered D, the month that ended two days ago, then you are correct.

AZJack is correct. Below are the actual numbers:

Date: March 2009

• 10,689 Notice of Trustee Sales
• 3,377 Trustee Sales Cancelled
• 39,744 Trustee Sales Pending (Usually these have been postponed because they are working on a short sale or workout of some type.)

Below are some actual sales numbers to go along with that:

48,243 Active listings April 2, 2009
56,676 Active listings April 2, 2008
50,527 Active listings April 2, 2007


11,416 Pending sales as of April 2, 2009
5,742 Pending on April 2, 2008
6,458 Pending on April 2, 2007


7,713 Sales closed in past 30 days
5,742 Sales closed same period 2008
5,664 Sales closed same period 2007


7 Months Supply April 2, 2009
13.9 Months Supply April 2, 2008


21.9% Lender Owned % Active Listings
66.7% Lender Owned Pending Listings
67.9% Lender owned Monthly Sales April


25.5% Pre-foreclosure % Active Listings
12.8% Pre-foreclosure % Pending Listings
10.2% Pre-foreclosure % Monthly Sales

Summary

• Active Inventory has declined
• Months supply has declined
• Sales have increased
• Pending sales have increased (Leading indicator of future sales volume)
• Lender owned are the biggest sellers
• Short sales are a smaller part of the sales volume
• I didn't show price info, but prices are still declining.

In my Val Vista Lakes community, sales have increased.

• Sales in the past 3 months have ranged from $190k to $685k
• There are 8 Pendings in the range from $160k to $1,5mil.
• There are only 58 Active in this 2000 home community.

My really good news is that a 5,178 sf house across the lake from me went pending within 3 weeks on the market. It is listed at $1,500,000. ($289/sf)
I don't know the sale price yet, but with it selling within 3 weeks my guess is that it is pretty close to list price. That's a good comp for me because I'm wanting to refinance while interest rates are low.

The sales activity in VVL give me an indication that the sales may be beginning to pick up in the higher priced move-up market now. I won't bank on that; however, it's encouraging that a $1.5 mil property sold very fast.

[markas214]

Originally Posted by Ponderosa

I am using zillow.com and my own properties as my gauge. I have two and both have held their value since October. I frequently visit model homes and there have been no downward price adjustments as was common last summer on new builds in months - possibly Oct but I can't say with certainty. Some have even gone up on the upgrades. I do not give two hoots about median home prices regardless of what you say. They make for good headlines but simply reflect how large the share of distressed low end sales are. A deeper analysis of the economic climate is needed to predict trends Your crystal ball is no clearer than mine. We will have to revisit in a year or so (if I am still on this board) to see if I was right. I think I am. (ps: I am not a realtor).

This really has nothing to do with prognostication. It is all about risking seeing a big down payment disappear. Again I am putting my trust in those who have correctly predicted the direction of the real estate market. Your two house Zillow example and near zero price drops on new new builds which have been resulting in near zero sales are hardly reassuring especially looking at your track record predicting the market. For example

Ponderosa 4-10-2007:

Originally Posted by Ponderosa

I think values here (I live in EMR too), will following the same track as the rest of the valley which according to RL Brown, a respected source, will be flat all of '07 and some of '08 and then resume their historic appreciation rate of near or slightly above the inflation rate. If you bought in the last year or so it's going to take 2-3 years to cover the costs of sale.

[teach1234]

Uhhh, people, the point here is to communicate information, not engage in literary fisticuffs (although I would argue against the word "literary" being applied to some of the posts I've read).