June 21, 2007

HousingPANIC Stupid Question of the Day

What five US cities / areas will have the biggest housing crashes over the next 2 years?

Which five US cities / areas will fare the best?


Here's the latest "markets that are gonna crash" report from PMI:

Riverside, CA, Phoenix, AZ, Las Vegas, NV, and West Palm Beach, FL rank highest on the index, with a 60 percent or greater chance that home prices will be lower in two years.

Five of the 11 MSAs facing a greater than 50 percent chance of a price decline are in California (Los Angeles, Santa Ana, Oakland, Sacramento, and San Diego) and four are in Florida (Orlando, Fort Lauderdale, Miami, and Tampa); the other two are Boston, MA and Washington, D.C.

Texas, Ohio, Indiana, and Pennsylvania MSAs constitute the lowest ranked group-those facing a less than 10 percent chance of lower prices.

"What the markets with the greatest risk of decline have in common is a history of price volatility: rapidly rising rates of price appreciation above the long-term average followed by a recent sharp slowdown in the rate of appreciation," Milner explained. "Markets with a history of volatility are more likely to see price declines in the future. MSAs with a history of low to moderate rates of volatility in house price appreciation have a lower risk of price declines."

53 comments:

Anonymous said...

SoFla
SoCal
NorCal
Bahstun
Portland

Anonymous said...

Keith, why do you care? You are in UK, right?

Anonymous said...

Phoenix
Vegas
San Diego
Orange County
Detroit

Anonymous said...

Worst:

Phoenix
Las Vegas
Boston
Detroit
Sacramento

Best:

Dallas
Houston
Iowa City
Texarkana
Normal

(no appreciation = no crash)

Anonymous said...

Yep, it's a GREAT time to buy in Scottsdale with 120% appreciation in 2 years. It's the PERFECT time to buy.

Anonymous said...

I'm so happy to see Riverside on that list.

I had an old Manager that I absolutely well...let's just say I didn't like him very much...bought there during the bubble.

What's that term that I see here so often?

schadenfreude

Yup!

Anonymous said...

I think they pretty much nailed it. California, Parts of Florida, Phoenix and Vegas are screwed. Most of Texas, other parts of the South that didn't see a dramatic increase in price will be okay.

Anonymous said...

I don't think LV and Phoenix will be hit as hard as you all do. People are still moving there. Regardless of the merits of the cities, for whatever reasons, people want to live there and the demand will be back for homes. Unlike Florida that is having an exodus of people, both Phoenix and Las Vegas continue to have a net positive migration.

I think the worst hit areas won't be so much metro areas, but segments of the areas.

LA won't get hit too badly, the subdivisions 40 miles from LA will get killed. Same with Washington DC exurbs, outer regions of Sacramento.

As for best: anywhere in Texas. In Dallas and Houston you can still buy a house for $100K. I can't see a price drop when starting that low.

Anonymous said...

Any city that can export goods to Asia (coal, minerals, airplanes, movies) will survive. Any city that has no exports will not be able to buy imports, and will collapse.

Anonymous said...

The WHOLE Penninsula of Florida
So Cal(As in the lower half)
Phoenix
Vegas
Boston

christiangustafson said...

Worst/murst:
San Diego
Las Vegas
Phoenix
Miami
San Bernadino

Best:
Seattle, WA will continue to appreciate at an annual 10% clip. While demand is off slightly, it cannot overcome the overwhelming support provided by the smugness of the local population. Your puny economic laws do not apply to us.

guy n. cognito said...

DC won't crash, too many wealthy foreigners and the local economy is based on tax & spend and print & spend business models. how can that fail? if the rest of the country refuses to pay taxes they'll be thrown in jail and the FedGov will just print more money from debt sold to China.

Stuck in So Pa said...

Prices may not vary much here in PA, but NOTHING is selling, and this is not a bubble area, no wild run up in EXISTING home prices, just overpriced new spec sh#tbox prices for the Balt/DC newbies!
Amazing what out of state dimwit execs/lobbyists will pay for the privilege of a five-hour daily commute in their suburban assault vehicles.

gringo star said...

anybody got any info on louisville, kentucky?

Anonymous said...

DC? But we have all the government jobs and money here, there is no way there will be price drops in DC metro

Anonymous said...

you missed new york city. we may be late to the 'party', but we'll make up for that.
-dark1

Anonymous said...

worst
San Deigo (all areas)
Lost vegas
Phoenix
tuson
most of florida
Best
most of Oregon (they are still buying like crazy)
Northern Cal
Virginia beach/Norfolk
Washington St.
alaska

Anonymous said...

Best? Probably perrenial loser East St. Louis. Reason: there ain't much there to lose.

Worst? The Monterrey Bay area of CA. They led the nation in pay option mortgages

AND

their median sales price dropped by $70,000 IN ONE MONTH (this past April to May).

Anonymous said...

Riverside

Antelope valley

Bakersfield

Anonymous said...

I sure wish the housing prices in Hawaii (HI) would crash soon...they are slowly coming down but I want to see blood!

Anonymous said...

Baghdad
Tehran
Damascus
Meca
Palestine

USA owns the world. And these places are getting close to a nuclear real estate bear market.

Glass parking lots dont sell well.

Frank@NeverColdCall.com said...

Phoenix, without a doubt.

What makes Phoenix especially vulnerable is the fact that almost their entire economy is connected one way or another to real estate.

Realtwhores ... mortgage peddlers ... contractors ... construction workers ... furniture dealers ... title companies ... insurance agents ... these are the jobs that the majority of Phoenix residents depend on, and they're all disappearing now.

At least in Vegas they can go get hotel/casino jobs but Phoenix has nothing to fall back on.

Shakster said...

California City Ca.
After,or during the complete meltdown to 1995 valuations,the houses will physically collapse.I was there.

james dean said...

DC is already getting hit bad!!!

There is NOTHING selling around here without MAJOR MAJOR MAJOR price cuts!

As far as the argument that DC is ultra-stable because of the goverment... DC has gone thru price drops in the past after modest price increases. The early 90s were quite BAD after the banking industry went south.

Lastly, our largest employer (the Fed) is bankrupt!

Anonymous said...

How can prices NOT drop in Phoenix after the subprime meltdown.

The 30k millionares can no longer finance thier way into these overpriced crapboxes.

The bottom is a long way down.

Anonymous said...

Realtwhores ... mortgage peddlers ... contractors ... construction workers ... furniture dealers ... title companies ... insurance agents ... these are the jobs that the majority of Phoenix residents depend on, and they're all disappearing now.

Majority of employment is r/e related? Yeah that's not really the case at all. Unless that is all those people working at Raytheon, Intel, USAir, ASU, Mayo Clinic, Luke AFB or Honeywell sell real estate for a living.

Tempe Top 15 Employers:

1 Arizona State University 6563
2 JPMorgan Chase Bankcard 2100
3 JPMorgan Chase 1400
4 Medtronic Microelectronics 1308
5 State Farm 1112
6 Salt River Project 940
7 Wilson Electric Company 850
8 Financial & Credit Services 800
9 United Parcel Service 792
10 Tosco Marketing Company 790
11 City of Tempe 737
12 Hilti Inc 725
13 Professional Event MGT LLC 705
14 Laboratory Sciences of AZ 701
15 Worldwide Security 700

Phoenix Top 15 Employers:

1. Wal-Mart Stores Inc., 25,969.
2. Banner Health, 19,662.
3. Wells Fargo & Co., 11,800.
4. Intel Corp., 10,900.
5. Honeywell International 10,700.
6. Raytheon 10,641.
7. Bashas' 9,966.
8. Home Depot 9,600.
9. Kroger 9,340.
10. JP Morgan Chase 9,263
11. USAirways 9200
12. McDonald's 9000
13. Target 8200
14. Safeway 7200
15. Pinnacle West Capital 7100

Top 5 Scottdale Employers:

Scottsdale Healthcare Group 4,473
Mayo Clinic 4,000
General Dynamics 3,600
Unified School District 2,700
Advance PCS 2,700

Top 5 Glendale Employers:

Luke Air Force Base: 6,836
Honeywell 2,762
Arrowhead Towne Center 2,500
Banner Health Center 2,036
City of Glendale 2,021

Anonymous said...

james dean said...
DC is already getting hit bad!!!

There is NOTHING selling around here without MAJOR MAJOR MAJOR price cuts!


Oh really? From 5/1 to 6/15 there were 945 sales in DC.

Here are a few examples:

50 M ST SE
Sold: $14.5 Million on 5/21

506 1ST ST SE
Sold: $700,000 on 5/10

406 M ST NW
Sold: $1.328 Million on 5/29

2425 L ST
Sold: $1.12 Million on 5/2

1817 SWANN ST
Sold: $830,000 on 5/29

You were saying....

keith said...

One third of the entire Phoenix economy is tied to real estate

Guess what happens to Phoenix, and the Phoenix real estate market, now that housing and the REIC have imploded

Any questions?


Valley's housing skid hurts other economic areas
Glen Creno
The Arizona Republic
Jun. 19, 2006 12:00 AM

Metropolitan Phoenix's housing slowdown is bad news for more than home-building companies and the investors who hold their stock.

The region's economy is unusually dependent on housing, so a lot of livelihoods rely on it.

Everyone from lumberyard workers to people who buy and sell land has a stake in it.

The housing market is slowing across the board as buyers rebel against rising prices and higher mortgage rates.

Sales of existing homes were down 34 percent last month compared with May 2005.

And home builders pulled 21percent fewer building permits in April than the year before.

Housing accounts for at least $1 in every $3 generated in the Valley's economy. When housing hits the skids, the effects ripple throughout the economy. Builders and real estate agents are hurt. So are subcontractors, land brokers and retailers that outfit homes.

http://www.azcentral.com/home/hb101/articles/0619ripple0619.html

Frank@NeverColdCall.com said...

Majority of employment is r/e related? Yeah that's not really the case at all. Unless that is all those people working at Raytheon, Intel, USAir, ASU, Mayo Clinic, Luke AFB or Honeywell sell real estate for a living.

Wow, a bunch of $7/hour unskilled labor. I hate to break it to you but that's what you just named. The factory jobs pay nothing and USAir flight attendants start at $17,000/year. (The exception is Mayo, but every city has hospitals, so honestly that counts for nothing.)

Sorry but your economy is all about real estate. Even when I moved there back in 2000, before the big boom started, it seemed like everyone I met worked in real estate, or was a stripper/waitress/bartender which again cannot sustain an economy.

Tourism? Don't even get me started. You have no real tourism. The one exception is the snowbirds, and having lived in a community where 50% of the owners were snowbirds, I can tell you they contribute no money to the local economy. They stay home all the time, lounge at the pool, bbq, etc.; they rarely venture out or to go restaurants or pump any money into Arizona.

It sounds like you're still firmly in the denial stage. Phoenix is royally screwed. Accept it and move on.

Anonymous said...

Biggest crash: Phoenix hands down

OK: Anywhere in the middle of flyover country

Mammoth said...

christiangustafson said...

”Seattle, WA will continue to appreciate at an annual 10% clip. While demand is off slightly, it cannot overcome the overwhelming support provided by the smugness of the local population. Your puny economic laws do not apply to us. “
-----------------------
Laughed so hard I blew snot out of my trunk when I read this!

Seattle may be behind the rest of the country in this housing decline, but the decline will indeed get here. There is already a feeling of gloom spreading over the local RE market.

Mark these words – a year or so from now, all those new >$500K condos they are building downtown will go begging for buyers.

-Mammoth

Anonymous said...

Phoenix Employment:

natural resources and mining: 2,000
construction: 140,000
manufacturing: 130,500
transportation & utilities: 339,600
information: 35,700
financial activities: 137,400
professional services: 270,900
health services: 172,600
leisure and hospitality: 160,500
other services: 64,200
government: 220,900

Yup, nothing but real estate jobs as far as the eye can see.

stuckinthecity said...

What about Chicago??

Anonymous said...

Median Family Income:

Tempe: $55,200
Scottsdale; $73,800
Phoenix: $46,500


LA: $39,000
SD: $53,500
Chicago: $42,700

You were saying something about Phoenix and $7 an hour jobs....

I love how LA is a "real" city with "real" jobs yet the income level is 85% of Phoenix and just over 1/2 of Scottsdale's which are "fake" cities with "fake" jobs.

Frank@NeverColdCall.com said...

natural resources and mining: 2,000
construction: 140,000
manufacturing: 130,500
transportation & utilities: 339,600
information: 35,700
financial activities: 137,400
professional services: 270,900
health services: 172,600
leisure and hospitality: 160,500
other services: 64,200
government: 220,900


Hmm, with the Valley's population approaching 4 million, you've left 2.4 million people unaccounted for. What do they do for a living?

HINT: They're the reason ramen is backordered in Phoenix.

PS: You've listed construction, utilities, financial, and professional in there.

Construction - hit hard by crash
Utilities - hit hard by crash
Financial - umm, heard about the mortgage crash?
Professional - lots of lawyers, accountants, and so forth tied to the real estate business, especially in Arizona.

BN said...

Those who like to use the explanation "people are still moving to Phoenix" are both stupid and most likely highly vested in the area. Nothing else could explain such a fantastic inability (or simple unwillingness) to see the plain and obvious.

FACT: the number of people moving into Phoenix is completely in line with historic trends. There is nothing whatsoever unusual in this trend that would fundamentally explain the exponential price appreciation in real estate in that area over the past 6 years. In fact, there is nothing unusual in any kind of data, relative to the historic norm, that would support it.

If "people are moving to Phoenix" is one's explanation for its incredible price spikes and immunity to decline, then one should try explaining why the same thing didn't happen earlier, when this same statement was just as true as it is now.

Make no mistake: Phoenix will be at the top of this list in the immediate future.

Anonymous said...

frank:

you don't read too well...that was Phoenix employment, not valley employment. Tempe, Glendale and Scottsdale were left out. Phoenix has 1.5 million people. That list shows 1.4 million jobs.

And are you so thick as to think that every finance job is a mortgage job? I know you know that is not the case.

You people are so out of touch with reality. As a % of lawyers, r/e is very small. As is the case in all cities, the majority of lawyers are personal injury.

Utilities don't get hurt. Whether you rent or buy you still need electricty, water, phone service, etc.

Get a clue.

Desperate in DC said...

Lastly, our largest employer (the Fed) is bankrupt!

JD raises an interesting point. What if fiscal demands (exploding Federal debt, massive annual Federal deficit, collapsing U.S. dollar) leads to massive cost cutting in DC? Very little Washington does is Constitutional. Huge job cuts and shuttering of various agencies would reveal DC to be the Company Town it is. And with the same results as any Company Town...

It's not even a very healthy place to live. Hot and humid summers, pollution, built on swamp land.

Frank@NeverColdCall.com said...

anon (a real name would be nice to make you believable anyway) -

By stating that the jobs are in Phoenix proper, you reinforce my case, because Phx proper has the lowest % of jobs in real estate. Go to Scottsdale where everyone who isn't a stripper or bartender is a realtor or mortgage peddler.

Oh yeah, and you fail to take into account that a HUGE percentage of the jobs you listed - construction, mining, unskilled labor - are held by illegals, who are not counted in the 4 mil population.

And let's not forget the massive hit in property tax revenue AND sales tax revenue that this is causing. I don't think AZ and its wasteful governor have any backup plan there.

Anonymous said...

Not too sure just how much this means, but I noticed that those who defend the "integrity" of the current real estate market are FAR less likely to sign their posts. Those arguing reasons why the market it endangered are far more likely to sign them. Again, not sure exactly what it means, but it doesn't seem like coincidence, and it sure doesn't seem like one group is very confident at the subconscious level.

I counted each post in this thread that seemed to fall into either category (those that were simply a "list of cities" I didn't include):

Pro-crash
8 anonymous posts
9 signed posts
(53%)

NO-crash
8 anonymous posts
1 signed post
(11%)

Just facts.

AnonyRuss said...

"If "people are moving to Phoenix" is one's explanation for its incredible price spikes and immunity to decline, then one should try explaining why the same thing didn't happen earlier, when this same statement was just as true as it is now."

THANK YOU, bn. It is like living in an insane asylum when people parrot that nonsense to justify 100% price gains from '03 through '05. The routes from the Midwestern tundra or expensive OC burgs did not just open a few years ago. There will be future population growth, just not enough to buy all those houses at 2005 prices under 2007-2011 lending standards.

I wish that some of the Arizona population promoters would give honest assessments of the percentage of illegal aliens in their numbers.

Anonymous said...

FACT: the number of people moving into Phoenix is completely in line with historic trends. There is nothing whatsoever unusual in this trend that would fundamentally explain the exponential price appreciation in real estate in that area over the past 6 years. In fact, there is nothing unusual in any kind of data, relative to the historic norm, that would support it.

True. But unlike Florida people are continuing to move there. All those empty houses in Florida will be empty 5 years from now. In AZ they will be filled eventually by the new arrivals. Which is why it does matter a lot that people are moving to Phoenix in large numbers.

OK professor McTryingToImpressWithBigWords?

Anonymous said...

San Jose San Francisco Seattle Phoneix Bellevue

Anonymous said...

Can anyone tell me why someone would be proud of paying too much for a home? That's like bragging that you overpaid for a car or plane ticket

Anonymous said...

Biggest crash will be in Miami. Why? It has the weakest fundamentals.
Low affordability index (price versus income). Miami has few high paying jobs.
It has by far the largest over supply of real estate (mostly condos).
It has the least favorable tax laws for outside investors. Unless you plan to live there don't even think about buying. As example, my girl friend pays $1500/mo rent for her 2/2 condo. Association fees $625/mo, taxes $750/mo, assesments $250/mo. If you add it all up, that's $1625 a month not counting the mortgage. The landlord can't raise the rent 'cos plenty of units are empty and up for rent at a lesser price.
Now get this. The asking price on the place is $600K !!!! One showing in 6 month.
By my calculations it worth $0. The carrying cost is larger than the potential income. So in fact it is a liability not an asset.
Burn, motherfucker, burn!!!

Anonymous said...

Keith please chime in with some facts to shut down the PHOENIX NUT-HUGGER ANON!!! He is annoying as hell.

Hpy Babyboomr in Glnd AZ said...

I live in Phoenix.

I do not know anyone personally who has lost their home or their job.

Unemployment remains below 3% in the metro area.

Try to hire someone in Phoenix, everyone already has a job. I know this because I hire people regularly.

At 950.00 a pop in the AZ republic for want ads, it gets tiring.

The speculative investors were mostly from out of state. Those guys are screwed.

I wish there would be a crash, and then I could find available employees of caliber. As it is, anyone not working either doesn’t want to or they are the scum sucking bottom feeders who can’t pass a drug screen or background check.


BTW our company pays starting at 16.50/hr for warehouse workers. 22.50/hr for drivers, 18.60/hr admin, 26.85/hr inside sales, 68k/yr Operations Mgr, 100k+ Outside Sales and 120K+ for Managers.


I only wish I had people who would work for 7/hr.

You can't even hire an illegal criminal border crosser for less than 10/hr to cut your grass. 40/ea to cut a palm tree.

There are stories about the coming real estate crash, but I haven't seen it yet.

As it is, Phoenix remains the fastest growing city in the US and has been so for a decade. You don’t move here because you want to work at a title company. You come here because there are jobs.

Anonymous said...

I need a job!!!

james dean said...

Dear Anon 6:25,
Yeah, quoting prices in the abstract makes lots of sense.

I have followed the market in the DC area for years. Prices for COMPARABLE houses are down down down.

To give an example, I know 13 folks trying to sell their homes in the DC area. Wanna know how many have sold? ZERO.

Second example. Some homeowner friends of mine said to make an offer on this property. 2000 sq ft with in ground pool, white area, pool house, gazebo, modern architecture, 4 acres of land, 20 minutes to DC line, wooded, secluded, nice upgrades. Listing at 750K, zillowed at 875K last year. They said to offer 600K and go up to 625K. Why are homeowners talking down the price of houses in their neighborhood? Because reality has set in and the truth can only be denied for sooo long.

Anonymous said...

"I wish there would be a crash, and then I could find available employees of caliber."

No the reason you find people of lower caliber is not because the market has not crashed..it's because you are in Phoenix!! We have families in AZ and CA since the 1960's. We also own a family business with branches in both states. Since I was a kid, all I know is that AZ has ALWAYS attracted the 'lower end' citizens. Why you ask? In general it was always cheaper housing and lower cost of living. Whcih results in a predominantly, blue collar, 'hourly paid' state. So my question is this how many of those $17 an hour workers can afford those 400k homes out there?? How many of those blue collar folks make the required $100k to carry tha 400k loan?? Not many I would say.

BTW...you are correct in saying there is no bubble..BECAUSE THE BUBBLE HAS ALREADY POPPED.
http://bubbletracking.blogspot.com/

BN said...

Quoting "anonymous":

"True. But unlike Florida people are continuing to move there. All those empty houses in Florida will be empty 5 years from now. In AZ they will be filled eventually by the new arrivals. Which is why it does matter a lot that people are moving to Phoenix in large numbers.

OK professor McTryingToImpressWithBigWords?"

As for paragraph 1: It must be embarrassing to broadcast in clear print just how much you simply don't get it. All you did was confirm my point. (Or was there a point somewhere that you showed me an increase in the historic trend of immigration to Phoenix?)

As for your final statement: Thank you. I don't have a PhD, but I do have a Master's, and two published books.

I will go out on a limb and assume that you were offended that I implied you were an idiot because you used the "people are moving to Phoenix" idea to support their real estate boom. And your kneejerk reaction to defend yourself didn't even address the real core of the point, which only makes you look even dumber.

I also find it funny that you would call me "Professor McTryingToImpressWithBigWords", implicitly trying to diminish me (with the "Mc" prefix) for apparently using "big words", when in fact there weren't any such words in my post. Well, at least they weren't tough words for the average person.

I also noticed that you fit squarely into the 53% who posted anonymously while delusionally defending their bad investments.

Anonymous said...

It's gonna happen in Hawaii, but it's going to take a while. We trailed California by 4 years during the last bust. I'm thinking 3 years this time.

beast said...

All areas that are at the edge of suburbia in California. I live in a city 30 miles east of SF/Oakland. It is getting hit hard here. The auction signs have started showing up on houses. I can look out my window and see three empty foreclosed homes that aren't selling. The price drops in the fall are going to be incredible! Oh and if your still not sure about the HOUSING BUBBLE, just put Detroit into a Realtor.com search for houses for sale.