December 30, 2007

Here's a letter to the editor from last May, saying there was no housing bubble in Phoenix. Didn't quite turn out that way, eh?

Maricopa County Arizona Median Home Price (Zillow.com)

[UPDATE - THANKS HP'ERS LIKE OC FOR DIGGING A BIT ON THIS ONE]

This F'd realtor paid $379,576 for his/her overpriced debt-trap in real-estate-hell Buckeye, Arizona (evidently never hearing the phrase "location, location, location" in August 2006.

It's now worth $266,571 and falling like a rock. A nice 16 month loss of $113,000, or $7,000 a month (so far).

Folks, it's tough to lose this kind of money this fast. Instead of writing letters to the editor bitching about the negative nellies, he/she should have picked up a copy of Manias, Panics and Crashes, and listened to HP.

You have permission to enjoy the schadenfreude on this one. Amazing.

[UPDATE]


What this writer didn't disclose in the letter is that she's not just a desperate homedebtor, but also a realtor. But hey, we should have guessed it. Like coke dealers doing coke. Bad idea.

What's sad is that these "blame the media" realtors and homedebtors will continue to blame the media during and after the crash. They won't blame the lying realtors, or the corrupt mortgage brokers, or the greedy builders, or the mortgage fraudsters, or the failed flippers, or the illegals, or the Fed, or anyone really responsible for this mess.

No, they'll just blame the media for exposing the truth. That's easier.

Well, I think HP'ers are happy to have played a part in exposing the big scam. No matter what realtors on commission and housing gamblers wanted.

Letter to the Editor - Arizona Republic

No housing 'bubble' bursting in the Valley
May. 27, 2006 12:00 AM

I see an awful lot written about the real estate "bubble" bursting, but I've yet to see evidence of this happening in Phoenix.I'm buying a home in Buckeye, a town that has seen a 4 percent increase in sales this quarter compared with the same time last year and where price appreciation has increased every month during the past three months.

In the overall Phoenix market, inventory is up more than 10 times year-ago levels; prices are up 70 percent over 2004 levels; yet sales dipped only 7 percent in the first quarter of 2006. Is this evidence of a bubble bursting? I think not.

- Sonny Shrivastava, Tolleson

39 comments:

Boom2Bust.com said...

A few days ago, a Chicago Tribune writer said that our new national pastime was suing.

Blame throwing must not be too far behind.

Anonymous said...

Now the realtroll will blame the media for causing housing to crash. In fact, the blogs and media were just reporting the events. It's like having the miners blame the carbon monoxide poisoning on the dead canary. The dead bird was just a warning to get the hell out of Dodge.

Anonymous said...

In the words of the immortal Edward G. Robinson in "The Ten Commandments"- 'Where's your Moses NOW?"

Realtors are your friend said...

As Greenspan would say, "Bubbles are for bathtubs".

Pwnd.

Veronica Lodge said...

RE: The ignorant Realtwhore bitch from Phoenix who last year wrote that there is "No housing 'bubble' bursting in the Valley.

Quote all of the phony "facts", figures and statistics you want.

In spite of what you think your Buckeye house is worth, it is only worth what a qualified buyer is willing to pay for it.

Is there a For Sale sign in front of this house?

My guess is that nothing has happened, nothing is happening and nothing will happen.

Except maybe a foreclosure.

V.L.

Housing Reaper said...

OK HPers. A quick link to county record for the very public letter writer Sonny Shrivastava indicates that he/she bought their house in 8/29/2006 for $379,576 based on a construction sale in December of 2005 (the peak of the frenzy). Looks like he wrote this letter in May of 2006 as the closing date was approaching in a desperate attempt to convince himself that everything was OK. My guess is that he put a ton of cash on deposit back in 2005.

Several similar properties in the area have recently sold in the very low $300's. Zillow indicates $266k!! Is this the evidence he was looking for? :)

Maricopa Appraiser link: http://www.maricopa.gov/Assessor/ParcelApplication/Detail.aspx?ID=504-25-431

Cow_tipping said...

In the overall Phoenix market, inventory is up more than 10 times year-ago levels; prices are up 70 percent over 2004 levels; yet sales dipped only 7 percent in the first quarter of 2006. Is this evidence of a bubble bursting? I think not.

- Sonny Shrivastava, Tolleson

Yea dumbass, Inventory is 10 times, get a clue, There is a lag between inventory going up and prices plumetting, a lag that is larger if it takes longer to complete the transaction.
BTW from the last name - This clown is Indian and from one of the most corrupt states in India. My guess is, he's lying about buying and more than likely out to sell to a few more knife catchers before going back to his day job as cabbie.
Cool.
Cow_tipping.

Frank@Scottsdale-Sucks.com said...

This disgusts me. Never in my life have I seen the level of thievery I saw living in the Phoenix area. Before that I lived in Las Vegas and even Vegas doesn't have nearly as many shysters, hucksters, and quick-buck scam artists as Phoenix.

They seem to be centered in the Scottsdale Airpark. I think the leasing people in the Airpark must offer specials on office space to scumbags and scam artists.

Ed said...

Keith,

Dude stop using zillow to prove anything. Those numbers are about as accurate as Lawrence Yun's.

realtors arent your freind said...

Realtors are your friend said...
'As Greenspan would say, "Bubbles are for bathtubs".'

Just to clarify:
Greenspan never said that..

It was a Realtwhore in Florida I believe that said that.

W.C. Varones said...

Sonny is actually a dude.

You can write to him at sonny@fineazrealty.com

Anonymous said...

it looks like he owns this home also

http://www.zillow.com/HomeDetails.htm?zprop=59271327

and here is the other one that housing reaper points to.

http://www.zillow.com/HomeDetails.htm?zprop=71617629

The dude should have listened instead of talked.

Anonymous said...

Verrado, the premier community in Buckeye. 1 in 5 homes will be going into foreclosure(NOD)....priceless.

Foreclosure figures are for the first 10 months of 2007
ZIP code 85396
Community Buckeye
Region SW
Households 678
Foreclosures 37
Foreclosure rate per 10,000 households 545.72
Notices 135
Notices rate per 10,000 households 1991.15

Anonymous said...

A vast wasteland of dead and Dying Americanos.

Vote for John McCain again. He's your man alright... LOL!

Adios, Senior! Brown Lawns Forever!

Grab Your Ankles, Arizona!

TM said...

Excellent post, Housing Reaper!

Halifax said...

RE/MAX agent talking his book.

http://www.azachievers.com/agentbio.asp?username=1002

http://ss610.azachievers.com/templates/17/

Chef said...

Well if that ain't a bubble - then slap me like a British nanny!

Anonymous said...

don't even think about setting foot in Maricopa county this january for the super bowl. the whole place has become a big police state with cameras everywhere. they will arrest and fine you for spitting on the sidewalk. they are intent on using the events of january to rob any and all visiting tourist of as much of their money as possible in order to make up for the shortfall from the absense of property tax revenue.

Anonymous said...

Death Penalty. NO appeals.

ocrenter said...

a great find from the past keith!

here's my take on this one.

Edgar said...

Take away the scamster's grift bottles and they start acting up.

Anonymous said...

This is from the Zillow page for 22012 W Devin Dr - pretty funny, don't you think?

Who Lives In Buckeye? The main types of people are:

1. Green Mile - People in correctional institutions. These individuals are confined to prisons, penitentiaries, or correctional facilities.

Anonymous said...


Vote for John McCain again. He's your man alright... LOL!


The housing bubble is John McCain's fault?

Anonymous said...

jingle mail, jingle mail, jingle all the way...

Enjoy your new credit rating Sonny!

Anonymous said...

No silly it is Bush's fault. Like when I couldn't find my keys yesterday, also Bush's fault. Don't you know by now that everything is his fault.

Anonymous said...

PUblicc fools: Greg Swann, Sonny Shrivastava, Kendra Todd, David Lereah

BUT Sonny has the honor of getting NAILED!!!!!!!!!!!

keith said...

I think what this story showed is that ignorance is not bliss.

Sonny probably has no economics education, no idea how to run the fundamentals (Price to Rent? Price to Income?) and no comprehension of bubbles and manias and how they related to this past bubble

Also, this story reminds me of ENRON employees who bought ENRON stock.

Bad idea.

Good news for Sonny though is that she can just walk away, no questions asked. It's the banks and bag holders who "own" this house. The gamblers get off scott free.

And that's the way the world works.

Hope she tooks some cash back at close and has it in an unmarked Swiss bank account.

Frank@Scottsdale-Sucks.com said...

Buckeye ... Buckeye!!! For those of you unfamiliar with the Phoenix area, Buckeye is a dirty industrial exurb that is well over an hour commute to downtown Phoenix during rush hour. It's ugly and there's nothing there but industrial plants and the token WalMart.

Housing Reaper said...

For what its worth the long-time REALTORS that I know personally are disgusted with the drivel coming out of NAR, Yun and even their local boards. There was a time (5 years ago) when the NAR analysis was a respected source. They even correctly called the California bust back in the 80's. Somewhere along the line they went over to the dark $ide.

Anyway, these constant lies by NAR have delayed an orderly price correction since desperate homesellers want so much to believe them and not their local REALTOR telling them that prices are dropping. In my own opinion we are now at a tipping point as evidenced by the rapidly increasing (negative) slope of the case-shiller index futures curve. Sure prices are down 6%+ over the past year, but half of that was over the last three months!!

death to housing said...

The drop in prices is accelerating. It's like one of those waterpark rides that starts off slowly then the bottom falls out

Anonymous said...

WHO WOULD HAVE THOUGHT JUST 5 YEARS BACK WHEN THAT HOUSE WAS SELLING FOR 87,000 THAT IT WOULD BE POSIBLE TO LOSE 113,000 IN A YEAR OWNING IT.....

Sonny Shrivastava said...

Hello everyone! I am so surprised that a letter I sent to the editor over a year ago, before I became licensed as a real estate agent, is still causing so much conversation. Blogs such as this one are great because they give potential buyers and sellers differing viewpoints -- the more the merrier. I'm all for having a spirited discussion about real estate! :)

Real estate is a story about local markets, so let's look at Windmill Village by Meritage Homes in Buckeye. The current price for a ground-up build of the Sunrise model is $238k ($245k minus 3% financing incentive) vs. $308k (318k minus $10k financing incentive) in late 2005. That's a drop of 23%. Looking at spec homes, the last three of that model which sold went for an average of $235k and had an average of $10-15k in upgrades. After deducting upgrades, we have a most recent net selling price for a stock Sunrise of $220k, or 28% lower than in 2005.

These numbers are nowhere near what is represented in the article. The author of the above article takes the current Windsong spec home price per square foot on a 6,500 sq.ft. lot and compares it to the price per square foot of a fully upgraded Sunrise model sold in 2005 on an almost 1/3 acre corner lot. You must keep in mind that builders keep the upgrades to a minimum on spec homes, and the two homes are in different parts of the development and are not necessarily considered comparable properties to one another. Windsong sits in Provence, which has up to 50% smaller lot sizes than Montage, where the Sunrise sits. Montage has home sites exceeding 1/3 acre, higher end home features, and more popular floor plans (hence the name "Montage", which is a mix of Meritage Homes' best-selling floor plans from throughout the valley). You must look at the numbers in context, you can't just take today's lowest number and compare it to yesterday's highest number, without qualifications, to come up with an inflated depreciation rate to fit your hypothesis. That is an inaccurate methodology which leads to incorrect and misleading conclusions.

Although a 28% drop from 2005 is not something to sneeze at, let's put it into context. The median home prices for the last four years in Maricopa County are as follows:

2004: $165,000
2005: $235,000
2006: $254,000
2007 (last three months): $234,000

This represents a 42% increase from 2004 to 2005, an 8% increase from 2005 to 2006, and a 7.8% decline from 2006 to the last three months in 2007 (reflecting the lowest median home prices of the entire year). Looking at these numbers, right out of MLS statistics, you can clearly see that someone who bought in early 2004 can sell today at a handsome profit close to 40%. There's no bubble in the median home price, so let's look at the average home price:

2004: $207,859
2005: $294,145
2006: $342,241
2007: $332,882

The average price reflects a similar trend of a major jump from 2004 to 2005, a smaller appreciation rate from 2005 to 2006, and a much smaller decline from 2006 to 2007. Both sets of statistics show that someone who bought in 2004, who did not cash out their equity, can see a net gain today of close to 40%. Essentially, the last two years have wiped out most of the appreciation since the market frenzy in 2005, which was an unusual and unsustainable event. For this to be a burst "bubble", we would need to be back at 2004 price levels -- this is clearly not the case. The closer you are to Phoenix and Scottsdale, the less your home has depreciated. The "drive until you qualify" philosophy that has been pervasive in the valley for the last few years is now causing some pain for people as the outlying areas are depreciating faster than the metro area. Some people, however, intentionally chose their destinations based on future potential. I have several buyers focusing in the Buckeye area on the basis of the strength of Buckeye's Master Plan, which will be going to the ballot in 2008. Buckeye plans on growing to a population of over 2 million from its current count of under 50,000. This is a long term project, but eventually Buckeye will shift from a Phoenix bedroom community to a metro area unto itself. Buckeye is home to Douglas Ranch, the largest master planned community in the state spanning over 35,000 acres -- that's the size of Tempe and could equate to 80,000 homes. Buckeye's master plan is also focusing heavily on being an employment center for the west valley with over 80% white collar office jobs. These all bode well for Buckeye's future, although currently it is mostly agricultural and some may not appreciate the 30 mile commute to Phoenix.

The sellers who are hurting right now are those who bought at the height of the market hoping for the appreciation rate to continue, which it clearly did not, in order to flip their purchase and make a profit. Those who bought in 2004 or earlier, who cashed out their equity and are now selling, are also hurting as are those who got into bad mortgages. A house, for the majority of people, is intended as a home and therefore is a longer term investment -- 10 years, often longer. A house is not a short term investment vehicle except under very specific circumstances. Many of us bought our homes because we found the right house in the right area at the right time. That means different things to different people. A lot of considerations go into buying a house beyond it being purely an investment vehicle, and even those who bought their homes at the height of the market will be just fine if they are in it for the long haul, as are most homeowners.

Regardless of your opinions about REALTORs, I can only speak for myself. I went into this business to combine my desire to help people with my love of homes. I see a lot of emotional posts on this blog, and that's fine -- everyone is entitled to an opinion. However, my business is based on numbers and trying to remove emotion from the process. I can understand that some of you are angry, for whatever reason, but I hope you can let go of some of that anger and find it in your hearts to console those who are selling today at a loss instead of relishing in their pain. Nobody likes to lose money, but even your 401K or IRA has most likely fluctuated downward 20-30% in some years, but on the whole comes out positive. I like to focus on the positive, and there are still a lot of positives about our current market especially for first time home buyers.

I welcome comments and discussion. Feel free to call me if you wish, to discuss the market in further detail. My job is to look at the numbers and utilize statistics, as best I can, to help my clients buy at the lowest price or sell at the highest price and in the least amount of time. I certainly am not an investment advisor, and indeed as REALTORs we are not allowed to make such recommendations. To those of you who do have a crystal ball and can peer into the future, I would encourage you to become REALTORs and capitalize on your unfair advantage. To those who are unhappy with REALTORs and find the need to insult them, I invite you to shed the negative energy and do something to make this a positive market, or join us in this business and show everyone that good, honorable, and professional REALTORs exist that can make a difference. We are out there.

Best wishes,

Sonny Shrivastava
REALTOR®
RE/MAX Achievers

(480) 302-9650 Tel
(480) 603-4383 Fax
sonny@FineAZRealty.com

Anonymous said...

say what you want about this sonny character, but at least he invested in what he believed. i would think most other realtor's out there never invested, but pushed for sales. due to this article he is probably getting plenty of hits on his website and possibly an increase in business.

Anonymous said...

say what you want about this sonny character, but at least he invested in what he believed. i would think most other realtor's out there never invested, but pushed for sales. due to this article he is probably getting plenty of hits on his website and possibly an increase in business.

Anonymous said...

"Sonny" posted: "The sellers who are hurting right now are those who bought at the height of the market hoping for the appreciation rate to continue, which it clearly did not, in order to flip their purchase and make a profit."

Bullcrap! A lot of people hurting now are trapped in piece of crap properties that they only bought because Realtwhores like you told them if they didn't they'd be priced out of buying anything forever.

If you have an inkling of economic sense you had to know that wasn't true, and if you don't you shouldn't be advising people on making the biggest purchase of their lives.

Shrug said...

I think that this shows that although it's fun to trash a misguided letter written a year ago, those letters are written by real people who read comments and have the potential to be hurt by them. Of Sonny, I will say 1) He clearly put his money where his mouth was, which is more than I can say of the typical Wall Street executive who cashes in his options while publicly telling people to "buy", and 2) he wasn't saying anything that everyone else wasn't saying as well--a lot of the people angry at him believed the same thing at the time. That's the nature of a bubble.

However, there is a shocking lack of foresight in building huge expanding cities in the middle of the desert. These places will be ghost towns in 20 years. There's no water there, people. Think!

Frank said...

"The median home prices for the last four years in Maricopa County are as follows:

2004: $165,000
2005: $235,000
2006: $254,000
2007 (last three months): $234,000

This represents a 42% increase from 2004 to 2005, an 8% increase from 2005 to 2006, and a 7.8% decline from 2006 to the last three months in 2007 (reflecting the lowest median home prices of the entire year). Looking at these numbers, right out of MLS statistics, you can clearly see that someone who bought in early 2004 can sell today at a handsome profit close to 40%. There's no bubble in the median home price.."

Hmmm... my read is that you just *proved* that there was a bubble in the median price. A bubble is characterized by a fast march up in prices, followed by similar drop down the backside -- exactly what you listed.

2007 started dropping the price back toward the mean and matched the 2005 price. 2008 will drop the price back to 2004 levels, and 2009 -- well, we don't konw what 2003 pricing would have been!

If you are trying to argue *against* the bubble perspective, Sonny, you need some new material

Anonymous said...

New to this site. How are "illegals" responsible for the housing bubble or the bursting of the housing bubble?

Sonny Shrivastava said...

Frank,

For there to be a true bubble, 2008 prices will have to fall to 2004 levels, but I just don't see that happening. We would have to see a 30% depreciation in the median sales price to get to that point. Considering 2007 median prices have fallen less than 8% from the previous year, 2008 will have to be a disaster year for real estate in Arizona to validate the bubble talk. It could happen -- anything could happen -- but it's highly unlikely.

In my office we've seen the highest December sales in quite some time. We're also seeing a new wave of investors pushing into the valley -- this time from Canada. Falling home prices and a weak dollar have created a very inviting investment environment for Canadians, especially those from Calgary who have seen their own homes continue to skyrocket in value.

What a lot of folks are missing is context. Nationally, we are in the fifth best housing market in history. Over the last 30 years, with all the ups and downs and bubbles or whatever else you want to call them, homes have still appreciated on average 6% per year. Please let's not forget that.

What you see in the media is only 10% of the story. Let's take the sub-prime mortgage market as an example. If you buy into all the media hype, you'd think we're in for a flood of foreclosures. The reality, according to the Mortgage Bankers Association, is that 2% of all mortgage loans are past due and only 1.3% are seriously delinquent or in foreclosure. The real numbers hardly live up to the media hype. You also hear about how Americans are in terrible debt, but what they don't tell you is that 30-40% of homeowners in America own their homes free and clear. These are real numbers, no hype.

Why do we live our lives in fear? If it's not terrorists, it's the mortgage market. If not that, then the real estate bubble. If not that, then something else. Unfortunately, history is the first thing to be sacrificed in this type of mindset, and it's history that holds all the answers if we look at trends and view today's situation in historical context.

I wish we could focus on the positives, look at things rationally, and actually do something in our own lives to effect positive change. Isn't that preferable to promoting doomsday scenarios and living in a constant state of fear, shocked into a state of paralysis?

Looking at the facts, especially in historical context, is liberating because you quickly see that things are never as bad as some people want you to believe.

Best wishes,

Sonny Shrivastava
REALTOR®
RE/MAX Achievers

(480) 302-9650 Tel
(480) 603-4383 Fax
sonny@FineAZRealty.com