Hitting 40,000 felt like a major milestone. But now they're sprouting like Kudzu or Tribbles.... This is a major economic news story, playing out in slow motion, but not as slow as I would have predicted...
Go Phoenix Go!!! 50,000 here we come!!!
Maricopa County MLS Home Listings:
1/2: 26,715
1/10: 28,790
1/20: 31,457
1/30: 32,512
2/10: 34,608
2/20: 35,455
2/28: 36,176
3/10: 37,680
3/20: 38,968
3/31: 39,852
4/10: 41,403
4/11: 41,946
April 12, 2006
Oh Dear God Phoenix... Oh Dear God...
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19 comments:
I hope the flippers really get screwed. Damn them for making property taxes go through the roof.
Although the inventory growth looks impressive, especially compared to last year, it’s really not that bad in Phoenix.
When you take out vacant land, there are about 35k homes on the MLS for metro Phoenix. Divide that by the 7265 sales last month, and you get an inventory of less than 5 months.
Five months of inventory isn’t really anything to be alarmed about.
I would have thought by now the Phoenix market would have blown up, but sales continue to grow at an amazing pace.
Clearly, there is large supply of stupid people who continue to buy at ridiculous prices. We might have to wait until summer before the market crashes.
Mark
I would have thought by now the Phoenix market would have blown up, but sales continue to grow at an amazing pace.
The number to look at is the sales volume compared to last year, as the realtors use. There is no growth here, but rather a huge drop.
March 2006 sales - 7,265
March 2005 sales - 10,035
> 28% drop
Q1 2006 sales - 17,980
Q1 2005 sales - 27,325
> 34% drop
Also, the number of listing seems to be accelerating - meaning the gap between houses listed versus houses sold is widening. Only a complete moron would buy a house in Phoenix right now.
Still sticking with my Fri, Jun, 9th prediction for 50k.
With markets formerly as hot as Phoenix it takes a long time to unwind. All those sales conditional upon sale of existing, contract sales for a specific time, retiremnt, graduations, job transfers could be reflecting transactions six months ago. Finally, new construction which is front loading as HBs rush product to market rather than risk cancellation for cause or just fear of being stuck with inventory.
For places like Phoenix with lots of new construction a faster market signal is through cancellations. http://www.eastvalleytribune.com/index.php?sty=61978
Mark, if you want to take vacant land out of supply did you take vacant land sales out of purchases? It really is that bad in Phoenix.
What the rising number tells me is the unbelievable number of would be sellers out there. For every property rushed to market ther's got to be another that looked at the inventory and held back a listing. Some because they know they waited too long, some because they know they need to spruce up the propertry in order to sell in this market and some si stupid they are waiting for the sellers market to return in a few months.
But...but...but...real estate never goes down!
What did inventory look like at this time last year? Is there normally a runup of inventory in the spring of every year?
>>>What did inventory look like at this time last year?
I know that the low point was an inventory of about 3,000 in February 2005 in metro Phoenix. It has increased since that point each month. I think that the early April 2005 figure was in the 5K to 6K range.
Phoenix is a major shithole for transients, second-stringers and retreads who can't make it anywhere else.
>> Lots of flippers who owe more then the house is worth and can't keep up with expenses will have no choice but to walk away.
With last year's change in the bankruptcy laws, I'm REAL curious to see how easy it will be to just walk away.
>> Lots of flippers who owe more then the house is worth and can't keep up with expenses will have no choice but to walk away.
Keith, any insight into the "walk away" issue and the new bk laws?
I don't see how people can "walk away" quite so easy in many cases.
If you owe the money, you owe the money.
The bank will foreclose on the home, and then SUE you for the difference.
Only if you are really compeltely broke---and this means that flippers will probably have to sell their primary residence---will bankruptcy help you. But you may be forced to cash out your stocks, IRA's, etc to pay the difference.
Some loans may be "non-recourse" meaning that the only thing the bank can do to recover the money is sell the house.
Of course, any difference between that and what you owe: the IRS will tax you on that as virtual income!
Then again, any difference from purchase and sales may be deductable as a capital loss, so it could even out.
Most states protect your home in bankruptcy. All of these people who walk away or are forced into foreclosure will not be able to get a mortgage for the next 7-10 years. The housing industry is dead. I would guess that 95% of people cannot afford to buy a home without a loan. The flippers will have to find another ponzi scheme to make the fast money
Well since no one commented...that's one bad ass photo!
Mark - just in case the explanations don't quite make the inventory levels clear: under normal markets: Spock and Capt. Kirk would be looking at say maybe 1/3 of those whatevers, but no, now they have way too many of thoses things and just don't know what to do. Many sellers are going to be staring like Spock at their full housing costs and saying: WTF?
best picture I ever posted, and very representative of the topic at hand
I should win an award for that one
"best use of a star trek photo to represent the content of a thread"
btw guys, we are now at 42,356 listings as of 4/12 noon.
From March 2005 to March 2006, the increase in inventory was 980% in Phoenix metro area!!
Keith, Like your blog. But isn't your Drama Queen inner self taking over a little too much?
But then again, accepting yourself and embracing your inner Queen-ness is healthy.
I couldn't help but tease you!
When Greenspan testified in congress a few years ago; he stated that he believed that the Govt made more promises (medicare & social security) for the baby boom generation then can be delivered.
It seems like a decistion was made to bait the baby-boom middle class workers into a housing bubble trap... then pull the plug out and drop the lot of them into debt-slavery. That's why the BK reform was passed...
If you can prevent the bulk of the baby boomers from retiring... you can keep them off the govt dole & paying payroll taxes.
The time for fresh starts is OVER!
The time for indentured servitue has been ushered in. Look for crime and violence to increase as the lemmings wake up to the new American Nightmare!
Agree that housing nationally has peaked out and will drop for years.
Wait for good margin positive cash flow before re-entering the RE market again.
It would be nice to be able to short these babies.
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