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Unemployment in Arizona is high. 9.2% and expected to creep to 11%. Also baby boomers with mortgages or with paid-off homes are more numerous than qualified younger people who could buy a house. Combine the two facts and you have years of further real estate price drops.
People are realizing most careers do not last the term of the mortgages.
Add this for the future: Treasury note and bond rates will have to creep up eventually. That will raise borrowing rates on houses, since they are tied to the treasury interest rates. This will make monthly payments higher.
Option ARM and ALT-A resets are going on and will continue for the next 28 months.
No real estate bottom until at least mid-2012 in Arizona, Nevada, Florida, and California. And maybe prices will stay flat for the next ten years.
Rents are falling too. This makes buying a home less attractive. My rent fell 12% and the new payment is effective this October. I anticipate the rent to fall another eight percent in my apartment in another year.
Why buy when you can rent cheaper?
And yet after all your "analysis" prices ARE going up.
And yet after all your "analysis" prices ARE going up.
So much for your analysis.
Ken
i'm still trying to understand this. so you're saying that because home prices on a few select homes were higher than the average this signals a turnaround in the market? not from what i see nor the trend numbers.....
we can argue this 24x7, but i think the market here in AZ has another 36 months to go before we see a turnaround.
It may come as a surprise to my detractors, but when the market was declining it was a dream market for me. It was one of the best markets for investors, who know what they're doing, that has come along in a long time. The bubble market was for "speculators" not "experienced investors".
With a declining market and a flood of REO's on the market I can negotiate excellent buys. Then by rehabbing quickly and getting them back on the market I can sell below the regular market homes and make a profit. There are risks in the declining market and the profits are smaller, but the properties are easier to purchase.
A declining market is best for my business model.
The only way that a person can make money when the market is sliding fast is to steal the home by negotiating well. When the market is tumbling as it was in the past, buyers do not feel the sense of urgency to buy (they feel the sense of urgency to sell). While you are rehabbing, the margin is slipping as the weeks go by so the only way to make money is by stealing the homes.
I have done my share of buying and selling (as well as rehabbing over the years): Ideally, I ALWAYS want to be selling while the market is on the upturn. If not, you are catching falling knives and rehabbing when no one wants to buy a home. So as of right now (because the market has not completely stalled) the negotiating power has diminished. Right now if you bought a rehab the margin is skinnier and you want the market to up turn.
When we were at a steep slide and you sell real estate, rehabbing in a down market is about the only game in town. You did it right by saving on the commission when you bought and when you re-sold.
Personally, I'd think a decent spot to find a potential buyer might be a forum in the area I was selling. That person would want to hear that the market is getting better (in the 2006-2008 market).
There is still money to be made when things up tick. I'm sure you will agree that the clean homes currently have the multiple bids. If there is dirty carpet, scuffed walls, a removed air conditioner with an ugly ceramic the bank still cannot get rid of them; traditional buyers can only handle a couple of problems before they go on to the next home. If you still want a steal, go with a few problems and no one will want them. Your $5K away from "rehabbing" and now having a quick re-sale because of the up-tick in the market. With skinnier margins in a down market, you run the risk of holding to avoid a loss while you follow down the market pricing.
Someones core business can switch from investment back to traditional real estate sales (depending on the cycle). In each case when you want to sell something, you want to have the perception that things are on the rise. When you BUY thing, you want to give the seller the perception that things are going down. That's how I would do it if I was in your shoes.
Realtors help people buy and sell houses. They are not financial advisors.
I'm posting the facts as they stand right now in the form of statistics. I am not making projections. That is for you to do if you want to make them.
Do you want me to write a book? My posts are too long as it is. I don't have to write what you would like to read. I post what I think is revelant. You can either accept them, or prove them wrong. What you do with them is up to you.
How about answering your own questions; or offer to pay me for the extraordinary amount of time you would request me to spend in order to write this disertation you want?
I'm happy you got a chuckle. That makes my day
You don't begrudge me getting leads from this site! You say that I add value; but on the other hand you criticize me for not taking hours of my time to give you information that you may want! And you say it isn't anything personal!!! And you expect me to believe that
And as I've said before, it is up to the individual to decide when they should buy. If you don't think this is the time for you to buy, then you probably shouldn't buy. If you don't think that houses selling at below building costs are reasonably priced, then you probably shouldn't buy.
As for me I've been buying for a year and a half, rehabbing and selling them, and kept two so far for rentals, and I intend to keep buying.
My primary business is investing. Working with clients is secondary. Because of my rehab business taking so much of my time I can only work with a maximum of 4 clients at one time, and most of those clients come to me from referrals from people who were my clients in 2007 and 2008. I don't need clients from City-Data, so that is not the primary reason I'm here.
I learn from the posts of many of the people here who are rational and not realtor haters, and who post their views on the market, and their experiences in trying to buy a home.
The experiences that people are currently writing here today mirror the experiences that my buyer clients are having today.
Now instead of attacking me, if you want to discuss any of the issues that you mentioned that can affect the market, then throw them out there and discuss what you think will happen and why. That will make a much more meaningful discussion that attacking me.
In other words: Discuss the Issue: Do not attack the other people who are providing information that can give food for thought. It only leads to unproductive arguments.
Bill. You said: "Realtors help people buy and sell houses. They are not financial advisors. "
Really. People who sell things are called sales people. Sales people recommend products. If I hire you to "sell" my home and you don't recommend it, you are fired! I'd hire you to SELL it. To recommend it. To help them figure out a way to afford it.
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Bill. You said: "I'm posting the facts as they stand right now in the form of statistics. I am not making projections. That is for you to do if you want to make them."
One sided facts is termed "skewed data". I do agree with all of your data. But you present only one side of it. Since you are a Realtor you must realize the perception that people are going to assume.
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Bill. You said: "How about answering your own questions; or offer to pay me for the extraordinary amount of time you would request me to spend in order to write this disertation you want?"
None of us are getting paid to post. Why would I pay you??? Your 2007 and 2008 predictions would have resulted in me loosing tens of thousands of dollars.
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Bill. You said: "You don't begrudge me getting leads from this site! You say that I add value; but on the other hand you criticize me for not taking hours of my time to give you information that you may want! And you say it isn't anything personal!!! And you expect me to believe that"
I do expect you to believe me. Work the forum to sell your rehab's and pick up leads. Why would I care?? Adding value and giving accurate advice are two different things. In other words, presenting data and giving accurate advice are not mutually exclusive.
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Bill. You said: "My primary business is investing. Working with clients is secondary. Because of my rehab business taking so much of my time I can only work with a maximum of 4 clients at one time, and most of those clients come to me from referrals from people who were my clients in 2007 and 2008. I don't need clients from City-Data, so that is not the primary reason I'm here."
Of course you don't "need" clients from City-Data. If the site went under tomorrow, you would still be in business. You post often. Just a few sales a year could result in $30K+ a year. Not bad. Everyone who posts knows how long it takes to write a well thought-out response. You write SEVERAL of them a day. If you only have time to work with 4 clients, might I suggest not posting so much if you really are not looking for leads. It seems illogical and since you do seem sane, I'm therefore not so sure I am buying the fact that you only want to work with 4 people at a time.
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I'm sorry. Your post about it being a sellers market when people are losing their shorts hit my tickle bone. I read people for a living. I have my perception on your posts. I'll leave it at that.
You are criticized because you always claim it's a good time to buy. The evidence clearlys backs that. These are your quotes from 2007 and 2008. It was clearly not a good time to buy then yet you suggested otherwise. You can accuse me of reaching to draw attention away from yourself but
anyone can read your past quotes below and recognize this is a trend with you. And that's why people question your motives. I respect your knowledge but I think you are manipulative and present data that only supports one view rather than being objective and presenting data that would support not buying property at a given time.
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Originally Posted by Captain Bill
If you look at some of the prices that are being asked for homes today and compare them with the prices 7 months ago, you'll see that there has already been a 15 to 25% drop in home prices. How much farther are sellers willing to go? I don't believe they are willing to go much farther
I just want to mention that sales have been up in the Phoenix area since the first of the year, that's 4 months and 3 weeks (not a single month). The sales have increased and the inventory has decreased. But because a large number of the sales are being affected by the Short Sales and REO's, the prices have still declined. I've been mentioning on the forum since the beginning of the year that there may be a trend developing and that we should watch that trend to see if it continues. I was blasted by a few people here for just posting the facts, and some of them chose to make something negative from the positive facts. I posted that from December 2007, through April 30 that the overall inventory of housing (all types including manufactured housing) had declined from a 19.2 supply to a 9 month supply, which to me is significant but some chose to make that negative.
Originally Posted by Captain Bill I just want to mention that sales have been up in the Phoenix area since the first of the year, that's 4 months and 3 weeks (not a single month). The sales have increased and the inventory has decreased. But because a large number of the sales are being affected by the Short Sales and REO's, the prices have still declined. I've been mentioning on the forum since the beginning of the year that there may be a trend developing and that we should watch that trend to see if it continues. I was blasted by a few people here for just posting the facts, and some of them chose to make something negative from the positive facts. I posted that from December 2007, through April 30 that the overall inventory of housing (all types including manufactured housing) had declined from a 19.2 supply to a 9 month supply, which to me is significant but some chose to make that negative.
March 26 2008: My personal feeling is that now is a good time to buy because of the supply of great homes at low prices and low mortgage rates, provided that one is going to be in the home for 5 or 6 years. If one may have to sell in 2 or 3 years, then that could be risky. Everyone must assess their own situation as well as the market in the area they're considering. I have about 10 relocating buyer clients that have their community picked out here and as soon as their home sells in their state, they will immediately move here and buy. Several others are here renting until their homes sell. So I see sales across the country as having a positive impact on the sales of homes in the Phoenix Metropolitan area
I think you're mistaken. If you'll look at the criticisms they all mention realtors, the NAR, or that I am a realtor, or that I have an agenda, or that I'm posting to get clients, and therefore, must have an agenda. If that isn't criticizing me because I'm a realtor, then I don't know what is.
You are forgetting those comments were made in response to your reputation for always providing an optimistic forecast. They were made specifically with regard to you and not other realtors on this forum. People simply addressed the obvious. You are a realtor. There is a conflict of interest so they questioned whether your advice was written in a way to create urgency in the market since you always provide a rosy forecast which is a fair question. I'm a physician. I oppose Obama's health care plan because I feel like the quality of care would drop. However, if someone accused me of opposing Obamacare because it would hurt me financially, they would have a point; there is a conflict of interest that I would have to admit. And if someone is skeptical of my advice because they believe that, I can't blame them.
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However, I understand that it is much easier to dispute information simply by saying the information is coming from a realtor and is not to be trusted, than it is to do research to find out if the information is correct.
You were encouraging people to buy when the general consensus stated the opposite so people are naturally going to be skeptical. That doesn't mean they dismissed all that you said. I was suprised you were so defensive when that response was to be expected given the circumstances at the time.
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I have no problem with people disputing the information that I post, or disagreeing with any opinion I may post. I do have a problem with attempts to discredit me and the information simply because I'm a realtor.
People dont dispute your facts, they dispute your use of facts. You include certain statistics to support your POV while omitting others that would hurt it. That is a biased presentation of data which is not objective.
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This was my opinion, and I am entitled to my opinion just as everyone else is. I didn't believe sellers were willing to go lower, and the regular sellers weren't. Many pulled their homes off the market and decided to stay put.
Yes, and your opinion was wrong and that is the point. It wasn't a good time to buy yet you told people it was.
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It was the influx of bank owned homes that kept driving the market. Fortunately, investors like myself bought those bank owned homes and helped to stop the slide, and stop the neighborhood blight, until the first time home buyers came along, and started buying.
This is disingenuous. The inventory was low and sales were up. You used that information to suggest the housing market was improving when the reality is the banks had yet to release additional homes. A lot of people told you this at the time and you ignored them and tried to discredit them.
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That post was factual information. It's the same thing I'm saying now. Trends give an indication of what to expect in the future. The changes do not occur over night.
Yet those trends you highlighted indicated that prices would increase because sales would increase when the opposite happened. Trends don't indicate anything, they are merely trends. If you have taken a course in statistical analysis, it doesn't mean trends continue in a linear pattern.
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The trend line was beginning then. It continued and it took until April 6 2009 for the price to level off, and begin an increase. That drop from 19.2 to 9 months was significant, and as it turned out, it was the beginning of the trend that continued and finally stopped the price decline on April 6, 2009. And as I stated, others decided to turn that into a negative, and they were wrong.
You are misquoting your own stats. The price continue to drop in 2008 and early 2009.
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I stand by those statements. Not everyone is a bottom fisher. I stated that anyone buying for a 2-3 year term would be risky, and that I thought 5 or 6 years they would be ok. From what is happening now, I believe I was spot on.
If people had bought homes with the intent of staying in a home in 5-6 years, they would have lost a considerable amount of money had they purchased in 2008. You were completely off.
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Somewhere during that time, some bears were forecasting that it would take until 2012 for the market to turn around. If I'm not mistaken one person who made that forecast, recently posted that he has bought a house.
The majority of people on this forum were not forecasting that. People cited the Money magazine article that stated the bottom of the Phoenix market would occur in the 3rd quarter of 2010.
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I have also said that people buying during that time were cherry picking and getting the best out there. Buyers could look at 100 homes until they found the home that was just perfect; and negotiate a good price. Today the cream of the crop is gone.
Again, you are basing this on anecdotal information and not statistics. Likewise I know several investors who bought property in El Mirage and other locations for less than 100K; had they bought back then they would have paid arguably 50-60K more than what they paid. People were getting better deals in early 2009 than in 2008.
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The early buyers may have paid a little more than they would today, but those who bought got exactly what they wanted and have been enjoying their homes.
There was also less supply then because more foreclosures entered the market. In addition, many more luxury homes were not on the market so there is more inventory now and more selection now than then.
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Today, all of the bank owned homes in that community have been sold. Only two homes are for sale now, the same models as the clients house. One is a short sale on the market for $185k, and one regular sale on the market for $230. So the prices in that community are back up to the ball park of what the buyer paid for theirs in 2008.
Again, this is anecdotal evidence. For every one of your stories, there are other realtors that can provide similar tales of people buying homes now that were not available then.
Last edited by azriverfan.; 08-29-2009 at 03:56 AM..
AZ's economy has historically been too dependent on estate speculation making it vulnerable to boom and bust cycles. The over building that went on during the housing bubble was extreme. And many buyers were leveraged into homes they could not really afford.
Additionally existing home owners irresponsibly used their houses like ATMs. The sum total of all this created a huge wave of foreclosures in the Valley's real estate market.
Home prices will NOT stabilize till the foreclosure wave stops and it has not yet.
AZriverfan, you have much too much time on your hands. I'm through with your inane accusations, and as I said, I won't respond to them any more. So have fun.
So, I guess the best thing to happen is for noone to consider any other of their personal circumstances except those related to the financial investment of purchasing a home. That way, noone will buy a house because they might still go down in value, more people are unable to refinance because they have no equity, others will walk simply because even though they are living in the home, they will not recoup there financial investment, which will in turn cause more foreclosures, which will then have people on forums continue to say DONT BUY NOW as prices will continue to drop until foreclosures slow down, which will in turn cause even more foreclosures...
Ummmm....does that sound like a solution? As I ve said....there are OTHER REASONS to purchase a home besides a financial investment!
The only way that a person can make money when the market is sliding fast is to steal the home by negotiating well. When the market is tumbling as it was in the past, buyers do not feel the sense of urgency to buy (they feel the sense of urgency to sell). While you are rehabbing, the margin is slipping as the weeks go by so the only way to make money is by stealing the homes.
I have done my share of buying and selling (as well as rehabbing over the years): Ideally, I ALWAYS want to be selling while the market is on the upturn. If not, you are catching falling knives and rehabbing when no one wants to buy a home. So as of right now (because the market has not completely stalled) the negotiating power has diminished. Right now if you bought a rehab the margin is skinnier and you want the market to up turn.
When we were at a steep slide and you sell real estate, rehabbing in a down market is about the only game in town. You did it right by saving on the commission when you bought and when you re-sold.
Personally, I'd think a decent spot to find a potential buyer might be a forum in the area I was selling. That person would want to hear that the market is getting better (in the 2006-2008 market).
There is still money to be made when things up tick. I'm sure you will agree that the clean homes currently have the multiple bids. If there is dirty carpet, scuffed walls, a removed air conditioner with an ugly ceramic the bank still cannot get rid of them; traditional buyers can only handle a couple of problems before they go on to the next home. If you still want a steal, go with a few problems and no one will want them. Your $5K away from "rehabbing" and now having a quick re-sale because of the up-tick in the market. With skinnier margins in a down market, you run the risk of holding to avoid a loss while you follow down the market pricing.
Someones core business can switch from investment back to traditional real estate sales (depending on the cycle). In each case when you want to sell something, you want to have the perception that things are on the rise. When you BUY thing, you want to give the seller the perception that things are going down. That's how I would do it if I was in your shoes.
You have to understand that people never stopped buying. It slowed down but did not stop. People were looking for bargains, and still are. People wanted updated move-in ready homes at a discount price. And that is what my business model provides.
In the down market one can get a house at a better price. My model is to rehab the property to make it the best in the community, with that wow factor, so that when someone walks in they want that house and they cannot find another like it in the community. I can price it just under the top and sell it fast.
When I buy a house I know exactly what the current market is in that area; how long it will take me to get it market ready; and what the selling price will be. I also have an exit strategy. And that is if things went to hell in a minute, I would wholesale it.
I know what my escrow costs are, my holding costs, selling costs and commission costs. Once I know those, if the profit margin that I need is there, with room for error, then I'm in good shape.
I also limit my area to within 25 minutes of my house, because I have better knowledge of those areas.
When a rehabber knows what he is doing, he has all the bases covered before making any purchase.
I never have problems finding a buyer. I put my properties on the mls with a 3% commission to buyers agents, and on some other sites, and they usually sell within 30 days. The last one sold in 10 days. It would have sold on the first day with multiple offers but they were all FHA and I had the seasoning issue.
The problems for me in a market like today is that there are too few homes available and too many people chasing them. Because buyers are having such a difficult time finding a house, they are also buying REO's that need a lot of work. They drive the prices of the REO's up so that I can't compete with them.
There are a lot of sources for me to buy homes with the margins that I need, it just takes more time and more work to find them.
My business model will continue with the emphasis on investing. My 5 year business plan is reviewed each 6 months to provide for growth.
I take fewer clients now because of time restraints, and eventually will not work with clients at all. That may come as early as Jan 2010. I actually got into real estate sales to further my education on the Phoenix markets so that I could get back into investing.
In the 1970's I rehabbed four-plexes in the San Francisco Bay area, but had to stop after a few years because I was flying internationally, and when I came home from a trip had to spend my off time working the rehab business. I finally had to give up one or the other, so I elected to give up the rehab business and continue my flying career with Pan Am.
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People who sell things are called sales people. Sales people recommend products. If I hire you to "sell" my home and you don't recommend it, you are fired! I'd hire you to SELL it. To recommend it. To help them figure out a way to afford it. 
It seems illogical and since you do seem sane, I'm therefore not so sure I am buying the fact that you only want to work with 4 people at a time. 
