Any guesses on home prices? (Phoenix, Scottsdale: real estate market, insurance, mortgage broker)

[Gentleman Jason]

Are they gonna go up or down in the next year or so?

[DougStark]

Sources I've read say Phoenix metro will appreciate moderately in 2016 (4%) approx. Not as healthy as some west coast cities, but no declines from what I've read.

[ShampooBanana]

Prices should continue to rise even with the interest rate increase. Demand is still outpacing supply, and new homebuilders are still having trouble keeping up since trades are still lacking capacity.

[MN-Born-n-Raised]

Anywhere between up or down 4%. PROBABLY not down 4%. Nearly always down in off peak months. Highly probable they will go up 3-6% around the buying season. But smoothout out the high and low months, those who study this predict 2-4% growth. I'm guessing closer to 2% versus 4%.

[petlover8]

I was just at a Chase branch the other day, and had an opportunity to talk to a mortgage banker I know there. She told me that 60% to 70% of the mortgage applications she receives never make it to underwriting. And several of those that do get turned down in underwriting. She say's this is because they feel the Phoenix real estate market is extremely unstable at present. Chase does NOT want to get caught with their pants down, standing in the fire, like so many banks did in 2008. She told me her friends who work at other lending institutions in the Valley say much the same. This is NOT a good sign.

[ScottsdaleMark]

I think banks being cautious is a GOOD sign. Banks are being much more demanding in terms of paperwork, financial records, personal credit history, etc., for applicants. This certainly slows the rate of housing appreciation, but it also makes it a much more secure and safe market than it was 10 years ago when anyone with a pulse could A) get a loan they couldn't afford and B) many mortgage brokers would rubber-stamp anything that came across their desk.

I would say, if people want to be pessimistic about anything -- the economy, the stock market, housing prices -- that's their right, but the tradeoff is missing out on possible earnings because of fear or because they're convinced the past is about to repeat itself. That's just my opinion. All investing involves risk, and buying a home is an investment. It will never NOT involve risk, but the fundamentals of the market all point to continued demand for homes in Phoenix.

[petlover8]

Originally Posted by ScottsdaleMark

I think banks being cautious is a GOOD sign. Banks are being much more demanding in terms of paperwork, financial records, personal credit history, etc., for applicants. This certainly slows the rate of housing appreciation, but it also makes it a much more secure and safe market than it was 10 years ago when anyone with a pulse could A) get a loan they couldn't afford and B) many mortgage brokers would rubber-stamp anything that came across their desk.

I agree. However, I think it will slow overall home appreciation. That said, better safe than sorry.

[ScottsdaleMark]

Originally Posted by petlover8

I agree. However, I think it will slow overall home appreciation. That said, better safe than sorry.

I'm glad we agree on that much. I think people making the biggest financial investment of their lives (in many people's cases) shouldn't necessarily be quick or easy. I do hear from people who are frustrated by how hard a time they have getting a loan when on the surface they have good jobs, etc., but on the other hand most mortgage applications would become incredibly risky if one of the applicants suddenly lost their job, which is something that does happen a lot.

I guess a corollary issue to all this would be the low savings rates in America, and the impact that has. People not having any savings to cover over a period of unemployment, etc., is certainly a factor in many bankruptcies or housing defaults.

I read recently that Canada, which has a truly red-hot housing market and has had for some years, has an even lower personal savings rate than America. That is probably not a good sign, either.

[petlover8]

Originally Posted by ScottsdaleMark

I'm glad we agree on that much. I think people making the biggest financial investment of their lives (in many people's cases) shouldn't necessarily be quick or easy. I do hear from people who are frustrated by how hard a time they have getting a loan when on the surface they have good jobs, etc., but on the other hand most mortgage applications would become incredibly risky if one of the applicants suddenly lost their job, which is something that does happen a lot.

I guess a corollary issue to all this would be the low savings rates in America, and the impact that has. People not having any savings to cover over a period of unemployment, etc., is certainly a factor in many bankruptcies or housing defaults.

I read recently that Canada, which has a truly red-hot housing market and has had for some years, has an even lower personal savings rate than America. That is probably not a good sign, either.

All true. Yet another factor is that because of the low savings rate, coupled with a lot of folks losing their jobs, many lenders now require mortgage insurance. Depending on the risk factor, this can be quite expensive. The added cost of it knocks many out of the box, because they cannot afford the increased monthly payment, which many are struggling to make to begin with. Add in the mortgage insurance premium, and it puts them over the top, and their application gets kicked. Too many are riding on the financial ragged edge as it is. This adds to even more housing market instability.

[asufan]

Originally Posted by petlover8

I was just at a Chase branch the other day, and had an opportunity to talk to a mortgage banker I know there. She told me that 60% to 70% of the mortgage applications she receives never make it to underwriting. And several of those that do get turned down in underwriting. She say's this is because they feel the Phoenix real estate market is extremely unstable at present. Chase does NOT want to get caught with their pants down, standing in the fire, like so many banks did in 2008. She told me her friends who work at other lending institutions in the Valley say much the same. This is NOT a good sign.

Chase is still one of the biggest investors of mortgages on the secondary market here in the Phoenix market. They are probably only looking for "A" paper and being more discerning, which makes sense to me. FHA loans are also not looked at as attractive to lenders anymore as well, with a company such as Quicken considering not doing FHA's anymore.

My thinking is about in line with MN, I see a 3-5% up or down, largely stable. I don't see a bubble and I do not see prices skyrocketing either.