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Old 03-19-2010, 01:32 PM
 
Location: Peoria, AZ
17 posts, read 49,346 times
Reputation: 15

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Brief synopsis: Relocated to Phoenix in August; wife and kids joined me in November. We rented a townhouse in Peoria (near 83rd/Thunderbird) since I was working near 101 & I 17. Commute wasn't horrible, and it was near a good friend of my wife's.

That job didn't last long, and now I have a new job near 40th Street and I-60 (south of the airport). Commute is now 75th down to Grand Ave, I-17/I-60 then to 40th St. Not horrible - but is about 40 minutes on average.

Our rent is up in May, and we're finding GREAT deals on houses in pockets within the valley. But mostly where schools aren't great. We're thinking it might make sense to get a great deal on a house even if the school isn't great, and then put the kids in private school. Might be worth it in the long run.

Problem is I'm not that familiar with the east side. Seems like on the west side, I could live in Tolleson, Avondale and have a bad commute, so long as it's close to the hwy.

For west side, Ahwatukee, Tempe or western parts of Mesa, Gilbert and Chandler would be fine, too. No idea what the commute looks like in the mornings from that side, but distance-wise, it's tolerable.

Scottsdale is still way too expensive. We're seeing houses for $150k with over 3,000 sq. feet in places like Tolleson and Avondale which just blows our mind.

Any other suggestions?
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Old 03-19-2010, 09:09 PM
 
123 posts, read 335,967 times
Reputation: 65
I would spend more money on the house instead of buying in a bad school district and sending the kids to private school. That just doesn't make any sense. You can find good deals right now even in areas with excellent school districts. Try Gilbert or Scottsdale. They both have excellent schools.
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Old 03-20-2010, 07:05 AM
 
8,248 posts, read 9,381,991 times
Reputation: 7214
At a 5.25% interest rate, you can borrow $70K more and it will cost you $5688 a year in interest. So from $150K to $220K you will be paying another $$5688 a year. Property taxes will be slightly more but you can write off property taxes as well as mortgage interest making the total out of pocket expense "reasonable". I'm assuming the cost of private school is North of $5688 and you cannot write off private school.

When it comes to resale, people absolutely consider the school district. You will get that $70K back the day you sell and most likely live next to people who care about education (or can afford the better education). Statatistically (all things being equal), it will be a "better" neighborhood.

I would also spend more to reduce the commute time (and costs). Meaning, figure what it costs to rot on the road for that extra hour a day in gas and depreciation alone. Then figure how many hours of free time you have a day from M-F and subtract an hour. What is that worth to you?? Quality of life does not only mean the size of your home or a lower "house payment". If you work the numbers using this approach you will make the right decision.

Just my 2 cents...
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Old 03-20-2010, 07:39 AM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 14,087,051 times
Reputation: 3868
Quote:
Originally Posted by der_kluge View Post
...

For west side, Ahwatukee, Tempe or western parts of Mesa, Gilbert and Chandler would be fine, too. No idea what the commute looks like in the mornings from that side, but distance-wise, it's tolerable.

Scottsdale is still way too expensive. We're seeing houses for $150k with over 3,000 sq. feet in places like Tolleson and Avondale which just blows our mind.

Any other suggestions?
I live in north central Gilbert in Val Vista Lakes which is about a half mile from hwy 60. On occasion I go to Phoenix or old town Scottsdale, and I don't find the commute traffic to be that bad. Compared to LA, Chicago, NY, San Francisco, traffic here is light.

You could probably be safe in your commute out as far as Val Vista Dr in Gilbert. If you're more to the south of the 60, then you can take the 202 south loop.

Chandler will work for you, and you could probably go as far as Ocotillo.

Of course Tempe is closer. So you have a variety of areas to choose from. You can map quest the distances and add a few minutes for the commute hour to get a pretty good idea.

Gilbert Chandler Tempe and Ahwatukee have a reputation for having good schools. But do check them out for yourself.

The February Monthly Average Sales Price per Square Foot price of homes for Chandler was $107/sf, and for Gilbert it was $96/sf.

However, that is the average. My seller just sold a great home for $92/sf, and one of my buyers is getting a 5 year old 4600sf home in Agritopia subdivision with granite counter tops, and loads of upgrades for $88/sf.

This can give you an idea of what size home you can buy at your budget price.
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Old 03-20-2010, 12:01 PM
 
Location: Glendale, AZ
93 posts, read 290,407 times
Reputation: 20
A.M and P.M. commute in east valley is a challenge, but it is from the west also. If you are willing to go way east there are some excellent values on new-build homes as well as resale. In my opinion the long-term upside would be better than Avondale or Tolleson. If you decide west side, you should consider Goodyear. Although a little farther out, it appears to many to have a brighter future than other west side cities. It's good to have choices, many people don't these days. Best regards.
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Old 03-20-2010, 12:13 PM
 
295 posts, read 525,024 times
Reputation: 98
Phoenix has the steepest drop in rental prices of any U.S. city last quarter: -8.7%. There are a lot of vacancies, and one can see this driving up and down most neighborhoods.

Report: Rental costs decrease in the West
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Old 03-20-2010, 10:12 PM
 
Location: Anoka, MN
2,062 posts, read 4,736,758 times
Reputation: 854
Quote:
Originally Posted by PhoenixAirConcerns View Post
Phoenix has the steepest drop in rental prices of any U.S. city last quarter: -8.7%. There are a lot of vacancies, and one can see this driving up and down most neighborhoods.

Report: Rental costs decrease in the West
Damn, only if I could get a job... I would go without even thinking about it. average rent is 695... damn
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Old 03-21-2010, 05:09 PM
 
Location: Anchored in Phoenix
1,942 posts, read 4,323,357 times
Reputation: 1781
I expect my rent to drop again this Fall in Ahwatukee.

If you are buying a house, don't fall into the trap of more buying square feet than you are currently renting because that is more likely going to increase your monthly costs. Remember to budget in Maintenance. It's the missing "M" to PITI(M). I call it PITIM. Principle, interest, taxes, insurance, and maintenance. If you can honestly do an assessment about all five cost factors and it is still cheaper to buy than rent and if you found a house you can honestly tell yourself you can live in it for fifteen years if it takes that long to break even, then buy.

Otherwise the news of the day is that the predictions of Ben Jone's housing Bubble Blog made three or four years ago are now catching up with mainstream media: More Real Estate price drops ahead in Phoenix Metro:

Home values in Phoenix metro may fall again because of 'shadow inventory'

Oh, and some of the pretend-naive types "don't think" Shadow Inventory is a problem. I brought this issue up lots of times in the last two years. Well read the above link. MSM is finally getting it.

Last edited by Howard Roark; 03-21-2010 at 05:12 PM.. Reason: missed a word
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Old 03-22-2010, 10:22 AM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 14,087,051 times
Reputation: 3868
Quote:
Originally Posted by Howard Roark View Post
...More Real Estate price drops ahead in Phoenix Metro:

Home values in Phoenix metro may fall again because of 'shadow inventory'

Oh, and some of the pretend-naive types "don't think" Shadow Inventory is a problem. I brought this issue up lots of times in the last two years. Well read the above link. MSM is finally getting it.
This is an Arizona Republic article by Catherine Reagor.

There are some errors, conflicting information, and a lot of speculation in the article.

Quote:
Homes lenders have taken back. More than 5,000 homes that have been taken back by lenders have not yet been listed for resale.
I would like to see her source for that info. Some realtors have stated that banks have told them they have homes held back that they're going to list with them soon. However, what has happened is that every realtor in the valley has been trying to get into the REO business, so the banks are spreading it around, and possibly giving listings to those who do the best jobs. That leads some realtors to erroneously believe there are many properties being held back.

Below is a statement that conflicts with her statement above:

Quote:
Lenders know they can take back Phoenix homes through foreclosures and get them off their books quickly by slashing prices and reselling them to investors. They have been doing this for the past 15 months. (My emphasis)
Well, we all know that lenders have not been slashing prices. That information is not correct. In one statement she states that they are holding back 5,000 homes, yet in another she says they have slashed prices and reselling them to investors for the past 15 months. That is not factual information.

Banks have been holding tough on their prices. It is because there are fewer bank owned properties and the banks holding tough on the prices that buyers have gravitated toward short sales with their lengthy turn around times and uncertainty.

Quote:
Uncertainty about what those investors will do with the more than 50,000 foreclosure homes they already have bought also stokes fears about a shadow inventory. Most foreclosure homes bought by investors have been turned into rentals. Now, there are so many rental properties competing for tenants, rents are falling. If new investors find they can't make money off rentals, some are likely to try to resell those homes to try to make a quick profit.
I doubt if she knows how many homes were purchased for rentals, as opposed to those bought by rehabbers and have already been rehabbed and re-sold, or bought as second homes.

Also, she is bundling all rentals into one statement so that the statement is erroneous.

It is the apartment rentals that are having the rent issues. Single family housing rental units are difficult to find and there is competition for them. The reason is simple. Most every family who lost their home immediately looks for a house to rent. That keeps the single family residence availablilty scarce.

I know that some move in with relatives for awhile, and some move out of state. But the majority need to get their family in a single family residence, in the same school district so as to cause minimum stress on the school children, especially if they are in high school.

The single family residence rentals, which is what is being referred to here, will remain strong, and it's sheer folly to think that landlords who bought homes at these cheap prices, with a minimum of 20% equity with loans at cheap rates (or paid cash) are going to walk away from them. It ain't gonna happen.

Quote:
But Phoenix real-estate data analyst Tom Ruff of the Information Market doesn't think investors will dump too many homes on the market this year because most of them paid cash for the foreclosure homes and don't have to count on high rents to make money.

"I don't think Phoenix's shadow inventory will cause another crash," Ruff said. "But the housing market's recovery is going to take longer and will be more drawn-out than many expected."
Quote:
An additional 50,000 inexpensive homes - the number of pending foreclosures in Phoenix - dumped on the market could drag a home valued at $125,000 down to $120,000, said national housing analyst Tim Sullivan of San Diego.
And those 50k homes are not going to be "dumped" on the market. Obviously that is impossible. They are all in some stage of foreclosure which is a minimum 90-day time period.

What's missing there is that a large number of those homes are already listed on the MLS as short sales. That number has remained about the same since August 2009 due to additions, cancellations and sales. Many of them are also working on loan modifications and will eventually be cancelled. And some will be cancelled because owners find a way to stay in the home without loan modification.

But let's assume that those 50k homes came on the market tomorrow.

According to his analyisis the homes would drop in price by 4%.

That would wipe out the price gains we achieved since last April. But what would happen to sales if the prices drop 4%?

Isn't it natural that since prices are cheap now that more people would buy them, which would in effect hold the prices up?

Below is one of the quotes in that article that makes sense and takes away all the speculation and fear mongering that the AZ article seems to be implanting:

Quote:
"If a bunch of foreclosure homes aren't dumped on the market at once, and the current inventory of foreclosure homes can continue to slowly move through the system," Sullivan said, "then prices will continue to level out."
Well that foreclosure number has remained steady since August so it looks like they are presently continuing to move through the system. Also we are still in the slow selling season months.

Below is what Fannie May had to say:
Quote:

Fannie Mae Reports The Real Estate Recovery is Moving Forward.
They report that the national home sales for February was somewhat of a disappointment, however, the Fannie Mae analysts believe it is a temporary decline, and believe a turnaround is likely by years end.

They see signs of consumer spending increasing, an improving service sector, and importantly, the probability that employers will begin hiring again soon.

In addition the favorable financial situation such as the low-interest rate makes them optimistic.
Quote:
The Feds Will Stop Buying Mortgage Backed Securities
Bloomberg news reported that the Federal Reserve is continuing to commit to keep key interest rates low, near zero, for an extended period of time. However, at the same time they did confirm that they will stop buying mortgage backed securities.

The reason given for extending the cap on interest rages is that housing starts have been flat and at depressed levels, and that employers are still not adding employees to their payrolls.
Karl Case, the co-creator of the Case/Shiller Home Price Index states that he would bet even odds that we’re at the bottom and will see improvements in the coming months.

Bruce Kasman, chief economist at JP Morgan Chase says the underlying trend is turning positive.

Remember that there are programs being developed to help curtail foreclosures, and banks are being pressured to do more loan modifications. Here is one of the programs:

Making Home Affordable - Loan Modification and Refinance

There are too many variables to accurately predict the market, so it helps to examine all the predictions to differentiate between what is fact and what is unsupported speculation.
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Old 03-22-2010, 12:18 PM
 
Location: Arizona
1,034 posts, read 4,227,529 times
Reputation: 1375
Location is the key. I would pay more for a home in the neighborhood and school district I wanted for my family and I. If that home happened to be closer to my work, then bonus.

Don't forget to check out Northeast Phoenix. The areas around the Desert Ridge area are beautiful and your commute would be right down the 51 which is farely light in the mornings and afternoons.
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