A ‘June Swoon’ For Phoenix Area Home Sellers
The Arizona Republic reports on the June housing numbers. “The Valley’s resale housing market took a hard fall in June, its worst performance for the month since 2000 and clear evidence that buyers sat out the start of the crucial summer selling season. The number of homes for sale and the time it takes to sell them keeps increasing, outpacing even more ‘normal’ years of 2003 and 2004, and the monthly selling reports look dismal.”
“‘It was a lot weaker than I thought it would be,’ said Jay Butler, head of the Real Estate Center. ‘I see a lot of for-sale signs staying up. I’m seeing homes that are on their third agent. Homes are getting initial drive-by activity from buyers, then nothing.’”
“Home builders have been blaming the local resale market for some of their troubles, saying that their buyers are canceling deals because they can’t get what they want for their existing homes. Now, resale experts are saying that builders are messing up their market by dumping so many built-but-not-sold homes on the market with outsize buying incentives.”
“‘There are (resale) homes out there selling for more than the brand-new home is selling for, and it’s in nicer shape and they’re offering the pool,’ said (realtor) Margie O’Campo de Castillo in Phoenix. ‘Who could say no to that? It’s going to be this way until the builders take these incentives back.’”
“(Realtor) Bill Ryan in Chandler said resale prices are down 15 to 20 percent in some areas compared with last year as the market has made ‘dramatic adjustments’ in the past 60 to 90 days. ‘There is so much property on the market that it is a very strong buyers market. It has done a 180 turn to what it was a year ago.’ he said.”
The East Valley Tribune. “It was June swoon for home sellers. Sales of existing homes in the Valley fell sharply last month, prompting an Arizona State University residential real estate expert to suggest it may be an initial sign that the market is growing weaker.”
“‘If we make it through August without a real big pickup, things really slow in the resale market after August. People don’t want to get into the holiday season looking for homes,’ Jay Butler said.”
“Despite misgivings among some experts that apartments converted into condos might not sell, they have been selling fairly well in Ahwatukee Foothills. But because converted condos sell cheaper than condos built as condos, the conversions may be dragging down median condo prices there.”
“The median prices for condos fell to $193,990 from $256,250. Butler said the decrease in condo prices could be because of the glut of converted apartments, which tend to be cheaper than units built as condos.”
“Scottsdale’s sales of existing homes continued to slow, dropping 13 percent from May to June. Scottsdale Realtor David Lewis said, ‘I’m seeing prices coming down 3 or 4 percent. Those are the properties that are moving. Buyers are reluctant to pull the trigger, wondering if prices or interest rates will drop, said Lewis.”
wow
June Swoons bring July Lies and August Angst and September Dismemberment.
LOL! You deserve some kind of award for “September Dismemberment” alone.
September dismemberment to rememberment. (reaching)
which brings us to “over in october”
which leads to……………..(c’mon guys)
Well, if you’re a realtor, I’m sure in October it will be ‘back to Normal in November’ and in November ‘Dandy in December’
of course, to everyone else it will probably be ‘nasty november’ and ‘decimating december’
November Surrender
November - Bend Over
November to dismember.
Necroting in November and Dead in December?
Dammit. Should be necrotizing.
June Swoon, Dry&Die in July, August or Bust, September Dismember, ew, gross! October it’s over.
How about September distemper?
For it’s a long long while / from May to December
But the price goes down / as we reach September
The autumn lull sends / profits up in flame
And I’ve plenty of time / for the waiting game.
(Hoping I’m not the only Weill-style fogey ’round here…)
One for the Lawyers:
Oh, the shark, babe, has such teeth, dear
And it shows them pearly white
Just a jackknife has old MacHeath, babe
And he keeps it, ah, out of sight
Ya know when that shark bites with his teeth, babe
Scarlet billows start to spread
Fancy gloves, oh, wears old MacHeath, babe
So there’s never, never a trace of red…
Let the blame game begin. BEN its all your fault! LOL
This blog is riding the tip of the spear on the meltdown. Unless Helicopter Ben somehow convinces the rest of the FED governors to buckle and begin to lower this next time (OR SOONER WHICH WOULD MAKE RATES PLUMMET), we might see a freefall that could stabilize the RE market in a hurry - albeit at 50% lower prices…
Just do like they’re doing in Northern VA…put up signs for sale/for rent!!!!!!
Or a new one in N. VA — “Public Auction” — except nobody bids enough.
I’ve noticed a lot more of those springing up in my neighborhood recently
“Scottsdale’s sales of existing homes continued to slow, dropping 13 percent from May to June. Scottsdale Realtor David Lewis said, ‘I’m seeing prices coming down 3 or 4 percent. Those are the properties that are moving. Buyers are reluctant to pull the trigger, wondering if prices or interest rates will drop, said Lewis.”
The girl I play golf with still has the house for sale in Cave Creek which is North Scottsdale and considered a very good area. She has dropped the price from 419K to 364k and has had NO OFFERS. None. Sorry David a 55K drop is more than 3% or 4%.
That’s the whole problem with median price reports in this market.
Across the country, median prices have been skewed up by handfuls of sales to the stupid rich, because middle- to low-end properties are not selling at all.
Once those houses do sell, there will be a downturn in reported prices so sharp and sudden it will stun even the bears.
Check out these median asking prices:
http://housingwatch.com/regionview.aspx?city=Phoenix&pct=50&g=m
(note that the inventory numbers are for a more limited definition of the Phoenix metro area than usual)
The first and third quartile are also down: http://tinyurl.com/dsbt4
What’s her entry price on this property? Is in an investment or her primary residence? Does she have others?
The story gets interesting. She and her hubby bought the house new in 2001 for 191K. About a year ago she got divorced (after getting an Inheritance) and bought her ex out of the house. At what price I do not know. She then bought a Toll Bros Condo pre-construction. The condo is 1,200 sq ft for a price at the peak of 400K. The condo was suppose to be completed last December, but it took an extra six months for the build. She used to come to the golf course and brag about her house going up 10K a month. At the Christmas party she brought samples of her granet counter tops in the new condo. I now have heard that she had problems getting finanacing because less than 30% of the condo’s are sold. What I am really going to enjoy is what she says when the builder starts to drop the price on the units around her. This is very satisfying because no one believed in my bubble talk when I quit looking for a house to buy. They are now finally starting to believe me.
OK, didn’t see your answer above.
Anyway 191 to 364 is still incredible. I bought my house for 117 in 98 and it’s worth 160 now.
She should back out of her condo b/c they are late with it.
The condo is 1,200 sq ft for a price at the peak of 400K
Whooweee-what a sucker!!!!!!!!!!!!!!!!!!! 1200 SF + assoc. dues for 400 large…ya gotta be on serious dope.
Much more of this to come. Women have been noted to have been the biggest segment of buyers in this bubble-and lauded by the media pundits for having done so…
A fool and her money are soon parted.
Why is she selling? How much did she originally pay? How many square feet? How big is the lot? Just curious.
N. Scottsdale sounds really nice.
Flagstaff sounds great. I’d kind of like to live there.
The MLS for the Cave Creek house is 2488530. The house is 1,700 sq ft on a 4,000 sq ft lot. It is in a gated community and it backs to a wash with a view fence. Still $214 dollars a sq ft is a lot.
I’v lived in North Scottsdlae for over 10 yrs…know it inside out…its overated and overpriced and 112 degrees today. 10 more motnhs and I’m outtahere…won’t even consdider a return visit.
From the Casa Grande Valley newspaper:
‘Don Graves, database analyst, said that based on the inventory of active projects, building permits, vacant land, current and proposed projects, ownership and infrastructure, he expected the district’s development potential to be roughly 195,000 homes, most in nonretirement projects.’
S’ome projects will not develop, he said. But all the major Arizona home builders are here now, and some of them are putting in much infrastructure up front, which shows a commitment to build.’
‘His estimates do not take into consideration land that is still being farmed, but could be sold in the future, he added.’
My brother sold his hay farm in Florence/Coolidge to a developer….this was big acreage. Now the entire project is being “mothballed”…lingo for putting the finishing touches on the infrastructure, and not going ahead with development. Everything is coming to a screeching halt down there, regardless of “major Arizona home builders” and their “commitment to build”.
This particular developer wanted either to pay off the land in increments, or he offered my bro an option to get cashed out immediately, albeit at a lower price…which, of course, we all screamed TAKE IT!! Other farmers are getting options cancelled left and right.
I’m happy for your brother. But I’m glad they stopped developing in that area. I love camping and hunting just south of Florence and would have hated seeing all that beautiful ( in the eyes of the beholder ) land destroyed by development.
I hear ya! Farming is becoming an antiquated lifestyle, especially in Arizona. And the groundwater issues in Pinal County especially are prohibitive. I too love the desert in that area and have done the same as you….
really, development on the scale they’ve been pushing isn’t realistic for the area. I’m glad my brother got out when he did, but there is a higher cost to all of Arizona…
The East Valley Tribune. “It was June swoon for home sellers. Sales of existing homes in the Valley fell sharply last month, prompting an Arizona State University residential real estate expert to suggest it may be an initial sign that the market is growing weaker.”
Perhaps it is just me but isn’t “sales falling sharply” the actual definition of a weak market? I mean what is this “initial sign” bullsh*t? It’s a frickin weak market, period. Real Estate expert?
Sales were down 53% year-over-year. 53-freaking-percent! And this joker calls it an “initial sign” that things might be weak? If you sold 100 cars one month, and 50 the next, would you as a car dealer be thinking “hmmm. Little bit of a dip there, eh?” No way. You’d be panicking. Aaaaiiiiiieeee…..
Denial ain’t just a river in Egypt.
River in Egypt is denial. At the end of the river you find the waterfall - defaults.
Heh Heh! Good one bubble Popper!
It’s going to be this way until the builders take these incentives back.
Or until flipuvestors lower their own prices, Margie.
Blame game.
They are going to take them back…….when they throw the incentives out the window and just start plain old reducing the prices. Be careful what you wish for…
My thoughts exactly - they take those incentives back and the game is really over for sure.
Everyone send Margie an email at Margie@ArizonaDreamRealty.com
Hey! It’s the much-awaited Summer Bummer!
followed by the aptly named Fall.
finally the republic prints some stark statistics, instead of quotes from phantom sources, i.e. “salesman” at apartment conversions or quotes from obviously biased realtors and the president of realty executives. please. now how about some quotes from trapped sellers, or regular joes that never got caught up in the bubble, but now are just as greedy…?
114 degrees in Phoenix today. That should help stem the inventory tide. i’m sure a lot of people will be out looking at homes this weekend with such mild summer temps. Ouch…
It’s 114 today in Phoenix with humidity! It feels much worse. And yes I have a tee time for both Saturday and Sunday early morning. It’s usually around the 12th hole that I start to question my sanity. Maybe I should write as AZgolfaddict!
I was playing golf with my Dad in La Quinta on a 110 degree day with stiffling humidity. We teed off at 6:30 am which wasn’t to bad but by the 6th hole we stopped talking, just stagger to your ball, swing then get back in the cart. On the 11th hole we looked at each other and without saying a word drove home. lol
Throw an extra few hundred dollars a month to cool that McMansion in this heat, on top of $3 gallon gas, rising property taxes with each assessment and the summer selling season takes on new meaning.
Throw an extra few hundred dollars a month to cool that McMansion in this heat, on top of $3 gallon gas, rising property taxes with each assessment and the summer selling season takes on new meaning.
You got tanking tourism based economies related to your scenario all over the country.
The politico’s are paralyzed.
How about the water bill for filing up the necessary pool??…doesn’t every house in Phoenix have a pool for those delightful summer barbecues and pool parties where the temp is 100 degrees at 9PM
Buyer’s Market — Where? When?
What is it with these real estate types and hyping the “Buyer’s Market”?
This isn’t a buyer’s market. We aren’t even close. By analogy, we knew it was a seller’s market when homes received multiple offers and sold within days — above asking prices.
By definition, there is no market when sales drop off.
Fundamentally, the term “buyer’s market” means that pricing power has shifted from the seller to the buyer.
When we can walk into a deal and name a price that is close to the fundamentals and have an overwhelming chance of being accepted, that would be a buyer’s market.
Right now, all you got is rising inventory.
Do you expect them to be honest and say “Don’t buy anything till prices drop 40%”?
It would speed up the collapse, shortening the time until sales pick up again. Strong sales are more in an agent’s interest than high prices. If only all of them knew this. They are unknowing supporting slower sales by supporting current prices, or by supporting a “slight price reduction” senario, hence supporting fewer real estate jobs and less sales per agent.
unknowingly
Double edged sword from the perspective of Joe Realtor. Yes, sales volumes will pick up (better for the NAR). But, most realtors are big time flippers and they are sitting on inventory that they can’t afford to see collapse in price. They are screwed either way.
“most realtors are big time flippers”
Ah yes, good point. This is probably more of a factor than anything else in the irrational statements of realtors lately. They have a personal stake in one side of the realty game. Not always a good business strategy.
i’m in real estate,and that is exactly what i have been telling people for 18 months.sell now unless you are holding for more than 10 years,go to a fixed in that case,do not buy until prices make sense.it cost me short term,but will pay off long term,and i can shave in the morning and sleep at night.
Realtors do well in a sellers market of a buyers market. They suffer serious income declines only in a market where sales volumes collapse… like now. They *WISH* it would be a buyers market. Now all they need to do is create one. A 50% decline in sales volume has the NAR worried about income, among other things. A confirmation of major price declines will make the market freeze up entirely, and then come the defaults…
Technically, it’s considered a seller’s market when there are more buyers than sellers, and a buyer’s market when there are more sellers than buyers. By that definition, it’s definately a buyers market. (This doesn’t necessarily mean it’s a good time to be a buyer.)
I’m seeing a lot of anecdotal evidence that financing is harder and harder to get. If Joe Sixpack can’t get funding for a $500K house, how long will it take for the prices to fall? Tighter lending standards are going to make this housing market crash a lot more quickly than the housing industry wants to admit.
The reason this will be slow to correct is obvious. Too many sellers can’t sell for the market price. Even many people who bought years ago have “cashed in equity” to the point that they simply can’t cut the price. As for the speculators, sub-prime buyers, and people “who just had to buy or be priced out forever”; they’re all upside down. They simply don’t have the money they would need to bring to the table. They have no reason not to wait for the forclosure process to play out.
“Right now, all you got is rising inventory.”
‘eggs’-actly!!!!! It sure is not a buyer’s market! Look at LA Beach cities too (south Bay). Just rising inventory. Prices down 5% from a year ago. ho hum. Yet prices have gone up about 75% since 1999 in beach areas such as Hermosa Beach! Suffer sellers! Suffer!
“Where are the stinking buyers, You can just smell the fear”, as a real estate agent put it, in an interview in the News-Press.
Selective reporting, or how the Media Fluffs the Housing Crash:
http://www.xanga.com/russwinter
Watching this all melt down gets better by the day. Pass the popcorn, and while you’re up, get me a beer…
Shows how out of it you are. Beer is so out of fashion now. Too cheap for Boomer Broods who need $20 martinis to validate their sense of self-worth and entitlment inherited from their parents.
(That’s the whole problem with median price reports in this market.
Across the country, median prices have been skewed up by handfuls of sales to the stupid rich, because middle- to low-end properties are not selling at all.)
True, but that’s always the case in a downturn, and this sophisticated fact has (surprisingly) been widely reported.
And, data on current and past sales of comparable homes in comparable places are much more widely available to the general public now than in prior downturns. The press has been reporting this too: “the house down the street sold for X last year but now a seller has been able to get X minus 20%.” I’ve even seen the term “comps” used in the general press.
it’ll be “bend over in October”
..that’ll be a November to Remember
OT…Rates falling…
http://news.yahoo.com/s/ap/20060713/ap_on_bi_ge/mortgage_rates
“‘There is so much property on the market that it is a very strong buyers market. It has done a 180 turn to what it was a year ago.’ he said.””
It will be a buyer’s market when prices drop about $100,000.
Intel to cut 1,000 managers jobs worldwide - per CBSMarketwatch.com
Silicon Valley is going down!
I suspect when the sales numbers of Fall 2006 approach the inventory numbers of Spring 2004 we will truly enter the real ‘buyers market’.
“The median prices for condos fell to $193,990 from $256,250.”
Now that is what we are looking for ! This is only the beginning, folk. But at least we don’t have to argue we had a bubble anymore. Seems like folks are figuring that out. Now we are playing poker. Who is bluffing on their prices and who is really stern. Buyers or sellers. Just a minute… there aren’t any buyers at the table any more. Just a bunch of sellers, trying to out bluff the others as to what the real price of their home is.
“I’m seeing homes that are on their third agent”
That kind of sums it up for me. These people are soooo desperate to get out! If it doesn’t sell within a matter of weeks they are frantically switching agents, staging the home, reducing price (by fractions) and still nothing! This is pathetic.
In the last real estate “soft Landing” we used to say. you want to be the first born, second wife and third realtor
Just-say-No-vember?
Q: How do you make a small fortune in Arizona real estate?
A: Start with a LARGE fortune!!!
There are (resale) homes out there selling for more than the brand-new home is selling for, and it’s in nicer shape and they’re offering the pool,’ said (realtor) Margie O’Campo de Castillo in Phoenix. ‘Who could say no to that? It’s going to be this way until the builders take these incentives back.
Okay, let me translate. There are resale homes out there listed (not selling) for more. The builders are handing the flippers their a$$e$$ in a bag by improving quality, offering incentives, and lowering prices. Where’s auger-inn? We may need him to buy another round for the flippers at the corner booth.
I think one major factor behind the sudden decline in sales is related to investors / speculators getting out (or trying to). What is left are genuine buyers looking for the long term but simply unable to buy when considering home purchase from a long term (instead of a short term) perspective. A great deal of them still believes in the “real estate can only go up” story but cannot meet the requirements without committing financial suicide even with a nudge from realtwhore “Suzanne” and no-docs loan “Pete”.
If you want more local anecdotes (and some people who sound half-way sane, maybe they read this blog!) check out the reader comments at the end of the article.
My MacShack (’65 era house) just cost me $250 in electricity for June, can’t wait for August! Plus I have a small plot of ground in grass, about 1800 sq. ft. It costs me about $100/m in water over and above my normal water bill.
I just love the desert in summer.
My 4000+ sq ft house here in Phx cpst me $254 to cool last month (June). Maybe there’s something to that conservation stuff.
>>>My 4000+ sq ft house here in Phx cpst me $254 to cool last month (June).
That is pretty good for that amount of space…are you part Gila monster? I spent $200 on electricity for my 1500 square foot, 9 year old rented house last month. APS has had some rate hikes in the last year, and further price increases are awaiting corporation commission approval.
Don’t complain about those electricity costs…my bill is $375 a month here in the Miami area. I got here last summer and was used to $140 in San Diego (rarely needed AC in the summer or heat in the winter). Ouch!
Buy the new “twisties” flourescent light bulbs. They use one third of the electricity and produce only one third of the heat. My electric bill is under $80. We converted the ENTIRE house to these bulbs 6 months ago and it has already paid for itself. (About $100) give or take.
Also: turn down the temperature of your water heater. What do you need hot water in the summer for? Warm water for showers, possibly. Hot water? Hot water doesn’t kill germs on dishes or laundry until it’s scaldingly hot, so why bother?
Can’t help ya on the a/c, but in some parts of the valley the houses come with SRP irrigation rights. I paid $65 FOR THE YEAR to irrigate 17000 sqft, 16 times a year. We’d end up with water 6 - 8 inches deep across the entire prop. That’s why even in summer some places actually have green grass for a yard instead of dirt & rock. Downsides– it was a bitch to mow (push), every friggin week.
rocketbob,
$250 for electric is brutal. do you have an electronic thermostat to turn down AC during the workday, or is it so hot in AZ that it has to run full out all day?
I’d recommend reading some books on natural gas supplies and the electric utility industry. i bet electric/heating bills will be a bigger financial burder than gasoline for most people in the next few years.
my rent @ $1800 for a 2bdr apt in San Fran may be as much as some peoples mortgages, but my combined gas electric bill last month….$17. In the dead of winter it sometimes hits $25 (small electric heaters in 2 rooms we use maybe 30 days/yr). oh…and no car payments/insurance/gas for myself or the GF.
factor all that in and it’s cheaper than a $700/month place somewhere like ohio.
I turn my air up to about 78 when at work. You can not turn it off or up much more or it will take more energy to cool it off when you get home. I live in a 1,600 sq ft house and my bill last month was $250.
It’s central AC that costs so much. If I lived in AZ, and I almost moved there, I’d get a really energy efficient window air conditioner to use for the room(s) I was hanging out in. You can leave that one room going all day at much lower cost.
When you come home, take a cold shower and hang out in a designated space, like the computer room
until the rest of the house cools off.
Cool showers work really great!
Otherwise— just enjoy paying the bill!
I am not sure if there is a good online source for comparing electricity rates from area to area (per kilowatt-hour). But Phoenix/APS rates are the highest that I have seen. And of course, the usage is huge during the summer. Over recent years, I have had service with Nashville Electric Service and Los Angeles Dept of Water and Power, and APS rates are much higher than both of those. I also remember that there was a huge disparity b/w LADWP prices and So. Cal Edison prices when I lived there after deregulation, but I never lived in an Edison area.
We pay about 14 cents a killowatt hour. Top that!
Con Edison (NYC) is 21 cents.
It looks like .14 cents per kw-h for APS/Phoenix summer rates (6 months/year). It will vary a little because anything over the 400 per month and 800 per month levels get progressively higher rates. I used 1450 on my last bill. They have some other plans where you pay higher rates during the day and higher flat fees, but get lower rates from 9pm - 9am. I doubt that would save me money, but possibly would help someone running pool equipment or other appliances during that timeframe.
AZ Sun - this house was designed for a swamp cooler and has no real insulation or double pane windows. I just put in a real A/C last year. That’s this fall’s project.
SF renter - apples & oranges. Lived in Palo Alto 4 years. You don’t need AC and rarely need heat. Everything else costs so much more there (except for vegetables) and its wall to wall people. But that’s why we have choices - I chose fewer people and hot as hell for 5 months. Also, I keep my office in the house, and don’t like to sweat on the keyboard.
Besides, I wanted to have a front row seat to view of the imploding real estate market here in Arizona. Something to tell my grandkids, if I ever have any.
I live in a 2000 square foot two-story house in Tucson. Last month, it cost me $136 to cool it. That was with kids home and the a/c running all day. We keep the temperature fairly high though and turn it off when we’re not there.
The “experts” will be saying the market may be weakening for 5 years to come.
I keep my Tucson 1200sf townhome at 78-80 degrees, last month was $116 for elec, will be higher becuase we’ve been hotter and more humid. BTW, rent is $885, good deal or no?