October 21, 2007

"Brutal" and "Perfect Storm". Arizona's fake housing-based economy spinning out of control as real estate market crashes



Everyone in Arizona glad they listened to idiot realtors on commission these past couple of years?

But what about all the jobs! What about all the immigrants! What about the fact they're not making any more land! What about the 365-days of golf!

Sorry. Something called gravity has now taken hold. Buckle up. Arizona housing prices are going to crash right back to pre-speculation inflation-adjusted 2001 levels, and might not even stop there. And the general Arizona housing-based economy will go into depression levels soon. When you build your fake economy on one fake industry full of fakes and fake promises, and then that fake industry blows up, things get real ugly, and that ain't fake.

Thanks to Doom for the great (and ugly!) charts. 17 month supply of homes in Phoenix. Ugly. I guess there aren't 21 reasons to buy homes today in housing-crash central Arizona.

Housing worries generally optimistic Valley experts

"Brutal" and "perfect storm" are some of the descriptions local economists now use to describe economic conditions in Maricopa County.

"I think this will be a brutal year," said Dennis Hoffman,an Arizona State University economist who helps guide sales tax forecasts for the state.

In an interview, he said "I think it has a lot to do with the fact that our local sales tax revenues are tied to this new house-new car phenonomen, decorating the house, doing maintenance and repairs and adding new carpeting, furniture and fixtures."

Economist Elliott Pollack reiterated that the housing market is a serious worry because there are so many houses on the market and lending standards have become tougher. Also the housing slump could slow migration into the state because homeowners in other states can't sell their houses to move here, he said.
"We especially have a perfect storm in the housing market," he said.

Local reality show exposes housing woes of the rich


The Landrys say they think viewers will warm up to their subjects for courageously airing their financial woes in public, something many in their social stratum consider the greatest taboo.

There are actually a lot of people at the Mahans' economic level who are facing those same foreclosure fears now, but they cover it up,” said John Landry, a retired architect who now works as a real-estate agent, “so nobody ever knows.”

Many sellers slash prices to sell homes


A Chandler man slashed his price by $60,000 to sell his home so he and his wife could move to Ahwatukee.

An east Mesa women accepted about $25,000 less than her original asking price even after installing carpet, remodeling a bathroom, upgrading the swimming pool and adding a $7,000 hot tub and a $2,000 shed.

Their tactics weren't extraordinary in the ongoing housing downturn, where prices are falling by double-digit percentages in some cases.

"Realtors need to have a discussion with sellers because appraisal value and market value are two different things now," she said.

18 comments:

stocksystm said...

I consider Phoenix and vicinity to be the epicenter of the housing crash. Those ugly graphs confirm it. That market will be dead for 10 years at least. If anyone can come up with anything uglier, please let us know.

Swanndive said...

But Greg Swann said Phoenix was money in the bank!

How rich do we want to be?

Anonymous said...

It's gonna take years to sort that mess out

Anonymous said...

last time I visited phoenix, I immediately thought this is not a place I want to live in. people hitting you up for money at the drive through, and it feels like walking into a blow dryer at night. imagine the AC bills!

Anonymous said...

Don't worry the Phoenix will rise from the ashes.

Anonymous said...

That moron Swann officially owes Keith an apology - how dare he now ignore the collapsing Phoenix real estate market when 1 year ago he proclaimed that the flying monkeys would be proven wrong.

So kiss our collective asses, Swann. You're getting murdered 'cause you weren't bright enough to see the writing on the foreclosure wall, while the flying monkeys are making out like bandits. You thought we'd be cowering now to your genius, but now we just mock you. You've become a joke to thousands. Hilarious, ain't it?

Anonymous said...

“And the general Arizona housing-based economy will go into depression levels soon.”

Oh, really?

“ When you build your fake economy on one fake industry full of fakes and fake promises, and then that fake industry blows up, things get real ugly, and that ain't fake.”






Don Wehbey, senior economist for the state Department of Economic Security, said the biggest surprise was that the unemployment rate fell to a historic low in the Phoenix area, matching the previous low of 3.3 percent set in 1967.

Where are all those unemployed people? I can’t find them anywhere.


The state gained a net 28,500 jobs in September. They include 19,100 seasonally expected jobs in government, mostly in schools, which put government jobs at a record 430,700. Other gains came in professional and business services, educational and health services, and hospitality.

The housing market continues to slump even while thousands continue to move to the state monthly.


How is the fallout from mortgage problems affecting jobs?

While there are job losses connected with the mortgage industry, he said the entire finance industry is not doing badly. "We're not seeing banks and security jobs go weak. It's mostly related to mortgages," he said. "Much of the financial industry remains pretty good."


Good? Try to hire someone in Phoenix with the unemployment rate at 3.3%. It is simply amazing how vibrant this economy is even with the housing debacle in full swing.

Skilled job seekers are being snatched up faster than homes were at the peak of the housing boom.

Ya gotta love it when HPers make Phoenix out to be in dire straights when reality paints a thriving and expanding economy.

May your city be as bad off as we are…. LOL.

It’s breezy and 84 degrees today in Phoenix… do you have your winter coats on yet, we are still wearing shorts and swimming outside in the pool.

Anonymous said...

>>>>Where are all those unemployed people? I can’t find them anywhere.<<<<

Where are they? They're running for the border, dumbass! They are undocumented illegals that bought houses they couldn't afford with no money down, adjustable rate, bogus mortgage products. It's just a matter of time . . .

Anonymous said...

"Try to hire someone in Phoenix with the unemployment rate at 3.3%. It is simply amazing how vibrant this economy is even with the housing debacle in full swing."

Little challenged with basic economic principles, eh? Employment is the most lagging of all indicators. We'll see if a year from now the Phoenix economy is still as vibrant as you paint it.

BTW, going snorkeling later this morning in Maui. And it was an absolute pleasure playing golf in August. How was it in Phoenix?

Anonymous said...

Millions of illegal immigrants, realtors, appraisers, flippers and contractors don't count in the unemployment scene. They are all unskilled. Their only hope is to flee the fire.

I guess all those skilled workers don't want to buy overpriced garbage stuco boxes

scott715 said...

>> The state gained a net 28,500 jobs in September. They include 19,100 seasonally expected jobs in government, mostly in schools, which put government jobs at a record 430,700.

Government does not contribute to an economy. It leeches off of it.

christiangustafson said...

HAHAHAHA Greg Swann! Enjoy your future, you REALTOR® hero, you piece of garbage!

ForWhomTheTollBuilds said...

"So kiss our collective asses, Swann. You're getting murdered 'cause you weren't bright enough to see the writing on the foreclosure wall,"

I thought Swann was a renter this whole time. Isn't that what made him the most contemptible of them all?

He *knew* we were right all along, but saw an opportunity for a sales gimmick between that time and the eventual bust:

"Realtor Of The Human Spirit."

He is a bug.

Frank@Scottsdale-Sucks.com said...

They deserve it.

These fake real estate hacks made living in Arizona unbearable for 7 years. There was never any real economy there. Tourism is a myth (it's mostly snowbirds who live in winter homes and never spend any money in the local economy) and outside of that and real estate there's no Phoenix area economy.

Intel, Motorola, and a few other manufacturers provide minimum-wage factory jobs. There used to be minimum-wage call centers for as far as the eye could see but India snatched up those jobs.

Baseball's NLCS series in Phoenix went more than 20% unsold, something unheard-of for baseball's championship series.

When more than 1/5 of your baseball playoff seats go unsold, you are the new Detroit (back in 2001 they sold out almost immediately).

Goodbye and good riddance to Phoenix/Scottsdale fake people and their fake economy.

Frank@Scottsdale-Sucks.com said...

It’s breezy and 84 degrees today in Phoenix… do you have your winter coats on yet, we are still wearing shorts and swimming outside in the pool.

Nah, no winter coat here. It's sunny and 80 in So Cal. When it's 115 and miserable in Phoenix it will still be 80 here. And in January when Phoenix is 55, windy, cold and blustery it will be 70 here. Sucker.

(PS: I lived there for 7 years and for the most part the winters sucked and were in the 50s and blustery so please, please don't give me any b.s. about how "beautiful" Phoenix winters are.)

Approximately 40% of the Phoenix area economy is real estate based.

If your economy is so great then why are nice restaurants dropping like flies and closing one after another? Why is the marketplace in DC Ranch at over 50% vacancy - why did all those businesses close? Why have foreclosures doubled in the last 2 months?

Sorry but your economy was based on the housing ATM and that's where all the spending money came from. Before 2001 your economy was based on call centers and low-paying manufacturing jobs, which have all moved to India and China.

Sorry, Phoenix is over and done with.

Anonymous said...

that is an awesome chart.
It would be neat to see one going back to 1987.
I remember in 1989 you couldn't even give away your house.
From the chart it looks like an average of 4,000 houses sell per month.
With 60,000 houses on the market, that would be a long time to sell everything.
From looking at the auctions it appears that a lot of houses for sale are in new developements. Which leads me to believe that most of the bubble trouble is on the fringes. There are established neighborhoods with very little flipper houses and where people didn't refinance because they didn't need to.
There has been very little churn on our street. One house sold since Aug '05

corvinus the ron paul fan said...

Who wants to live in the middle of an ugly desert if houses aren't skyrocketing in price? Heck, who wants to live in the middle of an ugly desert WITH soaring house prices?

I wouldn't be surprised if we saw population shrinkage in AZ and NV in the next few years.

blincoes said...

why are you guys so angry and so happy that people are loosing everything. I hope you get the same thrill when your family or friends are killed in a car accident or die of a painful cancer. Then wont you be able to gloat. Seems like some clerks at 7-11 got together to bitch about people who were going to prom while they sat at home. How much have you earned shorting the housing market? Probably as much as the rest of the country made the last 15 years. Ive got news for all you seers and sooths the market ALWAYS goes up slowly and it ALWAYS crashes so nice job you really saw this coming and got to the sidelines for the last 15 years to save all that cash. Cheer up