Home values still going down? Why? (foreclosure, condo, credit)

[LordBalfor]

Originally Posted by amatrine

I do not think we will see prices go anywhere unless the job market improves.

Without jobs who is going to buy these homes?

Here in Arizona City , a lot of the homes are worth less than the build cost.

There are a huge amount under 50k now. IN a year and a half my house lost half its value, and according to zillow went down another 7,500 last month.

There are few homes for sale here now because the forclosures are selling for
20-40 k and they are not selling! So no point in listing.

Speaking of jobs:

U.S. employers see hires in year ahead - Yahoo! Finance (http://finance.yahoo.com/news/US-employers-see-hires-in-rb-1052544161.html?x=0&.v=3 - broken link)

Ken

[rrrafael]

Originally Posted by Captain Bill

I would say there are several things that determine value:

• What a buyer will pay
• What a seller will sell for, when not under pressure to sell
• Supply and demand

When there was more supply than demand the prices went down.
Now there is more demand than suppy in the lower price ranges, so the prices leveled off and have increased.

When there is more demand than suppy, the buyers will bid prices up in the multiple offer process. That has been happening for the past few months.

Availability of financing has a huge impact on prices.

[Skywayy2001]

Our government will coerce any statistics to tell the "good news." Trust is: yes that Captain Bill is right that the lower end of the market hit bottom at the beginning of the year and is now rising (it overcorrected). You go up the market ladder and it's still chaos to an extent, especially over about $450k. Problem is still that the NOTS are increasing the metro area, unemployment is increasing, and at some point, interest rates on homes will be well over 6, 7, who knows maybe 10% (years down the line). But of course, listen to NAR and go out and buy a house now before it's too late. Real estate is your future investment..do it now..hurry.

[LordBalfor]

Originally Posted by Skywayy2001

Our government will coerce any statistics to tell the "good news." Trust is: yes that Captain Bill is right that the lower end of the market hit bottom at the beginning of the year and is now rising (it overcorrected). You go up the market ladder and it's still chaos to an extent, especially over about $450k. Problem is still that the NOTS are increasing the metro area, unemployment is increasing, and at some point, interest rates on homes will be well over 6, 7, who knows maybe 10% (years down the line). But of course, listen to NAR and go out and buy a house now before it's too late. Real estate is your future investment..do it now..hurry.

Interest rates are at near-historic lows right now.
When I bought my house in 1989 my interest rate was 10.5% - so it's not unusual for rates to be much higher than they are right now.
All the more reason folks should buy soon (and why many will) - while both prices AND rates are very low.

Ken

[Captain Bill]

Originally Posted by rrrafael

Availability of financing has a huge impact on prices.

Interest rates affect demand, because higher rates can make the payments higher than a person can afford in his price range.

If the demand declines and the supply increases, then prices will eventually decline. Price lags the supply and demand changes.

To see which direction the price will take, one needs to watch the supply and demand lines.

In 2005 the supply kept increasing while the demand was decreasing and the prices were increasing. That took about a year, until around March of 2006 for the price direction to change; and it made a very dramatic change.

People who were watching those trends, sold during 2005 because they saw what was going to eventually happen. People who weren't watching, bought, and they got caught in the decline.

In late 2007 the supply began declining and the demand began increasing, while prices were still declining. It took until April 2009 for the prices to level off and begin an increase. Not a steep increase, but up 7.4 % from April to August. On an annual basis that is around 29%.

It actually went up to 9% and dropped back 2% as we entered the slower buying season.

While there are many factors that have an indirect impact on price, such as interest rates, unemployment, economy, etc, just watching those numbers can't show what direction prices will move.

In the end it is the supply and demand that is affected by those items that is going to directly affect price. So watching the supply and demand statistics is the best way to determine the future direction of price, in my opinion.

[_Charles_]

The Valley has an exceptionally high number of foreclosures. This is due to a variety of factors and in short until the foreclosure wave is over - home prices will not stabilize.

[Wyoming Darrell]

We have been watching MLS prices for about a year now, I suppose we spend about 1 to 1 1/2 hours per day average on the computer doing this. I have to agree with Captain Bill: the market is definitely on the up-swing. It is hard to tell if it will continue to do this, but by all indicators that I can see, it's going up. The pattern isn't even in all towns in the Phoenix metro area though, some are regaining value at a better rate than others, but all seem to be at least stopping their decline, in my opinion.

[Captain Bill]

Originally Posted by amatrine

I do not think we will see prices go anywhere unless the job market improves.

Without jobs who is going to buy these homes?

Here in Arizona City , a lot of the homes are worth less than the build cost.

There are a huge amount under 50k now. IN a year and a half my house lost half its value, and according to zillow went down another 7,500 last month.

There are few homes for sale here now because the forclosures are selling for
20-40 k and they are not selling! So no point in listing.

Homes in most of the valley in the lower range have declined in price to below the cost to build. They over corrected, just as they over corrected going up.

Some Arizona City statistics:

15 Active listings $50k and below.
58 at $100k and below
117 total listings

• Only a 2.7 month supply of homes as of this week. (A sellers market)
• 117 Active listings
• 56 Contracts in escrow today
• 279 homes Sold since Jan 1, 2009

In June the average price increased from $44/sf to $49/sf.
In July the price declined from 49 to 43
In August the decline slowed down to 41/sf.

The entire picture and pattern is similar to the rest of the valley, except that the average price will be different in each city.

[azriverfan.]

Originally Posted by Beena

Yes, like Capt Bill said, prices are dropping and they will continue to. I would be very depressed if I had purchased within the past 3 years and no way would I purchase within the next couple.

Uh...actually that's the opposite of what Captain Bill said.

[azriverfan.]

Originally Posted by asufan

There is not more demand than supply, let's not kid ourselves. Only in certain pockets do you see multiple offers, and that is when the realtors price the properties with the express purpose of generating multiple offers and driving the price up. I also don't buy that prices are increasing. If you look at any submarket, and evaluate price per square foot for 0-3 months, and then 3-6 months, you will see that prices are pretty stable, with some submarkets showing small losses, and some showing small gains. It doesn't mean the PHX market as a whole is increasing. For every article that anyone can provide to show that the market is increasing, I can provide 10 that show it is decreasing or stable.

By the way, the definition of Market Value is: "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus." In other words, a willing buyer and a willing seller without undue duress.

This is the best and most rational response on here. More people need to read this particular response and not skim it. This has reflected my experience. I live in a very competitive and in-demand location and my house value according to zillow has dropped not increased. I'm specifically looking in the luxury housing market and prices have dropped tremendously in the last 4 months.