November 27, 2005

Phoenix, we have a problem - check out meltdown going on in Arizona

Check out the

A) Rapidly increasing inventory the past 12 weeks as investors (flippers) rush their properties to market in a desperate attempt to get out

B) Rapidly decreasing median asking prices in all pricing percentiles - note the 50% percential is the median price for the market

C) Note the lower bracket is holding better than the others - especially the high end which is seeing a complete meltdown. But then again, $850,000 for a two bedroom condo seemed a bit high, didn't it? Didn't it?!

Date Inventory 25th % 50th % 75th %
11/21/2005 13,782 $265,000 $355,000 $559,900
11/14/2005 13,295 $267,000 $359,000 $569,000
11/07/2005 12,813 $269,000 $359,900 $574,999
11/01/2005 12,275 $268,000 $360,000 $575,000
10/28/2005 11,959 $269,000 $364,500 $579,000
10/21/2005 11,287 $269,000 $368,800 $589,900
10/14/2005 10,845 $269,000 $370,000 $597,000
10/07/2005 10,169 $269,900 $374,990 $599,000
10/01/2005 9,264 $268,900 $369,900 $585,000
09/28/2005 9,118 $269,000 $369,900 $585,950
09/21/2005 9,352 $269,000 $375,000 $599,900
09/14/2005 8,907 $269,900 $379,000 $600,000
09/07/2005 8,319 $269,900 $380,000 $625,000
09/01/2005 8,030 $269,000 $380,000 $630,000
08/28/2005 7,979 $267,000 $379,900 $626,834
08/21/2005 7,769 $265,950 $379,900 $629,999
08/14/2005 7,447 $264,867 $379,900 $629,900


skytrekker said...

meltdown? Yes- number of homes on the market has doubled in the Phoenix area-yikes!
The recession is going to be worse in AZ, FL,NV parts of California, and the mid Atlantic states- hey that's the most important part of the USA - excuse me for my regional 'centricity'.

Metroplexual said...

I don't see much price change in the 25% range. These would be te more affordable units. There may be pent up demand in that range, I know here in NJ that is the case.

Tom said...

Yes, pent up demand and realtors still telling clients that if "you don't get in now then you may never get in because rates are rising."

All the prices dropping in the higher percentiles (because no one can afford these) will put pressure on the 25% to drop their prices also. It's enivatable and as home prices drop and equity disappears so does consumer confidence.

Friends of mine bought a home here in FL for 160,000 back in 2002. It was one of those cookie cutter sub divisions and they crammed 1900 sq ft into a 2 story house on a lot that was small enough you could see your neighbors. She has 3 kids and is a stay at home while hubby works making 60k with a college degree. The house next to hers look just like hers and so does the one across the street hence "cookie cutter". I see much speculation in these neighborhoods as many people bought them as rentals hoping to sell. The initially had a 6.5% interest rate. When rates were in the mid 5's the refinanced because their house was now appraised at 260k (based on how other homes sold, again the appraisers are helping run the prices of homes up). What do they do? They decide HEY let's pull 100 grand of equity out of our home. But the payments would be around 1400 and they went with the ARM because it was so much CHEAPER! Bad idea as rates are now rising for them. But they have that 100 grand right? Wrong, they bought some new appliances, and she got a Nissan Armada which they paid for in cash. They said it's better than paying a payment and she really wanted that car. In fact she loves her car and when she got it she says "hey look what I got" As if to show off and also be proud of what she has. Did they work for this? No, but will they pay for it? YES! They will and this is what is happening all across America and this is what is keeping our economy going. When the housing bubble does pop you will see a severe recession as the economy tries to land on two feet and catch it's breath. But it's not going to, when it lands it's going to break every bone in it's body and be hospitalized for a long time to come. There will be a lot of therapy and rehab.

It's sad it's come to this but as anything economic/business/investment/credit related these things run in cycles. At the top everything is good and near the bottom it's quite horrible.

keith said...

it was interesting to see the collapse at the higher end, and in the median, but the holding of the lowest level pricing

My take is that there is less and less of that lower level as prices went up 55% last year, so basic supply and demand

In addition, you don't get killed buying a $250,000 house that goes down to $200,000. You do get killed buying a $850,000 2-bed condo with the intention to flip it, that goes down to $650,000 in four month.

That's where the panic is right now - the overpriced new builds that investors are trying to flip - but now there are no buyers (i.e. other investors)

The meltdown in phoenix is happening lightening-fast. The market went from its apex, white-hot, panic-buying, to almost overnight panic selling and fear.

We'll miss the speculators. They sure made some people some serious coin. But now the community will pay the price. 40% of phoenix jobs are tied to construction. And probably 80% of the illegals are involved in housing in some way - it'll be interesting to see if they stay after the collapse - my take is they won't - as there'll be no jobs here.

skytrekker said...

New Jersey is vastly overpriced, from Trenton up to NYC- prices will fall at least 20%. Also most of the jobs in mid to northern NJ are real estate related- so any demand on the lower end will be muted.

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