Home Prices ‘Drifting Down’ In Arizona
The July numbers are out for Arizona. “By now it’s obvious the traditional surge of home sales in the summer isn’t happening this year. Actually, it’s worse than that. The latest numbers on housing resales Arizona State University show that sales of single-family homes throughout the Phoenix area in July were the weakest since July 1999.”
“Broker Barry Kramer said the market is still correcting itself after last year’s investor-driven wild ride. ‘When the dust settles and after people take a deep breath, they will lose some appreciation. But we will still be better off than when we started,’ he said. ‘You have to realize that what goes up had to go down. We are in one of those cycles.’”
“The Southeast Valley has almost 17,000 homes on the market, according to the Arizona Regional Multiple Listing Service, and Realtors believe that is a record.”
“Jay Butler, director of the real estate center, had been predicting several months ago that homes should start selling better in June and July but said now he can’t predict when things will get normal. ‘Now there is nothing hot and heavy except gas prices and your blood pressure,’ he said. ‘It’s one negative thing after another. There is no real positive thing you can hang your hat on.’”
“Sellers are afraid they will sell their homes for too little, and buyers are afraid they will pay too much, he said. ‘People just aren’t as confident as they were. They don’t want to stretch themselves,’ Butler said.”
“‘We’re now beginning to see some drifting down of the median home prices not only at the county level but in some of the various localities, which..a lot of people have been waiting for,’ said Butler.”
“Median prices fell in July compared to June in every East Valley city tracked by the center except Mesa, where home sellers happily saw the median increase $2,300 to $249,900. The median price fell $60,000 in Scottsdale, $12,500 in Tempe, $5,500 in Chandler, $5,000 in Gilbert and $2,000 in Phoenix.”
“There’s nothing unusual about Mesa compared with other cities, said (broker) Jan Montgomery. ‘It could be distorted if there was a larger number of more expensive homes selling than the smaller homes,’ she said. ‘Affordable housing is a problem I know, and I can’t think of any reason that would happen (higher median price). I don’t know of any Realtors out there that are selling so great the values are going to go up.’”
“During the summer each year, the center sends people out to take a statistical sample of the number of vacant homes in Maricopa County. Based on that survey, the center reported a vacancy rate of 3 percent, or 30,200 single-family homes. Last year it was 2 percent, or 19,400 homes.”
Many here predicted the median in the Phoenix area would turn negative this summer. Here is another auction of rare land:
‘When State Land officials put the first chunk of Superstition Vistas up for auction this fall, they hope it does a better than Tuesday’s failed auction of state land in northeast Phoenix. Up for sale will be a roughly 1,100-acre slice of Pinal County within a 12-square-mile parcel called Lost Dutchman Heights, which is part of the 275 square miles between Apache Junction and Florence known as Superstition Vistas.’
‘The Lost Dutchman parcel minimum bid will be based on more recent appraisals, Winkelman said. ‘The current appraisals take into consideration the current state of the market, so I anticipate somewhat lower prices,’ he said’
The ASU report:
‘The primary news of the last year’s housing market was the rapid rise in the median home price. As the housing market slows, the entry level sector basically disappears, while the move- up markets garner a larger share of the remaining activity. Thus, it is not unusual to see median prices to be fairly stable or even increase as the move-up market works to be satisfied.’
An update on the failed development:
‘A new lawsuit and foreclosure proceedings by Ohio Savings Bank may put an end to the dreams of buyers still hoping home builder Turner-Dunn would find a way to finish as many as 200 homes left withering in the Arizona summer sun.’
‘The properties are expected to be auctioned off in three large parcels in mid-November at the county’s Superior Court courthouse, according to filings by Ohio Savings. It’s unclear what happens to those who signed contracts or paid earnest money.’
Does anyone know how many houses were sold in Maricopa County last month and how many total listing there are? i.e. - how many months of supply does Maricopa county have right now?
If the Sheriff runs out of pink jump suits and tents he can store the illegals and other felons in those abandoned houses eh?
10-Year is back up to 4.97%, so the recent dip in mortgage rates may be reversed next week.
Seeing how we’re probably going to get a crap-load of inflation positive data coming down the pike over the next couple of weeks, coupled with the fact the Fed didn’t raise rates, is going to leave the bond market very vunerable. Watch the data. I think we might see the 10yr above 5.25 before next Fed meeting.
I bet the bottle of tranquilizers on Bernanke’s night stand is the size of a mayonaise jar.
Nah, he sleeps like a baby.
Yeah, he’s already put all his money in gold.
sleeps like a baby
So he wakes up every couple of hours and starts crying because he’s wet himself?
he’s a gov worker so he can’t get fired,but I think he made the right move as deflation is coming on fast
“he’s a gov worker so he can’t get fired,but I think he made the right move as deflation is coming on fast.”
Ever hear of “Ghawar?” Do you know what it is? It’s the largest oil field in the world. How long has it been producing? 40, maybe 50 years. How much oil is left in there? Is there an endless supply or finite. How come they are no longer drilling vertically along Ghawar, but drilling horizontally? Do you know what happens in aging oil fields when water eventually gets sucked up with the oil? Ever wonder why Texas oil fields are insignificant compared to when they were producing in the 50s and 60s? Ever here of Hubbert’s peak? And finally, what happens to the cost of a precious commodity when there is a shortage of it? Why have most of the wars in the last 30 years been over oil?
There are some inflationary pressures - oil.
There are deflationary pressures from an America-centric point of view: aging boomers spending less. But 60 million boomers versus 5 billion humans in this world? I would wonder again if the deflationary pressures are really that significant!
You got it Bill — also explains why SA is renting all the rigs in the world when Mexico should be — something to do with the large DECREASE of oil from SA even when prices are at an all time high.
Indeed! There will certainly be a ‘Crap Load’ of gov’t issued ‘Good News’ coming on consumer confidence blah blah.
Which means we can begin to think about Christmas shopping and the soft landing, prices stablized blah blah b*llshit. Damn the savings and man the cc’s.
Lost Dutchman’s Heights? Well, this is rich. I know that stretch of desert very well, and I think it might beat Queen Creek for the most unlikely place to put houses. It’s real desert, as in unattractive, rattlesnake infested, drought-dried desert. Also, there are many big parcels of developer-bought-just-last-year land being mothballed right now in Pinal County. Those developer dreams are evaporating like monsoon rain hitting a hot rock. I predict this auction will be a bust, just like the last one by Desert Ridge.
Plenty of business opportunity. Can’t you catch scorpions and sell them as trinkets?
Oh, I forgot to mention the State Pen nearby…I guess the inmates could make those scorpion paperweights and sell them in the gift shop….rehab, you know.
“When the dust settles and after people take a deep breath, they will lose some appreciation. But we will still be better off than when we started”
LOL! I guess that all depends on when you started! I doubt that last year’s buyers will be better off, ever!
Anyone have the months inventory? It must be around 9 months. Also,
how large do you think it will become before prices tank?
How much larger do you want it to get? Dear god! When you drive into the Phoenix area there should be just one big sign the says “It’s All For Sale, So Just Take Your Pick!”
“It’s all for sale” lol!!!
Exactly, the inventory for sale can’t go past 100%. Maybe we should start tracking what percentage of total homes are for sale
No kidding. I work near central Phoenix and this morning the street I normally use was sluggish due to an accident. So I detoured through the neighborhood (Coronado–one of the historic districts with older, smallish houses) and was absolutely astounded at the number of for sale signs. The last time I went through this neighborhood was probably three months ago, and the for-sale inventory has just exploded since then. Every street had at least three houses with signs out front.
that’s amazing! Coronado used to be so tight, that most homes for sale wouldn’t even hit the MLS, they would go to friends/family. Wow..
Until prices tank? You mean $60,000 drop is not good enough for you?
As for the still-rising inventory, I’ve been asking myself “What happens eventually?” for awhile now. Maybe the new line is “Inventory never goes down.” So I made a hypothi-graph showing how things might play out with price and inventory. Any real economists or those who have lived through a bust care to offer thoughts or constructive criticism?
Bubble Graph
(hmm, my post was put at the bottom instead of here. let’s try again)
I lived in Upstate NY in the 90s and the place was devistated economically. Houses were on the market for 2 -3 years without selling. What happened was that as inventory grew, people just didn’t bother listing their houses anymore since the neighborhood was full of For Sale signs. When the economy stablized 8 years later, and the population drain stopped, the marrket began a nice rebound.
No, 60K is not enough. I’m thinking 30-40% off peak prices. For a 500K house this would be more like 150-200K off. We have a long way to go IMHO.
60k was in one month. If it keeps going at that pace you’ll be pretty happy in a year.
They started with entry level homes at a 125K, and it should end with entry level homes at 135K. Yep, better than when they started.
“The median price fell $60,000 in Scottsdale”
Katie , bar the door!
“Jay Butler, director of the real estate center, had been predicting several months ago that homes should start selling better in June and July but said now he can’t predict when things will get normal. ‘Now there is nothing hot and heavy except gas prices and your blood pressure,’ he said. ‘It’s one negative thing after another. There is no real positive thing you can hang your hat on.’”
Jay, we all knew you would be wrong. Unaffordable housing=lower prices, eventually. Common sense.
Jay is a shill for the REIC!!!
Just like everyone in the RE business, he refused to let the facts interfere with his income!
Also, sounds like he is blaming this on the heat in AZ?!??!! Come on Jay…
Can we get this guy’s email and tell him to read this blog. His “predictions” are going to cost a lot of people there nest eggs. Things are going to get better for years to come.
“Jay Butler, director of the real estate center, had been predicting several months ago that homes should start selling better in June and July but said now he can’t predict when things will get normal.”
He could not predict several months ago either, but that did not stop him from winging it. Maybe he meant June and July 2009.
It is simply not credible that someone with immediate and complete access to Phoenix area real estate data really thought that summer 2006 would have strong (or normal) sales.
I love this. Another empty house for sale. Motivated seller. Will review reasonable offer. Hurry, don’t delay. Soon to be listed with realtor.
I smell another FB or carrying two mortgages while living in their newer home.
http://seattle.craigslist.org/est/rfs/192845803.html
I wonder why I’m supposed to care its about to be listed with a Realtor ? I’m not paying the 6% commish and will still bid accordingly.
I think it supposed to sound like they are trying to save the buyers some money by not jacking up the current asking price to cover for the RE commission.
Totally agree with you. Who gives a rat a$$ whether they sell the place thru RE agent or FSBO.
As a buyer, I’m still looking at the final price. If it’s overpriced, they will still be over priced regardless which route they go with.
Oh what a deal… A flesh colored house with green trim sporting vinyl floors, ugly carpet and cheap cabinetry and trim for only 425k!?? Boy, I bet the line is out the door down the street…. Dream on folks.
Another one of those McGarages; An architectural abortion that’lll be laughed at in the near future.
27131 Pembina Road, Rancho Palos Verdes, 90275 $1,099,000*
Status: ACT Orig Price: $1,295,000
3rd 200,000 price drop on a home in 92074/5 zip code this week. This one however is 2300 sqft on a tiny lot and built during korean conflict.
Do you know how long this one has been on the market?
BayQT~
And probably should be priced around 800 or 900k depending on whether it has a view a lot. Palos Verdes is fading fast or I should say faster than I expected. The last downturn was just downright hostile to that area. Looks like a little history is going to repeat itself
This is from Scott Simon at Pimco’s housing update:
“In the first quarter of 2006, Freddie Mac data showed that 88% of refinancing was equity take-out refinancing, which is about the highest it’s ever been. Even more interesting, and something we’ve never seen before, was the fact that in more than 50% of the equity take-out refinancings, the homeowner refinanced into a higher rate to take out equity.”
People refinancing in to a higher rate!! Unbelievable!
scariest yet- wonder how much total that is $$ ??
I wonder if this is people refinancing into a higher rate, but a lower payment due to teasers.
Talk about a BK waiting to happen; who in their right mind would buy that MBS?
Until prices tank? You mean $60,000 drop is not good enough for you?
As for the still-rising inventory, I’ve been asking myself “What happens eventually?” for awhile now. Maybe the new line is “Inventory never goes down.” So I made a hypothi-graph showing how things might play out with price and inventory. Any real economists or those who have lived through a bust care to offer thoughts or constructive criticism?
Bubble Graph
(sorry, I posted it yesterday too)
Pick your payment in AZ: http://www.kbhome.com/Promo~PromoID~1420~c~e.aspx
What a friggin joke this is becoming.
Had to get my magnifying glass to read the FINE PRINT!
Joke is right. It’s either KB or Toll trying to dump a bunch of overprice McMansions out on Long Island (nowhere near the water). Their bright idea? The great incentive? “Buy now and receive a free Helicopter ride to your closing!”!!!!!!!!!!! I kid you not , they’re running the ad on Bloomberg radio every morning.
A joke is right.
OK, I’ll bite.
Let’s take a hypothetical buyer who “picks” the $490 per month offer. This equals total payments of $5,880 for the first year. Very good.
Now, let’s estimate that a comparable rent in the area is $1,400 per month (I have no idea if that is correct for this area).
1st year cost to buy: $5,880
1st year cost to to rent: $16,800
Apparently, the buyer is ahead $10,620 of the renter after the first year.
..BUT WAIT!
During the first year, the home has decreased (let’s say conservatively) 10%. On $500K or $600K purchase price, that is up to $60K loss.
Now, the buyer is behind nearly $50K after one year.
BUT WAIT. The buyer is also going to have to pay the taxes, HOA fees, mello roos, etc. Let’s say that adds $400 per month to the PITI costs. Now the buyer is behind $55K after one year.
BUT WAIT. For the cou de gras, when the payments reset after one year, the buyer may decide (or may have to) to get out. And of course, he then gets slapped with 6% stealtors commission on the attempted sale–if it can be sold at all in next summer’s RE climate. Another $30K loss.
Bottom line. These offers are just trolling for GFs. Buyers will be upside down to the tune of $85K+ after the first year, compared to just renting.
You know. What makes me sick about this offer, is that the advertisement itself does not show the asking price of these homes! Only the 1st year monthly payments are shown.
You have to dig into the (very) fine print to see the asking price of these homes.
Even then, the actual payments that can be expected after the first year are not calculated.
To me, this is clearly KB trolling for GFs.
It also smacks of KB desperation to not even list the price of what is being sold, because they know the prices are too unreasonable for the current/upcoming market.
“Jay Butler, director of the real estate center, had been predicting several months ago that homes should start selling better in June and July but said now he can’t predict when things will get normal.
Hey! I thought the market was “normalizing”. What happened?
We are “normalizing”. Normalizing to the historical value of housing. Home prices are historically 3x median income of a community (of course some areas are more expensive, but Phx has absolutely no reason to be one of them). For Phx = $50,000 income X 3 = $150,000 (normal) median home price. Current median price = $250,000. Overvalued by about 40% in my opinion.
I recently ran into a friend of mine, she was telling me how she just bought a house in April (209,000). She began to say how she is drowning in payments (2,400 a month)and is looking for a second job. How is it possible to buy a house for 209,00 and have 2,400 a month payment??? What is she thinking??? She asked me if I could help her or knew of anyone that was hiring for part-time work….never thought I would meet anyone dumb enoughto get suckered into this scheme..
Chandler: Sales slowed from 745 to 380 sales from July to July, and the median price rose from $282,000 to $300,500. In June, there were 380 sales at $295,000, so median prices fell for the month. Condos declined from 80 to 40 sales, and the median price increased from $159,950 to $177,500 from July to July.
• Gilbert: Sales fell 650 to 315, but median prices grew from $315,000 to $335,000 from July to July for single-family homes. In June, there were 330 sales at a median of $330,000. Condo sales fell from 30 to 10, and the median price grew from $190,000 to $215,000 from July to July.
• Mesa: Sales fell in half from 1,225 to 610, and the median price rose from $230,000 to $249,900. That median is slightly better than the $247,600 in June, when 585 homes sold. Condo sales fell from 365 to 150, and the median rose from $128,000 to $163,250 from July to July.
——————————————————–
Sales fell!!! How about plunging off of a cliff! 50%+ decline in sales! Wow I see a lot of national sales statistics, but Phoenix sales have to be by far the worst compared to last year. Maybe I am wrong.
i submitted a comment back on the July 4th wekend which I thought might be a tipping point forTucson. I had driven on July 4th to Tucson and of the half dozen developments with completed and partially completed homes each sales office had only one or two vehicles parked in front(which I assumed to be the sales people).
I drove i-19 early this week through the town of Sahuarita (about 20 miles south of Tucson) which has been a hotbed of new construction the past several years, epecially the last two years. Since January four dvelopment projects have begun on both sides of the interstate. I don’t know if they are continutions of existing developments or new projects(can’t tell from I-19).
Well this week on one of the projects the obligatory developer flags have been moved to highlight a sign next ot I-19 which reads
” 279 improved lots for sale”. i think the sign will be there for awhile.
p.s. It boggles the mind to think that 279 homes could be built on a site this small.
Tucson will fall just like PHX, the wages here are too low to support $300K+ houses. Better to rent, lots of good deals. A lot of flippers here are getting really nervous!
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1205179&trail=180
Just waiting for the buy one house get one free specials!
I wonder how long it’ll take Flagstaff to start seeing some price reductions? I’ve been tracking the inventory on the MLS for Flagstaff and the inventory has doubled since February. I’ve got a chart up on my blog that is just unbelievable. I’m seeing a lot of bored looking guys standing on corners with signs for homebuilders, too. Something’s got to give soon!