May 26, 2006

The fake real estate based economy of Phoenix will make it Housing Bubble Ground Zero


With 33% of the entire fake Phoenix economy tied in some way to the Real Estate Industrial Complex (no real jobs there - they just sell houses to each other), this First Crash, the rapid decline in new homes being built, has to mean significantly less work for carpenters, roofers, foundation layers, stucco salesmen, architects, landscapers, painters, realtors, mortgage brokers, developers, etc. And those folks dry cleaners, auto salesmen, Home Depot workers, etc.

In other words, what's already happening in Phoenix means significant and growing job losses to come, and a tremendous crash in employment and to their economy.

More listings, less sales, declining prices, and a cycle spinning out of control.

One piece of good news though is that many of those homebuilding jobs went to Illegal Mexican Immigrants, who don't get direct social services and don't buy houses. So different than traditional unemployment for the State. However the question remains, will they go home? Will they start committing crimes?

New home permits and sales of existing homes fell sharply in April compared with the same month a year ago and they didn’t meet industry expectations they would match 2004 levels, the Phoenix Housing Market Letter reported.

RL Brown, author of the letter, said consumers have so far failed to buy up the growing inventory of new homes generated by an apparent wave of cancellations from consumers. He said this is because consumers haven’t been able to realize gains in their present homes in a faltering resale market.

And, he says, buyers have lost confidence in the current state of builder housing values.

Sales of existing homes so far in 2006 are down nearly 22 percent from the same time last year. Brown said the market should be showing some evidence builders have stemmed the flow of cancellations, adjusted their pricing policies and regained some momentum in their sales offices.

It is becoming more and more unlikely that we will salvage a 2004-like year out of this quagmire,

Brown said builders haven’t been able to hold buyers to contracts even when customers are forced to fork over thousands in earnest mocancelingling the deal.

Consumers are perceiving that the deep incentives builders are offering new buyers are indeed price cuts that will leave them with homes and mortgages that are perhaps $50,000 to $70,000 higher than what a walk-in can buy,” Brown wrote. “Builders can’t stomach giving the old buyers credits down to the ‘new price’ at closing and seeing those profits flushed out.”

44 comments:

panicearly said...

Hey HPers, This realtor wants to punch you in the nose, if you think some people have no business buying houses.
http://realtytimes.com/rtcpages/20060526_homeownershipreply.htm

keith said...

post as tinyurl

panicearly said...

gold is down guy must have a couple of condos in sandiego or phx. though the ridiculously long post is annoying,
its funny that hp blogs get a rise out of people like that. great, im gonna love it even more in 12 months, hey keith we should make "i told you so "
t-shirts and caps for all the HPers.

keith said...

panicearly - i took the post down not because of content, but because it was pages long

here's what it said

GOLD DOWN

repeated about 5000 times.

For that poster - make your point, but no 5 page long posts allowed

David from Texas said...

It's very naive to think that illegal aliens don't buy homes or get social services. They buy homes, collect unemployment and even vote. If you don't believe it, go to a hispanic area of Texas on election day.

Anonymous said...

http://tinyurl.com/fjxnt

The article the first poster mentioned. The author is an ass-clown card-carrying member of the R-I complex.

Anonymous said...

HILARIOUS. Strangely, I purchased my home, not as an investment but as a HOME!. I have no worries with a 5.5% fixed mtg.

Anonymous said...

Keith,

I looked at backpage.com and found a strange phenomenon. Rent to own houses is being pitched in a big way. It seems it is a big thing in PHX. Anyway, rents in PHX are incredibly cheap.

Anonymous said...

PHX is the king of the bubble, and The OC is his bitch.

PHX will collapse due to the rising inventories and slowing migration.

The OC will collapse due to its extreme pricing and high exposure to real estate related jobs.

Anonymous said...

I have been saying it for over a year, Phoenix is one hot stinky craphole, no one should even live there! By the end of the year they have a great shot at having 100k unwanted, not needed crapboxes piled on top of each other!

I cant wait until they bulldoze all those stupid empty houses on the side of the 10 Freeway, it will be like when everyone smashed there dico records!

Anonymous said...

How exactly does an illegal alien vote in Texas?

There's no way they would take that risk---I'm sure it's a crime, maybe even a felony---whereas being out of immigration status is (currently) a civil violation.

You have to consider that some citizens might look exactly the same as illegals.

Anonymous said...

Phoenix and its real estate is Palookaville, USA.
One-way ticket to nowhere, (paraphrased from the movie On the Waterfront/Marlon Brando).

Lee in Irvine said...

I like that note about the OC being PHX,s bitch! LOL

I had a morgage lender cold call me the other night here in OC. I just loved telling her that i just sold a house and was going to every open house I could. Hearing this she got all giddy. Then, I went on to tell her that I was looking at all these houses floor plans, so when I was at the forecloser sale at the court house, I'd have a better idea whether to place a bid or not.

After a few seconds of quiet, she told me ( in a very low voice ) I hate to say it, but I think your on to something.

I turned her on to this blog. who knows, maybe she'll read this and start giving us some inside news!

LOL

Anonymous said...

If the Phoenix area is such a crap hole then why do so many companies want to be here (Intel, Motorola, Honeywell, Chase, Wells Fargo, Google, etc..). Why can ASU.inc raise enough money to double in size? Have you seen the development around Tempe Town Lake? People want to be here because the lifestyle is easy and casual. The projected growth of the valley will absorb inventory in its own time. The market is correcting back to sanity.

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