Arizona Real Estate Notebook

8 responses so far ↓

• 1 Cbass // Dec 21, 2007 at 1:12 pm

  2008 will also be bad for:

  RE agents- many of whom will turn to a new line of work (thats good for you John, less people to share the small pie with).

  Construction workers- who will be laid off by the struggling home builders you mentioned.

  Illegals- because John’s brother did not stop the new Arizona employer-sanctions law from taking effect.

• 2 Chris Dowell // Dec 22, 2007 at 7:13 am

  As a 18 year real estate veteran in Kansas City, I agree with your prediction. Three builders in KC filed bankruptcy in the past 10 days and 2 builders lost their inventory to foreclosure.

• 3 AZ Foreclosures // Dec 22, 2007 at 7:52 am

  John- I completely agree. It’s going to be AWESOME for finding deals, and a tough hit on re-sale homes who have to compete with the big price drops and incentives from the builders. My wife and I are planning on doing a MAJOR upgrade to our home- keeping our existing home as a rental, and then buying a much larger home for much less price. We’re very excited. What a great time to be buying real estate!!!

• 4 Brian McMorris // Dec 26, 2007 at 8:57 pm

  Prices are only great when compared to 2006, not so great compared to 2002. We have a lot of adjusting to do before RE is a screaming BARGAIN.

  I don’t know if we really want to go through that process as a country (another 30% down). I am glad the Feds and foreign CBs are doing all they can to put on the brakes . The people who were reckless will get their due. Those who were more innocent will hopefully get some help.

• 5 AZ Foreclosures // Dec 27, 2007 at 3:25 am

  Brian- Do you think it’s possible that prices WON’T drop back down that far? Everyone is making claims that it’s going to, yet, the results we’re seeing are not proving it yet. Obviously prices are dropping some, however, is it possible that they’ll still stay elevated above the 2002-2004 prices? I feel that it’s very possible that they won’t drop too much more, and you’ll never see a ’screaming bargain’ unless it’s a foreclosure/short sale situation. Anyone else have thoughts on this?

• 6 Brian McMorris // Dec 27, 2007 at 6:33 am

  From my perspective, if I was buying (and I am not), I would want to see some flattening of the rate of price decline first. We just had a decline in October (the most recent month of the Case-Shiller survey) of -2.2% in Phoenix, that annualizes to -26.4% (I don’t expect the decline to be that survey over 12 months).

  Nationally, the one month decline in median price in the C-S survey was -1.4% which annualizes to -16.8%. So, the problem is not isolated and the Phoenix data is not an outlier. The pricing declines are widespread.

  A bottom will be seen by a slowing in the rate of change. We need to see declines of 0.2% or 0.1% on a monthly basis, for several months with an occassional uptick, before we know we have hit bottom. Maybe (hopefully) that will happen in late 2008, maybe not.

  I am investing in the big banks instead of real estate, as it is easier to trade and requires no maintenance. Being an optimist, I have been early on the bottom in banks and paid for it, so I am not throwing stones. I am playing alongside real estate investors and hoping for good news.

  But, the banks are beginning to show some signs of a bottom (smaller monthly declines and not reacting violently to bad news). The big commercial banks are not totally dependent on real estate or its derivatives (like CDOs and SIVs), so they will probably bottom first. Maybe that is a good sign for real estate 12-24 months from now.

• 7 Darren // Jan 24, 2008 at 1:09 pm

  It has always been my experience that we don’t know of an event, boom or bust, until 6 months down the road. Phoenix has been in a bust market since the 2nd or 3rd quarter of 2006 and, I believe that a year from now we will peg the bottom at the 1st quarter of 2008. The best time to buy is “ALWAYS” when everyone is crying “the sky is falling”. I think that bust markets are created by public perception more than by market conditions. If you want to buy a home in Phx., do it in the next 6 months. After that, you may have the could-of, should-of, would-ofs.

• 8 John Wake - Real Estate // Jan 24, 2008 at 1:31 pm

  Darren, That’s a very reasonable scenario. It will be interesting to see how the market plays out.

Leave a Comment