December 26, 2006

A picture is worth a thousand real estate clerks - a housing bubble update from Phoenix


Here's a look at Phoenix area home sales and inventory (thanks bubbletracking). Looks like about 10 months of inventory to me at the current rate.

You might want to check out Phoenix median asking price too, which has fallen $50,000 from August 2005 to now, from $379,900 to $329,900.

So what's going on out there in Phoenix? Are homedebtors giving up at this point, pulling or postponing their listings and waiting for a better day (which won't come)? Will dead inventory owners start slashing their prices now on a race to the bottom?

Most importantly, how much longer will it take to clear away that 52% speculator-driven rise in 2005?

That's still an awful lot of supply and anemic sales. Plus builder dead inventory and FSBO's that aren't recorded here.

30 comments:

Lost Cause said...

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$50,000 in 15 months -- Over $3000 per month? Where can you lose that kind of money? Even with a toxic loan and all the best credit cards, you can't top that burn rate. Las Vegas anyone?

Anonymous said...

Note the high end asking price (75th percentile) has dropped over $100,000 - from $630,000 to $525,000 today

Anyone who bought a year ago is screwed

Butch said...

Keith,

Not to worry. Nicholas Retsinas was just interviewed by NPR regarding the housing bust. He reassured us all that:

1. The housing bust will be mostly confined to the East and West coasts of the U.S.

2. And besides, it will all be over by the fourth quarter of 2007.

So, there is nothing to see here, move along, nothing to worry about, buy now, it's a great time to buy or sell a house, they aren't making any more land...you know the drill.

Now, one more time: WHO paid for Nick's "Joint Study" report?

LOL!!!

Anonymous said...

Looks like in America's most "bubble" city - the housing inventory level just came down in NOV 06 - what does that mean?

Marky Mark

geeski said...

inventory is down as sellers take their properties off the market for the holidays. showings are slow anyway. now look for a spike in january as the "inactives" come back online. but still, i don't think there are many buyers out there.

to put it bluntly, i think the housing market in phoenix is on life support.

Anonymous said...

Exactly, next fall should start to show the market's ture colors. Nearly everyone I see with a vague need to sell is planning on "waiting out the downturn", which is is all well and fine for a year or two. Three starts to get annoying, four changes things. Think about how stupid one would have been to invest in a .com video sharing venture in 2004???

Anonymous said...

ANOn - 3:22,

I have access to MLS (not a realtor, but am related to one).

I can assure you that the modest drop in active listings during the last 30-60 days is virtually all due to listings expiring and/or being withdrawn. It is certainly not due to those listings being sold.

Anonymous said...

I'm hearing speculators are pulling their listings and trying to rent out the units until the smoke clears

Bad strategy!

Anonymous said...

I am in Phoenix and I can tell you that there is not blood in the streets yet. The environment is more like 100,000 deers caught in the headlights. The sellers are not doing anything, everyone is just frozen...waiting for a miracle.

Mark in San Diego (sometimes) said...

Retsinas - "Housing bust confined to East and West Coasts". . .gee, that isn't so bad . . .what's that you say? NY to FLorida and Seattle to Calif to Phoenix is 70% of national sales. . .oh. . .too bad!. . .I can tell people for certain that the Detroit/Cleveland/Akron areas are in DEAD ZONE freefall as foreclosures there make Phoenix look good. . .they have these things call - CLOSED FACTORIES!!!. . .

brokersleaveyoubroke said...

Spring usually brings on a rash of new listings. Maybe then this bust will get into high gear and prices will get back to where they should be.

Anonymous said...

Only one problem. No buyers!!! The only buyers I see in the market in 2007 will be those that can sell. If you can't sell you probably won't be buying.

The only new buyers would be graduates (of which the majority won't be able to afford at least in the near future) and immigrants (of which I don't believe there will be enough to burn off the inventory).

We have way to many houses at way to high of prices for this market to turn around anytime soon.

Anonymous said...

I'm taking a job in Phoenix in April.....don't worry, healthcare....not REIC. At any rate, I do like Phx. to the dismay of most HPers. I'm thinking of renting at least a year first until the bleeding really starts. Though I do know a few people that are really screwed there....possibly worse than the ones I know in San Diego.

Anonymous said...

Phoenix housing prices will decline as much from the high cost of utility bills required to live there as other economic factors. One can live in San Diego with little in the way of a/c or heating, but Phoenix is on the wrong side of the the sun! Its still an anamoly that the city even exists.

AnonyRuss said...

Cancelled/Expired Listings on the Phoenix Area MLS from November 1st through December 15th:

2001 6,074

2002 6,465

2003 6,059

2004 2,751

2005 5,438

2006 11,495

Plus, there are currently 2,805 "Temporarily Off Market" residential listings.

Anonymous said...

I was in the am/pm last night (Scottsdale FLW/114 th Street). A kid in his 20's with a trenchcoat was telling these two teenagers how they could get rich in real estate.

Until I saw it with my own eyes, I thought it was a joke!!!!!

Of course he was driving a BMW 300 series.

Anonymous said...

North Scottsdale is the DEAD ZONE. I have seen several million dollar listings selling 20% below asking. My neighborhood is full of vacant houses, with flippers following the market down. They say that Phoenix area is still growing, which it is, but not at a rate to eat up the excess inventory anytime soon.

Usually this is the busy season here. People buying second homes to escape the winter. If things don't pick up soon, it is going to get ugly this coming summer.

To the anonymous in healthcare, where are you going to work? My husband works at Mayo. Good luck to you.

Anonymous said...

Median price in Detroit $115,000.00
Such a bargain

Anonymous said...

I haven't seen prices come down that much in North Scottsdale/McDowell Mountain Ranch/DC Ranch area -- certainly not to 2004 levels. Maybe 10%-15% off peak levels. I would love to see prices come down 30% or more. I cashed out and moved to Texas, but would move back if prices dropped enough.

Anonymous said...

Too bad no one wants to live in Detroit.

Shakster said...

In the next year,and a half,I bet their will be 16 million homes vacated,and hidden within packaged bundles to be sold dirt cheap to foreign investors,with slashed taxes,and holding fees.This will serve to prop up the banks books,allow the FED to report "soft landing" numbers,and keep the flow of foreign investment dollars coming into Fannie.

Shakster said...

But it won't work.

Anonymous said...

those 375,000 were 87,000 in year 2002, guess i will never break even on the loss of purchase power of cash investments, even with 10 year notes at 15%

Anonymous said...

Fannie Mae issued a report(warning) that there could be as many as 2.2 million foreclosures during the first qtr 2007.

Real "Grapes of Wrath" stuff should this happen.

Anonymous said...

Funny, today I saw a foreclosure in the Tucson, AZ area. It sold in 2002 for 200K and was being offered as a foreclosure for $262K. I've never done this before, but I figured I'd contact the property management company for shits and giggles and low ball them. I offered them $185K. Figured I'd never hear from them. They contacted me back, thanked me for my offer (yea right), and said they had a buyer for the FULL asking price.

Now is it me or are they lying? Who would offer FULL asking price? I would think a prudent buyer would try to haggle a little.

So when should the lowballing start for an area like mine, 6 months, a year, now? Thanks.

foxwoodlief said...

Annoymous said, "Note the high end asking price (75th percentile) has dropped over $100,000 - from $630,000 to $525,000 today

Anyone who bought a year ago is screwed"

And that makes anyone who bought in 2002?

Just returned from there after a week. No doomsday there yet. Homes were selling (which surprised me) and with no significant price reductions where I looked.

Visited friends, one who lives in my old neighborhood and has a lovely home on a half acre lot he bought in 2005 and then sunk $200,000 into remodeling and backyard (house was built in 2003). If I wanted to move back and buy that house would cost three times what it sold for new in 2003. The house new would have sold in 2003 for $350,000 without his upgrades. Would $550,000 be out of line? In this gated neighborhood and in Litchfield park, no as it would be about $170 a sq ft and the homes in there are still selling for $200 a sq ft.

Because he bought at the peak and then sunk $200,000 into it I personally think he'd be out $80,000 but someone from California or Seattle or Boston or New York would probably pay $750,000 for it and he'd break even.

I only mention this example because it is the only one I have from my trip of someone I know who actually overpaid in 2005. Had he not done the extensive remodel he'd still be okay but he paid cash and plans on living there for many years so I doubt it is an issue for him. Hell, he has $250,000 in cars sitting in his driveway. He owns seven new cars and the least expensive is a caddillac Escalade.

Why anyone nees a different car to drive to work each day is beyond me but he is a CEO, his family has millions so he actually lives way below his means even if I consider it extravagant.

Inspite of this chart the fact that Phoenix had its fourth best year for house sales in 2006 and that they have moved into the fastest growing state category says that the market should be absorbed quicker than most here think.

Anonymous said...

I live in DC Ranch in North Scottsdale. I calculated how long it will take for the current inventory to sell at the pace it has been selling in 2006. It is just over 18 months for the current inventory. I know this in only a small snapshot of the market in Phoenix, but it shows certain pockets are in really bad shape.

Anonymous said...

PS

Esp. considering those numbers for DC Ranch do not include all the builder specs. Seems like a ghost town around here... :(

realestate said...

sweet blog

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