USA Today had a piece on the Phoenix housing crash underway. My only question again is - what took so long? And why is the Arizona Republic not all over this story? Too many new homes ads to be objective?
Up 52% in 2005, down 33% in 2006-2007? Yes, that'll get Phoenix back to 2004 levels, with the speculator-fueled-bubble fully deflated. But I doubt it'll stop at down 33%, as 40% of the entire Phoenix economy is tied to building houses in some way.
Now in addition to deflating the spectacular speculative bubble, Phoenix will have to deal with hundreds of thousands of unemployed and hungry REIC members, a complete loss of the "wealth factor" driving the economy, a sea of foreclosures and bankruptcies, a rapid migration out of Phoenix, a million unemployed and angry illegal Mexicans, and ghost towns of empty homes where the "buyers" cancelled their contracts all around the valley.
In the end, I hope they start tearing down a lot of these disgusting homes. If you want to see the worst designed homes in America, visit Phoenix one day - a sea of concrete, garage doors and brick walls, where neighbors don't know each other and every house looks the same.
What to call the Phoenix meltdown? Housing devastation? Housing collapse? I don't think the US has ever seen anything like what will now befall Phoenix, Arizona, at least not since the Great Depression.
Phoenix: Prices, sales tumble, but that's 'getting back to normal'
Asking prices in the Phoenix area have dropped about 25% this year, says David Khalaj, an agent at Realty Executives. Existing single-family home sales tumbled 34% in the first nine months of the year compared with the same period last year, and condo sales were off 24%. Construction permits for single-family homes were down 23% through August.
The declines appear so dramatic because Phoenix's housing market last year (and for the past several years) was so hyperinflated.
"Last year was just one of those atrocities that happens rarely," in terms of bidding wars and soaring prices, says Camille Sullivan, also an agent at Realty Executives. "I've never seen it before, and I've been doing this for 25 years. It was a very difficult time."
October 21, 2006
Spectacular and historic Phoenix housing crash getting national media attention now
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17 comments:
Keith, reporting from Bubble Markets Inventory Tracking, here are the latest numbers for Phoenix:
Inventory: 54,548
% Reduced: 43.2%
Modesto's got us all beat with its 50.2% reduced listings, but no worries, Phoenix would get there soon enough.
Try telling the above to the average Phoneician or Suburanite. Everyone is convinced the market will be fine and all fine and dandy once new homes are sold. It will take off again and there will be more gains and money $$$$ to be made.
My neighbor is trying to sell a small two bedroom across the street and alrady in the process of moving into a much bigger and nicer home on the ARM teaser killer mortgage and swears all will be fine in the spring and last quarter of next year. Two years from now my new home will be up 100K or more ! This is Phoenix Baby and people piling in here by the hundreds every day will keep this party going for years to come. I think he's (financially) destroying his 30's in his 20's.
>Modesto's got us all beat with its 50.2% reduced listings, but no worries, Phoenix would get there soon enough.
When a seller calls a realtor to inquire about listing their property, the seller and agent generally has to agree to an offering price. This last year sellers really wanted to set the initial offering price pretty high.
As a realtor you had two choices, do the clients bidding and set the price at their level, or not take the listing.
Many agents did take the listing, and later lowered the price to try to meet the market. This equals only frustration for the seller and to me not a good business practice.
I know this first hand and have made mistakes on initial offering prices. The mistakes are mine even though the seller insisted on the too high of asking price. On those occasions the listings either expired or the price was lowered to what the buyers would be willing to pay for.
I don't make those mistakes any longer. I've been working with enough buyers this year (none with exotic financing) to know where the line of success is for a successful transaction.
In the sales I've made representing the seller this year, all made a return from their original price they paid for their property. All were happy with the net gain, even the ones that had to reduce price.
There are good opportunities for buyers on the current market. But please don't confuse that statement and take it meaning that these opportunities will make the buyers rich next year if they intend to sell the property. It only means there are good deals right now, on price alone, for today's current market.
I don't know what the future holds, and I didn't choose to be a financial advisor.
Todd,
Have you gotten any clients yet from your advertising scheme of commenting on a housing bubble blog and representing yourself as an honest agent who "does not give financial advice"?
Smells like a load of crap if you ask me. Just curious if anyone has fallen for it.
Jenkins...
I'm not advertising here. Just joining the discussion.
In Todd we Trust.
You mean good opportunities to go broke.
Anyone buying now, even a "good deal" is still looking at a 40% haircut by the time this is over.
The stupidest of the stupid are all that are left in the buyer arena.
Anyone find it funny that HP's realtor commentator uses his picture even on a blog?
Todd, word to the wise, you don't have to put your picture on everything.
Todd,
"I'm not advertising here. Just joining the discussion."
I guess that's a no. Oh well, keep trying.
"Does spending more money per capita (another factor) always mean the students get a better education? Maybe yes, maybe no."
HELL NO it doesn't! It just means that the God Almighty teacher's union coffers are packed fatter than last year, that's all!
More MONEY does not make a better teacher, they simply make more MONEY ,period! Teachers are either good or they are not. It’s a shame there is no way to really reward the good ones, but that would violate the union contract.
Good, bad, indifferent they all get paid (overpaid?) the same. When property taxes start drying up, it should get interesting!
Vermont #1? It is is all white, I have heard.
I'm just sayin.
Still looking for bargains in Phoenix and can't find them yet. I've tried looking at the home builder websites and all their houses to be built and inventory is still listed $200,000 higher than I'd pay, let alone for what they sold for in 2002. Even compared to 2004 they are over $150,000 to high. Still see historic homes in the Central city listed for $399,000 and they are 2/1s in not the three best historic districts. These homes sold for $54,000 or less on average in 1994/95 (areas like Coronado, not Willow).
The new house I bought in 2002 (to be built so didn't move in until the end of 2002) had a base price of $168,000 with absolutely NO UPGRADES and the same house out west with Absolutely NO UPGRADES is offered by US HOMES for $400,000 base. The Doctor who bought my house paid $375,000 with every upgrade imaginable and pool and extremely upgraded landscape. Zillow show the house at $411,000. She bought it spring of 2005 before things got way out of hand. Do the home builders really think people will pay what they are asking?
The condo conversion we rented off Central has since lowered their price from $425,000 to $325,000 and thrown in their premium upgrade package and are still not sold out, not close, which is what we figured when they tried to get us to buy. The units would be nice at $225,000 max for the largest units so they still have a $100,000 to go. You can only rent the units for $1,400-1,500 a month so $425,000 was ridiculous.
Still, I look around and still don't see a meltdown. Oh, and comparing Phoenix to the Great Depression? During the depression phoenix actually had one of the better performing and growing economies and very low unemployement by the way.
So at the moment Keith is sensationalizing by stating "Spectacular and Historic Phoenix Crash". I lived in Phoenix in 1982 when the new home I bought was selling for $20,000 less than the previous buyers and that was equal to 20% decline and in 1992 I bought in Moon Valley a house for $136,500 that had sold in 1988 for $225,000 and in 1990 for $175,000 and by the time I got it had a brand new heated pool and spa. So compared to those two times I hardly see any bargains or extreme meltdown yet.
foxwood - just go make an offer. $100,000 off on a $300,000 should get you some interest
wake up
I'll vouch for that one - Arizona is truly the dumbest state I've ever visited or lived in. Arkansas is close, but Arizona is a state full of high school dropouts, GED's and best case an ASU or UofA degree.
ASU compared to a real university is like comparing Van Gogh to a house painter.
Those kids never study, their school is a joke, and the result is predictable - idiots who become realtors at best
Colorado, FYI, is the smartest state I've lived in or visited. Lots of smart folks there, but no jobs for 'em.
>Anyone find it funny that HP's realtor commentator uses his picture even on a blog?
Todd, word to the wise, you don't have to put your picture on everything.
I totally understand, yet the only reason my photo shows up here is because of my blog account with blogger. I looked for a way to not post the photo but I haven't figured it out yet. I'm not taking it off my blog, and besides my blog the only other place my photo shows up in my marketing is on my webpage. No calendars, no business cards, no stationary.
I am not big on realtor mug shots either.
>Hi Todd, I don't know if you are for real but how do you define a "good deal" based upon "price alone". How do I know what a good price is for a particular home in a particular market at a particular interest rate?
Charlie... I cannot see into the future. The data I have is a snapshot of today and the recent past. I do have my feelings on the future market but I don't pass those along as there is no sure way of telling whether I'll be right or wrong.
I share the data with potential clients, I ask them to pay for financial advice before making a decision.
There are good values based on today's market. If you were my client and wanted to wait out the market for a better time to buy a property... that would be your decision.
I've seen the slowdown (or crash whatever anyone wants to call it) happen this year. I've have told some buyers that there will be more listings on the market this year than ever and that there is less pressure and competition from other buyers. If the choice is not to make an offer today, then that is the choice.
In 04 and 05 I couldn't make the same statement to a buyer ready to buy. It was more uncomfortable then than it is right now, that circumstance. People felt like they had no choice (even though they did) when there was little inventory to choose from and there was too much competition for the inventory there was.
The best market is when the buyers have at least some bargaining power. Right now they have all the bargaining power. How long will this last?? I DON'T KNOW. Many around here seem to know though.
It will take about 24 months for the Phoenix market to make revert to the mean. The only reason its has not already is that the unsecured mortage loan losses are being held in bundled mortage backed securities and the S&L "Charles Keating" vintAGE induced panic that will lead to mailing in the keys and walking away from an upside down debt has been forestalled due to the larger pyramid scheme sequence for collapse this time around. But its already very real and very certain.
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