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I knew about all that what I want to know is are those ST rental homes going to flood the market as they attempt to sell them after purchasing them at a much higher price.
When someone sees $$$ they throw common sense out the window and assume money will flow in. All I'm saying is home prices in 2021-2022 were not normal increases that is going to correct just like in the past.
"Flood the market"? "Throw common sense out the window"? I explained that the total ST rentals in your town are literally a nothing burger! Even if 100% of ST renters sell TOMORROW, it's not much of a factor. But you still are inserting fear in your head. I must say, we are on different wavelengths.
There are 117,000 families in Scottsdale https://www.point2homes.com/US/Neigh...ographics.html and AZ has one of the highest rates of renters or about 50%. That's roughly 60,000 single-family homes that are owner-occupied.
Next, I showed you a link to a grand total of 270 ST rentals on AirBnB. That's 0.4% of influence. Furthermore, I can see there are about 975 total homes for sale in Scottsdale right now. Add every single ST renter who decided to list their home tomorrow, and the total impact isn't much of a factor. And we both know that's impossible.
Think about this logically and you will be able to sleep better at night. IMO, you are imagining things with ST renters that are not going to happen. This took me about 2 minutes of googling. Let logic and statistics drive your fears and not emotions. Chillax.
"Flood the market"? "Throw common sense out the window"? I explained that the total ST rentals in your town are literally a nothing burger! Even if 100% of ST renters sell TOMORROW, it's not much of a factor. But you still are inserting fear in your head. I must say, we are on different wavelengths.
There are 117,000 families in Scottsdale https://www.point2homes.com/US/Neigh...ographics.html and AZ has one of the highest rates of renters or about 50%. That's roughly 60,000 single-family homes that are owner-occupied.
Next, I showed you a link to a grand total of 270 ST rentals on AirBnB. That's 0.4% of influence. Furthermore, I can see there are about 975 total homes for sale in Scottsdale right now. Add every single ST renter to the total homes for sale and it's not a factor.
Think about this logically and you will be able to sleep better at night. IMO. you are imagining things with ST renters that are not going to happen. This took me about 2 minutes of googling. Chillax.
Let's forget about Scottsdale what about entire maricopa county? I sleep easy at night I have 2 1/4 % rate only owe 120k left on my mortgage which I could pay off with my savings if I needed to. I didn't buy it in 2021 I bought in 2003 and paid much less then someone would pay in 2021. I would like to see prices fall I want a more balanced market where it's not so difficult to move. We would like to move up to Prescott, or Payson area but I don't want to deal with the issues of selling a home and buying a home. I don't want to overpay for something then watch the prices fall. Kick myself for not buying land in 2010 instead of investing in a business I sold did okay but was a ton of work.
Let's forget about Scottsdale what about entire maricopa county?
Sigh. Well, most of the ST rentals are in the more desirable portion of town. Like Tempe, Scottsdale, etc. So percentage wise, Scottsdale is as congested with SFH ST renters as can be. It's math: There are 1.3M homes in the county https://arizonareport.com/how-many-s...ricopa-county/ Now you go on AirBnB and actually see home many pages they have: they lie about their total (I've proved that). It's STILL a nothing burger!
Quote:
Originally Posted by kell490
We would like to move up to Prescott, or Payson area but I don't want to deal with the issues of selling a home and buying a home. I don't want to overpay for something then watch the prices fall. Kick myself for not buying land in 2010 instead of investing in a business I sold did okay but was a ton of work.
Payson is mostly a 2nd home market. It's a COMPLETELY different market up there. My guess is Payson is more volatile. I cannot speak to the Prescott area.
If I was looking to buy a new home and had the time to wait, I would. We know that both Prescott and Payson will be going down just like here. This isn't a mystery. You have been talking about the sky falling with ST renters "dumping" because "they throw common sense out the window". Well, how do you think they had the money to buy 2nd or 3rd homes?
Anyways, your other points are irrelevant. Not that you have $120K mortgage, etc, etc, etc. I'm not sure why you even mentioned it?
I knew about all that what I want to know is are those ST rental homes going to flood the market as they attempt to sell them after purchasing them at a much higher price.
When someone sees $$$ they throw common sense out the window and assume money will flow in. All I'm saying is home prices in 2021-2022 were not normal increases that is going to correct just like in the past.
I have no idea what the future will hold, wish I had that kind of power to predict market prices for anything... but recent data may be suggesting the housing price declines could be over in Phoenix. I don't know what kind of correction you're looking for but the median price for homes sold is now leveling off and the number of units for sale is decreasing, so less supply available which will not drive more price decreases.
The fact is people have a lot of equity along with very low rates on their homes. I just don't see signs of some big correction coming and the data seems to be proving that out so far.
- The Valley’s median home price dropped $1,000 less than projected in November to $420,000 and is expected to be flat in December based on pending sales.
- The number of homes sold fell more than 10% in November from October to 4,756. The supply of houses for sale dropped almost 8% to 21,067.
New building permits have collapsed. In October, permits were down by 53% compared to a year earlier. Antidotally, while I see houses going up all around me from momentum, I'm also seeing a fraction of new home tours. I understand the housing currently going up is all pre-sold from deposits given months ago. And with the rates so high, I predict those buyers are all paying cash specifically in our neighborhood (already at 60% cash buyers).
Because of the low housing stock including pending new builds, I could to put my rosy glasses on and imagine a scenario with another big run-up in a year or more. Of course, this also assumes interest rates go down a lot, too and it assumes new people continue to come to PHX in record numbers. We see what happens with low-interest rates, high demand, and low inventory.
As for the barometer, I think February will be the month to watch. If the price of homes does not go up a little in Feb as they do every year and it continues to go down, then we can all expect a steeper fall for the rest of the year. As I said before, record-high inflation (which is a lot higher than the government hand-picked "baskets of good") put a floor on the perceived run-ups on homes. Yea, the pendulum swung way too far and PHX area homes were overpriced. But I'm a big believer that people need to reset in their minds what things now cost. It doesn't matter that a Subway sandwich used to be on sale for $5. Now, they are on sale for $11. Cut, paste, repeat. And that includes housing prices.
For those who are predicting a big recession, you are going to have to change the perception of the consumer who has a massive amount of job security https://www.pbs.org/newshour/economy...-a-50-year-low . Because unemployment is at a 50-year, record low all the while the FEDs are trying to cool off the economy. Though, the longer interest rates are higher the longer we slowly deflate. I'm predicting as soon as this all passes, the prices are going to quickly jump back up to April 2022 prices. Because that's our new norm. If true, go ahead and wait out the storm and get ready to compete with 50 pairs of shoes in the entryway at those open houses.
I'm with you MN BnR, things can change quickly but from where we sit now this isn't looking like a major recession and therefore major price declines, time will tell but to see the home prices flattening in December makes it look like this is a minor drop, as most major real estate analysts we're predicting.
With regards to rents: recently rented a Gilbert home in one day. 146 views (Zillow) and 22 contacts. The couple with two children who took the house have a combined income of 130k.
This was the property with the doctor (240k a year) and his family. They wanted a bigger place and locked a two-year lease for 3100 a month or 74k for the two years. They can afford to buy but decided to wait. However, they have been down this road before. When they moved into my property early 2021 it was because they felt home prices were too high. A year later prices were over another 100k
Not suggesting prices will return to the peak 2022 levels anytime soon. But right now buyers are still in the driver’s seat. Why not get the home you want without much competition.
I'm with you MN BnR, things can change quickly but from where we sit now this isn't looking like a major recession and therefore major price declines, time will tell but to see the home prices flattening in December makes it look like this is a minor drop, as most major real estate analysts we're predicting.
I will repeat myself saying by saying it another way: if inflation on every single solitary item didn't take off well beyond the BS quoted 9% government inflation rate (it's absolutely higher), then I too would predict housing would have dropped like a rock once we reached an equilibrium between supply and demand.
So people need to erase a large percentage of the run-up relating to housing. It's happening on every single topic. I just paid $125 an hour for a handyman. I got a $1000 freight bill (with an 80% FEDEX Freight discount). That freight would have cost me $450 2 years ago. I can go on and on. Big picture, there is a point when being sticker shocked has to fade.
That doesn't mean I don't think PHX housing will be cheaper in 9 months than it is today. When only 25% of the average income can afford an average home that's what happens. Though if I understand those statistics correctly, those percentages don't take into account equity or a person's downpayment.
New building permits have collapsed. In October, permits were down by 53% compared to a year earlier. Antidotally, while I see houses going up all around me from momentum, I'm also seeing a fraction of new home tours. I understand the housing currently going up is all pre-sold from deposits given months ago. And with the rates so high, I predict those buyers are all paying cash specifically in our neighborhood (already at 60% cash buyers).
Because of the low housing stock including pending new builds, I could to put my rosy glasses on and imagine a scenario with another big run-up in a year or more. Of course, this also assumes interest rates go down a lot, too and it assumes new people continue to come to PHX in record numbers. We see what happens with low-interest rates, high demand, and low inventory.
As for the barometer, I think February will be the month to watch. If the price of homes does not go up a little in Feb as they do every year and it continues to go down, then we can all expect a steeper fall for the rest of the year. As I said before, record-high inflation (which is a lot higher than the government hand-picked "baskets of good") put a floor on the perceived run-ups on homes. Yea, the pendulum swung way too far and PHX area homes were overpriced. But I'm a big believer that people need to reset in their minds what things now cost. It doesn't matter that a Subway sandwich used to be on sale for $5. Now, they are on sale for $11. Cut, paste, repeat. And that includes housing prices.
For those who are predicting a big recession, you are going to have to change the perception of the consumer who has a massive amount of job security https://www.pbs.org/newshour/economy...-a-50-year-low . Because unemployment is at a 50-year, record low all the while the FEDs are trying to cool off the economy. Though, the longer interest rates are higher the longer we slowly deflate. I'm predicting as soon as this all passes, the prices are going to quickly jump back up to April 2022 prices. Because that's our new norm. If true, go ahead and wait out the storm and get ready to compete with 50 pairs of shoes in the entryway at those open houses.
Do you agree that home pricing went up abnormally in 2021-2022? These price increases were directly related to low cost borrowing, and the federal reserve QE "Printing money". There might not be a direct relationship but maybe indirectly though low unemployment and higher paying salaries. If the fed reverses these polices indirectly could eventually result in an undoing of those abnormal price increases.
Do you agree that home pricing went up abnormally in 2021-2022?
Obviously! Actually, you missed a year (2020-2022). I believe nearly every single solitary item went up abnormally. Most of which are not coming down. And specifically, housing went up even more. Cheap money (mortgages) caused a balance problem between supply and demand. The demand increased a lot (people moving in) and the PHX metro demographics were changing too with deeper pockets. New companies were still coming into town as well. WFH helped people move to western states too without being tethered to their former cold state.
Quote:
Originally Posted by kell490
These price increases were directly related to low cost borrowing, and the federal reserve QE "Printing money".
Yep. But you forgot to discuss supply chain problems. If we specifically discussed housing, there were part shortages that added more costs to make windows, flooring, shingles, labor, etc. And let's not forget that the manufacturer's profit margins have jumped too. One day, inflation will be under control. But that's not happening yet in January 2023. But inflation is slowing.
Quote:
Originally Posted by kell490
If the fed reverses these policies indirectly could eventually result in an undoing of those abnormal price increases.
My point is that post was onefold. Everything is more expensive now. And that includes housing. And in the Eastern Valley and specifically your town of Scottsdale, a $1M doesn't buy you much. And that's the new norm. For years, $2M doesn't buy you much in the Bay area or around LA. It's happening here to a lesser degree.
Look around you. A $100 bill doesn't buy you much like it did a couple of years ago. I'm talking about the price of food, cars, rent, airfare, eating out, etc. Compare the cost of freight, labor, furniture, etc as compared to early 2020. I have, and the price of nearly everything is out of control.
And I will repeat myself. Housing WILL continue to go down around PHX metro so long as mortgage rates are 6-7%. An entire year of massive run-up has been erased exclusively because the feds are trying to curb inflation as a whole. Just in the last 12 months, much of the run-up has already been erased. The difference here is you think it is going to continue to go back down a lot more. And I don't think it will (I think it will go down slowly). When that manipulation stops (a.k.a. 7% mortgage interest rates), I'm not going to be surprised if it pops back up.
IMO, while the FEDs claim that they want housing to go down, I don't believe they care. After all, they were buying mortgage-backed securities for a sold year after they watched homes being bid up by tens of thousands of dollars. Heck, my daughter in Spokane lost 5 homes to escalation. She finally bought a $400K listed home (that sold for $300K a year earlier) for $85K over asking. Do you think the FEDs didn't know what was happening? MAYBE they wanted inflation? Because QE and the massive debt increase now feel a lot cheaper. Or putting it another way, they got at our savings without a tax. It's going to take me $25K more a year in retirement to have the same standard of living. They knew what they were doing (intentional inflation) but it got out of control and took off way too fast. I digress... But I think the FED wanted inflation as it relates to their drunken-sailor spending spree. Or if it wasn't intentional, they surely saw the inflation trade-off as something positive.
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Though, the longer interest rates are higher the longer we slowly deflate. I'm predicting as soon as this all passes, the prices are going to quickly jump back up to April 2022 prices. Because that's our new norm. If true, go ahead and wait out the storm and get ready to compete with 50 pairs of shoes in the entryway at those open houses.
Because QE and the massive debt increase now feel a lot cheaper. 
