Avg Phoenix home price will hit millions of dollars in few years (Tucson: real estate, mortgage)

[OUgrad09]

Originally Posted by locolife

LOL, yes, Palm Springs with it's zero big city amenities from sports teams to events, total lack of economy, and zero higher education options is 1:1 with Phoenix.

Based on your logic the entire country should live in California because nobody else has THAT weather and THOSE amenities.

It's silly.

"Might as well move to Palm Springs instead of Phoenix"

And work where exactly?

Palm Springs is a good place to golf and vacation, and that's about it. The cities, outside of the desert climate, aren't remotely comparable. Frankly, it's an insult to the average person's intelligence to even venture a comparison, let alone claim Palm Springs is the more reasonable place for a non-retiree to move to. There's a reason people have to get hotels and rentals to attend Coachella, none of them choose to live in Palm Springs.

[Potential_Landlord]

Let's leave the hyperbole behind and look at the long-term history and facts:
1. RE prices outstrip wage growth over the long term across the US and whole world
2. The mortgage payment / income ratio grows from generation to generation
3. RE has part asset characters. Asset prices are more volatile than consumer prices.
4. Thus RE prices fluctuate significantly even if they go up long-term

Anything that happened in PHX RE since 2005 when I moved here is NOT unusual. The GFC crash, the increase first slow and then the boom. All part of how RE works. I guarantee you guys following going forward :

1. PHX RE prices will continue to outstrip wage growth over time
2. PHX RE prices will encounter more crashes
3. PHX prices will recover first gradually then booming
4. People will complain about these things incessantly
Enjoy!

[Potential_Landlord]

Let's continue some fact finding:
1. There are very interventionist governments in RE markets. For example, Singapore which is extremely expensive bans everything from AirB&Bs, second homes or foreigners from buying RE. Result: higher RE prices.
2. There are very laissez-faire governments in RE like AZ- where any of the above goes. Result: higher RE prices
Either way, or whether we have a central bank or not or whatever. The result is higher RE prices

[Valley Native]

Originally Posted by Potential_Landlord

Let's continue some fact finding:
1. There are very interventionist governments in RE markets. For example, Singapore which is extremely expensive bans everything from AirB&Bs, second homes or foreigners from buying RE. Result: higher RE prices.
2. There are very laissez-faire governments in RE like AZ- where any of the above goes. Result: higher RE prices
Either way, or whether we have a central bank or not or whatever. The result is higher RE prices

Which is largely the free market at work. Investments generally appreciate in value over time due to the markets being historically bullish the majority of the time. Some people even disagree about home purchases being investments, but that's exactly what they are whether they like it or not. Most of the ones who complain about home prices being too high are the renters. The main complaint I have about the Phoenix market is it tends to be boom/bust more than other metros, but I hope that will be less of a factor with our renewed business focus & changing demographics.

[garden17]

Crazy predictions. Another report from Goldman-Sachs said Phoenix home prices will plummet. What are people supposed to believe especially if they're potential buyers?

[OUgrad09]

Originally Posted by garden17

Crazy predictions. Another report from Goldman-Sachs said Phoenix home prices will plummet. What are people supposed to believe especially if they're potential buyers?

Not sure I see that. As long as inventory in the Valley remains low, and demand keeps picking up due to stabilizing mortgage interest rates, I don't see home prices plummeting. If you're a buyer who is in the market for an updated, move-in ready home in a good area, don't be surprised if you're back to competing against multiple offers.

In fact, some neighborhoods (such as Scottsdale, PV, Chandler, etc.) are in seller's markets right now. The biggest thing the Valley needs for prices to come down is inventory to significantly increase. But that might be hampered by the fact that potential sellers sitting on 3-4% mortgages may just sit on the sidelines rather put their home on the market for a discounted price, just to have to turnaround and go buy another home at 6%.

[KurtAZ]

Originally Posted by OUgrad09

Not sure I see that. As long as inventory in the Valley remains low, and demand keeps picking up due to stabilizing mortgage interest rates, I don't see home prices plummeting. If you're a buyer who is in the market for an updated, move-in ready home in a good area, don't be surprised if you're back to competing against multiple offers.

In fact, some neighborhoods (such as Scottsdale, PV, Chandler, etc.) are in seller's markets right now. The biggest thing the Valley needs for prices to come down is inventory to significantly increase. But that might be hampered by the fact that potential sellers sitting on 3-4% mortgages may just sit on the sidelines rather put their home on the market for a discounted price, just to have to turnaround and go buy another home at 6%.

Or a 2.5% loan. That is a major deterrent for us to sell at this point knowing that you have to replace the home at some point. Although when we do get ready to sell in a couple of years, I can advertise that it is an assumable VA loan

[DetroitN8V]

I found this interesting where they are offering seller financing at 4.99% in the listing. Of course it doesn't say the terms and won't be enticing to those in the sub-3% area but I wonder if we'll see more of this.

https://www.redfin.com/AZ/Phoenix/13.../home/28297230

[Mike from back east]

I don't expect the price of homes in AZ to skyrocket, not now and not ever. People are just too well informed of the water issues out here and very few could qualify for such a mortgage in the millions. I'm sure some have already left for wetter climes.

One of Wall Street's biggest investment firms, Goldman Sachs (GS), predicted home prices to FALL 40% this year in most major cities.

Here's another piece where GS specifically expects Phoenix to drop 25% this year. Here the excerpt: "And finally, Phoenix, Arizona was named as a city that would see declines of over 25%. According to Redfin data, in December 2022, Phoenix home prices were down 1.4% compared to last year, selling for a median price of $410,000. On average, homes in the Phoenix are sold after sitting for 61 days on the market compared to 31 days the year prior. There were 1,242 homes sold in December this year, down from 2,427 in 2021."

[locolife]

Originally Posted by Mike from back east

I don't expect the price of homes in AZ to skyrocket, not now and not ever. People are just too well informed of the water issues out here and very few could qualify for such a mortgage in the millions. I'm sure some have already left for wetter climes.

One of Wall Street's biggest investment firms, Goldman Sachs (GS), predicted home prices to FALL 40% this year in most major cities.

Here's another piece where GS specifically expects Phoenix to drop 25% this year. Here the excerpt: "And finally, Phoenix, Arizona was named as a city that would see declines of over 25%. According to Redfin data, in December 2022, Phoenix home prices were down 1.4% compared to last year, selling for a median price of $410,000. On average, homes in the Phoenix are sold after sitting for 61 days on the market compared to 31 days the year prior. There were 1,242 homes sold in December this year, down from 2,427 in 2021."

Redfin is leaving off an important stat, sales of homes declined because far fewer homes we're listed. Which is a big reason why the home price drop GS is predicting is probably too high. In June of 2022 Phoenix had over 10,000 homes listed by December that was only 3,300. YoY from December, Phoenix home listings are down over 44%. Supply of homes is shrinking which will soften price drops.

Now late into January we're seeing mortgage rates drop and some signals buyers are starting to pickup again.

I see any major water issues impacting new home development as likely to drive prices higher. Less supply availability is going increase upward price pressure.

https://www.zillow.com/research/dece...-report-32009/