2023 Phoenix Area Home Prices (Scottsdale, Goodyear: home sales, employment, to buy)

[kell490]

Originally Posted by MN-Born-n-Raised

Here you go. From the Harvard Business Review who was extremely impressed by USA economic predictions: https://hbr.org/1984/09/are-economic...current%20year.


"Each year has its own peculiarities, but the overall record is impressive. The group shows an average error of only 1.1 percentage points between the October forecast of real GNP for the target year and the actual figure. By and large the early forecasts capture the directional change from the current year."

But to be clear, the data was gathered by the "group of 44 leading economic forecasting services". Also, your article was from comparing the entire world of economics. We agree, some people certainly get it wrong. But in 2023 it seems, EVERYONE is too big to fail. So the idiotic US government will bail out banks, commercial real estate (a pending crash), etc. It's the exclusive reason why we haven't had a recession in the country in a LONG time. Bail out after bail out. One day, it's going to happen in a big way. The how and why are down the road.

Why Economists Failed to Predict the Financial Crisis


“It’s not just that they missed it, they positively denied that it would happen,” says Wharton finance professor Franklin Allen, arguing that many economists used mathematical models that failed to account for the critical roles that banks and other financial institutions play in the economy. “Even a lot of the central banks in the world use these models,” Allen said. “That’s a large part of the issue. They simply didn’t believe the banks were important.”

[MN-Born-n-Raised]

Originally Posted by kell490

Why Economists Failed to Predict the Financial Crisis


“It’s not just that they missed it, they positively denied that it would happen,” says Wharton finance professor Franklin Allen, arguing that many economists used mathematical models that failed to account for the critical roles that banks and other financial institutions play in the economy. “Even a lot of the central banks in the world use these models,” Allen said. “That’s a large part of the issue. They simply didn’t believe the banks were important.”

We agree. "Many" economists do fail and are in denial. I put in quotations that the study explicitly stated "The group of 44 leading economic forecasting services." Remember, there are 29,000 USA economists.
Harvard was discussing the top 44 services. https://datausa.io/profile/soc/econo...s%20is%20White.

Not all doctors are created equal, not engineers, lawyers, etc. And just because you are really brilliant in one portion of the economy (or law or medicine or engineering or __________), it doesn't mean you are brilliant in understanding other aspects of your discipline. So when you take a stable at what the economy is going to do and you send out a huge survey to everyone, you are going to get a lot of bad guesses.

That all said, there is no question that economics isn't an exact science. We are a bomb away from hitting a nuclear plant in Ukraine or 100 other unpredictable reasons from tipping us into a recession.

As they say, you do you. We have people on this forum who sold their homes to cash out and are renting. Meanwhile, all of those selling costs are lost and they are spending money on rent. We have had a "trust me, it's going to crash" ex-Surprise, AZ RE agent that explained how we are all screwed. I can go on. I'd have to look at your personal words, but if my memory serves me, you have been semi-convinced housing was going to crash. All the while I pointed to some metrics like 36% of PHX own their home outright. That also means there is a TON of equity in a significant of other owners. I mentioned that EVERYTHING is a lot more expensive now. The actual appreciation of your home (in real dollars) is far less. And if it does tank, we are multiple interest rate cuts away from stimulating housing again.

But hey, Rchafe might eventually be right. But not based on his weak argument. Eventually, we are going to have another recession.

Meanwhile, get scared by listening to this dope.


https://www.youtube.com/watch?v=fARym2qkpHs&t=12s

[Potential_Landlord]

SFH market still going very strong in Phoenix with no overbuilding visible at all. MF is more flat right now but with good chances of one more price recovery when rates come down. Office and also industrial have oversupply issues and have probably peaked for this RE cycle. That's where the next RE downturn will bite most. But as of yet no signs for recession at all, quite the opposite economy def reaccelerating. Even when a recession hits, our SFH market is well insulated as MN-Born_and_raised stated: massive equity, l/t fixed IR loans, no oversupply, no speculative frenzy like 2003-7, mmuch tighter lending standards. When you compare globally- Scandinavia and the US traded places from 2007: in the Nordic Countries debt ratios are crazy higher and variable IR / sketchy loans dominate. I think we will see a Scandinavian Banking Crisis like in early 1990s. That was also a much milder RE downturn in the US (mostly contained to CRE). A repeat of that is in the cards later this decade.

[KurtAZ]

The long and short of this is that prices are going to remain strong unless there is a glut of available homes to hit the market. Most folks I know either refinanced or bought in 2020 or before and are sitting on ~2% mortgages. Selling would come down to absolute necessity (moving out of state, loss of employment or something) or cashing out their equity and betting on renting for a while and see if interest rates come back down. The flip side would be if landlords (either long term rentals or Short Term/AirBnB) decide to dump properties. My bet is going to be on AirBnB owners as a recent report shows rentals down 48% nationwide

Either Builders are going to need to start building (which is going to make people scream about sprawl/water use/blah blah blah) or interest rates need to come back down to dislodge existing homeowner's fears.

[CTREInvestor]

Originally Posted by Potential_Landlord

SFH market still going very strong in Phoenix with no overbuilding visible at all. MF is more flat right now but with good chances of one more price recovery when rates come down. Office and also industrial have oversupply issues and have probably peaked for this RE cycle. That's where the next RE downturn will bite most. But as of yet no signs for recession at all, quite the opposite economy def reaccelerating. Even when a recession hits, our SFH market is well insulated as MN-Born_and_raised stated: massive equity, l/t fixed IR loans, no oversupply, no speculative frenzy like 2003-7, mmuch tighter lending standards. When you compare globally- Scandinavia and the US traded places from 2007: in the Nordic Countries debt ratios are crazy higher and variable IR / sketchy loans dominate. I think we will see a Scandinavian Banking Crisis like in early 1990s. That was also a much milder RE downturn in the US (mostly contained to CRE). A repeat of that is in the cards later this decade.

Overbuilding?

From an outsider considering Phoenix, housing prices of $400-$500/sf seem difficult to support, even with low taxes.

Most houses on Zillow seem to be house flippers. Renovating old houses is of course fine and dandy, but it's like hundreds upon hundreds of listings.

Talking about Scandinavia is crazy.

I'm looking to pay cash up to $800K, but a 1950s ranch house that is 1,600 square feet? Just doesn't make sense given household income and historical prices.

[KurtAZ]

Originally Posted by CTREInvestor

Overbuilding?

From an outsider considering Phoenix, housing prices of $400-$500/sf seem difficult to support, even with low taxes.

Most houses on Zillow seem to be house flippers. Renovating old houses is of course fine and dandy, but it's like hundreds upon hundreds of listings.

Talking about Scandinavia is crazy.

I'm looking to pay cash up to $800K, but a 1950s ranch house that is 1,600 square feet? Just doesn't make sense given household income and historical prices.

$400 - $500? Are you looking in Arcadia? Other high rent districts? Average for Phoenix is ~$280ish. Scottsdale is in the $380 range...https://www.valleywidehomes.com/calc...-foot-phoenix/

[Ponderosa]

Phoenix had the largest drop in median home prices in the country last month. Also the biggest drop in new listings which probably helps keep prices up.

https://news.remax.com/press-release...-for-july-2023

[locolife]

Originally Posted by Ponderosa

Phoenix had the largest drop in median home prices in the country last month. Also the biggest drop in new listings which probably helps keep prices up.

https://news.remax.com/press-release...-for-july-2023

PHX had the highest drop in median home sales prices, not listing price. PHX also had the largest drop in new listings, which are pretty much stagnant right now. Piece the story together a bit and not much is being listed, not much is being sold, but those that have to sell are dropping their prices a bit to get the movement.

Things seem pretty stagnant in home sales and that's probably not changing any time soon.

[MN-Born-n-Raised]

Originally Posted by locolife

PHX had the highest drop in median home sales prices, not listing price. PHX also had the largest drop in new listings, which are pretty much stagnant right now. Piece the story together a bit and not much is being listed, not much is being sold, but those that have to sell are dropping their prices a bit to get the movement.

Things seem pretty stagnant in home sales and that's probably not changing any time soon.

With the mortgage rates over 7%, that's impacting the people who need to borrow money. Close to 40% own their homes outright. So it seems logical that the median home prices have dropped. Based on the Paraphrasing from the Cromford report: "Some badly informed observers still think there is a bubble popping situation ahead, but they completely misunderstand the situation. For prices to fall, we have to have an excess supply compared to demand. Even though demand is very weak, supply actually got 2.6% smaller over the last month. There is very low delinquency in residential real estate lending right now, so it takes a leap of great imagination to believe that foreclosures are going to have any significant effect on supply in the foreseeable future."

Basically, we need a recession for prices to drop. Obviously, we eventually will see another recession. But when and how deep? Currently, the "Cromford Market Index" is about 160. And therefore, it's still a seller's market even though there is a lack of enthusiasm on both sides of the table (buyers and sellers).

When the cooler weather hits, the luxury market should take off again. There are the haves and have-nots (which is a problem). The haves are blowing money on luxury properties. On our lake in MN which is the size of Lake Pleasant and hundreds of homes, prices are going nuts! People are paying ca$h for $200K boats as well as million-dollar+ lake homes. My lake home has gone up 25% in the past 2 years. Crazy! And that's at high-interest rates. The buyer is often an owner of a trades/ construction business. They are making bank because no one seems to want to work with their hands any longer. Heck, I pay $90 an hour for a semi-talented handyman here in AZ. In 10 short years, a $100 bill now feels like a $20 bill!? I paid $12 for a Subway sandwich the other day ($16 with a soda and a bag of chips). IMO, people need to realize the new norm that nearly everything is overpriced: including housing.

[MN-Born-n-Raised]

One more point ...

See the AZ MLS stats here https://armls.com/docs/2023-July-STAT.pdf

The average sales price is up +1.4% year-over-year while the year-over-year median
sales price is down -4.1%. Or more specifically, the median sales price for July is $435K. But the average price $544K. Therefore, bigger dollar properties are not moving as fast because people are not flying down to buy a 2nd home in 110 degrees. That will change in two short months. There are all kinds of sub-market trends going on inside the PHX metro. Including short-term rentals, flippers, retirees, etc.