Arizona Real Estate Notebook

14 responses so far ↓

• 1 Paul Cooper // Oct 22, 2007 at 11:49 am

  NEWS: Canada Dollar Falls Most Since ‘05 as Dodge Calls Climb `Quick’

  http://www.bloomberg.com/apps/news?pid=20601082&sid=a81QZDPctZh8&refer=canada

• 2 Cbass // Oct 22, 2007 at 4:22 pm

  I don’t think the Canucks can save our housing market even with a falling dollar. A falling dollar means that more of those people just hanging on are going to be paying more for lead coated toys at Walmart and more at the pump to support terrorism.

  Thus any gains made by the Canucks will only hurt our US economy, not help it. This is not a good thing!

• 3 John Wake - Realtor // Oct 22, 2007 at 4:57 pm

  Geez, you guys can find something negative in anything!

  When someone gives you a gift you are supposed to say, “Thank you,” not, “What took you so long” and “It’s fattening.”

• 4 Paul Cooper // Oct 23, 2007 at 3:21 am

  Another ALL TIME RECORD inventory hit this week. It is just unbelievable how many homes are for sale in the Phoenix area and more are continued to be added each day. I dare not to think what happens come Feb/Mar 2008 when the record number of resets hits. Its going to get real ugly…

• 5 RE Investor // Oct 24, 2007 at 11:54 am

  John, as I said in an earlier thread, “Why Bother”. The sentiment is negative across the board. The blood is running in the streets, or as Warren Buffet used to say - “Be greedy when everyone else is worried, be worried when everyone else is greedy”. We are at the worried stage, and no matter what positive points you make, its going to be the same barrage of badness. This market is not a vacuum, just like every other market, and all it takes is a catalyst to change the direction of a market. Trust me, the Government is on the side of growth and they will do whatever it takes to make houses more valuable again. They have no choice in an election season. And one thing I have learned in all of my investment years is never to bet against the Fed, and the greed and resourcefulness of bankers losing their shirts. It happened before, and it WILL happen again, time is the only unknown at this point. And as far as the record inventory, that is as much to do with season as with anything else. This is the historically slow season for RE in the valley. Also, the panic is running deep and people are selling that may just be selling at the bottom simply because they are worried. People tend to do stupid things in crunch situations, (just like in the boom) and with no good news, it is just a one sided trade. That does not make the asset less valuable because in a moment in time there is a market problem. Credit is too valuable to banks, and mortgages are too valuable. Toxic mortgages are 4% of the US mortgage market, of those 15 -20% are going bad. that leaves 96% of people with good Mortgages. The builders built too much, but they built in locations that are not desireable due to proximity so it skews the numbers. And then everyone else sits on the side. This is an over correction to a credit tightening, nothing more nothing less. Credit will loosen, and greed will come back, they will just find another vehicle to do it other than CDO’s and SIV’s. Phoenix has several things going for it that Vegas, Florida and California do not. Not the least being no natural disasters, lowest property taxes (except for the idiots in Pinal), most business friendly environment, and an increase in employment when a lot of comparable cities are experiencing downturns. And the increase in employment has been in office and clerical - not construction. We have a diverse economy and business friendly tax incentives for large business. It is cheaper for business to move here, therfore they will. Jobs are what really drive RE longterm not fear, so just sit back watch the show, don’t panic and let the chips fall where they may, but I will bet that this will be another crisis for the history books in about a year like the 2001 tech bust. Remember, no one would ever buy stocks or trust mutual funds again? Right?

• 6 Ken44 // Oct 24, 2007 at 6:19 pm

  Well said.

• 7 Cbass // Oct 24, 2007 at 6:39 pm

  RE Investor is funny, I also wonder why I bother to try and help the helpless from time to time.

  Two plus years ago when I first began shouting that things are not right (50% appreciation in one year) people laughed and said, “buy now or be priced out forever,” “Real estate only goes up,” “fastest growing city in the country” and on and on… Then the stuff started hitting the fan and people were like “What happened?” Still to this day they deny that things will get worse and expect the ATM to fire up next spring so they can get some new 22″ rims, a set of quads, and pay off all their credit card debt. So as you can or cannot see I am the contrarian Buffet is referring to, not you!

  Here are some charts from the last 6 months you viewing pleasure:

  altosresearch.com/research/AZ/PHOENIX

  If you interpret these graphs as a buy signal, more power to you. I will continue to save my coin and wait until the last of the bulls like you cry uncle. Then I think it will be time to buy again.

• 8 RE Investor // Oct 24, 2007 at 7:22 pm

  Cbass, don’t hold your breath. I won’t be crying uncle any time soon. My properties are doing just fine, and on paper I still don’t have a loss. Prices would have to drop another 15% (average, some more some less) for me to break even. However, I have hedged well, through stock, primarily deep sea drilling and solar, so please don’t wait until I cry uncle. I don’t interpret the charts as a buy signal, but the announcement by Countrywide today that they will be modifying mortgages across the board unless there is absolutely no hope for the borrower, is the industry crying uncle, and now that Countrywide has blinked, it gives the other banks (servicers) a precedent to keep them protected from investor lawsuits for modifying mortgages and changing CDO contracts. The banks are not doing it for the borrowers, it is for their own well being. But who cares, it will work. That is why I believe that this is on it’s tail end of the fall. If the foreclosures are halved by the banks, then the inventory that remains are the weakest borrowers and the homebuilder inventory. Still inventory, but dramatically less. Thus a faster return to normal. Couple that with aggressive fed action, healthy employment (again due to an aggressive fed) good export numbers (increasing employment) and a light at the end of the tunnel emerges, maybe a long tunnel, but a light just the same. I am not an eternal bull, but I do like to look at the opposite side of “conventional wisdom”. Inflation is a concern, however I think fear alone may keep that in check for a little bit.

• 9 Brian // Oct 25, 2007 at 11:23 am

  Investor…I normally agree with CBass on these posts, and once more I do. Look at the price chart on the home page of this site and see the nice annual price gain of the median home price (Phoenix Area Home Price at a Glance). You can see that in 2000, the median price was around $125K.

  In normal times, the price would continue to appreciate around 5% annual. That is the 100 year rate of appreciation (including effects from inflation). It would be nice to see that chart going back into the mid 80s so this was more obvious. If the 5% long term appreciation rate had continued on, the median today would be around $170K. The past 5 years were the aberation. It sounds from the 15% statement that you bought during this “outlier” period. Before the market is fairly valued against the long term, the median price must drop back to around $160-170K. Anything below that level would create the kind of value that would capture Warren Buffet’s interest. As it is now, the Phoenix real estate market is valued like a chip stock in March 2001 (it has a long way to go!!).

  Don’t count on the Canadians to bail out the Phoenix real estate market. That is really grasping at straws. (they can get the same exchange rate deal anywhere in America, so Phoenix has no advantage here).

• 10 RE Investor // Oct 25, 2007 at 11:52 am

  Hi Brian,

  Agreed, however I think that the median price started to become an aberation in 2004, since inflation was a little bit higher in 2003 (thanks to Greespan overdoing it a little), plus we had job growth that was a fundamental reason for a 6% growth that year. This was before all of the builders that I had never heard of started swooning on the valley, and building up tracts in far away places (Pinal). I don’t think that the over building will cause anything less than 2004 prices simply because we have still grown at a constant rate since 04 and a lot of folks that purchased that inventory back then still could not get loans by just fogging a mirror so probably are not toxic. They may feel soe loss on paper, but for now, they still have equity (the smart ones of course that did not refi) and are not scared in to selling. All in all, I think we probably have much the same price targets, it is just I feel that this will be corrected sooner rather than later, either by fed, banks, greed or a combination of both, and then we will return to the historic mean appreciation rate after a couple of years. Too much hype right now, not enough objective real analysis (other than posters on this blog). Besides, at least from the perspective of a long term landlord, I don’t really care what the price of the asset is in the short term (3 - 5 years) since rent is paying the bills. I care what it will be in 10 - 15 years. The in between time is for flippers not investors.

• 11 Mark // Oct 25, 2007 at 12:57 pm

  The Feds will try to delay the recession but if they succeed it will only hit harder and deeper. Corporate greed is at an all time high. Sarbine and Oxley does nothing to address human nature. In other words, it’s ok to only care about your own greedy ass as long as you can prove that you document your money grubbing policy and follow it. The middle class is truely crunched. We can no longer borrow the American dream because it’s gone baby gone. The Feds can cut rates a couple points to delay the inevitable recession. I’d rather it just start now than hit like a falling piano. I’d also rather the housing price correction get over with before the job cuts start. It’s really just started now. RE INVESTOR is clinging to hope with his 15%. That 15% is already gone. It’s just not been written up yet. Recession is unavoidable but the depth and speed is controllable. But so far the forces that be are still busy creating the perfect storm so let’s brace ourselves. Our only hope is that the rich keep spending money like crazy. We need a new Iphone or Isomething to come out every month. Maybe an I-friend. Yeah, a little robot that monitors the neighborhood while it keeps up with new products via 3G internet connection. I-friend will make a weekly shopping list for you to stay ahead of the Jones’. It will call you to tell you that you look super cool as you receive a call on your latest Iphone while standing in line at Starbucks the first day they opened their first Starbucks inside a Starbucks barthroom. After the democrats take office they will tax the shit out of the middle class and then give a portion of it back to us in the form of shit-fo-the-po-we-don-want. (As we will now be the poor).

• 12 RE Investor // Oct 25, 2007 at 1:41 pm

  Wow, Mark, what can I say to that. I think your lost, the Jerry Springer of blogging is housingpanic.blogspot.com. They would welcome your passion with open arms. Don’t forget your tin foil hat on the way in, the government may be monitoring your thoughts, or the corporations may already have spies in your backyard (or apartment complex).

• 13 Mark // Oct 29, 2007 at 9:32 am

  RE Investor, What exactly would qualify my statements as “Jerry Spinger”. Recession IS coming. This is normal. I predict that the depth of it will not be normal. You disagree? (Hint, a good arguement may be that the economy is more global now and will prevent a major downturn.) You don’t like my humor?

• 14 How Arizona home prices look to Canadians | Arizona Real Estate Notebook // Jan 10, 2008 at 11:14 am

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