January 29, 2007

FLASH: 25,000 unused, unwanted, unneeded and unsold spec homes in Phoenix


25,000 homes sitting there empty and unloved, cookin' in the Arizona desert sun, with another 80,000 stupidly and hilariously on the way.

Oh, man, this is gonna get ugly.

I got nothin' else to say.

He estimated that as many as 25,000 unsold spec homes are sitting on the market, the result of buyers backing out of deals when they couldn't sell their existing homes.

Brown and Burger, of the consulting firm Home Builders Marketing, reported that the Valley finished 2006 with a building-permit total of 42,460, a big drop from the housing-boom period.

Builders pulled more than 60,000 permits for new homes in both 2004 and 2005, but this year's slowdown cut the number drastically.

The analysts expect permits to total 41,000 this year and 44,000 in 2008.

36 comments:

Anonymous said...

Builders continuing to pump out inventory into the crash is only going to hurt prices even more

Bring it on!!

Anonymous said...

CRASH!!!!

Anonymous said...

get that song CRASH up.... get the you tube link for DAve Matthews band

keith said...

With all those unneeded homes rents will get cheaper and cheaper and prices will fall for anyone trying to sell

Anonymous said...

I was in Phoenix over the weekend to attend a wedding. My wife was in the wedding party and so I had a couple of days to kill while she was doing the bridesmaid thing. After shelling out more money than should be legal to play golf, I thought I'd check out the real estate scene. Having read the doom and gloom supposedly happeing in PHX on HP, I was quite surprised at the reality I saw.

The wedding was in Scottsdale and I
limited my search to that area. For those of you familiar with the area I was within a 5 mile radius from the Phoenician Golf Club where the festivities took place.

On Friday I drove around several neighborhoods looking for "For Sale" signs and to get the feel of the area. To my surprise For Sale signs were few and far between. Judging by HP posts I expected every 2nd house to be for sale but quite honestly there were practically none. I also saw only a handful of For Rent signs. Again judging by HP I expected every 2nd house to be a rental as well, or an unrented rental.

On Saturday I went looking for open houses. Again, not very many. I went to 4. The asking prices ranged from $579K to $645K. At all 4 the real estate agent hosting the open house was quite nice. No hint of desperation, no begging me for an offer. Quite pleasant, showed me the house, answered my questions, etc.

So I don't know folks, where this panic selling and crash is occuring in Phoenix. Granted it's a big city and I stayed in a very limited area, But still, my on the ground experience was nothing like what is being described on this blog.

Anonymous said...

This is WHY...In case, somebody missed it or can't get it through their heads, here it is again:

Phoenix and it surrounding metro area is finding its own level.

Basically, a repository of mediocre poorly educated bottom-feeders seeking cheap banal living and easy money.This souless mix of carpet-bagging transients, budget seniors,tatooed misfits, real estate grifters, toothless white trash
tweakers, minimum wage job seekers and pseudo Scottsdale millionaires has created a major population
center that masquarades as a major metropolis but is really one big cow town.
A bleak barren landscape with terrible weather,traffic
congestion, bad air, stuffed with ugly stucco houses and big box retailers peddling Chinese crap, corporate food, and a dumbed down semi-literate citizenry,
Phoenix metro epitomizes the lowest commom denominator of American cities.
If somehow, by either plan or accident, you're living
in metro Phoenix, you rank on the bottom rungs of the
intelligence charts. The only reason to be here, (temporarily), is if you're making a decent income
(absolute min. 250k per yr). Anything less is not
worth it, as your health, mental well being and personal esteem will deeply suffer by living in this
genetic cesspool of half-breeds.

As someone posted here before,
Metro Phoenix, AZ:
"There is no there, THERE".

Anonymous said...

anon 4:29,

How many times are you going to post that garbage? We get it, you don't like Phoenix. But it seems like it goes beyond this and you have an unhealthy obession with hating the city.

I have a simple solution for you. If you live there now, move. If you don't live there, stay away.

Either way, just freaking relax man.

Anonymous said...

Except there are no high paying jobs in Arizona. They are few and far between. When the average wage in Arizona is 36K who can afford a 600K+ house?

Anonymous said...

Anon said:
How many times are you going to post that garbage? We get it, you don't like Phoenix. But it seems like it goes beyond this and you have an unhealthy obession with hating the city.

I have a simple solution for you. If you live there now, move. If you don't live there, stay away.

Either way, just freaking relax man.

-------------------------------

You don't get it man...he's posting a PUBLIC SERVICE ANNOUNCEMENT...read some of the recent posts by some naive HPr's who think Phoenix is OK..if one greater fool is saved from the Phoenix realty scumbags like Swan and living in that shithole, its worth posting and reading several times a day.

truthsquad said...

Great Post by anon 4;29 on Phoenix as a city and its population mix and very relevant to the housing debacle underway there. Actually its a great meatphor for the entire housing bubble as it focuses on the key element that made it all happen, the clueless American consumer, the human element that is.
You can blame the entire REIC and quote all kinds stats, but unless you had willing BUYERS of the caliber so well described by the Phoenix post, you wouldn't have a bubble and its aftermath.
All the bubbble areas of the country
share most of the Phoenix profile and its very appropriate in any housing bubble discussion as it focuses on the key drivers, the American ignoramus consumer.

Anonymous said...

Phoenix is not bad. The area that was visited in Scottsdale was a high end area. That area will continue to sell well to high end corporate types who relocate there. There are other desirable areas like Gilbert and Chandler that do have educated higher paid individuals. The areas to avoid would be Surprise, El Mirage, the areas around Sky Harbor airport, older areas like Mesa and outlying areas like Queen Creek, Maricopa, Casa Grande and Apache Junction. The outlying areas have longer commute times and few shopping areas or other infrastructure so their prices are dropping and too many homes where bought in those areas by speculators.

trapped in AZ said...

The post on the scuminess of Phoenix and its environs is a gem and a must read for anybody contemplating buying or living here. Wish something like it was available 10 years ago when I decided to move to this dump and got stuck due to job and young kids in school.
But finally, four months more and out of this pit!... but worried that my children may have been inflicted with WTS, (White Trash Syndrome),
by growing up here. Maybe some cultural/educational rehab is in order after the move.

Anonymous said...

Anonymous 6:16 has it exactly right... there is a coming crash to the OUTLAYING areas of Phoenix. But the nicer ares saw little to no price reduction in 2006. There might be a correction in those suburbs, but it should be limited unless interest rates go up. A lot of the cash back type deals happened in the outlaying areas, but did somewhat happen in Scottsdale and Phoenix itself. I think we see a -5% to -10% correction in Phoenix as the builders pull back in 2007. Then inventory will reduce and Phoenix is one of the fastest growing cities in the US... so the incoming population will suck up the excess by 2008.

Doom and Gloom is kind of cool to think about, but probably won't happen unless interest rates go up soon.

Anonymous said...

Phoenix is not bad. The area that was visited in Scottsdale was a high end area. That area will continue to sell well to high end corporate types who relocate there. There are other desirable areas like Gilbert and Chandler that do have educated higher paid individuals. The areas to avoid would be Surprise, El Mirage, the areas around Sky Harbor airport, older areas like Mesa and outlying areas like Queen Creek, Maricopa, Casa Grande and Apache Junction. The outlying areas have longer commute times and few shopping areas

----------------------------

So Phoenix has some high end parts, some pretty good parts and some shitty parts including the area near the airport.

Sounds like pretty much every city in the country.

Anonymous said...

Except there are no high paying jobs in Arizona. They are few and far between. When the average wage in Arizona is 36K who can afford a 600K+ house?

1. Making a blanket statement like "there are no high paying jobs in AZ" is incredibly stupid and simply not true.

2. $36K is the ARIZONA average? According to Census 2000, it was $38K 7 years ago. How about at least getting basic acts right?

3. You are talking about housing in Scottsdale yet using ARIZONA income averages. How about comparing apples to apples? Look at zip codes 85250 and 85262. Median income there is $75K. That is where houses are in the $500Ks. That is also where these non-existent high paying jobs are or at leat where the workers live.

4. Just because you make $13 an hour and can't afford a nice home in a nice area doesn't mean everyone is in the same boat. Maybe YOUR only option is renting a deprepid 1 bed 1/ bath in the ghetto surrounded by Mexicans. Maybe YOU will never afford a home and will have Jose as your neighbor forever. Don't assume everyone is like YOU.

Anonymous said...

Anonymous said...
Except there are no high paying jobs in Arizona. They are few and far between. When the average wage in Arizona is 36K who can afford a 600K+ house?

Monday, January 29, 2007 5:24:26 PM
----------------

Ditchdiggers, cab drivers, and valets meake $97,000 a year. What's the prob??

Anonymous said...

anon 4:29,

Right you are. I much prefer the culture LA has to offer.

Anonymous said...

Go the foreclosure.com, click on to AZ, Scottsdale and you will notice that there are 1,385 foreclosures in process as of today. That's alot of foreclosures for a high end area.

robert said...

Anonymous said...
“3. You are talking about housing in Scottsdale yet using ARIZONA income averages. How about comparing apples to apples? Look at zip codes 85250 and 85262. Median income there is $75K. That is where houses are in the $500Ks. That is also where these non-existent high paying jobs are or at leat where the workers live.”

Nice anon, very nice.

lanonymous said...

What culture exists in LA? It's full of shallow, self-centered idiots and the garbage of the world

azfamdeals1 said...

Scottsdale over-rated,overpriced, overdone and overhyped...I should know... 10 plus years on a corporate relo and staying here while I milk the last cent of a high paying, high benefit NYC job and retire my way out of here.
(actually "desirable" North Scottsdale in my case, which is supposedly the primo part..still an ugly place populated by debt-ridden phonies living in hideous McMansions in IMHO).

Uncertain Buyer said...

Anon 4:26 sounds like a RE "Shill".

25,000 empty spec homes and buyers cancelling because they can't sell their existing homes, does not sound good to me.

Uncertain Buyer said...

Someone making $75k/year should not be paying $500K for a house. Go to your favorite bank website and use a mortgage affordability calculator.

$200-$250K is more like it, on a 30 year fixed 5.5% mortgage.....with $10K down and very limited expenses.

Anonymous said...

Someone making $75k/year should not be paying $500K for a house. Go to your favorite bank website and use a mortgage affordability calculator.

$200-$250K is more like it, on a 30 year fixed 5.5% mortgage.....with $10K down and very limited expenses.


$200K home on a $75K salary..are you high?

1. Why do you assume only 10% down? Homes in that price range are not purchased by 1st time buyers who only have 10% saved up. Homes in that range are purchased by people who have buult up equity in their own home over many years and are moving up. I'd say $100-200K is more like the down payment that would be made on a home like that. Plus it's Phoenix where many retirees from the northeast can come and pay cash for that $500K home.

What you renters forget is that just because YOU only have 10% doesn't mean the rest of the world is like you. Just beveause YOU have been renting for the past 10 years doesn't mean everyone else has. Just because YOU have no equity built up in your 1 bed / 1 bath decrepid apartment, doesn't mean everyone else is in the same situation as you.


2.I made $60K a year and bought a $300K home 4 years ago with 5% down and a 5.7% mortgage and it was plenty affordable. I know make nearly twice as much and thanks to the beauty of mortgages my home payment is the same.

$200K home on $75K salary...you loonies are getting funnier by the day.

Anonymous said...

Dude get a fucking grip - you sound like a disgruntled contractor in Scooterville who is about to lose his ass. Yes, AZ is a poverty state.

http://www.ecanned.com/AZ/
2007/01/
income-and-poverty-in-state-of-arizona.html

Scooterville must be the lighthouse of the state if ya'all are pullin' in 75 big ones and livin' in a perty 600K house.

Your arguement holds no water. Is Scooterville going to carry the housing bubble, ie 50K homes at the moment on the market ~250K+? They should be able to with all that extra cash floating around according to you...

foxwoodlief said...

Yes, I agree, Phoenix is paradise to some and hell to others. My wife LOVES Phoenix and the desert and HATES humidity. She thinks Austin hotter than Phoenix! Each to their own.

Like any city, Phoenix has some really nice areas, does have its own culture, is growing, becoming more liberal, progressive. Then there are those shit areas skipped over by all the new building to become the "hip historic areas ten years from now."

Still, the Sonoran desert is one of the most vibrant and diverse ecosystems in the world and AZ has great sunsets, great winters, beautiful mountains and Phoenix is close to lakes and mountain forests. And, a young, new city so not as sleazy as other cities and yes, maybe a little more sterile as a result.

Those who hate it have a problem. I've traveled extensively my whole life and there are many communities I find less than pleasant (and Phx is not one of them) but I don't care...I don't live there. Every man's home is his castle and if someone likes Del Rio, great!

I'd never want to live in San Diego or LA or NY City or Chicago or even Denver but to say they are hell holes? Some people find those places paradise on earth.

So give Phoenix a break. There are good jobs there and as I've said many times I know very few people, mostly young or lower service type job holders, that make less than $50,000 a year with two salaries. There are enough good jobs there that it is easy for the lower end to earn $50,000-70,000 with two incomes. With middle professionals, two incomes easily brings you from $70-100,000 and with one middle income and one professional easily $100,000 to $150,000, and of course for those at the top of their fields, $150,000 up is not uncommon. There is a lot of money in Phoenix.

So don't bash what you don't know. Like the guy said, he drove around, saw fewer homes for sale or rent and no desperation and that has been what I saw on my trip there in September, December and last week.

Yes there are areas, Maricopa, Surprise, Queen creek, just like I'm sure in every city. Even in San Diego homes are still selling in the right areas and maybe soft on the fringes or in specific markets like condo conversions.

Get a grip annonymous who hates himself and is reflected by his attacks on Phoenix.

Davos said...

1. Why do you assume only 10% down? Homes in that price range are not purchased by 1st time buyers who only have 10% saved up. Homes in that range are purchased by people who have buult up equity in their own home over many years and are moving up. I'd say $100-200K is more like the down payment that would be made on a home like that. Plus it's Phoenix where many retirees from the northeast can come and pay cash for that $500K home.

LOL, did someone hit a nerve? Do you fall for every troll post on HP? B/c it's really funny to hear you post a rebuttal for it EVERY time. You should just post w/ a handle so we can all keep track of your Greg Swann-suckup comments. Oh, I forgot, everyone in Phx is a pro RE investor like that scammer Kiyosaki.

I will say Phx is not a terrible place, right now. But in 5 years, the traffic, crime, illegals, pollution and general lack of planning will put an end to any glimmer of hope there. I hope you don't have young kids, for their sake. The place is a fucking train wreck in slow-motion and only a fool would be unable to see it.

Davos said...

The wedding was in Scottsdale and I limited my search to that area. For those of you familiar with the area I was within a 5 mile radius from the Phoenician Golf Club where the festivities took place.

Metro Phoenix is around 9000 square miles. Do you really think driving around on a weekend getaway is going to give you an accurate reading of the inventory numbers?

AZL (look up the ticker) was down a little over 7% today. Do you think that's indicative of well the market did?

Anonymous said...

davos and previous anon got it - Scottsdale a very yupscale neighborhood; that a small area could be saturated with people on the far end of the bell curve is quite possible. I golfed at Camelback several years ago, and my impression of Scottsdale was of a place for rich people. But since I read The Millionaire Next Door, I'd have to include high-consumption high-earners, who may have that posh-looking house in the best zip code in town, but have no net worth.
The place struck me as a little too nice - unreal. "Plastic" and suburban. Southwest does have a splendid if stark natural beauty. I prefer the mid-Atlantic region for now.

Anonymous said...

Oh, and the BIG problem facing "metropolitan" areas like Phx and Tucson, etal, is that their is NO WATER for long term growth. Yet the fuctard builders and others keep building shit like its going out of style. So YOU tell me how "good" Phx and the other metro areas will be in ten or twenty years (possibly even sooner) when no water supplies exist? Maybe we can do like all the wets do when they cross the border, dink our own piss. Hahahahaha...

foxwoodlief said...

annoymous get your facts straight. Apparently you have never lived in Arizona. Arizona has a couple of the USA's largerst acquifers, the Cococino being the largerst one in Arizona! Do you know how many resevoirs there are surrounding Phoenix? You have Lake Pleasant, Bartlett, Horseshoe, Canyon, Roosevelt, Sahuaro, just to name a couple. A lot of Phoenix's surface water comes from snow melt down the Salt and the Gila, then there is the ground water under the city and then the Arizona Canal project...and Arizona has a surplus they sell to Nevada and California who use more than their allotment. Sudivisions have to certify at least a 100 years supply before they can get permits to develope.

Most of Arizona currently has at least a 300 years supply for a population base that is double to triple the current population. Of course that doesn't diminish the importance of water conservation as in historic times the SW has had fifty year droughts and ground water takes hundred's of years to replace.

They have 38" a year here in central Texas of rain yet are more drought prone than Arizona. Southern California is even more dependant on "outside" sources of water...just look at what they did to the Owen's valley! And they get a lot of water from northern California...and if a quake destroys the aqueducts...sorry S. California! Worse off than Arizona. Even in New England they feel the effects of droughts much quicker than Arizona.

Before you bash a place, get your facts straight. Then remember the WHOLE planet is having a resource problem, water, oil, etc. That doesn't mean that Arizona should pass harsher laws to control water use, waste, and population growth but at the moment agriculture and mining take up more water than people.

Anonymous said...

"$200K home on $75K salary...you loonies are getting funnier by the day."

Sorry you are wrong. That is just about right and where I want it. I make 80k and bought a 227k home 3 years ago. Factor in a car payment, 2 kids and a stay at home wife and $1400 is EXACTLY where my payment should be. Yes, I could have stretched out to maybe 300k home but I like taking vacations and saving for my kids college.

If you make 75k and bought a 500k home, then either: A) you dont have any other debt, B)you have s econd income or C) you HAD to have fuxked up and got a TOXIC loan (e.g. Interest Only Option ARM for 80 years) Cheers!

Anonymous said...

Ahh good ol' Foxwoody to the AZ rescue. You have now been crowned the official state of Arizona official 'nut hugger'.

So many people claiming Arizona is a poverty state. Like CHinese to Rice. Could 500 billion Chniese be wrong??

My parents live in Tucson and the 'fine living' is a small percentage.
Final consensus: AZ = shithole.

Anonymous said...

foxwood,

Why bother dude? These renters have probably never traveled more than 50 miles from their apartments. They have never been to Phoenix. All they know about it is the same old tired cliches regurgitated here and other blogs.

It reminds me high school. The renters here are the losers who desperately wanted to be cool. The way they made themselves feel better was trash talking the football team and cheerleaders. No different now except replace football team with people whose living quarters consist of more than 500sq ft of apartment space and an income above $8 an hour.

So I wouldn't get too worked up over it. At the end of the day, they live in an apartment. They will live in that apartment - most likely alone - for the rest of their lives. So they have an outlet through which to bitch and complain, better than showing up at work with a gun. It also entertains me so it's a win-win for everyone.

But you can't possibly take anything they say seriously.

foxwoodlief said...

Thanks annonymous. I agree with most of what you say. I'm always amazed at people's ignorance. I gues the negativity is just their nature since they apparently are unhappy with their lives. I've traveled a lot and have always been amazed at how content and happy so many people are living in shit holes with nothing around the world that would envy living in a place as "horrible" as Arizona. Guess it really is all in the attitude.

Having been in the AF and lived in Asia, Europe, Saudi, traveled in central and south America, the carribean, US/Canada, I can say that there are worst places to live. I have no problem with those who rent. I met many professionals who chose to rent instead of buy. Some friends of mine (nurse/engineer) rented for forty years in Phoenix and then bought a condo in 1995 in Scottsdale and said, "Wow, why didn't we do it sooner. If we had bought in 1950....the prices then" But the invested well, saved and so were no worse off.

I guess a lot of posters here have that typical American attitude that "Only America is worth living in and extend that to their select small communities like San Diego or such. Please, anyone who has traveled knows that there are many, many wonderful places to live that others would never consider living. My friends wife came from Italy and hated it there! Loves the Bay area and would NEVER consider returning to the Bellagio..I love that part of Italy.

So you are right. People get pre-concieved ideas, make their own out-come and then try to only use data that support their limited, bigoted view.

And as my wife always said, "If you are rich...everywhere is paradise and if you are poor...even Santa Barbara is hell!"

Anonymous said...

Normal income to home value is 2.5 times income. We are now at a record and disturbing 3.6% AVERAGE! I ran into a 7 times income recently in OC.