I realize that most of the dolts who live in Phoenix don't have the luxury of a college education, or at least a good one (see ASU standards), so this could get a bit confusing, but just in case:
There's this thing called supply. When it increases, prices likely will decline.
Then, there's that thing called demand. When it drops, that can create more of that thing called supply, which when it increases, as we know now, prices likely decline.
Talking to some folks in Phoenix, I'd say they have no idea that 1) prices are already declining, 2) inventory is rapidly increasing or 3) the market is crashing now, and I mean right now. Many homeowners I know are still counting their paper worth, or worse still, extracting $$ from their "equity" to buy new cars, a fancy trip, etc.
This market has fallen off of the cliff.
Thanks to http://overvalued.blogspot.com for another great chart. A picture is worth a thousand words (especially to the illiterate homebuyers/flippers/investors in Phoenix)
January 23, 2006
Phoenix lesson in supply and demand coming - watch a market implode in front of your eyes
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18 comments:
I agree with the above, I know some really cool people in Phoenix, and none of them are "dolts".
I'd say people who bought overpriced real estate that they can't afford with no money down are not that smart.
I think it's becoming clear the lenders' ability to take advantage of dumb people has been a major factor in this bubble.
Remarkable. This is much more interesting than reading about forecasts of a price decline. Looks like discussion of a housing bubble can move from theory to reality. I wonder how bad it will get.
Gee namcie, you're right we need to be much more sensitive to how the dolts... I mean suckers... I mean idiots... well what ever you think they should be called, are portrayed. After all just because their ignorance and stupidity... I mean lack of common sense, ran real estate up to mind numbingly unsustainable prices and have in turn prevented vast numbers of non-dolts from owning their own homes for years to come (who of course now feel like chumps), why should they be subjected to name calling. Soooo immature. Lets all watch very carefully what we say from now on because we wouldn’t want someone to get their feelings hurt.
I believe the author was only trying to point out that no one has communicated to the home owners that their house values are dropping.
Thanks for the kind words on the http://overvalued.blogspot.com blog.
Two quick points about the chart. First, the price data reflects asking prices. In other words, these are the advertized prices and not final settlement prices. In a downturn, settlement prices are likely to be significantly below the original asking price. Second, the source of data is Housetracker. A direct link to the data can be found on the site. The sceptical reader can check out the numbers if they wish.
Finally, I am looking for photos of excessively overvalued property for the site. If you know of any good links, then let me know on:
housingcrash2006@yahoo.com
BTW, housing panic a great blog. Keep up the good work. Who knows, sanity might finally return to housing market.
returntodc
dolts folks refer to the 21 year old bartenders who have a high school GED who are telling everyone who'll listen about the killing they're making flipping condos.
dolts are the live beyond your means all flash no substance people who've decended on scottsdale, and who'll be the first in the chapter 11 line when the housing atm dries up, people who have no understanding of supply, demand, debt or investing. the get rich quick crowd.
the other 90% of phoenix people are good by me (even though ya gotta admit ASU is a party school, eh?)
Call a spade a spade - many of these IDIOTS in the housing market have no need to be there. 21-year old bartenders & uneducated wal-mart cashiers owning $250,000 shitty tract homes.
Most of us know (either personal or through proxy) one IDIOT who has stretched themselves and will be slammed in this bust.
Demand for housing is not dropping, what is dropping is quantity demanded. There is a difference.
What pisses me off are two things. The bubble is going to leave behind tracts and tracts of crappy product. It's like the Automakers redistributed their production lines to build only Neons or Navigators. Nobody is going to bother building anything nice with all this overhang. The other thing is the attitude of the bubble participants. Early 20somethings weren't supposed to get into the housing market. The economics of the transaction weren't designed for them as a consequence they distorted the market for all and they'll find in a few years they distorted the market for themselves. The townhouse in Orenco Station (Portland, OR) isn't going to look so good when taxes go up 800% in 8 years and you find you need to pay private tuition because the schools are starved to pay for the New Urbanist lifestyle demanded by the young demographic. Keith B. has it spot on with his generalizations about the Phoenix bubble riders.
No they are dolts.
robert cote:
You are spot on in your assessment. The people of my generation are not only destroying everyone else, we're also destroying ourselves and our futures. My generation has the entitlist mentality that we deserve to live like our parents NOW even though they spend 30 years working to have large homes and SUVs. Many beautiful wetlands, fields, and forests have been torn up to build mile after mile of shitty tract homes around here, surrrounded by expensive restaurants and shopping plazas. What happens when this bubble collapses leaving people trapped in their overpriced shitboxes? Who will be shopping at the mall and eating $50 sushi dinners then?
The "new urbanist" lifestyle is also a sham. It's merely a rip-off scheme (Ponzi scheme?) to steal money from those with more money than brains. Paying $500K to live above a place serving $10 martinis and $30 top sirloin steaks? Yeah, that's my generation.
My grandpa once told me "a fool and his money are soon departed". Man that is so truthful.
Recent article in St. Petersburg (FL) Times about housing costs are causing scarcity of highly-educated people moving here. People can't move because the costs are so high and wages cannot support these high costs.
http://www.sptimes.com/2006/01/23/Business/Biggest_concerns_hit_.shtml
Moman:
Thanks for the kind words. I'm a Tweener or Cusper even though technically a boomer (b. 1959).
It isn't all your fault either. The big lie is about the very idea of a middle class. It is looking more and more like a transient phenonema instead of the corenerstone of the American Dream. Part of that was this "owning one's own home." It wasn't supposed to be two years out of college but then college wasn't supposed to put you in debt for 10 years either. The single most valuable "virtue" that we've lost is "delayed gratification."
For all our substantial agreement I have one bone to pick. You said; Many beautiful wetlands, fields, and forests have been torn up to build mile after mile of shitty tract homes around here,...
It may seem that way but in truth we are so protecting so many marginal areas that it has made the housing bubble worse.
The "new urbanist" lifestyle is also a sham. It's merely a rip-off scheme (Ponzi scheme?) to steal money from those with more money than brains. Paying $500K to live above a place serving $10 martinis and $30 top sirloin steaks? Yeah, that's my generation.
Don't be so hard on your age demographic. There's also a group of would be social engineers called planners that made this happen. THere are extremes like Portland, OR where current residents were forced to accept change and there are opposites like Phoenix where current residents' interests were not protected either.
Before we start stereotyping twentysomethings, I want to point out that the "irrational exuberance" has transcended all age groups.
As a twentysomething myself, I choose to live under my means. For the past few years we've embraced the "quiet millionaire" approach (although far from it), where we patiently save and invest. My wife and I have significant equity in our home and would never cash out of it. We even share one car.
Now when you look at my neighbors, one 40-something just ran out and bought a brand new red mercedes convertibile that he stares at more than drives, another 40-something bought a new boat that just sits there, and my wife reports that the other wifes are constantly flaunting their expensive jewelry at her. And they're always bragging about vacations they just took. All totally convinced that they can just keep pumping cash out of their house...
Inventory is skyrocketing here in South Florida..Funny thing though listing prices are not dropping just getting more ridiculous. Listings Listings everywhere and not a buyer in sight. I see a Hard Landing scenerio.
Robert Cote:
"It may seem that way but in truth we are so protecting so many marginal areas that it has made the housing bubble worse. "
I hear you. I have no qualms with development when done correctly. The issue I have is tearing everything up to create house after house with 10' between them and 30' deep backyards that look into someone else's living room. I'm all for planned communities, not bedroom communities.
left las vegas:
"Before we start stereotyping twentysomethings, I want to point out that the "irrational exuberance" has transcended all age groups."
That's correct but a lynchpin of this boom is the lack of delayed gratification where people our ages are in the houses that my parents were buying in their 40s. We have an entire generation that has skipped starter homes. If this is good or bad, I do not know, yet I suspect it will hurt our generation in the long haul.
OR have the California BUYERS with the big bucks from their homes STOPPED COMING? ie: The market flops in California and leads to flops in Nevada, Arizona, Oregon, and Washinton........ and so the dominos fall.
Show more history on the graph. The fact that the average asking price is over $350,000 is the real story. Pulling back from $380,000 is probably more a reaction of people getting greedy. My guess is if you go back two years on this chart, the average price is closer to $150,000. Pretty amazing gains despite the recent pullback.
I "live" in an apartment near Shea and Frank Lloyd Wright in Scottsdale, AZ. Of the 6 apt. complexes near this corner, 4 have or are now planning to convert to condos. Casa Santa Fe is having a hard time selling since they started 5 months ago. Two more places (The Overlook and Joshua Tree) are planning to convert this year. Where will all the people who have to work the crappy retail jobs in this area going to live?! Villa Montana Apts. is already at 99.99% occupancy! Who are all of these f+cking buyers? Don't they know that a kazillion apartments have already been converted here in the last 2 years? Don't they know that inventory has gone from 6,000 to 32,000 in about 6 months?
CAN SOMEONE SHED SOME LIGHT ON THIS?!!!!!!!!!!!!!!!!!!!!!!!!!!
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