This was an interesting story about an historic adobe home in Paradise Valley, Arizona.
A historic Paradise Valley home was sold last month after it went to foreclosure in August.
The 1.67-acre property northwest of McDonald Drive and Invergordon Road includes one of the area’s original adobe homes, built in 1931 by Duncan MacDonald.
The home had been on the market a year ago for $2.6 million.
John Pappas bought it in February for $975,000.
But a home story without photographs is sorta like Diet Pepsi without caffeine.
Our readers, however, get to see a ton of a photographs of this historic Paradise Valley home here. (This link is valid until 4/29/2009.)
{ 7 comments… read them below or add one }
Brian 04.01.09 at 8:58 am
I love that area between McDonald and Lincoln Dr. around Invergordon. It is the definition of classic AZ living. Just shows how far this market has come (fallen) with a 65% reduction from original list price.
The Shiller data is in. The PHX market area is now down -48.5% from the June 2006 peak, about half price. The decline in January was 5%, so the rate of decline has not changed but is full steam ahead. Still, the massive Federal stimulus will catch hold at some point. We definitely need some inflation to offset the deflation. I wouldn’t mind seeing 10% inflation a year for the next five years. It would get asset values back to a reasonable level (if not all the way back to 2006/07 and help heal the financial system. But then, watch out. Interest rates will get jacked up to slow the inflation. The window for buying anything on debt is the next 24 months.
Cbass 04.01.09 at 10:33 pm
To bad my boss is not going to give me a 10% raise for the next 5 years otherwise that is a great plan. I doubt yours will either so it is pointless.
Brian 04.02.09 at 1:59 pm
I disagree Cbass. Earnings keep up with inflation. That has been the history of inflation. Stocks also keep up with or surpass inflation and hard assets definitely appreciate more than inflation. Were around in the 70s? I was and remember it well as it was when I started my career and started investing. Materials and energy stocks led from 1976 to 1982. Real estate also did well during that period. What gets trashed by inflation are those on the other side of the ledger: lenders offering fixed rates and other financial assets in general.
But you definitely won’t get a raise during periods of deflation. If anything, you see your income reduced by either fewer hours per week, getting an outright paycut of 10-20%, or losing your job as companies downsize or fail. Let’s see, which situation is better? Having your costs increase by 10% a year, but also having your income increase by about the same amount? Or losing your job? Doesn’t seem like a tough decision to me.
Cbass 04.02.09 at 3:08 pm
Umm I am getting a raise this year and I would call what we have experienced a deflation? I still have a job and so do most people. Wages will not keep up in a 10% inflationary period. Not sure who your boss is but I want to work for him. City job? They are the only ones who get a cost of living adjustment and also give you an actual raise on top of that. I have to live in the real world with the rest of America. This bubble bursting is the best thing to happen for me. I am looking at some beautiful houses that I can actually afford on my salary. I did not buy during the boom because it did not make financial sense. There was a time when doctors and lawyers bought $350K+ houses, not people who worked at Mickey Ds, plumbers, and other middle class people. That time is upon us again so embrace it.
Brian 04.02.09 at 3:23 pm
I will give you my boss’s phone number and you can see if you can get a job. Only problem, we have had two layoffs in the past 4 months and aren’t hiring. If you are getting a raise this year, consider yourself very lucky. Unemployment will go over 10% in the next couple months. Don’t know what you do for a living, but it must be really important if you aren’t experiencing layoffs.
If you were working in the 1970s, you would know that income keeps up with inflation. If you aren’t convinced, consider any profession that gets paid 100% commissions or tips, like sales or waiting tables. As prices go higher, income goes up exactly the same percentage. In addition, inflation only happens when there is excess demand. It doesn’t matter to me (or most others) that excess demand is due to growth in monetary supply. Excess demand requires job expansion which puts more people to work. We should be so lucky as to have inflation so that unemployment can be reduced.
The only time this is not true, is when inflation is totally from an external source that is not about increased demand, but is from limited supply. There were a couple of years in the late 70s where price inflation was due to artificial supply constraint on oil by OPEC. This is how we got stagflation where employment levels did not increase, but prices did. But that won’t happen this time. OPEC controls much less of world oil supply, and as a total economy, we are less dependent on oil (though we are too dependent on imported oil for the energy we do need, but the majority of imported oil comes from our friendly neighbor Canada).
CBass, you and the other anti-inflation types need to quite beating yourself in the head and need to figure out how to benefit from inflation. Buy some real estate, oil or some gold. If you can’t beat them (and you can’t) then join them.
Cbass 04.02.09 at 10:24 pm
Brian,
I do feel like I have an important job, but that is only my opinion. My company is actually hiring right now and expects to add another 1k jobs over the next 2 years. So as of today things are good on that front. I am in the IT field for what it is worth.
After I buy a house this year and take advantage of the 8K tax credit and undervalued RE prices I guess I don’t really care what happens with inflation. It is wrong but I see it as inevitable as there is no other way to save all the morons who thought they were RE tycoons, doctors, and lawyers buying houses they could not afford. I do need that inflation thing to wait till at least next year though.
I ignored a lot of people who told me to buy RE in 05, 06, and 07. They said your married now you gotta buy a house, you have a kid think about your family. John will tell you I have been kicking around here for a long while. Man am I glad I did not listen to those idiots. Anyway I am here to say that I Cbass am giving a buy signal on RE as of March this year. Thats right you heard it here first, this Bear has turned into a Bull right before your very eyes.
John,
Sorry but my sister is a RE agent, you were my second choice though
Brian 04.03.09 at 5:14 am
CBass, You are indeed fortunate :o) “IT” is the strongest segment in our economy as shown by both your experience and the stock market. Tech is the only segment that is positive for the year. I myself am in the industrial / manufacturing sector. That segment is one of the weakest along with consumer durables, which include automotive and housing.
Your willingness to be pragmatic and profit from inflation is also reassuring. As I have repeated till everyone is sick of hearing it, inflation is much better than the alternative (and there is really no in-between). We have had some degree of inflation for 100 years now, except for the darkest time in our history, the Great Depression. Inflation is good because it means excess demand, which means economic growth, business expansion, more jobs and maybe a better living standard if growth is accomplished by increased productivity.
What everyone fears, hyperinflation, only happens when excess demand is the result of constrained supply: not enough basic goods like food for everyone. In our prosperous nation with all our productive resources, that will not happen. Hyper-inflation happens in economies that are broken and that can’t increase supply for some reason: either a lack of natural resources or governments that discourage capital formation and investment, or just rip off the nation’s assets for the leaders’ personal gain (in addition to Zimbabwe, think North Korea, USSR or China before the fall of communism).
The German experience everyone likes to cite was in the 1920s after WW1 destroyed the industrial base of the economy and the male labor pool. After the war, the unwise Allied governments repressed Germany and forced war reparations without rebuilding the economy (a lesson we learned and did not repeat after WW2). German leaders then ran the money printing presses in desparation because of public pressure for more money to pay for limited essential goods like food. That is how you get hyper-inflation. Zimbabwe today and Argentina and Brazil in the 70s are the same stories: broken or non-existent production which limits aggregate supply. Limited supply is the cause of hyper-inflation. Excess money supply is the effect.
In our country today we have the opposite: excess supply with idled plants and workers. Our problem is to increase demand to absorb the supply. That is done through monetary expansion to fill the hole left by capital contraction / destruction of the past two years. With our current reflation policies, eventually that hole WILL be filled. We will know it is full because unemployment will drop back below 5% and prices for basic goods, including real estate, will start going up.
The worst that can happen is that we may see a repeat of 1980 and Paul Volker’s rapid increase of interest rates and buying back of Treasuries to sop up money supply. That might precipitate a recession, but at least there is no feeling that the world is coming to an end. If this scenario plays out, and it very well might, then financial assets will move to the fore and hard assets will decline in value, as did gold, oil and other commodities after 1980.
Advice: buy US Treasury Zero Coupon bonds if this scenario plays out the next 10 years. The best investment I have ever seen in my life was in 1980 when you could buy a 20 year, non-callable Zero Coupon Treasury with a 14% interest rate: zero risk with market beating return.
I am truly glad you are doing well. Good luck to you and your family as you become a home owner for the first time.