Any guesses on home prices? (Phoenix, Scottsdale: foreclosure, lenders, houses)
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So would I. And I agree, they are not overpriced. In fact, Phoenix represents some of the best buys in the real estate market today on a dollar for dollar basis..... As they most always have. That in itself does not exempt them from major downturns in the housing market, as we have seen in the past. If that were not the case, they would not be rated so poorly.
The reason for the massive sand state slide / downturn was investors and easy money. This included parts of FL, AZ, and NV. Developers were building homes for investors and broke people. Money was given away freely with lair loans and banks borrowed money to anyone with a pulse. They thought, why not? The government guaranteed the funds. The rationalization was if the broke person went belly-up, it would be quickly worth more money after the buyer vacated the property.
Next problem. When you are building like mad, your economy is leveraged with building related jobs and its related infrastructure. AZ was also a non-recourse state. So when people easily reneged from their mortgage, this created even more oversupply which eventually caused the market to overshoot. So basically these 9 sentences explained what happened.
If you believed the sky-is-falling "experts" who you are quoting (NEVER forget fear generates readership), they claimed their was a 25 year supply. Their math was simple and some postulated they needed to bulldozer homes because no one would want them. Some of these "experts" were way off. Because when the price of houses overshot and were incredibly CHEAP, 45% of buyers walked in with cash mopping up thousands of homes. In hindsight, I should have gobbled up 5 more. Folks from Canada helped absorb inventory as well and we are where we are. Fast forward: Builders are building. It wasn't 25 years later but rather 3 years. But they wanted clicks and had advertising to sell. People believed their story so they sat on the sidelines refusing to buy. In 2011 when you could obviously see the light at the end of the tunnel, people on this forum were strongly suggesting it was going to get worse. The doom-and-gloom sites got it wrong. The right answer was always in the data mining statistics! You had to study all of the data and not cherry pick what you wanted to see.
It is very easy to get derailed as to why stocks, housing, commodities, etc are going to go up or down. Give me a few moments to generate an argument and pull in all kinds of partially related reasons to sell myself either way to support what I want to believe. You have done that and are attempting to explain how much people are upside down, their total debt, etc etc. If those are so important, then housing would already be on the way down! Yet it isn't showing up in the numbers or forecasts. So forget the noise for a moment and exclusively stare at the PHX housing trends like the data that the Cromford Report mines. If your gloom-and-doom predictions come true, you will obviously see it in the housing numbers. BUt you are NOT seeing it. The great news is it takes a solid year for pricing to react to the trends. It's not like a stock that will drop overnight. In fairness, I stole that statement from Mike Orr and it is true. I saw it happening in 2005 and I got out. I didn't predict the house I bought for 37 cents on the dollar would fall that dramatically but the market was obviously out of balance.
So in short, the numbers are showing a small uptick in pricing (inflation) for the foreseeable future.
My best guess would be 5% up next year in Phoenix.
We will need to see growth in better paying jobs in the Phoenix area to see that kind of number across the board. Really, to get any kind of appreciation requires regional wage growth. You get that through inflation or by upping the quality of the jobs. Inflation looks to be rather tame for the foreseeable future.
All those people who walked a way from underwater homes in the late aughts, 2010 and 2011 through short sales or bankruptcy must soon be back in the market. How long does it take to climb out of bankruptcy or to have your credit rating bounce back from a default? In a very simple supply vs demand model, the fact that those folks may soon be able to buy homes should mean the recent prices should remain firm or climb.
All those people who walked a way from underwater homes in the late aughts, 2010 and 2011 through short sales or bankruptcy must soon be back in the market. How long does it take to climb out of bankruptcy or to have your credit rating bounce back from a default?
And just how much more financially solvent do you think they'll be this time around?
All those people who walked a way from underwater homes in the late aughts, 2010 and 2011 through short sales or bankruptcy must soon be back in the market. How long does it take to climb out of bankruptcy or to have your credit rating bounce back from a default? In a very simple supply vs demand model, the fact that those folks may soon be able to buy homes should mean the recent prices should remain firm or climb.
Short sellers have been back for a while. The hit was only a couple years for them. My neighbors short sold in 2010 and just recently bought back their old house for a hundred grand less than they owed on it previously! With the second for the pool no longer.
It's all relative and for an outsider coming from a higher home price area who sells high and buys high in lower priced Phoenix, so what if he or she buys high by 10 to 25 percent if they sold high by the same from where they came. So long as the home is what they want and it's a long-term hold, it really doesn't matter because high and low values come and go just like the wind or a summertime Phoenix monsoon.
So would I. And I agree, they are not overpriced. In fact, Phoenix represents some of the best buys in the real estate market today on a dollar for dollar basis..... As they most always have. That in itself does not exempt them from major downturns in the housing market, as we have seen in the past. If that were not the case, they would not be rated so poorly.
As always, you can believe what you wish. Forget real estate for just a moment. I look at the overall financial picture, which tells a far more realistic tale than what some college professor thinks or predicts.
Mike Orr owns the Cromford Report business and happened to be incredibly accurate about local RE sales. Don't put him in the same bucket as "professors".After years of his continued success and knowledge of PHX RE sales which was nothing more than studying statistics, ASU hired him. He is so far from a typical college professor. In fact, he doesn't have a PhD (he has his Masters in Mathematics from Oxford). He worked in the computer science field and later wanted to invest in RE so he got his RE licence. He happens to be passionate and extremely good at it so he sold his metrics to local companies who wanted the most accurate data mining. I propose anyone with a statistics background and his level of passion can mine data and point to the direction where housing is going. There are national services but Mike happens have boots on the ground here in PHX. The 1st trick to get accurate information is to eliminate a bias. Forget the data from Fannie and Freddie, or the head an economist from NAR. So if you disregard his data as a "tale from a college professor" you are going to lose a valuable data point.
My simplistic message is that you can plug your ears about every single variable happening in current events until those events become important. When/ if they do, they will show up on the PHX RE sales. The events will show up in the form of inventory, days on market, developers buying land, demographic buyers, amount of cash buyers versus loans, etc, etc, etc, etc.
Let's look at just one piece of important data. Ponderosa often points at the need for higher paying jobs. True. His point of view shows up in the strong demand for cheaper homes (<$250K). Another person mentioned buyers who defaulted coming back (called "Boomerang Buyers"). This past years uptick in sales was partially because of a surge in demand created by these "boomerang buyers"(Will 2 million 'boomerang buyers' ignite housing? ). The fear of interest rate increases also caused some buyers to react out of sense of urgency. So of course the economy has a lot to say about housing. My point is if you want to get derailed on an accurate prediction, use your approach and study all that is wrong in the economy and hone in on it and ignore that the PHX sales figures are still solid.
I'm not saying that a recession won't soften sales or college students graduating with debt that cannot find a job. Recessions always happen and the next one is ALWAYS on the works. High debt and underwater mortgages are never a good thing for housing either. But mysteriously, houses are being built and sold in the PHX area. The other 81% of the people (actually 19% are underwater) and buying and selling.
If your point is that we are on a crash course in a decade or two. Maybe. But how can I control that? Should I worry and not buy a house and rent? Should I pile up on some emergency dehydrated food or build a bomb shelter? Based off of your post, should I assume that the medical system is going to collapse now (our rates are at $8K a year for my wife and I with a $13K deductible). I guess I have chosen not to get my undies in a bundle. I didn't worry about Y2K, killer bees, the Swine Flue, sars, anthrax, or WMD either.
Let's take one such example of fear and worry. How about BP and the well that leaked at sea (Deepwater)... Some predicted it would take YEARS and a the sea floor would drop causing an apocalypse (See Apocalypse in the Gulf: Could a Sinkhole Swallow the Deepwater Horizon Well -- And BP? - CBS News ). I'm sure some people were trying to dump their ocean front homes out of fear they values would plummet. A quick google shows that "another 30% RE price drop in FL, LA, MI, and LA was expectedOil Spill Drags Down Real Estate Values . It seems that didn't happen now did it.
My advice: for some people, stop reading the paper and turning on the news. They sensationalize to sell viewership. Plus, you cannot control what is happening and it is NEVER as bad as you might think. "Don't worry, be happy!" Ya'mon.
Last edited by MN-Born-n-Raised; 12-26-2015 at 05:32 AM..
LOL, A "lonely housing bear" Why am I supposed to believe this one guys prediction of a "possibility" rather than my own, considering I make money here locally buying, selling and consulting on Real Estate and study the actual market every week? As I stated before, I see the market mostly stable, no more than 3-5% drop or increase in 2016 and I am sticking to that. When median sales prices drop 30-40% in 2016, get back to me and I'll buy you a 6 Pack of San Tan Mr Pineapple beer.
Let's revisit this topic in a year. My guess is that you'll be in Chapter 7 bankruptcy. Or that's where you'll be headed. I can't tell you the number of people I've known in Phoenix who thought they were real estate gurus. Multiple properties, doing well. Until the whole market crashed.
Right now, people are asking $350K for houses that are worth $95K, at best. Those days are numbered.
Let's revisit this topic in a year. My guess is that you'll be in Chapter 7 bankruptcy. Or that's where you'll be headed. I can't tell you the number of people I've known in Phoenix who thought they were real estate gurus. Multiple properties, doing well. Until the whole market crashed.
Right now, people are asking $350K for houses that are worth $95K, at best. Those days are numbered.
How in the world can you predict I'll be in chapter 7 without knowing anything about my finances? If you think $350,000 houses are worth $95k then sit on the sidelines, I don't care. I will however say that's an idiotic claim based on absolutely nothing on your part. I never said I was a real estate "guru" but I do have 4 rentals plus a primary residence, much equity in each property however the equity in all 5 properties makes up less than 30% of my net worth, I have cash and investments like everyone else. in addition my monthly mortgage payment in less than 10% of my monthly net income so I'll be fine anyway but thanks for your concern
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The rationalization was if the broke person went belly-up, it would be quickly worth more money after the buyer vacated the property. 
After years of his continued success and knowledge of PHX RE sales which was nothing more than studying statistics, ASU hired him. He is so far from a typical college professor. In fact, he doesn't have a PhD (he has his Masters in Mathematics from Oxford). He worked in the computer science field and later wanted to invest in RE so he got his RE licence. He happens to be passionate and extremely good at it so he sold his metrics to local companies who wanted the most accurate data mining. I propose anyone with a statistics background and his level of passion can mine data and point to the direction where housing is going. There are national services but Mike happens have boots on the ground here in PHX. The 1st trick to get accurate information is to eliminate a bias. Forget the data from Fannie and Freddie, or the head an economist from NAR. So if you disregard his data as a "tale from a college professor" you are going to lose a valuable data point. 
